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Labour Law Project
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Authorities under Employees State
Insurance Act, 1948
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Roll Number 762
IX Semester

TABLE OF CONTENTS
INTRODUCTION...............................................................................................................................3
AUTHORITIES UNDER THE ACT..................................................................................................3
I.

EMPLOYEES STATE INSURANCE CORPORATION.........................................................3

COMPOSITION.......................................................................................................................................4
TENURE OF THE MEMBERS...................................................................................................................4
POWERS OF THE CORPORATION............................................................................................................5
DUTIES OF THE CORPORATION.............................................................................................................6

II. STANDING COMMITTEE........................................................................................................7

TENURE OF OFFICE...............................................................................................................................7
POWERS................................................................................................................................................7
III. MEDICAL BENEFIT COUNCIL..............................................................................................8
POWERS AND DUTIES OF THE COUNCIL...............................................................................................8
TENURE OF OFFICE...............................................................................................................................9
PROVISIONS COMMON TO THE CORPORATION, STANDING COMMITTEE AND MEDICAL BENEFIT
COUNCIL.............................................................................................................................................10
Resignation..................................................................................................................................10
Disqualification...........................................................................................................................10
Vacancy in office..........................................................................................................................10
Validation of acts.........................................................................................................................10
Salary..........................................................................................................................................11
IV.

REGIONAL BOARDS, LOCAL COMMITTEES, REGIONAL AND LOCAL BENEFIT

COUNCILS........................................................................................................................................11
V.

PRINCIPAL OFFICERS...........................................................................................................12
SOCIAL SECURITY OFFICERS..............................................................................................................12

VI.

MEDICAL APPEAL TRIBUNALS......................................................................................14

VII.

EMPLOYEES INSURANCE COURT................................................................................14

QUALIFICATION OF JUDGES................................................................................................................14
POWERS OF THE EMPLOYEES INSURANCE COURT.............................................................................15

Introduction
The Employees State Insurance Act, 1948 (ESI Act) was enacted in 1948 with an objective
to introduce a scheme of health insurance for industrial workers and to provide for
Compulsory State Insurance benefits to the employees in case of sickness, maternity and
injury to workmen who employed in factories other than seasonal factories.

Authorities under the Act

The Employees State Insurance Act established various authorities in order to ensure the
effective functioning of the scheme envisaged by it.
1. Employees State Insurance Corporation
2. Standing Committee
3. Medical Benefit Council
4. Regional Boards, Local Committees, Regional and Local Benefit Councils
5. Principal Officers
6. Medical Appeal Tribunal
7. Employees Insurance Court

I.

Employees State Insurance Corporation

Employees' State Insurance Corporation (ESIC) is an autonomous corporation under

Ministry of Labour and Employment, Government of India. The Corporation is a body
corporate having perpetual succession and a common seal, which can sue and be sued in its
own name. As it is a legal entity, the corporation can raise loans and take measures for
discharging such loans with prior sanction of the central government and it can acquire both
movable and immovable property and all incomes from the property shall vest with the
corporations. The corporation can set up hospitals either independently or in collaboration
with state government or other private entities, but most of the dispensaries and hospitals are
run by concerned state governments.

Composition
The corporation is tripartite in nature having representation from employers, employees and
the government. It consists of the following members:
a. A Chairman who is to be appointed by the Central Government.
b. Vice-Chairman who is to be appointed by the Central Government.
c. Persons appointed by the Central Government should not be more than five
d. One person, each representing each of the States (to be appointed by the State
Government concerned)
e. One person to represent the Union territories (appointed by the Central Government)
f. Ten persons representing employers to be appointed by the Central Government
g. Ten persons representing employees to be appointed by the Central Government
h. Two persons representing the medical profession to be appointed by the Central
Government
i. Three members of Parliament of whom two shall be members of the House of the
People (Lok Sabha) and one shall be a member of the Council of States (Rajya
Sabha) elected respectively by the members of the House of the People and the
members of the Council of States.
j. The Director-General of the Corporation, ex-officio.
Tenure of the members
All members referred to under clause (f) to (i) mentioned above are to serve for a tenure of
four years and those referred under clauses (a) to (e) are to hold their office during the
pleasure of the Government appointing them and they are to continue to do so even after the
period of four years until the appointment or election of their successor is notified.1

