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REGISTERED No. D-(D)-72

The Gazette of India

EXTRAORDINARY

PART II-—Section 2

PUBLISHED BY AUTHORITY

No. 16] NEW DELHI, SATURDAY, MARCH 22, 1975/CHAITRA 1, 1897

Separate paging is given to this Part in order that it may be filed

as a separate compilation

RAJYA SABHA

The following Bill was introduced in the Rajya Sabha on the 22nd

March, 1975: —

BILL NO. VII OF 1975

A Bill further to amend the Employees' State Insurance Act, 1948, and to

incorporate an explantory provision connected therewith in

section 405 0f the Indian Penal Code.

BE it enacted by Parliament in the Twenty-sixth Year of the Republic

of India as follows: —

1.(1) This Act may be called the Employees' State Insurance (Am-

endment) Act, 1975.

Short title and com- mence- ment.

(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act.

34 of 1948.

Amend- ment of section 2, Z. In section 2 of the Employees' State Insurance Act, 1948 (herein- after referred to as the principal Act), In sub-clause (b) of clause (9), for the words "five hundred rupees" in both the places where they occur, the words "one thousand rupees" shall be substituted.

Amend- ment of section 17.

3. In sub-section (1) of section 17 of the principal Act, for the words "with a maximum monthly salary of five hundred rupes and above", the words "the maximum monthly salary of which exceeds one thousand and two hundred rupees" shall be substituted.

(279)

Amend- ment of section 89.

4. In section 85 of the principal Act, for the words "he shall be punish- able with imprisonment which may extend to three months or with fine which may extend to five hundred rupees, or with both.", the follow- ing shall be substituted* namely: —

"he shall be punishable—

(i) where he commits an offence under clause (a), with imprisonment for a term which may extend to six months but—

(a) which shall not be less than three months, in case of failure to pay the employees' contribution which has been deducted by him from the employee's wages;

(b) which shall not be less than one month, in any other

case,

and shall also be liable to fine which may extend to two thousand rupees:

Provided that the court may, for any adequate and special reasons to be recorded in the judgement, impose a sentence of imprisonment for a lesser term or of fine only in lieu of imprisonment;

(ii) where he commits an offence under any of the clauses (b) to (g) (both inclusive), with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.".

5. After section 85 of the principal Act. the following sections shall

be inserted, namely: —

Inser- tion of new sec- tions 85A, 85B and 85C.

"85A. Whoever, having been convicted by a court of an offence punishable under this Act. commits the same offence shall, for every such subsequent offence, be punishable with imprisonment for a term which may extend to one year, or with fine which may ex- tend to two thousand rupees, or with both:

En- hanced punish- ment in certain cases after pre- vious con- viction.

Provided that where such subsequent offence is for failure by the employer to pay any contribution which under this Act he is liable to pay, he shall for every such subsequent offence, be punish- able with imprisonment for a term which may extend to one year but which shall not be less than three months and shall also be liable to fine which may extend to four thousand rupees.

Power to re- cover damages.

85B. (1) Where an employer fails to pay the amount due in respect of any contribution or any other amount payable under this Act, the Corporation may recover from the employer such damages not exceeding the amount of arrears as it may think fit to impose:

Provided that before recovering such damages, the employer

shall be given a reasonable opportunity of being heard.

(2) Any damage recoverable under sub-section (1) may be

recovered as an arrear of land revenue.

Power of court to mak" orders.

85C. (I) Where an, employer is convicted of an offence for failure to pay any contribution payable under this Act, the court may, in addition to awarding any punishment, by order, in writing, require him within a period specified in the order (which the court may if it thinks fit and on application in that behalf, from time to time, extend), to pay the amount of contribution in respect of which the offence was committed.

(2) Where an order is made under sub-section (i), the employer shall not be liable under this Act in respect of the continuation of the offence during the period or extended period, if any, allowed by the court, but if, on the expiry of such period or extended period, as the case may be, the order of the court has not been fully com- plied with, the employer shall be deemed to have committed a further offence and shall be punishable with imprisonment in res- pect thereof under section 85 and shall also be liable to pay fine which may extend to one hundred rupees for every day after such expiry on which the order has not been complied with.".

G. After section 93 of the principal Act, the following section shall be

inserted, namely: —

Inser- tion of new "ec- tlon 9iA

Liability in case of trang- fer of establish- ment "93A. Where an employer, in relation to a factory or establish- ment, transfers that factory or establishment in whole or in part, by sale, gift, lease or licence on in any other manner whatsoever, the employer and the person to whom the factory or establishment is so transferred shall jointly and severally be liable to pay the amount due in respect of any contribution or any other amount payable under this Act in respect of the periods up to the date of such transfer;

Provided that the liability of the transferee shall be limited to

the value of the assets obtained by him by such transfer.".

Amend- ment of •ection 95.

7. In section 95 of the principal Act, in sub-section (4), for the words "or in two successive sessions, and, if, before the expiry of the session in which it is so laid or the session immediately following", the words "or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid" shall be substituted.

8. In the First Schedule to the principal Act, in paragraph 3, for the

Table, the following Table shall be substituted, namely:—

"TABLE

Corres-

ponding

Totat

weekjy

contri-

bution

Group of employee! whose

average dally wages are

dally

standard

beneat

rate

Em-

ployer's

weekly

contri-

bution

Em-

ployees'

weekly con-

tribution

(recover-

able

from

employees)

(employee's

and

employer's

contri-

bution)

3

i

3

5

4

Pal"i

Paite

I.

