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IN THE HIGH COURT OF DELHI AT NEW DELHI

+

FAO 4/2006

MOHD.ARIF

..... Appellant

Through:

Mr.Mohd. Abid, Adv.

versus

EMPLOYEES STATE INSURANCE CORP. ..... Respondent

Through:

Mr.K.P.Mavi, Mr.Saurabh Dhawan,

Advocates.

CORAM:

HON'BLE MR. JUSTICE MOOL CHAND GARG

1.Whether the Reporters of local papers may be allowed

to see the judgment?

Yes

2.To be referred to Reporter or not?

Yes

3.Whether the judgment should be reported in the Digest?

Yes

:

MOOL CHAND GARG,J

1.

The issues involved in this appeal filed by the appellant under

Section 82(2) of the Employees‟ State Insurance Act, 1948 (hereinafter

referred to as „the Act‟) against judgment and order dated 11.08.2005

passed by the ESI Court dismissing the petition bearing No.39/1999

under Section 75 of the Act are:

i.

Whether the establishment of the appellant, which is

admittedly only a guesthouse/lodging house without any

kitchen, is coverable under the ESI Act even if it has only

11 employees?

ii.

Whether the use of refrigerator with the aid of power in the

establishment of the appellant amounts to manufacturing

process rendering the establishment coverable under the

Act?

iii.

Whether the learned ESI Court was right in ignoring the

judgment of the Madras High Court cited as 1956 Mad 600

which clearly says that the mere use of refrigerator with

power does not amount to a manufacturing process?

iv.

Whether the letter obtained by the Inspector of the ESIC

from the Manager of the establishment with a request to

2010:DHC:5196

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cover the establishment under the ESI Act is sufficient for

coverage even when the establishment is not legally

coverable under the Act?

2.

Before the ESI Court, it was pleaded on behalf of the appellant

that he was running a lodging house under the name and style of Hotel

Orchid at G-4, NDSE, Part-I, New Delhi which was having 18 rooms and

was strictly meant for lodging purposes. No tea, coffee, food or eatable

items etc. were prepared/manufactured or provided in the hotel/lodging

house. It was also pleaded that the customers/guests/staff have to

make their own arrangements for the same from outside. There was no

kitchen in the hotel for manufacturing/preparation of any food or

beverages items nor any power is being used for any such purposes. It

was also stated that in fact, the terms of license issued by the

Commissioner of Police as well as by the MCD expressly prohibited

preparation and serving of any eatables or beverages in the

hotel/lodging house. It was pleaded that on 01.12.1997 one Inspector

of the respondent visited the hotel and asked for production of complete

record relating to employee in the hotel for inspection purposes. Since

the appellant was not present in the hotel, the Manager at the dictation

of the Inspector gave in writing, the names of 11 persons who were

working in the hotel at that time. The inspector also got one Form-01

filled up from the Manager. Thereafter, the appellant received a

communication dated 02.06.1999 threatening prosecution of the

appellant and proposing to receive a sum of `40,898/- as dues under

the Act and it was on that account, the appellant filed a petition under

Section 75 of the Act before that he also wrote a letter dated 06.07.1999

informing the respondent that the hotel was not covered under the Act

and also informing that he has deposited `10,107/- towards

contribution without prejudice to his rights and under protest. It was

thus, pleaded that the establishment of the appellant could not have

been covered under the Act inasmuch as the number of employees

employed in the hotel being less than 20 and the hotel being not

involved in any manufacturing process could not have been termed as a

factory so as to bring it within the ambit of the Act.

3.

The claim of the appellant was denied by the respondent. It was

submitted tha