Prospective ESI liability upheld where interim orders blocked deductions and retrospective recovery would cause hardship and impracticability.

The enhancement of the Employees State Insurance wage ceiling was upheld, but the Court sustained prospective operation of the liability from the date of the High Court judgment because interim orders had prevented employers from deducting and remitting contributions while they themselves provided medical benefits and allowances. Requiring retrospective recovery for the intervening period would have caused grave hardship, served no practical purpose, and been impracticable as many employees had retired or left service. Applying equitable principles and the power to do complete justice, the Court held that the statutory liability need not be enforced for the past period in these peculiar facts.

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Issues: Whether the notification enhancing the wage ceiling under the Employees State Insurance law could be made operative only from the date of the High Court judgment, and whether employers could be compelled to pay contributions retrospectively for the period during which interim orders prevented deduction and the employers themselves provided medical benefits.

Analysis: The notification enhancing the wage ceiling was upheld, but the employers had been restrained by interim orders from deducting and remitting contributions while they continued to provide medical facilities and allowances to the employees. The Court accepted that requiring retrospective payment for the intervening period would cause grave hardship, would not serve any practical purpose, and would not advance the object of the statute in the peculiar facts. The Court applied equitable considerations and the principle that an act of court should prejudice no party, and held that relief could be moulded under the constitutional powers of the Court to do complete justice. It also observed that recovering employee contributions after long delay would be impracticable because many employees had retired, left service, or otherwise ceased to be available.

Conclusion: The direction that the enhanced liability would operate only from the date of the High Court judgment was sustained, and retrospective recovery for the past period was not permitted.

Ratio Decidendi: Where interim judicial orders prevent statutory deductions and the employer provides substitute benefits, the Court may mould relief so that statutory liability operates prospectively, because retrospective recovery in such circumstances would offend equity and complete justice.

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