JUDGMENT - S.M. DAUD, J.:---The interesting question arising in this appeal under section 82(2) of the Employees' State Insurance Act, 1948 (E.S.I. Act), is whether the use of electric power for processing the effluent water preparatory to its eventual dispersal, can be termed as a manufacturing process as contemplated by the use of that expression occurring in section 2(12) of the aforementioned Act?

2. The question posed in the first paragraph has to be determined in the backdrop of the following facts :

Respondent Vyankatesh Co-operative Processors Society Limited of Ichalkaranji in District Kolhapur, of which Pandurang Yeshwant Magdum is the Secretary, was in the business of hand-processing grey-cloth at Ichalkaranji. The business being done by the Society involved the processes of bleaching, dyeing and mercerising. The water employed in these processes got polluted and the same had to be treated before its discharge into the Krishna River basin. For the discharge of the effluent, permission had to be obtained from the Maharashtra Prevention of Water Pollution Board under the Maharashtra Prevention of Water Pollution Act (Pollution Act) and such permission had been obtained by the Society. The effluent's treatment required the use of a motor operated by electricity. The processes of bleaching, dyeing and mercerising did not involve the use of electricity at all. The Society was in two minds as to whether or not it was covered under the E.S.I. Act, having regard to the fact that it employed a labour force of more than 20 persons. The appellant's Directorate was equally undecided. Initially, the Directorate was of the view that the Society was not covered by the E.S.I. Act, as, though it employed more than 20 persons, it was not using power for any manufacturing process. Subsequently, the Directorate underwent a change of view and called upon the Society to pay contribution under the E.S.I. Act for the period January 1978 to January 1982--both inclusive. That communication led to the Society moving the E.S.I. Court for a declaration under section 75 of the E.S.I. Act. The declaration sought was that the Society was not covered by the E.S.I. Act and the consequential relief that the notice calling upon it to remit contribution for the aforementioned period, was liable to be withdrawn. The Directorate contested the application moved by the Society. It contended that the manufacturing activity in which the Society was engaged involved the discharge of the effluent. Unless the Society obtained permission to discharge the effluent after treatment, it could not have engaged in the activity of bleaching, dyeing and mercerising grey-cloth. In fact, it would not have been granted permission to start a unit without the requisite permission under the Pollution Act. Treatment of the effluent prior to its discharge was being done with the aid of power and that was an integral part of the manufacturing process. The application moved by the Society was misconceived and liable to be dismissed. The Society and the Directorate examined a witness each in the proceedings before the E.S.I. Court. The Society's witness Pandurang Mohite testified to the nature of the activity being carried on by the Society. The Directorate's witness who was once posted at Kolhapur as an Insurance Inspector, spoke of what he had seen on the occasion of his visit to the Society's factory. He had prepared a report and that report dated 22-7-1981 was proved by the witness. One important answer given by the Inspector, is, that the manufacturing process in which the Society was engaged would not be affected in any manner even if the motor used for the treatment of the effluent was not operated. The learned Judge of the Insurance Court having found in favour of the Society, it is the Directorate, or rather the Corporation of which the Directorate is a limb, that has come in appeal before us.

3. Certain definitions of the E.S.I. Act and the Factories Act of 1948 (F.A.), t

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