The court established that mere storage of ingredients in a refrigerator does not constitute a manufacturing process with the aid of power under the ESI Act.

JUDGEMENT

1.The present Appeal is filed by the ESIC Corporation under Section 82 of the Employees’ State Insurance Act, 1948 (hereinafter referred as ‘ESI Act’) challenging the order dated 12th March 1997 passed by the Employees’ State Insurance Court, Mumbai (hereinafter referred as ‘ESI Court’) in Application (ESI) No.93 of 1992 filed by the Respondent, whereby the ESI Court NILAM SANTOSH KAMBLE Digitally signed by NILAM SANTOSH KAMBLE Date: 2024.07.12 2024:BHC-AS:27526 was pleased to allow the Application and hold that the Respondent-Establishment was not covered within the provisions of ESIC Act, prior to 12th November 1978 and set aside the order dated 7th February 1991 and 13th February 1991 passed under Section 45-A by the Respondent-Corporation.

2.Brief facts leading to the filing of the Appeal are as under:-

The Respondent-Bakery being an establishment employing 20 or more employees in preceding 12 months was covered under the ESI Act pursuant to the notification issued on 12th November 1978 to the classes of establishments mentioned in the Schedule. The Respondent covered all eligible employees and deposited contributions payable under section 12 of the Act, w.e.f. 12th November 1978. The ESI Inspector visited the Respondent for verification of records and observed that yeast is one of the ingredients for making bread/pav was stored in the refrigerator and concluded that the bread was manufactured by the use of power. The Insurance Inspector, on verifying records found that the Respondent was employing 20 or more employees and was using power for manufacturing process w.e.f. 4th October 1976. Based on the report of the Insurance Inspector opinion was formed by the ESI that the Respondent-Bakery was covered under the ESI Act w.e.f. 4th October 1976 and called upon the Respondent to pay contribution in respect of the eligible employees for the period from 4th October 1976 to 11th November 1978.

3.The Appellant-Corporation issued show cause notice in From-C-18 calling upon the Respondent to Show Cause as to why an amount of Rs.16,382/- should not be determined under Section 45-A of the ESI Act for the period 4th October 1976 to 11th November 1978. On receipt of reply the Corporation by orders dated 7th February 1991 and 13th February 1991 passed an order under Section 45-A determining the amount of Rs.16,382/- as contribution payable by the Respondent for the period from 4th October 1976 to 11th November 1978 and further interest of Rs.889/-. The said order passed under Section 45-A was challenged before the ESI Court under Section 75 of the ESI Act.

4.By the impugned order dated 12th March 1997 the ESI Court allowed the Application filed by the Respondent under Section 75 of the Act. The ESI Court held that usage of a domestic refrigerator does not amount to usage of power in the manufacturing process of bread/pav and thus held that the Respondent-Establishment was not covered within the ESI Act for the period from 4th October 1976 to 11th November 1978 against which the present Appeal is filed.

5.Ms.Anita Bafna, the learned counsel appearing for the Appellant submits that the substantial question of law arises in this matter as under:-

Whether storage of yeast in the fridge for the preparation of the bread/pav is an integral part of the manufacturing process of bread and thus usage of the fridge (with power) would amounts to usage of power in the manufacturing process under Section 2(k) of the Factories Act ?

6.In support of the question of law stated above, the learned counsel for the Appellant submits that yeast is required to be stored in the refrigerator for the purpose of mixing maida for the manufacture of bread/pav. Since the fridge uses electricity there is power utilization by the Respondent in the manufacturing process.

7.The Respondent-Establishment is thus covered within the definition of Section 2(k) of the Factories Act. She further submits that storing and preserving yeast for mixing with flour for the purpose o