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Agents and Manufacturers Vs. the Employees State Insurance Corporation - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtDelhi High Court
Decided On
Case NumberLetters Patent Appeal No. 84 of 1973
Judge
Reported in18(1980)DLT383; 1980RLR567
ActsEmployees State Insurance Act, 1948 - Sections 2(2)
AppellantAgents and Manufacturers
RespondentThe Employees State Insurance Corporation
Advocates: Bajinder Dhawan and; A.P. Gupta, Advs
Cases Referred(Barry v. Clevland Bridges and Engineering Co.
Excerpt:
labour and industrial - factory - sections 2 (2) and 2 (12) of employees state insurance act, 1948 - whether three places owned by respondent where manufacturing process take place constitute factory - going through facts of case and precedents established that distance of enclosure not a determining factor but heart of definition of factory is continuous process of manufacturing - held, places in dispute constitute factory. - .....goods are polished, packed and sold at the third place. there can be no doubt that the persons employed at places 525 and 508 are engaged in one manufacturing process. the fact that these two premises are separated from the third by a distance of a furlong or so will not take the appellants out of the definition of the term 'factory' (7) counsel for the appellants contends that since the three places are situated at a distance from each other they cannot be called one premises within the precincts of which the appellants may be said to be manufacturing goods. he has cited a number of decisions. (8) the act is a social legislation. . its object is to give social security to the workers. it provides for certain benefits to employees in case of sickness, maternity and employment injury.....
Judgment:

Avadh Behari Rohatgi, J.

(1) These are three letters patent appeals from a common order of a learned single judge dated February. 5, 1973.

(2) These are the facts. The appellant M/s. Agents and Manufacturers, are a partnership firm. They manufacture wooden furniture. They make base and cover of sewing machines. For their manufacturing business they have taken three separate place in Shahdara. Two of these are in Chotta Bazar and the third in Circular Road. Circular Road place is at a distance of one to two furlongs from Chhotta Bazar. These place bear different municipal numbers. In Chhotta Bazar the numbers of the places are 525/16 and 131. In Circular Road the municipal number is 508. It is common ground that at two places, namely, 525/16, Ghhotta Bazar and 508, Circular Road there is supply of power and they are equipped with machinery. The wooden base and cover of the sewing mechines are manufactured with the aid of power. At No. 131 the manufactured goods are polished, furnished, packed and sold. There is no power at the last named premises. It is not disputed that all the three places are managed by the appellants.

(3) An inspector of the respondent. Employees State Insurance Corporation, visited these places. He found that the manufacturing process was being carried on at all these places. At 131 he saw that the goods were being polished, packed and sold. He stated so in his report. Subsequently be deposed this in court. The respondent claimed employer's special contribution from the appellants under the Employees State Insurance Act, 1948(the Act). The appellants refused to pay. Their case was that they were not a factory as they did not employ 20 or more persons at any of the three places. It is not in dispute that at each place the workers employed were below 20. But it is common ground that if the workers working at all the three places are clubbed together they will be more than 20.

(4) The respondent did not accept the case of the appellants that they were not a 'factory' because the workers employed at each of the three places were below 20. The matter was taken to court. The Employees' Insurance court held that the three places constituted a 'factory' within the meaning of Section 2(12) of the Act. From its decision the appellants appealed to this court. The learned single Judge agreed with the Employees Insurance Court. He held that the manufacturing process at all the three places would be part of one factory and all the employees working therein could be counted for the purpose of determinining whether the firm of the appellants was a factory or not. From his decision these appeals have been brought.

(5) The real question in these appeals is whether the three places constitute a 'factory' within the meaning of the expression as defined in Section 2(2). 'Factory' is defined in Section 2(12) in these terms:

'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 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 or a railway running shed,'

(6) Now in the present case the manufacturing process or business is one. It is the production of wooden base and wooden covers. Some part of the manufacturing process is 'being carried on a tone place, some at second and finally the finished goods are polished, packed and sold at the third place. There can be no doubt that the persons employed at places 525 and 508 are engaged in one manufacturing process. The fact that these two premises are separated from the third by a distance of a furlong or so will not take the appellants out of the definition of the term 'factory'

(7) Counsel for the appellants contends that since the three places are situated at a distance from each other they cannot be called one premises within the precincts of which the appellants may be said to be manufacturing goods. He has cited a number of decisions.

