Subsequent amendment made in Factories Act must be read in to ESI Act considering scheme and object of the acts.

K.Govindarajan, J.: The petitioner before the Employees State Insurance Court, Nagapattinam, in E.S.I.O.P.No.33 of 1998 filed the above appeal, having aggrieved by the judgment of the learned single Judge in C.M.A.No.273 of 1993, dated 8.6.2000, confirming the order passed in E.S.I.O.P.No.33 of 1988.

2. The appellant is a Co-operative Society registered under the the provisions of the Co-operative Societies Act. The Society has been purchasing milk from the cattle owners and after selling the milk, if there was any excess, they used to store it in a cooler for storage and it will be sold to the customers later. The Employees State Insurance Corporation issued a show cause notice on 28.9.1988 to determine and recover damages under Sec.85(B)(1) of the Employees State Insurance Act, hereinafter called ‘the E.S.I. Act’. It is also stated that from December 1982, the Society has been paying the contribution to the Employees State Insurance Corporation regularly. An order was passed asking the appellant to pay contribution of a sum of Rs.21,385 for the period from 14.5.1978 to 30.11.1982 stating that the cold storage was installed only in the year 1984 and so the Society cannot be construed as a factory as defined under Sec.2(12) of the E.S.I. Act as no manufacturing process was being carried on. Challenging the same, the Society filed a petition before the E.S.I. Court.

3. The same was contested by the Employees State Insurance Corporation stating that the Society has been involved in the manufacturing process within the meaning of Sec.2(12) of the E.S.I. Act and the meaning assigned to the expression “manufacturing process” under the Factories Act, 1948. By an amendment to the Factories Act, 1948, the process of storing any article in cold storage deep freezer etc., had been brought under the definition of “manufacturing process” under Sec.2(k) of the Factories Act with effect from 26.10.1976. On that basis a sum of Rs.21,384.38 was calculated as contribution.

4. The E.S.I. Court held that the Society was liable to pay contribution for the period from 14.5.1978 to 30.11.1982. So, the Society preferred an appeal in C.M.A.No.273 of 1993 and the learned Judge also found that in view of the amendment to the Factories Act with respect to the definition “manufacturing process”, the petitioner also is liable to pay contribution. Aggrieved against the same, the appellant preferred the above appeal.

5. Learned counsel for the appellant submitted that the learned Judge is not correct in applying the subsequent amendment to the expression “manufacturing process” to the provisions of the E.S.I. Act, merely because the said expression has been incorporated in the E.S.I. Act by reference. In effect, according to him, the expression “manufacturing process” as it stood at the relevant time, has to be applied and not the subsequent amendment.

6. Learned counsel for the respondent-corporation submitted that the E.S.I. Act and the Factories Act are supplemental to each other and so the amendment to the Factories Act has to be taken into consideration to assess the liability of the appellant-society. Otherwise, the provisions of the E.S.I. Act are only unworkable and ineffectual.

7. The points for consideration in this appeal are:

(1) Whether the definition of "manufacturing process" under the Factories Act 1948 as amended under the Act 94 of 1976 has been incorporated under Sec.2(12) of the E.S.I. Act?

(2) Whether there is a mere reference or citation of the definition of ‘manufacturing process’ under the Factories Act 1948 in the E.S.I. Act?

8. The Employees State Insurance Corporation came into effect from 19.4.1998. Sec.2(12) of the E.S.I. Act defines "factory", which runs as follows:

"2. Definitions: In this Act, unless there is anything repugnant in the subject or context,-

(12) ‘factory’ means any premises including the precincts thereof whereon twenty or more persons are employed or were employed for wages on any day of the preceding twelve months, an

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