ORDER

C.A. Nos. 1144-45, 1147-48 of 1982

1. The point involved in all these appeals is whether the hotels run by the appellants are factories within the meaning of the provisions of Section 2(12) of the Employees State Insurance Act, 1948 (hereinafter referred to as the Act) and, therefore, covered by Section 1(4) of the Act.

2. The State Insurance Corporation had raised a demand for contribution from the appellant-hotels for different periods between 1970 till November 11, 1978 treating them as factories within the meaning of the Act. It may be noted here that there is no dispute with regard to the contribution payable on and from November 12, 1978 since a notification has been issued treating the hotels as "establishments" from that date and, therefore, they are since covered by Section 1 (5) of the Act.

3. The main contention of the appellants before us was that the entire premises of a hotel cannot be treated as a "factory" within the meaning of the said section merely because the process of cooking food is carried on in its kitchen which forms only a part of the said premises. It was not disputed before us, though it appears it was vehemently argued before the High Court, that kitchen is a factory since a manufacturing process within the meaning of Section 2(k) of the Factories Act is carried on there. The argument was that the activities which are carried on in the rest of the premises of the hotel must have a connection with the activity carried on in the kitchen, and since there is no such connection, the definition of "factory" should not be extended to the other premises of the hotel. The definition of "factory" given in Section 2(12) of the Act reads as follows:

"2. Definitions.- In this Act, unless there is anything repugnant in the subject or context,-

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(12) factory means any premises including the precincts thereof-

(a) whereon ten or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on, or

(b) whereon twenty or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power or is ordinarily so carried on,

but does not include a mine subject to the operation of the Mines Act, 1952 or a railway running shed;"

4. The "manufacturing process" as defined in Section 2(14-AA) of the Act read with Section 2(k) of the Factories Act, 1948 is as follows:

"2. Interpretation.- In this Act, unless there is anything repugnant in the subject or context,-

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(k) Manufacturing process means any process for-

(i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal, or

(ii) pumping oil, water, sewage or any other substance; or

(iii) generating, transforming or transmitting power; or

(iv) composing types for printing, printing by letter-press, lithography, photogravure or other similar process or bookbinding; or

(v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels; or

(vi) preserving or storing any article in cold-storage;"

5. Since the manufacturing process in the form of cooking and preparing food is carried on in the kitchen and the kitchen is a part of the hotel or a part of the precinct of the hotel, the High Court has held that the entire hotel falls within the purview of the said definition. We do not see any infirmity in the conclusion arrived at by the High Court although we agree with Shri Sorabjee that the reasons given by the court in support of the conclusions are not all valid. The unity of ownership which is adverted to by the High Court in this connection does not appear to be relevant to the point in issue.

6. Shri Sorabj