Freezing or storing any article in cold storage is a kind of manufacturing process.

P. Sathasivam, J.

Kumbakonam Milk Supply Cooperative Society through its Secretary, aggrieved by the order dated 28-02-1994, made in E.S.I.O.P.No. 33/87 on the file of the District Judge, Thanjavur, has filed the above appeal under Section 82 (2) of The Employees' State Insurance Act, 1948.

2. According to the appellant, it is a society registered under the Co-operative Societies Act and their main object is to purchase milk from its members and to sell the same. The said work was being done for the last 45 years. While so, on 14-5-85, a memo was issued claiming Rs.87,101/- towards E.S.I. contribution for the period between 1-4-79 and 31-12-84. Again, on 26-5-86 it received another notice demanding Rs.1,11,488.40 towards E.S.I. contribution. It is further stated that on receipt of the said notices, the appellant sent a reply stating that it is a society and not an industry, that no manufacturing process is being carried out and that the persons working in the society are not employees within the meaning of Section 2 (9) of the Employees' State Insurance Act, 1948 (hereinafter referred to as "the Act"). It is further stated that since their explanation was not satisfactory, the society filed E.S.I.O.P.No.33/87 before the District Court under Section 75 (1) of the Act. Before the District Court, the Accountant of the Society was examined as P.W.1 and Exs. P-1 to P-11 were marked in support of their claim. On the side of the Employees' State Insurance Corporation, their Inspectors were examined as R.W.1 and R.W.2 and Exs. R-1 to R-4 marked in support of their defence. The learned District Judge, after framing necessary issues and after considering the evidence, both oral and documentary, and after holding that the appellant society is an organisation under the Act, and hence it is liable to pay its contribution, dismissed the O.P., filed by the society. The District Court also permitted the society to approach the Corporation for modification of the quantum, if there is any variation in the contribution. Questioning the said award, the society has preferred the above appeal.

3. Heard Mr. T. Susindran, learned counsel for the appellant and Mr. G. Desappan for respondent.

4. Though no substantial question of law was framed by this Court at the time of admission, the appellant society has raised the following substantial questions of law in the Memorandum of Grounds of Appeal:

a) Whether the appellant-Society can be attracted by the provisions of the State Employees' Insurance Act, 1948, in view of the fact that the Appellant-Society's duty is only to preserve the milk purchased from the purchasers for the purpose of distributing the same to its customers and as such no question of manufacturing process arises, as contemplated under the provisions of the said Act?

b) Whether in the absence of any transformation of a new product from the milk preserved by the Appellant-Society, can the Appellant-Society be termed as 'factory' in which manufacturing process is undertaken so as to attract the provisions of the State Employees' State Insurance Act, 1948.

5. First we shall refer the relevant provisions of the Employees' State Insurance Act and the Factories Act which are required for the disposal of this appeal. Section 2(9) of the Employees' State Insurance Act, 1948 reads thus:

"Section 2(9) "employee" means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and-..."

Section 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 with