The term 'persons employed' in section 2(12) of the Employees' State Insurance (Amendment) Act, 1975 does not include persons who are not 'employees' as defined in section 2(9) of the Act.

( 1 ) THE question for consideration in this appeal is whether the appellant M/s. M. M. Suri and Associates Pvt. Ltd. is a "factory" within the meaning of section 2 (12) of the Employees State Insurnance (Amendment) Act, 1975 (hereinafter called the Act ).

( 2 ) THE facts fall into a short compass. Having been asked by the Employees State Insurance Corporation by its letter of July 26, 1990 to submit Form No. 0. 1, the appellant company took the stand that it was not a "shop" and as such not covered by the above-referred Notification and that, in any case, the number of its employees being less than 20, the provisions of the Act could not be extended to it. However, since the Corporation remained unmoved, the appellant company filed a petition under section 75 of the Act.

( 3 ) THE learned Senior Civil Judge, before whom the petition came up for disposal, held that as the Company was dealing in retail sale of services, it was a "shop" and that as admittedly 24 persons were employed, section 2 (12) was attracted notwithstanding the fact that out of the said employees 13 were drawing more wages than the prescribed limit and thus were not "employees" within the meaning of section 2 (9) of the Act.

( 4 ) THE order of the learned Senior Civil Judge has left the company dissatisfied. Hence this appeal.

( 5 ) THE case of the appellant Company is that as out of the 24 persons working with it, 13 were getting more wages than the prescribed limit, therefore, they were not "employees" within the meaning of section 2 (9) of the Act and that as such the appellant could not be treated to be a "factory" within the meaning of section 2 (12) of the Act.

( 6 ) IN order to appreciate the point in issue it is necessary to set out the relevant provisions of the Act.

( 7 ) SECTION 2 (12) defines "factory"in the following terms:

"2 (12) "factory" means any premises including the precincts thereof- (a) whereon ten or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on, or (b) whereon twenty or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952) or a railway running shed;" The term "employee" is defined in section 2 (9) of the Act as under: "2 (9) "employee" means any persons employed for wages in or in connection with the work of a factory or establishment to which this Act applies and- (i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or (ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or (iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service: and includes any person employed for wages on any work connected with the administration of the factory or establishent or any part, department or branch thereof or with the purchase of raw materials for or the distribution or sale of the products of, the factory or establishment or any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or under the standing orders of the esta