(8) The Act is a social legislation. . Its object is to give social security to the workers. It provides for certain benefits to employees in case of sickness, maternity and employment injury as is stated in the preamble. How do we interpret such legislation. There should be, as Lord Diplock has said recently.

'A purposive approach to the Act as a whole to ascertain the social ends it was intended to achieve and the practical means by which it was expected to achieve them.'

(R. v. National Insurance Commissioner (1972) A.G. 904 (1005) .

(9) It will be frustrating the purpose of the Act to give the term 'factory' a narrow meaning and to say that if two places where the goods are produced are separated by a distance, long or short, then they will not be covered by the definition. In Halsbury's Laws of England (4th edition volume 20 at page 195 it is said :

'Separate buildings, even though a considerable distance apart, may if used for one continuous manufacturing process, constitute a single factory.'

In our opinion this is a correct statement of the law, if the manufacturing process is one continuous then the premises are covered by the definition of the term 'factory', whether the manufacturing process is being carried on in one building or range of buildings. It is the manufacturing process which lies at the heart of the definition. It does not matter that the manufacturing process is being carried on in separate buildings. The buildings may be situated at some distance. They may be situated within one compound wall. For example, there may be a whole complex of buildings inside the compound wall. They will constitute a factory. (See Birla Cotton Mills v. Employees State Insurance Corporation, : AIR1970Delhi167 ). Or two buildings where the goods are produced they may be situated at a distance separated by a road. Nevertheless they will constitute a 'factory'. This was the view of Shamsher Bahadur J. of Punjab High Court in S.K. Talwar v. Employees State Insurance Corporation, F. A. 0. 99 of 1958 decided on 7th September, 1959. He said:

'Even if 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 inclined to hold that the separate buildings really constituted one factory in the instant case.'

(10) A similar view was taken by Venkatadri, J. in Radhian & Bros. v. E.S.I. Corporation, A.I.R. 1967 Mad. III. In that case a firm was engaged in the manufacture of iron safes. Iron safes were being manufactured at one place but the painting work was done at a far away place. It was held that painting work being part of the process of manufacture, workmen employed in painting work could be counted for deciding whether the firm was factory or not.

(11) With these two decisions we are in respectful agreements. In Arbesbir B. Bhiwandiwala v. State of Bombay, : (1961)IILLJ77SC it was said:.

'The expression 'premises including precincts' does not necessarily mean that the premises must always have precincts. Buildings need not have precincts. The word 'including' is not a term restricting the meaning of the word 'premises', but is a term which enlarges the scope of the word 'premises'.'

(12) It will thereforee be proper to adopt a construction liberal enough to achieve the legislative purpose without doing violence to the language. (See Works Manager, Central Ely. Workshop v. Vishwanath A. I. R. 1979 S.C. 488.

(13) A building or group of buildings appropriated to the manufacture of goods, including the machinery necessary to produce the goods and the power by which the machinery is propelled will constitute a factory. It does not make any difference that the place where the workers are employed in fabricating goods, wares, utensils is one or more than one. All buildings, sheds, structures or other places used for or in connection with the manufacturing process where twenty or more persons are employed at labour will be covered by the expression 'factory'. The word does not necessarily mean a single building or edifice, but may apply to several where they are used in connection with each other for a common purpose. The term includes all buildings and premises wherein power is used for manufacturing or making goods for purpose of trade or gain or business carried on therein. ..These buildings may stand in one enclosure or they may be separated by some distance. But the business of making an article has to be carried on with power-driven machinery.

(14) It appears to us that it is not the distance or the enclosure which is the determining factor. The test is whether the manufacturing process is one continuous. On the facts of this case we have no difficulty in arriving at the conclusion that three places constitute a factory. They have to be combined because the manufacturing process is common. The workers employed at the three places have to be added for the purpose of determining whether the appellants have employed 20 or more persons in their factory.

(15) Counsel for the appellants referred us to a decision of V.D. Misra J. in Employees State Insurance Corporation v. Shanker Lal 197l (Vol. 40) Indian Factories Journal 498. With respect we do not agree with the learned judge when he says that in order to constitute two buildings as one 'factory' it is necessary that they must be enclosed by one compound wall or boundary. A place can be a 'factory' although it has no boundary wall or fence. (Barry v. Clevland Bridges and Engineering Co., (1963)1 All. E.R. 192).

(16) For these reasons we affinn the view of the learned single judge and dismiss these appeals. The parties are however left to bear their own costs.


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