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V. Mohamed Haneef and Co. and Ors. Vs. Regional Director, Employees' State Insurance Corporation (03.11.1967 - MADHC) - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Case NumberWrit Petn. Nos. 1166 of 1962 and 2652 of 1966 and Letters Patent Appeal No. 43 of 1964
Judge
Reported inAIR1969Mad155; (1969)ILLJ586Mad
ActsEmployees' State Insurance Act, 1948 - Sections 2(12); Factories Act - Sections 2
AppellantV. Mohamed Haneef and Co. and Ors.
RespondentRegional Director, Employees' State Insurance Corporation
Appellant AdvocateV.K. Thiruvenkatachari, Adv. for ;T.T. Srinivasan and ;A.N. Rangaswami, Advs., ;King and Partridge in W.P. No. 2652 of 1966 and ;Govt. Pleader in L.P.A. No. 43 of 1964
Respondent AdvocateKing and Partridge in L.P.A. No. 43 of 1964 and ;Govt. Pleader in W.P. Nos. 1166 of 1962 and 2652 of 1966
Cases ReferredM. S. Abdulla Basha & Co. v. Regional Director
Excerpt:
commercial - factory - section 2 (12) of employees' state insurance act, 1948 and section 2 of factories act - whether tanneries would come under definition of factory under section 2 (12) - basic requirement to come within definition of factory under section 2 (12) that manufacturing process must be carried on with aid of power - well with pump set situated outside premises of tannery - water pumped for securing its supply - mere use of power for pumping water used for subsequent manufacturing purposes cannot be described as use of power in manufacturing process - held, tanneries do not fall within scope of section 2 (12). - - the water which is essential at the several stages of the tanning processes is obtained from a well in an open space outside the compound. water from the said.....natesan, j. 1. in these cases we are concerned with the true scope of the definition of 'factory' in section 2(12) of the employees' state insurance act (central act 34 of 1948) and whether the tanneries in question in these cases would come under that definition of 'factory'. for the tanneries it is contended that they do not, while the regional director, employees' state insurance corporation, contends that they do fall under the definition of 'factory' in the act. a brief reference to the circumstance under which the question arises for determination is necessary at this stage for a proper appreciation of the problem.2. the petitioner in w. p. no. 1166 of 1962 owns a tannery at ranipet in north arcot district, wherein the several processes of tanning of hides and skins are carried on.....
Judgment:

Natesan, J.

1. In these cases we are concerned with the true scope of the definition of 'factory' in Section 2(12) of the Employees' State Insurance Act (Central Act 34 of 1948) and whether the tanneries in question in these cases would come under that definition of 'factory'. For the tanneries it is contended that they do not, while the Regional Director, Employees' State Insurance Corporation, contends that they do fall under the definition of 'factory' in the Act. A brief reference to the circumstance under which the question arises for determination is necessary at this stage for a proper appreciation of the problem.

2. The petitioner in W. P. No. 1166 of 1962 owns a tannery at Ranipet in North Arcot District, wherein the several processes of tanning of hides and skins are carried on by manual labour. The premises where the tanning is carried on are enclosed with walls and within the premises the raw and dried skins and hides undergo various processes, such as soaking, lining, unhairing, flashing, delining, scudding, colouring, buffing, etc. The water which is essential at the several stages of the tanning processes is obtained from a well in an open space outside the compound. Water from the said well is pumped into a tub near the well with the help of one horse power motor pump set worked by electric energy. From the aforesaid tub the water is led by a channel on the ground into the premises for washing, cleaning and other tannery processes done by hand. The water flows through the channel into the tannery premises by gravity. More than twenty people are employed in the process of tanning within the premises but have no access to the pump set which is in charge of an independent care-taker. Electric Power is not used within the premises at any stage for the tanning processes.

The dispute between the petitioner and the Regional Director, Employees' State Insurance Corporation, the respondent in the petition, arises on the demand of the respondent for contribution from the petitioner under the Employees' State Insurance Act. Section 38 of the Act enjoins that all employees in factories or establishments to which the Act applies shall be insured in the manner provided by the Act. The contribution under the Act in respect of an employee shall comprise contribution payable by the employer referred to as the employer's contribution and the one payable by an employee referred to as the employee's contribution. Under Section 73-D the employer's special contribution payable under Chapter V-A may be recovered as if it were an arrear of land revenue and Section 85 provides for penalties for failure to submit returns, to pay contributions, etc., in terms of the several provisions of the Act. The petitioner contends that for the establishment to come within the definition of 'factory' under the Act, the basic requirement of the definition, namely, that the manufacturing process must be carried on with the aid of power, should be satisfied, and that it Is not so in the present case. Therefore the petitioner denies its liability to submit returns and pay contributions under the Act. There is no serious dispute as to the facts by the Regional Director. It is only said that the well with the pump set is situated just about five feet north-west from the western wall of the tannery premises and the eastern embankment of the well is connected with the western wall of the tannery premises. It is also said that the petitioner pays rent for the tannery building and also for the open space where the well is situated.