Below RH. 2 . ..

100

Pals*.

Nil

PalM 75

75

2.

Rs. 2 and above but belo -

40

Rs. 3

8a

1 20

1 30

Rs. 3 and above but below

3^

1 00

Rs. 4 . . ..

1 50

50

175

Rs. 4 and above but below

4.

Rt. 6 .

70

1 40

2 10

3 50

Ri. 6 and above but below

5.

Rs. 8

2 8j

19 a

95

350

t.

Rs. 8 and above but below

1 25

3 50

Rs. 12

$oo

375

Re. ia and above but below

7-

Rs. 16

175

3 50

7 00

5*5

8.

Rs. 16 and above but below

Rs. 24

8*5

550

"75

1000

Rs, 34 and above

750

1135

375

9-

1500"

9. In section 405 of the Indian Penal Code, the Explanation shall be lumbered as Explanation 1 thereof and after the Explanation as so lumbered, the following Explanation shall be inserted, namely: —

Amend-

ment of

Act 49

of 1880.

34 of 1948,

"Explanation 2.—A person, being an employer, who deducts the employees' contribution from the wages payable to the employee for credit to the Employees' State Insurance Fund held and administer- ed by the Employees' State Insurance Corporation established under the Employees' State Insurance Act, 1948, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.".

STATEMENT OF OBJECTS AND REASONS

The Employees' State Insuiance Act, 1948, provides, inter alia, for certain benefits to employees in case of sickness, maternity and em- ployment injury and for certain otr.ir matters in relation thereto. At present the Act covers employees vhose wages do not exceed Rs. 500 per month. This limit is considered very low in the context of the cur- rent wage levels in various indun tries. The situation has become worse, as fresh increases in wages are being made on account of inflation. As a result, there are instances where moat of the labour working in a fac- tory falls outside the scope of the Act and loses the valuable benefits conferred by it. There have, therefore, been persistent requests for en- hancement of the wage limit for coverage under the Act. The last in- crease in the wage lim> was made when the Act was amended last in 1965. It is, therefore, propo&ed to raise the wage limit for-coverage of employees fro'm Rs. 500 to Rs. 1 000 per month so as to secure the bene- fits conferred by the Act to a larger section of the employees,

2. The working of the Act has reveaud that the penal provisions in the Act are not effective in checking defaults in the payment of contri- butions. It is, therefore, proposed to impose enhanced and more deter- rent penalties for defaults in the payment of contributions.

3. Opportunity is also being taken to amend the Act for the purposes mentioned below:

(a) The limit for creation of posts by the Employees' State In- surance Corporation without the sanction of the Central Govern- ment is being raised from Rs. 500 to Rs. 1,200.

(b) It is proposed to provide that the buyer or transferee of an establishment in respect of which dues payable under the Act are pending shall also be liable to pay those dues.

(c) The Table of contributions and benefits in the First Schedule to the Act is being revised, consequent on the raising of the wage limit from Rs. 500 to Rs. 1.000.

4. It is also proposed to clarify that any contributions deducted from the employees' wages by the employer under the Act shall be deemed to be entrusted to the employer within the meaning of section 405 of the Indian Penal Code

5. The Bill seeks to achieve the aforesaid objects.

NEW DEIHI; K. V. RAGHUNATHA REDDY.

The 7th. March, 1975.

FINANCIAL MEMORANDUM

The Employees' State Insurance Act, 1948, applies to a number of

Central Government undertakings.

2. Clause 2 of the Bill seeks to increase the wage limit for coverage of employees from Rs. 500 to Rs. 1,000 per month. This involves pay- ment of contributions by employers (including Central Government) also in respect of employees who draw a, monthly wage between Rs. 500 to Rs. 1,000.

3- Clause 8 seeks to substitute the existing Table in paragraph 3 of the First Schedule by a new Table which provides i'or rationalisation of the rate? of contributions payable by employers and employees. These proposals in so far as they relate to the Central Government undertakings will involve increased expenditure from the Consolidated Fund oi India.

4. The additional liability on account of inclusion of employees who draw* monthly wages between Rs. 500 and Rs. 1,000 will, however, be off-set to the extent that with the rise in wage level, by and large, the original coverage of the Act will more or less be preserved. Further the employers will get relief from' their liability in respect of employees under the Workmen's Compensation Act, 1923 and the Maternity Benefit Act, 1961* Moreover, many of the Central Government undertakings have been exempted from the operation of the Act under section 90 thereof since they provide benefits which are superior or substantially similar to those provided under the Act. However, as the Act is being extended to new areas from time to time and the number of undertakings and employees covered go on changing, it is not possible to give an estimate of the total additional recurring expenditure in- volved from the Consolidated Fund of India. However, the additional recurring liability of employer on account of rationalisation of the rates of contributions and additional coverage has been estimated at Rs. 17.513 and Rs. 16.44 per annum per existing employee respectively.

5. There will be no non-recurring expenditure.

B. N. BANERJEE,

Secretary-Genera].

"PRINTED BY THE GENERAL MANAGER, GOVERNMENT OF INDIA PRESS, MINTO ROAD, NEW DELHI AND PUBLISHED BY THE CONTROLLER OP PUBLICATIONS, DELHI, 1975