1 Section 15, ESI Act, 1948

Powers of the Corporation

1. Power to promote measure for health, etc. (Section 19)
In addition to the scheme of benefits and contributions mentioned in the Act, the Corporation
is empowered by the Act to
a. promote measures for improvement of the health and welfare of insured persons, and
b. rehabilitation and re-employment of insured employees who have been disabled or
injured.
For implementing such measures, the corporation may incur expenditure out of the funds of
the Corporation but within the limits that are prescribed by the Central Government.
2. Power to hold property (Section 29)
The Corporation is empowered to acquire and hold both movable and immovable property. It
may even sell or transfer any property which has been vested in the Corporation or acquired
by it. Apart from sale, the Corporation may even raise loans or invest or reinvest any money
which is not immediately required for expenses or it may realise such investments. A
provident or any benefit fund for the benefit of its staff or any class of them can be
constituted as the Corporation deems fit.
3. Power to determine special contribution (Section 45 A)
The corporation is empowered to determine the amount of contributions payable to in respect
of the employees of a factory or an establishment in the following instances:
a) When the factory or establishment does not submit, furnish or maintain any returns,
particulars, registers or records in accordance with Section 44; or
b) Where any Social Security Officer or other official of the corporation is prevented by the
principal employer in exercising his functions or discharging his duties under Section 45
4. Power to impose damages (Section 85-B)
When an employer fails to pay the amount due in respect to any contribution or any other
amount payable under the ESI Act, the Corporation may recover a penalty from the employer

which should not exceed the amount of arrears as may be specified in the regulations. It may
even reduce or waive the damages recoverable in case of a sick industrial company.
5. Power to make Regulations
Section 97 of the ESI Act empowers the Corporation to make such regulations for the
administration of the affairs of the Corporation which should not be inconsistent with the Act
and rules made thereunder.
The aforesaid section raises the question whether the Director General can exercise powers
under this section. In E.S.I. Corporation v. Balaji Wvg. Mills2, the Madras High Court held
that whatever regulations are to be made under Section 97 can only be made by the E.S.I.
Corporation and not by the Director General. If the Director General wishes to exercise any
of the powers of the Corporation under the Act he can only do so on being delegated the
express authority from the Corporation.
Duties of the Corporation
Aside from having varied powers, the Corporation also has duties such as framing budget
every year showing the probable receipts and expenditure and submit a copy of the same for
approval by the central government.3 The Corporation should also maintain correct accounts
of income and expenditure4 and get those audited by the auditors who are appointed by the
Central Government.5 The Corporation should also promptly submit an annual report of its
work and activities to the Central Government. 6 At an interval of every five years, the assets
and liabilities of the Corporation should be valued by with the approval of the Central
Government.7
2 1975 Lab IC 134 (Mad).
3 Section 32, ESI Act.
4 Section 33, ESI Act.
5 Section 34, ESI Act.
6 Section 35, ESI Act.
7 Section 37, ESI Act.

II.

Standing Committee

To administer day to day functioning, the Act provides for the constitution of the Standing
Committee which is the executive body of the ESI Corporation. The committee subject to the
control and superintendence by the corporation is entrusted with the administration of the
affairs of the corporation.8 The members of the committee shall be chosen from amongst the
members of the corporation consisting of the following members:
a. a Chairman appointed by the Central Government;
b. three members of the Corporation;
c. three members of the Corporation representing such three State Governments thereon
as the Central Government may specify from time to time;
d. eight members elected by the Corporation as follows :
i.

three members representing employers (from among the members of the

Corporation);

ii.

three members representing employees (from among the members of the

Corporation);

iii.

one member from among the members of the Corporation representing the
medical profession ; and

iv.

one member from among the members of the Corporation elected by

Parliament

e. the Director-General of the Corporation, ex-officio.

Tenure of Office
The Chairman and representatives of the Central and State Governments are to hold offices
during the pleasure of the Central Govt. and the other eight elected members are to hold
office for a period of two years. It should be noted that a member shall cease to be a member
of the Standing Committee if he ceases to be a member of the Corporation.9
8 Section 8, ESI Act.
9 Section 9, ESI Act.

Powers
According to section 18 the Standing committee is empowered to administer the affairs of the
Corporation and exercise any of the powers and perform any of the functions of the
Corporation. It can also submit for the consideration and decision of the Corporation all such
matters as specified in the regulations and may submit any other case or matter for the
decision of the Corporation in its discretion.

III.

Medical Benefit Council

To advise the Corporation on medical questions and on other matters pertaining to the
administration of the medical benefits the Act provides for the setting up of a Medical
Benefit Council10 consisting of the following members:
(a) the Director General, the Employees State Insurance Corporation, ex-officio as
Chairman;
(b) the Director General, Health Services, ex-officio as Co-Chairman;
(c) the Medical Commissioner of the Corporation, ex-officio;
(d) one member each representing each of the States (other than Union territories) to be
appointed by the State Government concerned;
(e) three members representing employers to be appointed by the Central Government in
consultation with such organisations of employers as may be recognised for the purpose by
the Central Government;
(f) three members representing employees to be appointed by the Central Government in
consultation with such organisations of employees as may be recognised for the purpose by
the Central Government; and
(g) three members, of whom not less than one shall be a woman, representing the medical
profession, to be appointed by the Central Government in consultation with such
organisations of medical practitioners as may be recognised for the purpose by the Central
Government.
Powers and Duties of the Council
Section 22 empowers the Medical Benefit Council to advise the Corporation and the
Standing Committee on matters relating to the administration of medical benefit, the
10 Section 10, ESI Act.