The Regional Director would contend that the requirements of 'factory' within the meaning of Section 2(12) of the Act are satisfied in this case. The petitioner, on threat of proceedings, by the Regional Director of non-compliance with the requirements under the Act and default of payment of contribution, has come to this Court praying for the issue of writ of mandamus, against the respondent directing him to forbear from enforcing the provisions of the Act.

3. The Letters Patent Appeal No. 43 of 1964 and W. P. No. 2652 of 1966 relate to another tannery located at Vaniyambadi in North Arcot District. The East Asiatic Company (India) Private Ltd., owning the tannery applied in the Court of Addl. Commissioner for Workmen's Compensation for a declaration that it was not liable to the Employees' State Insurance Corporation for the employer's special contribution prescribed in Section 73-D of the Act in respect of its tannery. Here also power is not used within the factory premises for any manufacturing purpose. But power is used only for pumping out water from a well outside the tannery premises. There is a well inside the tannery premises with an oil engine for pumping water therefrom. But the water from this well is not used in the manufacturing process due to some technical reasons. Water from the well outside the premises alone is brought through conduit pipes for the manufacturing process. The well in question from which water is drawn for manufacturing process is situated in a cocoanutthope, a furlong away from the tannery premises; and in the open space between the well and the tannery premises there is another tannery owned by a third person.

This well, it is said. Is common to several persons and with the aid of power water Is pumped from the well to a raised tub and stored there. From this tub the water flows through pipe lines laid under the premises of the tannery belonging to a third party, On reaching the petitioner's tannery premises the water is filled in pits for the several tanning processes. Power Is used only at the stage of lifting the water from the well to the tub and thereafter there is free flow of water to the tannery premises by the force of gravity. Within the premises the tanning processes are carried on with the manual labour and no power is used. The Addl. Commissioner for the Workmen's Compensation, decided that the act of pumping water is also manufacturing process and as admittedly there is a well inside from which water is pumped by an oil engine, all the essentials of definition of 'factory' under the Act are satisfied.

Against this order of the Addl. Commissioner for Workmen's Compensation, the owners of the tannery preferred an appeal to this Court as provided for under Section 82(2) of the Act. On this appeal Venkatadri, J., upheld the contention of the owners of the tannery that they were not carrying on manufacturing process with the aid of power in any part of the premises and that therefore the order of the Addl. Commissioner for Workmen's Compensation was not correct. Before the learned Judge the very maintainability of the appeal was questioned. But the learned Judge overruled the objection. The Letters Patent Appeal has been preferred by the Regional Director against the decision of Venkatadri, J., inasmuch as the maintainability of the appeal has been questioned and the owners of the tannery premises are not sure of the same, they have ex abundant cautela preferred W. P. No. 2652 of 1966 under Article 226 of the Constitution for the issue of a writ of certiorari or any other appropriate writ quashing the impugned order. As differing views have been expressed by learned single Judge of this Court in the application of the Act to tanneries utilising water similarly obtained, W. P. No. 1166 of 1962 which in the first instance came up for hearing before Srinivasan, J., was referred by the learned Judge for hearing by a Division Bench. It is thus all the matters are now before us,

4. The essential requisite for the establishments in question -- we are using a natural expression -- to be liable for contribution is that they must fall within the definition of 'factory' in the Employees' State Insurance Act, 1948. The Act which is intended to provide for certain benefits to employees in case of sickness, maternity and employment injury and related matters, by Section 1(4), enacts that it shall apply in the first Instance to all factories including factories belonging to the Government other than seasonal factories. Under Section 2(12) 'factory' Is defined thus:--

' '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 Indian Mines Act 1952 or a rail-Way running shed. .........'

The expressions 'manufacturing process' and 'power' shall have the meanings respectively assigned to them in the Factories Act 1948.'

The Factories Act to which we have to refer for the definition of the expressions, 'manufacturing process' and 'power' defines 'factory' under Section 2(m) thus: 'factory' means any premises including the precincts thereof:--

(1) Whereon ten or more workers are working or were working 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, pr is ordinarily so carried on, ...............

.............. but does not include a mine subject to the operation of the Mines Act, 1952.' (Relevant part only extracted).

