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Agents and Manufacfurers, Delhi Vs. the Employees State Insurance Corporation, New Delhi and anr. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtDelhi High Court
Decided On
Case NumberFirst Appeal No. 27 of 1971
Judge
Reported in9(1973)DLT500; [1974(28)FLR27]; 1974LabIC220; (1973)IILLJ447Del
ActsEmployees State Insurance Act, 1948 - Sections 2(9) and 2(12)
AppellantAgents and Manufacfurers, Delhi
RespondentThe Employees State Insurance Corporation, New Delhi and anr.
Advocates: Rajender Dhawan and; A.P. Gupta, Advs
Cases ReferredHindustan Construction Co. Ltd. v. Employees State Insurance Corporation. In
Excerpt:
labour and industrial - question of law - sections 2 (9) and 2 (12) of employees state insurance act, 1948 - at premises manufactured goods polished, finished and packed - painting and finishing work part of manufacturing process - workman employed at place employees of factory - separate buildings located at some distance apart used for continuous manufacturing process constitute single factory - held, manufacturing process carried on at premises no. 525 and 508 and finishing work carried out at premises 131 part of one factory - employees working therein counted to determine whether factory falls under section 2 (12). - - 508 and 525/16 as well s the premises no......is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment;...........'it would be clear from the above definition of the word 'employee' that any person who is employed for wages in the factory or in connection with the work of the factory would be an employee of the factory. it is not dispuled that at premises no. 508 and 525, the wooden bases and covers of the sewing machines are manufactured. there can be no doubt that the persons employed at the said two premises are working in the manufacturing process of the wooden furniture for the sewing machines. the fact that these two premises are separated from each other by a distance of a furlong or two would be entirely.....
Judgment:

R.N. Aggarwal, J.

(1) This judgment will dispose of F. A, 0. Nos. 27, 28 and 29 of 1971 sines they involve common questions of law and fact. The appellant (M/s. Agents and Manufacturers a partnership firm) is carrying on the business of manufacturing wooden furniture, that is, base and cover of sewing machines. The firm is carrying on the above business in three separate premises-No. 508 Circular Road, Shahdara, 525/16 Chhota Bazar. Shahdara and 131 Chhota Bazar, Shahdara. In the first two premises, the wooden base and cover of the sewing machines are manufactured with the aid of power. At premises No. 131. the manufactured goods are polished, finshed, packed and sold. There is no power at the last named premises. It is not disputed that the above three units are managed by the appellant. The Employees State Insurance Corporation found that the manufacturing business carried on by the appellant is covered by

(2) The appellant contended before the Employees' Insurance Court that the workmen employed at each place of manufacture were less than 20 and in order to determine whether the said two places of manufacture were a factory within the meaning of the term ' factory ' contained in section 2(12) of the Act, the employees working in the office could not be added to the number of employees working at the places of manufature. Anthore contention urged was that the three premises are not located within the same prectncts and thereforee the place of manufature and the office cannot falt within the definition of the term 'factory' as given in the Act On the other hanf the Corporation contended that both the manufatureing place that is premises No. 508 and 525/16 as well s the premises No. 131 Chhota Bazar where pianting finishing and packing was done, would form an integral part of the same business and the workmen emplyed at the three places were more than twenty and. thereforee, the places where the manufacturing of the wooden furniture for the sewing machines was carried on would be a factory within the defination of the term in section 2(12) of the Employees' State Insurance Act (hereinafter called the ' Act ')

(3) The Employees' Insurance Court on the evidence produced on the record came to the conclusion that the two manufacturing places and the premises no. 131 where the painting, finishing and packing work was done, form part of one factory and, thereforee, the places of manufacture would be a factory within the definition of the term in the Act. The Employees Insurance Court accordingly rejected the contentions of the appellant Against the order of the Employees Insurance Court, the appellant has filed the three appeals.

(4) Section 2(12) of the Act defines the expression 'factory' and the relevant portion of it reads as :

'(12)'factory' means 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 which 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 or a railway running shed;............ '

From the definition of the term factory, it would appear that the essential requisites of a factory under the Act are (1) a premises, a geographical area within a certain boundary; (?) in a part of which at least manufacuring process should be carried on with the aid of power; and (3) twenty or more persons are employed or were emloyed for wages on any day of the preceding twelve months. Shri Dhawan, learned counsel for the appellant, contended that premises No. 508 and 525 where manufacturing process with the aid of power is earned on are not located within the same precincts and, thereforee, the workman employed in each to the two promises cannot be clubbed together to determine whether any of the said two premises .is a factory within the definition of the term in the Act. The counsel further contended that the workmen employed in premises No. 131, Chhota Bazar, where the manufactured goods are stored, packed and sold, also cannot be taken into account in determining whether the first two premises are a factory.

(5) I have given my careful thought to the arguments addressed at the Bar and in my view, they are without substance. Section 2(9) of the Act cefines the word 'employee' and the relevant portion of it reads as :-

'(9)'employee' means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and- (i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of the factory or establishment whether such work is done by the employee in the factory or establishment or elsewhere; or (ii)who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment;...........'

