MOOL CHAND GARG,J

1. The issues involved in this appeal filed by the appellant under Section 82(2) of the Employees' State Insurance Act, 1948 (hereinafter referred to as „the Act') against judgment and order dated 11.08.2005 passed by the ESI Court dismissing the petition bearing No.39/1999 under Section 75 of the Act are:

i. Whether the establishment of the appellant, which is admittedly only a guesthouse/lodging house without any kitchen, is coverable under the ESI Act even if it has only 11 employees?

ii. Whether the use of refrigerator with the aid of power in the establishment of the appellant amounts to manufacturing process rendering the establishment coverable under the Act?

iii. Whether the learned ESI Court was right in ignoring the judgment of the Madras High Court cited as 1956 Mad 600 which clearly says that the mere use of refrigerator with power does not amount to a manufacturing process?

iv. Whether the letter obtained by the Inspector of the ESIC from the Manager of the establishment with a request to cover the establishment under the ESI Act is sufficient for coverage even when the establishment is not legally coverable under the Act?

2. Before the ESI Court, it was pleaded on behalf of the appellant that he was running a lodging house under the name and style of Hotel Orchid at G-4, NDSE, Part-I, New Delhi which was having 18 rooms and was strictly meant for lodging purposes. No tea, coffee, food or eatable items etc. were prepared/manufactured or provided in the hotel/lodging house. It was also pleaded that the customers/guests/staff have to make their own arrangements for the same from outside. There was no kitchen in the hotel for manufacturing/preparation of any food or beverages items nor any power is being used for any such purposes. It was also stated that in fact, the terms of license issued by the Commissioner of Police as well as by the MCD expressly prohibited preparation and serving of any eatables or beverages in the hotel/lodging house. It was pleaded that on 01.12.1997 one Inspector of the respondent visited the hotel and asked for production of complete record relating to employee in the hotel for inspection purposes. Since the appellant was not present in the hotel, the Manager at the dictation of the Inspector gave in writing, the names of 11 persons who were working in the hotel at that time. The inspector also got one Form-01 filled up from the Manager. Thereafter, the appellant received a communication dated 02.06.1999 threatening prosecution of the appellant and proposing to receive a sum of `40,898/- as dues under the Act and it was on that account, the appellant filed a petition under Section 75 of the Act before that he also wrote a letter dated 06.07.1999 informing the respondent that the hotel was not covered under the Act and also informing that he has deposited `10,107/- towards contribution without prejudice to his rights and under protest. It was thus, pleaded that the establishment of the appellant could not have been covered under the Act inasmuch as the number of employees employed in the hotel being less than 20 and the hotel being not involved in any manufacturing process could not have been termed as a factory so as to bring it within the ambit of the Act.

3. The claim of the appellant was denied by the respondent. It was submitted that coverage of the appellants' hotel was based upon the information given by the Manager of the Hotel at the time of survey. The hotel was also having a deep freezer which was a power using unit and as such the hotel of the appellant was covered under the manufacturing unit and thus, was covered under the Act as they were having 11 employees also and in addition to having been involved in manufacturing process and that the refrigerator was being used by the Hotel run by the appellant for storing cold drinks and water which used to be supplied to the customers.

4. The ESI Court framed the following issues:

“1. Whether th