Managing Partner, M/S Shanthi Flour Mills v. Regional Director, Employees' State Insurance Corporation, Thrissur

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE J.B.KOSHY** **&** **THE HONOURABLE MR. JUSTICE P.N.RAVINDRAN** **WEDNESDAY, THE 9TH JULY 2008 / 18TH ASHADHA 1930** **MFA.No. 625 of 2002()** **--------------------IC.64/2000 of ESI COURT, PALAKKAD DATED 13/3/2002** **....................** ## **APPELLANT: APPLICANT:** **---------------------------------------** **MANAGING PARTNER, M/S. SHANTHI FLOUR MILLS, 11/32, PARATATTANI, THRISSUR.** **BY ADV. SRI.BECHU KURIAN THOMAS** **RESPONDENT/OPPOSITE PARTY:** **--------------------------------------------------** **REGIONAL DIRECTOR, EMPLOYEES STATE INSURANCE CORPORATION, THRISSUR.** **BY ADV. SRI.T.V.AJAYAKUMAR** **THIS MISC. FIRST APPEAL HAVING BEEN FINALLY HEARD ON 09/07/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** _Kss_ **ORDER ON C.M.P.NO.3584/2002 IN M.F.A.NO.625/2002** ## **DISMISSED** **9/07/2008** **SD/- J.B.KOSHY, JUDGE SD/- P.N.RAVINDRAN, JUDGE** **/TRUE COPY/** **P.A.TO JUDGE** _Kss_ ## **K. PADMANABHAN NAIR ,J.** ## **-------------------------------------------------** ## **M.F.A.No.625 of 2002** **------------------------------------------------Dated, this the 25[th] day of February, 2008** ## **REFERENCE ORDER** The employer has filed this appeal challenging a decision of Employees' Insurance Court, Palakkad by which it was held that to apply the provisions of Employees' Insurance Act to the employees in a factory in which ten or more persons are engaged in the manufacturing process with the aid of power, it is not necessary that all the ten or more employees shall be working at the place of manufacturing itself. The Employees Insurance Court took a view that if employer has got a factory and a sales depot and if the number of persons working in the manufacturing place as well as sales depot put together exceeds ten it satisfies the definition of factory given under the Act and the same is coverable. When the matter was argued, learned counsel for the appellant relied on a decision of a Division Bench of this Court reported in **Choisons v. E.S.I. Corporation (2005(3) KLT 1039)** in which it was held that the manufacturing place can be called as a factory which is liable to be covered under the ESI Act if ten or more persons employed in the premises or precincts of that unit. It was held as follows: MFA No.625/2002 2 “In view of the very wide definition, if petrol pump is a factory and a covered establishment, three employees working in the office may also be covered as they also, among other things, do some accounting works in respect of the pump. For that petrol pump should be a 'factory'. But, pump can be said to be a factory if only ten or more persons are employed in the premises or precincts of the pump. Since office is not in the premises or precincts, these three employees are not working in the pump and appellant's petrol pump is not a factory.” 2. Learned counsel for ESI Corporation relying on the decisions reported in **Employees' State Insurance Corporation v. Bengal Printing Works (1984 Lab.I.C . 1), The Yemmiganur Weavers' Co-operative Production and Sale Society Ltd. v. The Regional Director, E.S.I.C. Hyderabad and another (1977 Lab.I.C. 1514)** and **Hyderabad Asbestos . Employees Insurance Court (AIR 1978 SC 356)** has argued that the Division Bench of this Court has not considered the effect of amendment to the definition of word 'employee' in the ESI Act while considering the issue. In Choisons' case (supra) the finding of this Court was to the effect that if only ten or more persons are working at the manufacturing place and is engaged in manufacturing process with the aid of power then only the employees working in the establishment can also be clubbed. In Bengal Printing Works' case (supra) the firm was engaged in MFA No.625/2002 3 the work of printing with the aid of power and it was housed in three separate buildings. The number of employees working in each building was less than twenty but the total number of employees working in the three buildings put together exceeded twenty. The department clubbed the three premises together and held that employees were coverable. Learned counsel for the respondent has argued that a reading of the definition will show that the definition does not indicate that the factory will have to be located within a single premises or building and it may be housed in three or more separate buildings and it lays emphasis on the use of power for manufacturing products. In Yemmiganur Weavers' Co-operative Production and Sale Society Ltd.'s case (supra) there were two separate premises. A Division Bench of Andra Pradesh High Court after considering the question took a view that it is not necessary that all ten persons should be employed in one manufacturing place and it is sufficient it the manufacturing process is being carried on in any part of the premises or precincts. 3. Learned counsel for the appellant placed reliance on a Division Bench decision of the Madras High Court reported in **In re K.V.V.Sarma (AIR 1953 Madras 269 (Vol.40, C.N.101))** and argued that precincts MFA No.625/2002 4 means an enclosed place. In paragraph 34 of the decision the Division Bench considered the meaning of the premises and precincts and held that precincts is a place enclosed by walls. It is argued that in Bengal Printing Works' case (supra) manufacturing process was being carried out in all the three units and it was not a case where the workers in the manufacturing place and establishments were clubbed together. In Hyderabad Asbestos' case (supra) it was held that an employee may be working within the factory or outside the factory or may be employed for administrative purposes or for purchase of raw materials or for sale of the finished goods, but all such employees are included within the definition of employee in Section 2(9) of the Act. It was further held that the provisions of Sections 2(9), 2(12), 38 and 39 do not warrant the restricted interpretation that in order to bring an employee within the scope of the Act, he should not only be an employee within the meaning of Section 2(9) of the Act but also that he should be an employee of a factory as defined in Section 2(12) of the Act. 4. Learned counsel for the respondent has argued that for the purpose of Section 38 he may be an employee but to consider whether there can be a factory which is coverable the total number of employees must be more than ten or more in the manufacturing place itself. **5. I** n view of the principles laid down in Hyderabad Asbestos's MFA No.625/2002 5 case (supra), I am of the view that the matter requires re-consideration. So the case is adjourned to be heard and determined by a Bench of two Judges. In the result, appeal is adjourned to be heard and determined by a Bench of two Judges. Registry is directed to place the matter before the Hon'ble Chief Justice for orders as this matter is likely to recur in many other cases. **K. PADMANABHAN NAIR, JUDGE.** cks MFA No.625/2002 6 K.PADMANABHAN NAIR, J. M.F.A.No.625 of 2002 REFERENCE ORDER 25[th] February, 2008.