A factory is classified as seasonal under the ESI Act if its predominant activity is seasonal, and it is exempt from ESI applicability if it employs fewer than ten workers.

JUDGMENT :

RAVI NATH TILHARI, J :

Heard Sri Venna Kalyan Chakravarthi, learned Counsel representing Sri U.R.P. Srinivas, learned Standing Counsel for the appellant-ESI Corporation.

2. No representation for the respondents.

3. This appeal under Section 82 of the Employees’ State Insurance Act, 1948 (in short ‘ESI Act’) has been filed by the Regional Director of ESI Corporation challenging the order dated 29.03.2007 in ESI OP No.7 of 1998 passed by the Presiding Officer, Labour Court, Guntur.

4. The respondent No.1-K.S.R. Cotton Mills Private Limited filed petition being ESI OP No.7 of 1998 under Section 75 of ESI Act with the prayer to declare it as seasonal factory and not covered under the ESI Act. The respondent No.1 is a company incorporated under the Indian Companies Act situated at Etukur Road. The case set up was that it dealt in pressing the lint into bales which is exclusively a seasonal one and it used to function hardly for 2 to 3 months in a year. It was depending upon the availability of ginned cotton. It was a seasonal factory within the meaning of Section 2 (19-A) of ESI Act. The respondent No.1 in ESI/the present appellant issued a letter dated 15.10.1997 stating as if it was factory covered under ESI Act. The respondent No.1 herein was not given any opportunity. After sometime, the appellant also sent a letter dated 08.01.1998 demanding for production of records, which was duly replied by respondent No.1 on 14.02.1998 submitting inter alia that respondent No.1 factory was seasonal factory and was exempted from the purview of ESI Act.

5. The appellant/respondent No.1 in ESI OP filed counter. The case set up was that the Inspector of the Regional Director, ESI Corporation visited the establishment on 10.02.1997 and verified Form-1 submitted by the factory. It was found that there were more than 10 workers employed from 07.01.1995 to February, 1997. Respondent No.1 was also engaged in a commercial activity of purchase and sale of ginned cotton and seeds. The establishment was covered under Section 2 (12) of ESI Act but the respondent No.1 did not comply with the provisions of the ESI Act. Consequently the notice dated 12.02.1999 was issued.

6. The learned Presiding Officer, Labour Court, Guntur framed the following points for consideration :

“(i) Whether the petitioner is a seasonal factory within the meaning of Section 2(19-A) or shop within the meaning of Section 1(5) read with G.O. Ms. No.187, dated 02.03.1978?

(ii) To what relief the petitioner is entitled to?”

7. On behalf of petitioner in ESI OP (respondent No.1 herein), D. Sivaram Prasad was examined as PW1 and on behalf of the respondent therein (appellant herein), RW1-A.B. Sastry & RW2-K. Yesu were examined. The parties also filed their respective documentary evidences.

8. The Presiding Officer recorded the finding that the respondent No.1-factory was a seasonal factory within the meaning of Section 2 (19-A) of ESI Act, as it was engaged in main and pre-dominate activity of cotton ginning. It could not be treated as establishment. Merely because the respondent No.1 herein was engaged in sale of cotton lint, cotton pressing and separation of seeds from the cotton, the factory did not loose its characteristic of seasonal in nature. So it was exempted from the operation of ESI Act and the Presiding Officer also recorded the finding that the seven workers were employed within the prescribed wage limit which were less than 10