The material difference in the language is, whereas in the Factories Act ten or more persons should be working in the premises, in the Act now under consideration the requirement is 20 or more persons and secondly whereas the Factories Act speaks of 'ten or more workers are working or were working', the Act under consideration speaks of persons 'employed or were employed for wages'. We may here point out that even under the Employees' State Insurance Act, 1948, previously the language employed was 'persons are working or were working' and it is by Act 44 of 1966 the words 'are employed or were employed for wages' were substituted. The amendment gets a wider coverage of persons entitled to be benefited by the Employees' State Insurance Act. As will be apparent by a reference to a definition of 'worker' and 'employee' In the respective Acts, whereas the object of the Factories Act is to secure health, safety and welfare, proper working hours and other facilities for workers employed and working in factories, the object of the State Employees' Insurance Act is to secure maternity, disablement and medical benefits to employees in factories and establishments and also benefits to their dependents. The Factories Act does not extend its benefits to those working outside factory premises and precincts, whereas the State Employees' Insurance Act by the definition of 'employee' extends its benefits to persons working in the establishments and those working 9Utside, that is, to field workers. Under the Factories Act the requirement is ten or more persons are or were working in the establishment where under the State Employees' Insurance Act the requirement is 'twenty or more persons are or were working In the establishment.' Under both the Acts the manufacturing process must be carried on with the aid of power.

5. 'Manufacturing process' Is defined under Section 2(k) of the Factories Act thus:

'Manufacturing process' means any process for -

(i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal, or

(ii) pumping oil, water or sewage.........................' (Relevant part only set out).

'Power' is defined in the said Act thus;--

' 'Power' means electrical energy, or any other form of energy which is mechanically transmitted and is not generated by human or animal agency.'

6. Now, we shall proceed to examine the requirements for 'factory' under the Employees' State Insurance Act. 1948, in the light of the above definitions. For an establishment to be a 'factory' the following conditions must be satisfied: (1) there must be a premises which also Includes its precincts; (2) 20 or more persons must be employed in the premises for wages or must have been employed on any day of the preceding 12 months; (3) manufacturing process must be carried on in any part of the premises and (4) the manufacturing process must be carried on with the aid of power or is ordinarily so carried on. If the aforesaid conditions are satisfied then the entire premises including the precincts thereof would be a 'factory' under the Act, even though the actual manufacturing process is carried on in a part of the premises. Neither the expression 'premises' nor the term 'precincts' is defined in the Act. Stroud's Judicial Dictionary interprets 'premises' as some definite place within metes and bounds, for example, land or land with buildings upon it. The term 'precincts' is defined in Shorter Oxford Dictionary thus:

'The space enclosed by the walls or other boundaries of a particular place or building or by an imaginary line drawn around',

'Precincts' Is a relative word and is really an adjunct of a premises. The Word 'precincts' comes from the Latin Prae Cingere meaning 'to surround or gird'. Webster's 20th Century Dictionary, for the expression 'precincts' in plural gives the meaning environs. It is defined further as an enclosure between buildings, walls, etc., specifically the grounds immediately surrounding a religious house or Church. The terms 'premises' indicates the main building and its appurtenances. Lest any part of vacant lands attached to the establishment should be omitted in the definition precincts are included or added to the premises. The use of mechanical process whether within the premises proper or on the precincts, would make the place a factory, if other conditions are satisfied. In Halsbury's Laws of England, 3rd Edition, Vol. 17, at p. 15, 'factory' is described thus:

'A Factory must occupy a fixed site but a place is not excluded from the definition of factory only by reason of the fact that it is in the open air. Subject to the exceptions mentioned hereafter, the area of the factory in the whole space contained within its walls.'

As will be seen from the definitions It Is a requirement that a place forming precincts must be a definite place with boundaries, and it is essential that the place must be an adjunct of the principal premises. But merely enclosing a part of the premises of an establishment where 20 persons are employed with boundary walls and locating the place where power for the manufacturing process of the establishment is utilised just outside or adjoining land, may not be sufficient to take the establishment out of the definition of 'factory', if all the other conditions are satisfied. In Nagpur Electric Light & Power Co. v. E. S. I. C., : (1967)IILLJ40SC the Supreme Court had to consider the question whether certain employees of the Nagpur Electric Light and Power Company were employees within the meaning of Section 2(g) of the Employees' State Insurance Act. After referring to the requirements for a premises to constitute a factory under the Act. Bachawat, J., delivering the judgment of the Court observed:--

'The premises constituting a factory may be a building or open land or both--see Ardeshir H. Bhiwandiwala v. State of Bombay. : (1961)IILLJ77SC . Inside the same compound wall, there may be two or more premises; the premises used in connection with manufacturing processes may constitute a factory, and the other premises within the same compound wall may be used for purposes unconnected with any manufacturing process and may form no part of the factory'.

