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PUNJAB & HARYANA HIGH COURT
V.Ramaswami, Ujagar Singh and G.R.Majithia JJ.
Employees State Insurance Corporation
Versus
Bhag Singh
Letter Patent Appeal No. 692 of 1982,
Decided On : MAY 19, 1988
EMPLOYEES STATE INSURANCE ACT, 1948 - SECTION 1(5), 2(12), 2(K) - FACTORIES ACT, 1948 - SECTION 2(K) - EMPLOYEES STATE INSURANCE (EXTENSION OF COVERAGE TO CERTAIN ESTABLISHMENTS) NOTIFICATION, 1976 - INTERPRETATION - MANUFACTURING PROCESS - SCOPE - PETROL PUMP AND SERVICE STATION - WHETHER COVERED.
Fact of the Case:
The respondent, M/s. National Service and Petrol Pump, was a proprietary concern of one Bhag Singh. The establishment was surveyed by an Inspector of the Employees State Insurance Corporation (ESIC) on September 5, 1976, and November 13, 1976, and as per the survey report, 15 persons on September 5, 1976, and 13 persons on November 13, 1976, were found employed by the establishment. The ESIC initiated proceedings against the respondent for the recovery of contributions under the Employees' State Insurance Act, 1948 (the Act). The respondent filed an application before the Employees' State Insurance Court, Chandigarh, praying for a declaration that the coverage of his establishment under the Act is illegal, arbitrary, void ab initio, and that the ESIC is not entitled to recover any amount under the Act from him. The Employees' State Insurance Court dismissed the application, but on appeal, a learned Single Judge of the Punjab and Haryana High Court allowed the appeal and held that the respondent's business was not covered by the Act and the demand made by the ESIC was illegal.
Finding of the Court:
The Full Bench of the Punjab and Haryana High Court held that the decision of the learned Single Judge was erroneous and that the respondent's business was covered by the Act. The Court held that the definition of "manufacturing process" in Section 2(k) of the Factories Act, 1948, is wide enough to include the activities carried out at a petrol pump and service station, such as washing, cleaning, and oiling vehicles. The Court also held that the respondent's establishment fell within the first category of establishments covered by the Employees' State Insurance (Extension of Coverage to Certain Establishments) Notification, 1976, which includes establishments where ten or more persons are employed and a manufacturing process is being carried on with the aid of power.
Issues: 1. Whether the respondent's business of running a petrol pump and service station is covered by the Employees' State Insurance Act, 1948? 2. Whether the activities carried out at a petrol pump and service station, such as washing, cleaning, and oiling vehicles, constitute a "manufacturing process" within the meaning of the Act?
Ratio Decidendi: 1. The definition of "factory" in Section 2(12) of the Act covers premises where 20 or more persons are employed and a manufacturing process is being carried on with the aid of power. 2. The Employees' State Insurance (Extension of Coverage to Certain Establishments) Notification, 1976, extends the provisions of the Act to establishments where 10 or more persons are employed and a manufacturing process is being carried on with the aid of power. 3. The definition of "manufacturing process" in Section 2(k) of the Factories Act, 1948, is wide enough to include the activities carried out at a petrol pump and service station, such as washing, cleaning, and oiling vehicles. 4. The respondent's establishment falls within the first category of establishments covered by the Employees' State Insurance (Extension of Coverage to Certain Establishments) Notification, 1976, which includes establishments where ten or more persons are employed and a manufacturing process is being carried on with the aid of power.
Final Decision: The Court set aside the judgment of the learned Single Judge and restored the judgment of the Employees' State Insurance Court, which had held that the respondent's establishment was covered by the Act.
V.RAMASWAMI, J.
1. The Employees State Insurance Corporation, hereinafter called the Corporation, has filed this appeal under the Letters Patent against the decision of a learned Single Judge of this court Dt. Dec. 3, 1981, which is reported in Bhag Singh V/s. Employees State Insurance Corpn. (1982) 84 Pun LR 605 : (1983 Lab IC 412), in which the learned Judge has held that M/s. National Service and Petrol Pump, which is a proprietary concern of one Bhag Singh, is not covered by the Employees State Insurance Act, 1948, hereinafter referred to as the Act, and the demand made by the Corporation was illegal and could not be sustained.
2. It appears that the establishment was surveyed by an Inspector of the Corporation on Sept. 5, 1976, and Nov. 13, 1976, and as per the survey report, 15 persons on Sept. 5, 1976 and 13 persons on Nov. 13, 1976, were found employed by the establishment and that, therefore, the establishment was covered by the Act. When proceedings were sought to be initiated on that basis, the respondent filed an application under S.75 of the Act before the Employees State Insurance Court, Chandigarh, praying for a declaration that the coverage of his establishment under the Act is illegal, arbitrary, void ab initio and that the Corporation are not entitled to recover and amount under the Act from him. He pleaded that he was carrying on two independent businesses, one of sale of petrol etc. and the other of running a service station for repair of motor cars etc; that each of these two businesses could be carried on independently and the one was not inter-dependent upon the other so as to make it as one business so that one could not be carried on without the other. He further pleaded that the number of employees of each of these two businesses taken separately were below 10 and that, therefore, the Act is not applicable. In any case, even if the employees of both the businesses were clubbed together, the total number will be below 20 though above 10 and since he was not carrying on any manufacturing process with the aid of power, the Act cannot be made applicable to him. The Employees State Insurance Court held that the petrol pump and the service station are located in one and the same premises, the power connection for both is the same and that the other evidence also showed that they are not separate concerns as claimed, and since more than 10 persons were working in the premises during the relevant period, the business of the respondents is covered by the Act. In the result, it dismissed the application. On appeal, however, the learned single Judge was of the view that the respondent s business was not covered by the Act and the demand made by the Corporation is illegal and in that view allowed the appeal.
3. When the appeal against the judgment of the learned single Judge came up for hearing before the Bench, it was of the view that the point involved in the appeal deserved to be decided by a larger Bench in view of a direct judgment of the Bombay High Court taking a contrary view and accordingly the appeal was referred to the Full Bench.
4. The Employees State Insurance Act, 1948, came into force on August 31, 1948, but applies to all factories other than seasonal factories. Sec.1(5) empowered the appropriate Government by a notification in the official Gazette to extend the provisions of the Act or any of them to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise, Sec.2(12) defines a "factory" as meaning "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, and in any part of which a manufacturing process is being carried on with 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; "and further stated that the expression "manufacturing
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