ESI Act to apply to bothaided and unaided schools

A full bench of the Madras High Court, comprising three women judges, has ruled that the Employees State Insurance (ESI) Act is applicable to both aided and unaided private educational institutions in the State.
ESI Act to apply to bothaided and unaided schools
Madras High Court


The directive came while deciding on a crucial question of law as to whether unaided private educational institutions could be treated to be an ‘establishment’ under Section 1(5) of the ESI Act of 1948 so that the provisions of the legislation could be made applicable to them.
Justice Pushpa Sathyanarayana, Justice Anita Sumanth and Justice PT Asha, the first all-woman full bench of the Madras High Court upheld the Government Order which extended the provisions of the ESI Act to educational institutions (excluding government and government- aided).
Following conflicting judgments on the issue, the first bench led by Chief Justice AP Sahi had formulated an all-woman bench to mark International Women’s Day for an authoritative pronouncement on the batch of cases filed by a large number of private unaided educational institutions in the State.
The petitions had sought to declare the GO issued in this regard as illegal and unconstitutional insofar as the members of the petitioner association are concerned.
It was argued that the ESI Act was meant to alleviate difficulties faced by industrial workers and teaching and non-teaching faculty members cannot be equated with industrial workers.
Also, on pointing out that educational institutions are neither an industry nor a commercial venture, it was argued that there cannot be any difference or distinction between government and government-aided schools on one hand and unaided self-financing private institutions on the other since all institutions are primarily imparting education.
The failure to adopt norms also formed part of the arguments by stating that the ESI Act provisions to unaided private schools were extended despite the lapse of the preliminary notification.

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