Dealing with the reasoning of the High Court that the whole area over which the process of transmission was carried on including the Sub-stations where electricity was stored and supplied to the consumers by further transmission lines would all be a factory, it was said;--

'We cannot accept this line of reasoning. It seems to us a startling proposition that every inch of the wide area over which the transmission lines are spread is a factory within the meaning of Section 2(12). 'A factory must occupy a fixed site' -- See Halsbury's Laws of England, 3rd Edn.. Vol. 17, Article 15 p. 15. The company's factory has a fixed site. It is located inside the Kamptee Road premises and its boundaries are fixed by the compound wall of the premises.'

7. In Regional Director E. S. I. Corpn. v. Sriramulu Naidu. : (1960)IILLJ699Mad the Division Bench observed:

'In our opinion the scope of the statutory definition of the term 'factory' and the application of the Act (the Employees' State Insurance Act, 1948) cannot be decided on the basis of what the employer, either for the sake of efficiency or convenience of management, does, e.g., by dividing the factory into various departments. The essential requisites of a factory under the Act are (1) a premises, geographical area within a certain boundary, (2) in a part of which at least manufacturing process should be carried on with the aid of power and (3) twenty or more persons should be working in the premises. It is not necessary that all the twenty persons should be working in the same section or department.'

8. There is no dispute that the tanning establishments under consideration carry on manufacturing process. Raw and dried skins and hides undergo various processes with a view to their adaptation for profitable use, sale and disposal. This manufacturing process is manifestly carried on by manual labour within the premises of the establishments and not outside.

9. Really the substantial question for consideration in these cases is whether It could be said that the manufacturing process is being carried on with the aid of power for the reason that the water utilised in the process is lifted by power from a well before it is taken through channels or pipes to the tannery premises. This involves an interpretation of the clause 'manufacturing process is being carried on with the aid of power. The manufacturing process that has been carried on in the establishments is tanning. The question is whether it can be said that the tanning is done with the aid of power. In these cases power comes into the picture only in that the water is lifted from a well situated outside the establishments by electric power and stored in tubs and therefrom the water is diverted into the establishments, the water flowing into the establishments in a normal way the ground levels facilitating the flow.

The words 'carried on with the aid of power' do not appear to us to have been used as terms of art and they are not technical expressions. The words should be construed in the sense which people conversant with the subject-matter with which the statute deals would attribute to them. The words 'with the aid of power' look to us plain English words meaning that power is employed in the manufacturing process that is it also assists the manufacturing process. The vital question for consideration is whether power in aid of manufacturing process is used in any part of the premises or precincts. If power is used outside the premises and not even on the precincts can it be said that the manufacturing process which is carried on in the premises is done with the aid of power merely for the reason the water used has been lifted from the well with the aid of power?

10. For ascertaining the force of the expression 'with the aid of power' we may usefully refer to the decision in Law v. Graham, (1901) 2 KB 327 in which the application of words 'steam, water or other mechanical power is used in aid of the manufacturing process' came up for consideration. Under the English Factory Act, 1878, a premises would be factory wherein any manual labour was exercised by way of trade or for purposes of gain in or incidental to adapting for sale of any article and wherein or within precincts of which, steam, water or other mechanical power was used in aid of the manufacturing process carried on there. In the premises beer-was bottled for sale; but the filling was done by manual labour. The bottles however before being filled up were washed by a rotary brush driven by a small gas-engine held in position by hand. Lord Alverstone, C. J., while of the view that by a somewhat strained construction it is possible to regard the process of bottling the bear brought in casks wholesale as adapting of the article for sale, held that the washing of the bottles by mechanical means could not be fairly called a process which was used 'in aid of' the bottling of the beer. He observed:--

'It is true that the bottles must be clean, and that the respondents wash them because they are going to put beer into them; but, in my opinion, that operation is not 'in aid of' in the sense in which those words are used in the section.'

11. Another decision which is relevant in the context is that of Rajagopalan, J., In New Taj Mahal Cafe Ltd. v. Inspector of Factories, AIR 1956 Mad 600 , The question in that case was whether the use of a refrigerator run by electric power for storage purposes, in a restaurant where the preparation of food stuffs and other eatables was done in a kitchen forming part of the restaurant would fall within the definition of manufacturing process so as to bring the restaurant under the definition of 'factory' in Section 2(m) of the Factories Act for the reason that power could be considered to be used in aid of manufacturing process. The learned Judge observed:--

'..,...... every place where a Frigedaire is used will not become a factory, even if the requisite number of persons are engaged in work on the premises where a refrigerator is in use. If a refrigerator was the only appliance driven by power that was used in the restaurant, what the statutory authorities had to decide was whether any manufacturing process was carried on with the aid of that refrigerator, that is, with the aid of the power that was needed to work that refrigerator. .........