certification for purposes of the grant of benefits and other connected matters. They also have
such powers and duties of investigation as may be prescribed in relation to complaints
against medical practitioners in connection with medical treatment and attendance. The
Medical Benefit Council is also bound to perform such other duties in connection with
medical treatment and attendance as may be specified in the regulations.
Rule 14 of the Employees State Insurance (Central) Rules, 1950 provides the following
powers and duties of the Medical Benefit Council
a) to advise the Corporation in regard to the constitution, setting up, duties and powers of
the Regional and Local Medical Benefit Councils
b) make recommendations to the Corporation in regard to
i.

the scale and nature of medical benefit provided at hospitals, dispensaries, clinics and
other institutions and the nature and the extent of the medicines, staff and equipment
which shall be maintained at such institutions and the extent to which these fall short of
the desired standard

ii.

the medical formulary for use in connection with the medical benefit provided under the
Act

iii.

medical certification, including the procedure and the forms for such certification,
statistical returns, registers and other medical records

iv.

measures undertaken for the improvement of the health and welfare of insured persons,
and the rehabilitation and re-employment of insured persons, disabled or injured

c) to advise the Corporation on any matter relating to the professional conduct of any
medical practitioner employed for the purpose of providing medical benefit under the
Act.
Tenure of Office
The Director General and the Deputy Director General, Health Services shall hold office
during the pleasure of the Central Government. The representatives from the states shall hold
office during the pleasure of the respective State Governments. The other members are to
hold office for a period of four years from the date on which their nomination is notified. But

the members shall continue to hold office even after the expiry of their tenure till the
nomination of their successors is notified.11
Provisions common to the Corporation, Standing Committee and Medical Benefit
Council
Resignation
Resignation of membership is dealt with under Section 11 of the Act according to which a
member may resign his office by notice in writing to the Central Government. A member
shall cease to be a member of that body if he fails to attend three consecutive meetings
thereof; or if he has ceased to represent such employers, employees or the medical
profession; or if he ceases to be a Member of Parliament.12
Disqualification
Disqualification is dealt with under Section 13 of the Act according to which a person shall
be disqualified for being chosen as or for being a member in the following cases:
i.
ii.
iii.

if he is declared to be of unsound mind by a competent Court

if he is an undischarged insolvent
if he has directly or indirectly, by himself or by his partner any interest in subsisting
contract with, or any work being done for, the Corporation except as a medical

iv.

practitioner or as a share-holder (not being a Director) of a company

If he has been convicted of an offence involving moral turpitude.

Vacancy in office
The vacancies in the office of members shall be filled by appointment or election, as the case
may be and a member appointed or elected to fill a casual vacancy shall hold office only so
long as the member in whose place he is appointed or elected would have been entitled to
hold office if the vacancy had not occurred.

11 Section 10 (2) (3), ESI Act.

12 Section 12, ESI Act.

Validation of acts
The ESI Act provides for the validation of acts of these bodies by providing that no act of the
Corporation, the Standing Committee or the Medical Benefit Council shall be deemed to be
invalid on the following grounds:13
i.

by reason of any defect in the constitution of the Corporation, the Standing

ii.

Committee or the Medical Benefit Council

or on the ground that any member was not entitled to hold or continue in office by

iii.

reason of any disqualification or of any irregularity in his appointment or election

or by reason of such act having been done during the period of any vacancy in the
office of any member of the Corporation, the Standing Committee or the Medical
Benefit Council.

Salary
Members according to section 15 are to receive such fees and allowances as may from time
to time be prescribed by the Central Government

IV.

Regional Boards, Local Committees, Regional and Local Benefit

Councils

The corporation is empowered under Section 21 to appoint Regional Boards, Local

Committees, Regional and Local Medical Benefit Councils and delegate them such powers
and functions as may be provided by the regulations.
Regional boards are set up to achieve efficiency by decentralisation of administration and
speedy disposal of the claims and disputes. Regional Board may be set up for each State or
Union Territory by the Chairman of the Corporation 14 which shall perform the functions
assigned to it by the Corporation or the Standing Committee.
Local Committees can be set of for such areas as may be considered appropriate by the
Regional Board. The local committee discusses the local problems in regard to ESI schemes.
It refers such complaitns as it considers necessary to the regional director concerned. Also, it

13 Section 24
14 Regulation 10

advises the corporation or the regional board concerned on matters that are referred to it for
advice.

