ESIC Promotions and DACP Scheme: Supreme Court Rules on Career Progression

The case of Employees’ State Insurance Corporation (ESIC) vs. Union of India & Others is a landmark judgment concerning promotions within statutory bodies and the applicability of government career progression schemes. The core issue in this case was whether the Dynamic Assured Career Progression (DACP) Scheme, introduced through an Office Memorandum, could override the statutory recruitment regulations framed by ESIC. The Supreme Court’s ruling clarified crucial aspects of administrative law, statutory interpretation, and service jurisprudence.

Background of the Case

The Employees’ State Insurance Corporation (ESIC) is a statutory body under the Employees’ State Insurance Act, 1948 (ESI Act). It functions under the Ministry of Labour and Employment and has its own recruitment and promotion regulations. The dispute arose when certain employees of ESIC, who were initially appointed as Assistant Professors, sought promotion to the post of Associate Professor under the DACP Scheme, which allows promotion after two years of service.

The contesting respondents, who were Assistant Professors at ESIC Model Hospital, Rajajinagar, Bengaluru, joined the organization between February 7, 2012, and June 26, 2014. Their promotions were contested on the basis that ESIC’s Recruitment Regulations, 2015, stipulated a minimum of five years of service for such promotions, contrary to the two-year requirement under the DACP Scheme.

Legal Issues Raised

The primary legal issues before the Supreme Court were:

Whether the DACP Scheme, introduced through an Office Memorandum, had overriding statutory effect over ESIC Recruitment Regulations, 2015.
Whether the Karnataka High Court erred in ruling that the DACP Scheme was applicable to the contesting respondents.
Whether an incorrect concession made by ESIC before the Central Administrative Tribunal (CAT) had binding legal consequences.

Arguments of the Petitioner (ESIC)

ESIC, through its counsel, raised the following key arguments:

The ESIC is an autonomous statutory corporation that operates under the Ministry of Labour and Employment, not the Ministry of Health. Therefore, the DACP Scheme, which applies to the Ministry of Health employees, does not govern ESIC employees.
Section 97 of the ESI Act grants ESIC the power to frame its own regulations, and the ESIC Recruitment Regulations, 2015, mandate a five-year service period for promotion from Assistant Professor to Associate Professor.
Government Office Memoranda, such as the DACP Scheme, do not override statutory regulations framed under an Act.
The ESIC Recruitment Regulations, 2015, were issued with the approval of the Central Government, as required under Section 17 of the ESI Act.
The High Court incorrectly held that the contesting respondents were entitled to promotion under the DACP Scheme, disregarding the statutory regulations.

Arguments of the Respondents

The contesting respondents, through their counsel, made the following counterarguments:

The DACP Scheme was extended to all medical professionals, including teaching faculty, by the Ministry of Health in 2008.
ESIC’s recruitment advertisements in 2011, 2012, and 2013 explicitly mentioned that the DACP Scheme would apply to promotions, creating a legitimate expectation among employees.
Previous ESIC communications acknowledged that the DACP Scheme was under implementation for medical officers.
Even if the ESIC Recruitment Regulations, 2015, required five years of service, the contesting respondents had already completed two years of service before the regulations came into effect and should therefore be eligible for promotion under DACP.
The High Court was correct in holding that the ESIC Recruitment Regulations, 2015, did not override the DACP Scheme.

Supreme Court’s Observations

The Supreme Court, led by Justices Dr. D.Y. Chandrachud and A.S. Bopanna, made the following key observations:

Legislative Supremacy: Regulations framed under the ESI Act have statutory force and cannot be overridden by Office Memoranda or executive instructions.
Prior Approval: The ESIC Recruitment Regulations, 2015, were approved by the Central Government, satisfying the statutory requirement under Section 17 of the ESI Act.
Incorrect Concession by ESIC: The court held that an incorrect concession made by ESIC’s counsel before the CAT did not bind ESIC, as there can be no estoppel against statutory provisions.
Judicial Precedents: The Court cited previous rulings that an Office Memorandum cannot supersede statutory rules, reinforcing that service conditions must be governed by statutory regulations.
Recruitment Advertisements: The Court ruled that erroneous statements in recruitment advertisements cannot override statutory service regulations.

Final Judgment

The Supreme Court set aside the Karnataka High Court’s ruling and upheld the ESIC Recruitment Regulations, 2015, as the governing law for promotions. The judgment categorically held:

“The DACP Scheme, introduced through an Office Memorandum, does not override statutory recruitment regulations framed under the ESI Act. Promotions within ESIC shall be governed by the ESIC Recruitment Regulations, 2015, which mandate five years of qualifying service for promotion to Associate Professor.”

Significance of the Judgment

This ruling has far-reaching implications:

Clarifies Legal Hierarchy: It establishes that statutory regulations take precedence over executive instructions.
Prevents Backdoor Promotions: Ensures that promotions within autonomous statutory bodies are governed strictly by their regulations.
Protects Administrative Integrity: Prevents employees from claiming benefits under schemes that were not intended for them.
Establishes Employer Rights: Affirms that ESIC, as an autonomous entity, has the authority to frame its own service rules.

With this verdict, the Supreme Court has reinforced the principle that recruitment and promotion policies within statutory bodies cannot be arbitrarily altered by administrative instructions. It ensures that employees are promoted based on established statutory rules, preventing ambiguity and ensuring fairness in service matters.

Petitioner Name: Employees’ State Insurance Corporation.
Respondent Name: Union of India & Others.
Judgment By: Justice D.Y. Chandrachud, Justice A.S. Bopanna.
Place Of Incident: ESIC Model Hospital, Rajajinagar, Bengaluru.
Judgment Date: 20-01-2022.

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