JUDGMENT

Aftab Alam, J.—

1. In an inspection held on May 7, 1991, the officers of the Employees’ State Insurance Corporation found that there were 15 persons working as employees in the appellant-establishment, called M/s. Hotel New Nalanda. They also found a refrigerator and an electric grinder in use there in the ‘manufacturing process’. On the basis of the inspection the officers of the Corporation took the view that the appellant-establishment was a factory within the meaning of section 2(12) of the Employees’ State Insurance Act, 1948 and it came within the purview of the Act. They, accordingly, asked the Managing Director of the establishment to comply with the provisions of the Act provisionally with effect from May 7, 1991, the date of the inspection.

2. The appellant did not accept the findings recorded in course of the inspection and filed an application under section 75 read with section 77 of the Act (E.I.C. 55/91) before the Employees’ Insurance Court, Kozhikode, seeking a declaration that the establishment in question was not covered by the Act and that the applicant/appellant was not bound to observe the provisions of the Act. According to the applicant/appellant, the establishment called M/s. Hotel New Nalanda was a tourist home where rooms were let out to people on monthly or daily rent basis. The establishment never employed more than 8 persons. No manufacturing process was carried on there, much less with the aid of power. The establishment did not constitute a factory as defined under section 2(12) and it was not covered by the E.S.I. Act. The applicant/appellant also pleaded that at the time of inspection there were only 8 persons working as employees in the establishment; the other 7 persons whose names were mentioned in the inspection report were actually brokers/agents/errand boys who brought prospective clients to the tourist home from the railway station and bus stand etc. for small commission and used to hang around there for carrying out errands for the residents staying there on payment of tips by them.

4. The Regional Director, ESI Corporation, the opposite party in the application filed an objection relying upon the findings recorded in the inspection report. On behalf of the opposite party reliance was also placed on a written statement submitted by the applicant to the Insurance Inspector at the time of inspection stating the names with designation of the 15 persons working as employees in the establishment.

5. Before the Insurance Court, the applicant/appellant examined four witnesses; PW1 was the applicant-appellant himself and PWs 2 & 4 were persons who were shown in the inspection report as employees in the establishment but who came before the court to depose that they were not employees in the tourist home but were only brokers and errand boys. The applicant-appellant also produced a number of documents that were marked as exhibits P-1 to P-18. On behalf of the Regional Director ESI Corporation, the Insurance Inspector who had made the inspection of the establishment was examined as DW1 and three documents were produced that were marked as exhibits D1 to D3; exhibit D1 was the written statement submitted by the applicant-appellant and exhibit D2 the inspection report.

6. On hearing the parties and on a consideration of the materials on record, the Insurance Court found and held that as a matter of fact 14 persons were employed in the establishment; the fifteenth person named in the inspection report was the Managing Partner and he could not be counted among the employees in the establishment. The Insurance Court further held there was no satisfactory evidence that there was a refrigerator and a grinder being used in any manufacturing process being carried on in the establishment. On the basis of the second finding the Insurance Court came to hold that the establishment in question was not a factory within the meaning of section 2(12) of the ESI Act and it was not covered by the Act. It,