The main legal point established in the judgment is that the definitions of 'manufacturing process' and 'power' as in the Factories Act were specifically incorporated into the Employees State Insurance Act at the inception itself, and the subsequent amendments to the Factories Act were intended to apply to the provisions of the E.S.I. Act.

1. This appeal is directed against the order of the Employees State Insurance Court, Nagapattinam, in E.S.I.O.P. No. 33 of 1988. The petitioner before the E.S.I. Court is the appellant in this appeal.

2. According to the appellant, the petitioner is a Co-operative Milk Supply Society, registered under the Co-operative Societies Act. The object of the Society was to purchase and sell the milk to the residents of Velipalayam and Nagapattinam. The milk is purchased from cattle owners and sometimes from other societies according to the needs of the customers. Normally the entire milk will be sold every day and if there was any excess milk it will be stored in a cooler for storage and will be sold to the customers. The Society was carrying on business for the past 25 years. In the beginning the number of employees of the Society was very meagre and they worked sometimes in shift system. While so, the E.S.I. Corporation proposed to apply the provisions of the Employees State Insurance Act (hereinafter called “the Act) from December, 1982 and the Society has been paying the contribution regularly. At that time, it was represented by the Inspector of the Corporation that there may not be any liability for me payment of contribution prior to December, 1982. However, the Corporation issued a show-cause notice dated 28.9.1988 proposing to determine and recover damages under Section 85(B)(1) of the Act. The notice did not contain any particulars. Therefore, the petitioner was waiting for the proper notice with particulars. However, an order was passed on adhoc basis directing the petitioner to pay a contribution of Rs. 21,385/- for the period from 14.5.1978 to 30.11.1982. The said order was totally void. It was further stated that the petitioner society was not a factory as defined under Section 2(12) of the Act as no manufacturing process was being carried out. Cold storage was installed only recently in the year 1984. The Corporation was not entitled to collect any contribution even if the society was liable to pay. The Corporation did not render any benefit or assistance to the employees from 14.5.1978 to 30.11.1982. The Special Officer of the Society made representation to the respondent requesting that the proposed action may be withdrawn. However, the respondent Corporation sought to proceed under the Act. Hence the petition.

3. In the counter filed by the Corporation, it was contended that the Society was involved in the manufacturing process within the meaning of Section 2(12) of the 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 Section 2(k)of the Factories Act with effect from 26.10.1976. The Inspector of the Corporation had surveyed the petitioners factory on 22.12.1981 and found that the society was liable to pay contribution. The Inspector collected the particulars from personal inspection as well as the records produced by the society. From the records, he had collected the particulars of number of employees employed during the period from May, 1978 to 1982. An amount of Rs. 21,384.38 was arrived at on a calculation of wages totalling Rs. 3,05,491.58. The order passed by the E.S.I. Corporation was in conformity with the provisions of the Act and hence the petition was liable to be dismissed.

4. The E.S.I. Court held that the establishment had not substantiated its contention that the cooler was purchased only in the year 1984 and that since there was evidence to show that more than 20 persons had been employed to work in the year 1978, the establishment was liable to pay the contribution for the period from 14.5.1978 to 30.11.1982. Hence the appeal.

5. Mr. Srinath, learned counsel for the appellant had raised the very issue of liability of the appellant establishment under the Act a