It would be clear from the above definition of the word 'employee' that any person who is employed for wages in the factory or in connection with the work of the factory would be an employee of the factory. It is not dispuled that at premises No. 508 and 525, the wooden bases and covers of the sewing machines are manufactured. There can be no doubt that the persons employed at the said two premises are working in the manufacturing process of the wooden furniture for the sewing machines. The fact that these two premises are separated from each other by a distance of a furlong or two would be entirely immaterial and the said two manufacturing places would be part of one factory 6 Public Witness Public Witness 2 Shri Rameshwar Dayal, Partner of the appellant firm, stated that after the wooden base and cover of the sewing machines are manufactured, they are packed and sold at their office at 131 Chhota Bazar. Rw 4 Shri D.K. Sethi, Inspector, stated that after the wooden furniture is manufactured at premises No. 508 Circular Road, the goods are finished polished and packed at premises No. 131 Chhota Bazar. This statement of the wilness was not challenged in cross-examination. Thus, from the evidence produced on the record, it is clear that at premises no. 131 the manufactured goods are polished, finished and packed. There can be no manner of doubt that the painting and the finishing work would also be part of the manufacturing process or incidental thereto and the workman employed at that place would be employees of the factory.

(7) A similar point arose in N.V. Radhiah and Bras, v. Employees State Insurance Corooration. The facts of the cited case were that the appellant was carrying on business in the manufacture of iron safes. The manufacturing of the iron safes was earned on in Kondithope and the painting work was done at another place in Govindappa Naicken Street. The Employees Slate Insurance Corporation had found that the appellant firm was covered by the provisions of the Act. It was contended on behalf of the appellant that the workmen employed in the painting work should not be taken into consideration when deciding the question whether the place of the manufacture of iron safes was a factory or not. His lordship Venkatadri, J. negating the contention of the appellant held that 'painting work being part of the manufacture or incidental thereto, workmen employed in painting work would be counted while deciding whether firm was factory or not.'

(8) In the case of S.K. Talwar v. Employees' State Insurance Corporation F.A.O. No.99 of 1958 decided on 7th September, 1959, Shamsher Bahadur, J. observed :

'EVENif it is conceded that less than 20 persons were working in the building in which the manufacturing process was being carried on, I think that the persons working in the second building should also be added to this number. On this question of law, I am inclimed to hold that the two separate buildings really constituted one factory in the instant case.'

(9) In Halsbury's Laws of England, Vol. 17 (Simonda edition) page 16, it has been stated that separate buildings, even though a considerable distance apart, may, if used for one continuous manufacturing process, constitute a single factory. See Coles v. Dickinson, Action Corporation v. West Afiddle sex Assessment Committee, and Thomes Huyle and others v. 0ram,.

(10) In another case. The Birlu Cotton Spinning & Weaving Mills Ltd. v. The Employees State Insurance Corporatlon, Hardayal Hardy and V.S. Deshpande Jj, while interpreting section 2(9) of the Act, observed :

'THEworkers employed by a textile manufacturing Company to work outside the factory but in close connection with the work carried on in the factory are employees within the meaning of Section 2(9) of the Act. The work of employees in administrative offices of the Company together with the manufacturing process conetitutes the work of production in which the Company is engaged When tbe manufacturing process carried on in the factory cannot in itself result in the production of goods without the help of these persons, the work done in the office of the factory must be said to be connected with the work of the factory.'

(11) From a discussion of that above authorities, it is clear that separate buildings, even though located at some distance apart, when used for one continuous manufacturing process will constitute a single factory.

(12) Shri Dhawan in support of his contention placed reliance on Employees' State Ins-rance Corporation v. Shankar Lal. The respondents in the cited case had two premises, one at Original Road. Karol Bagh and another at Josbi Road. At the first premises, which was described as a factory, cases were manufactured with the aid of Power. At the second premises, the manufactured goods were stored, packed and delivered to the customers. At neither of the above two premises more than twenty workers were employed. However, if the workers employed at both the places were added up, they numbered more than twenty. V. D Misra, J., while interpreting Section 2(12) of the Act, found that since the godown and the factory were not located in tbe same premises, the two premises could not be clubbed together and, thereforee, could not be said to fall under the definition of factory. I have carefully gone through the cited judgment and in any view it can be of no help in deciding the case in hand. It appears that no argument was addressed before Misra J whether the employees working at the godown could be said to have been employed in the work connected with or incidental to the factory. The decision in the case has mainly turned on the finding that the two premises are not located in the same precincts and, thereforee, cannot be clubbed together to determine whether the premises where manufacturing process is carried on is a factory. This case must be taken to have been decided on its own facts.

(13) Shri Dhawan further relied upon a judgment of the Assam High Court reported as M/s Hindustan Construction Co. Ltd. v. Employees State Insurance Corporation. In the eited case their Lordships observed that 'If a person is neither employed on any work of the factory, that is, in the manufacturing process, nor in any work incidental or preliminary to or connected with the manufacturing process, he will not be an employee within the meaning of the Act.' No exception can by taken to the above statement of law on the interpretation of section 2(9). It appears from the concluding portion of the judgment that the case was remanded to the court below to find out which of the workers could be said to be employed in the manufacturing process or work connected with or ancillary to it. The cited decision can be of no help in deciding the point that has cropped up for consideration in the case in hand.

(14) Shri Dhawan next contended that in section 2(12) the expression ' factory means any premises including precincts there of where 20 or mere persons are employed or were employed for wages on any day in the preceding 12 montins', means that 20 or more workmen must have been employed at the factory premises, and that there being no evidence that at premises No. 508 and 525 more than 20 persons were working, those premises will not fall within the definition of factory. I have in the earlier part of my judgment held that the workmen employed in the manufacturing process or in the work connected with or ancillary thereto would also be employees within the meaning of section 2(12) of the Act.

(15) In this view the finding of the Employees Insurance Court that the manufacturing process carried on at premises No. 525 and 508 and the finishing work carried out at premises No. 131 would be part of one factory and all the employees working therein could be counted to determine whether the factory of the appellant would fall within the definition of section 2(12) is correct.

(16) The three appeals are dismissed. However, I would leave the parties to bear their own costs.


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