V.

Principal Officers

The ESI Act provides for appointment of principal officers 15 of the Corporation who are
entrusted with the day to day administration of the scheme. The exercise of all powers by the
Principal Officers are subject to the control of the Director General.
A Director-General and a Financial Commissioner may be appointed by the Central
Government who should not hold office exceeding five years and may receive such salary
and allowances as may be prescribed by the Central Government. These officers may at any
time be removed by the Central Government if such removal is recommended by a resolution
passed at a special meeting and supported by the votes of not less than two-third is of the
total strength of the Corporation.
The Director General is the CEO of the Corporation and entrusted with the work of
coordinating, supervising and controlling the work of the other Principal Officers. He may,
with the approval of the standing committee, delegate any of his powers or duties to his
subordinates.
The Medical Commissioner supervises, directs and coordinates the administration of the
medical organisation of the Corporation. He also conducts such medical research on the
advice of the Medical Benefit Council.
The Chief Accounts Officer maintains Corporations accounts, prepares its budget, arranges
for investment of the corporations fund.
Social Security Officers
Functions and duties of a Social Security Officer are mentioned under Section 45 of the ESI
Act. The term inspectors used earlier has been replaced with the term Social Security
Officers after an amendment. These officers are to be appointed by the Corporation within
such local limits as it may assign to them.
15 Section 16, ESI Act.

i.

Social Security Officers are entrusted with the following powers for the purposes of
enquiring into the correctness of any of the particulars stated in any return referred to
in Section 44 or for the purpose of ascertaining whether any of the provisions of this

ii.

Act
They may require any principal or immediate employer to furnish to him such

iii.

information as he may consider necessary for the purposes of this Act

They may require any person found in charge thereof to produce such accounts,
books and other documents relating to the employment of persons and payment of
wages or to furnish to him such information as he may consider necessary and allow

iv.

him to examine the same

They have the power to examine the principal or immediate employer, his agent or
servant, or any person found in such factory, establishment, office or other premises,
or any person whom he has a reasonable cause to believe to be or to have been an

v.

employee
make copies of, or take extracts from, any register, account book or other document
maintained in such factory, establishment, office, etc.

Employer v. Alibhai16 it was held that the employer is required under the Act to produce
documents where he is called upon by any inspecting authority of the corporation. Failing to
produce a register or other document on demand is breach and punishable under the Act.
Wherein an employer got the license of his factory top produce the registers and other
records prior to 1957. The employer stated that he had not maintained all the papers and
other documents prior to the year 1957. On these facts the court ruled that there was no
ground to hold the employer liable when he failed to produce or show the books of accounts
and registers as required by the Inspector under Section 45 of the Act.17
The Bombay High Court in State of Saurashtra v. Pitambar18 held that inspectors have no
power to call for production of registers and other documents at his own office. The failure of
the employer or manager of the factory or other establishment to comply with such order of
the Inspector does not expose the employer to penalty.
16 AIR 1963 Nag 79
17 ESI Corporation v. Malhotra, (1962) 1 LLJ
18 (1954) 1 LLJ 138 (Bom).

VI.

Medical Appeal Tribunals

The State Government is empowered to constitute as many Medical Appeal Tribunals as it

thinks fit under Regulation 76 which shall consist of such persons, exercise such jurisdiction
and follow such procedure as the State Govt. may decide from time to time
Medical Appeal Tribunal shall consist of
(i)

a person who is or has been a judicial officer of a State Govt. or a legal practitioner of 3
years standing or is a Commissioner for Workmens Compensation as Chairman

(ii)

One or more medical experts, and

(iii)

One or more officials or members of trade union or unions.

VII. Employees Insurance Court

Section 74 provides for constitution of the Insurance Court the rules for the functioning of
which may be made by the State Government after consultation with the Corporation 19 with
regard to the following:
a) to constitute an E.S.I. Court
b) qualifications of persons who may be appointed Judges
c) conditions of service of such Judges
d) procedure to be followed and the execution of orders made by such Courts
Qualification of Judges
Section 74 (3) stipulates that only a person who is or has been a judicial officer or is a legal
practitioner of five years standing shall be qualified to be a Judge of the Employees
Insurance Court.
19 Section 96, ESI Act.

Powers of the Employees Insurance Court

The powers of the Employees Insurance Court have been provided for under Section 78
according to which it shall have all the powers of a Civil Court for the purposes of
summoning and enforcing the attendance of witnesses, compelling the discovery and
production of documents and material objects, administering oath and recording evidence
and such Court shall be deemed to be a Civil Court. The court is to follow the procedure as
prescribed by the State Government and the orders of the Employees Insurance Court shall
be enforceable as if it were a decree passed in a suit by a civil Court.