1. Dispute regarding whether factories excluded as seasonal factories under the Employees State Insurance Act, 1948, lost such exclusion following an amendment to the statutory definition. (Para 1 , 2 , 3 , 4 )
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1991 Supreme(SC) 345
SUPREME COURT OF INDIA
K.Jagannatha Shetty : V.Ramaswami : Yogeshwar Dayal
Regional Director, Employees State Insurance Corporation
Versus
High Land Companyffee Works Of P.F.X.Saldanha And Sons
Case No. : 1837 , 1841 of 1977
Date of Decision : 7/26/91
The word "include" in a statutory definition is used to enlarge and extend the meaning of the preceding words, not to restrict them. An amendment adding inclusions to a definition does not strip existing entities of their status under the original definition.
Headnote:(A) Employees State Insurance Act, 1948 - Section 1(4) and Section 2(12) - Definition of "seasonal factory" - Amendment by Act 44 of 1966 - Interpretation of the word "include" in statutory definitions - The word "include" in the statutory definition is generally used to enlarge the meaning of the preceding words and it is by way of extension, and not with restriction - When used in interpretation clauses, such words must be construed as comprehending not only such things as they signify according to their natural import but also those things which the interpretation clause declares that they shall include. (Paras 6, 7)
Facts of the case:
Certain factories were excluded from the operation of the Act as they were declared to be seasonal factories. Following an amendment to the definition of "seasonal factory" which expanded the scope to include factories engaged for a period not exceeding seven months in a year in specific processes such as blending, packing or re-packing of tea or coffee, the statutory corporation demanded contributions and threatened recovery. The factories challenged this demand, contending that the amendment did not alter their status as seasonal factories and that they continued to be excluded from the operation of the Act.
Findings of Court:
The amendment was intended to widen the definition of "seasonal factory" and not to restrict it. The use of the words "include a factory" indicates an expansion of the original definition rather than a limitation of it.
Issues: Whether the amendment to the definition of "seasonal factory" resulted in the factories losing the benefit of exclusion from the operation of the Act.
Ratio Decidendi: The court held that the word "include" in a statutory definition is used to enlarge the meaning of the preceding words by extension and not by restriction. Since the amendment added new categories to the existing definition without restricting the original scope, the status of the factories as seasonal factories remained unaltered.
Result: Appeals and the special leave petition dismissed with costs.
Legal Category Hierarchy
Table of Contents
2. Whether the amendment to the definition of seasonal factory restricted the original scope or merely expanded it, thereby maintaining the exclusion of existing seasonal factories. (Para 5 , 6 )
3. The amendment's use of the word include indicates an intention to widen the definition by extension rather than restriction, preserving the status of existing seasonal factories. (Para 6 , 7 , 8 )
4. In statutory definitions, the word include is generally used to enlarge the meaning of preceding words by way of extension and not with restriction. (Para 7 )
5. Appeals and special leave petition dismissed with costs. (Para 9 )
6. How is the term include generally interpreted within statutory definitions?
The word include is typically used in interpretation clauses to enlarge the meaning of words or phrases in the statute, ensuring they comprehend both their natural import and the additional items declared by the clause. (Para 7 )
7. Does an amendment that expands a definition via inclusion restrict the original scope of that definition?
No, an amendment that uses the words include a factory is an expansion of the original definition and makes additions to it by inclusion rather than restricting the original meaning. (Para 7 )
8. Whether the widening of the definition of seasonal factory under the Employees State Insurance Act, 1948, removes the exclusion benefit for existing seasonal factories?
No, because the purpose of such an amendment is to enlarge the statutory concept of a seasonal factory, the position of existing establishments as seasonal factories remains unaltered. (Para 6 , 7 )
JUDGMENT
K.JAGANNATHA SHETTY, J.
(1) THESE appeals by special leave are directed against the judgment of the Karnataka High court rejecting the claim of the appellant-corporation for covering the factories of the respondents under the provisions of the Employees State Insurance Act, 1948 (the Act).
(2) S. 1(4 excludes "seasonal factory" from the scope of the Act. The "seasonal factory" is defined under S. 2(12 of the Act which is extracted hereunder:
"2. (12 * *
SEASONAL factory means a factory which is exclusively engaged in one or more of the following manufacturing processes, namely, cotton ginning, cotton or jute pressing, decortication of groundnuts, the manufacture of coffee, indigo, lac, rubber, sugar (including gur) or tea or any manufacturing process which is incidental to or connected with any of the aforesaid processes."
(3) THE factories of the respondents were excluded from the operation of the Act since they were declared to be the seasonal factories within the meaning of the above-stated definition. There is no dispute on this aspect.
(4) BY Amending Act 44 of 1966 which came into force with effect from 28/01/1968, the definition of "seasonal factory" has been amended. The definition as amended reads:
"2. (12 * * *
SEASONAL factory means a factory which is exclusively engaged in one or more of the following manufacturing processes, namely, cotton ginning, cotton or jute pressing, decortication of groundnuts, the manufacture of coffee, indigo, lac, rubber, sugar (including gur) or tea or any manufacturing process which is incidental to or con nected with any of the aforesaid processes and includes a factory which is engaged for a period not exceeding seven months in a year-
(A) in any process of blending, packing or re-packing of tea or coffee; or
(B) in such other manufacturing process as the central Government may, by notification in the official Gazette, specify;
THE expressions manufacturing process and power shall have the meaning respectively assigned to them in the Factories Act, 1948";
(5) AFTER the said amendment, the Employees State Insurance Corporation called upon the respondents to pay the contributions payable under the Act and threatened to take coercive steps to recover the arrears under the Revenue Recovery Act and prosecute them. Challenging the validity of the demand made, the respondents approached the Employees Insurance court, inter alia, contending that the amendment to the definition of the expression "seasonal factory" brought out by the Amending Act 44 of 1966 has not altered the position of the seasonal factory as obtained prior to the amendment and S. 1(4 of the Act would still continue to exclude such factory from the operation of the Act. The Employees Insurance court accepted the respondents plea. The Karnataka High court has also agreed with the view taken by the Employees Insurance court. The Corporation has now appealed to this court.
(6) THE sole question for consideration is whether the respondents factories in view of the amendment to the definition of seasonal factory have lost the benefit of exclusion from the Act. The High court on this aspect has observed that the purpose of the amendment was to enlarge and not to restrict the statutory concept of "seasonal factory" and the position of respondents establishments as seasonal factories under and for the purpose of the Act remained unaltered even after the amendment.
(7) THE view taken by the High court seems to be justified. The Statement of Objects and Reasons of the Bill which later became the Act 44 of 1966 indicates that the proposed amendment was to bring within the scope of the definition of "seasonal factory", a factory which works for a period of not exceeding seven months in a year -(a) in any process of blending, packing or re-packing of tea or coffee; or (b) in such other manufacturing process as the central government may, by notification in the
