The definition of "factory" in section 2(12) of the ESI Act requires that twenty or more persons were working in the premises of the appellants on any day of the proceeding twelve months. This requirement is satisfied even if the twenty or more persons did not work at the same time, as long as they worked in the premises during a day of 24 hours of the preceding twelve months.

This is an appeal against an order of the Employees Insurance Court, Bombay. It appears that the issues in the matter were tried in three stages and there are three orders dated February 28, 1961, March 15,1962 and July 6, 1964. By the final order the appellants were ordered to pay a sum of Rs.2,293.76 as their contribution under section 39 of the Employees Siale Insurance Act, 1948 (hereinafter for the sake of brevity referred to as "the said Act") with interest from the date of judgment and Rs. 50 as costs. Under section 82 of the said Act an appeal lies to the High Court from an order of an Employees Insurance Court constituted under section 74 of the said Act, if it involves substantial question of law.

2. The appellants carryon the business of bakers. They are registered as a factory under the Factories Act, 191-8. By a letter dated October 22, 1959 the Employees State Insurance Corporation constituted under the said Act (hereinafter referred-to as "the Corporation") called upon the appellants to pay a contribution in respect of their employees under section 39 of the said Act from the year 1954 onwards. On November 12, 1959 the appellants replied repudiating the claim. On March 22, 1960 the Corporation filed the application from which the present appeal arises claiming contribution from October 3, 1954 to December 31, 1959 amounting to Rs. 4,462.35. It is on this application that as a result of the three orders referred to hereinabove the appellants have been ordered to pay the contribution. The appellants have filed the present appeal against the said orders.

3. The first contention taken by the appellants is that they are not a "factory" within the meaning of section 2 (12) of the said Act and therefore they are not liable to pay any contribution under section 39 of the said Act. The admitted facts are that the appellants are a factory as defined in the Factories Act, 1948. They work in five shifts, four during the day and one at night. The day shifts overlap one another. During the day there is a shift for pastry work, another one for cleaning of pastry, a third for kneading flour and the fourth for office work. The night shift is only for cutting and moulding. It is admitted that if the workers employed in the several shifts are taken separately, each shift engages less than twenty employees. But the aggregate number of employees who work in the several shifts exceeds twenty. The contention of the appellants on these facts is that because during no part of a day of 24 hours twenty employees work together at the same time, they" were not a "factory" within the meaning of section 2 (12) of the said Act.

4. Section 2 (12) of the said Act provides as under:

"factory" means any premises including the precincts thereof whereon twenty or more persons are working or were working (are employed or were employed for wages) on any day of the preceding twelve mouths, and in any part of which a manufacturing process is being carried on…."

In the above definition at the date material for this appeal the words "are working or were working" existed. The words "are employed or were employed for wages" have been substituted in place of the original words by section 2 of Act 44 of 1966 with effect from January 28,1968. We are not in this appeal concerned with the amended definition. We are concerned with the definition in which the original words "are working or were working" existed.

5 It would appear from the above definition that premises become a factory within the meaning of the said Act if on those premises twenty or more persons (a) are working or (b) were working on any day of the preceding twelve months. For the purpose of this appeal, part (a) namely "are working" is not material. The only question is whether twenty or more persons "were working on any day of the proceeding twelve months" in the premises of the appellants. On the interpretation of this part of the. definition depends the confusion of the appellants. T