Normally refrigerator is used for the purpose of storage. Even in a restaurant articles are kept in the refrigerator till they are required for sale. Mere storage as such will not be part of the manufacturing process as denned by Section 2(k). Factories Act of 1948. ..................... If, however, a refrigerator is used for treating or adopting any article with a view to its sale, then the test required by Section 2(k) would be satisfied. ............... If, however, ice-cream is made with the aid of a refrigerator like a 'Frigedaire', then the Frigedaire would have been used for making or otherwise treating or adapting the article for sale.'

12. The decision in Longhurst v. Guildford Water Board, (1961) 3 All ER 545 though dealing with a somewhat different set of facts, is also instructive. Here the use of power comes in at the subsequent stage, that is, after the processes of the main purpose of the factory were over. Water collected from springs and streams within an area flowed by gravity into a filter house where the water was contained in filter beds and there cleansed of impurities. From the filter house the water passed into a large concrete tank. There was a pump house physically separated from the filter house and three engines therein with pumps drew water from the tank, put it under pressure and forced it along mains either up to a reservoir for distribution by fall of gravity to the houses in the District or through the mains direct to the houses. Under Section 151 (6) of the English Factories Act 1937, where a place within the precincts forming a factory is solely used for some purpose other than the process carried on in the factory, it is deemed not to form part of the factory for the whole purpose of the Act, and the question was whether the pump house was not part of that factory, since the pumping of water was not incidental to filtering of water, but was only part of the distribution of water to consumers. Lord Guest, in his speech in the House of Lords said:

'The 'processes carried on in the factory' cannot refer to any process whether it be a factory process or not. It must be a process which brings the premises within the definition of a factory under Section 151(1)............. Now, the main of the factory in the present case is the filtering of water. The sole question which then arises is whether the pumping of the water is incidental to that purpose. Such storage as is merely a necessary and a transitory incident of the manufacturing process may be a factory purpose. ...... It was argued ...... that the pumping of the water was a necessary incident to the filtering, but, in my opinion this was a different and new process which was being carried on. It was not necessary to the filtering of water that it should be pumped. All that was necessary was that it should run away by gravity from the filters. The pumping was necessitated by the fact that the reservoir was situated at a higher level than the pumping station. The pumping, in my opinion, was part of the distribution of the water and not incidental to its filtering.'

13. The actual tanning process in the tanneries now under consideration is admittedly carried on by hand. It mattered little to the tanning how the water required for cleaning was brought into the tannery premises. That aspect plays no part in the process. It is not necessary for the manufacturing process carried on within the premises that the water should flow at any particular pressure. Nor is it urged for the Regional Director that the tannery process requires flow of water at any particular velocity or quantity for more effective and convenient user of water in the tanning. The mere fact that water has been lifted at some point by mechanical process using power, will not itself make the manufacturing process carried on in the tannery as a process carried on with the aid of power. The use of electric energy is at too remote a point and unconnected with the actual manufacturing process to associate it with the manufacturing process and treat its user as in the course of manufacturing process. We may well illustrate the absurdity of the proposition by an illustration. One can conceive of a case where water is transported from a distance for tanning purpose in cisterns mounted on carts drawn by bullocks or even by motor vehicle fitted with water tanks. Water may be pumped into the cisterns or tanks with electric power. It would be ridiculous to contend that the manufacturing process in the tannery is being carried on with the aid of electric power for the reason that water is pumped into the cisterns or tanks. Can it make any distinction if instead of water being brought to the tanning premises as aforesaid water is led through conduit pipes from tubs near the well into which the water is pumped? We think, not.

If there is no distinction in such a case, the fact that the well is situated in the immediate neighbourhood of the establishment or adjacent to the establishment cannot be of much significance. The distance of the well from which water is taken, or the ownership of the intervening land in third party by itself is not a safe test. In a particular case it may emphasise or accentuate the disassociation. In A. R. Md. Sulaiman v. Regional Director of E. S. I. Corporation, W. P. No. 691 of 1959 (Mad) the electric pump was not installed in the premises of a tannery but in land adjoining subsequently acquired. The water lifted was mainly used for the purpose of irrigation; but was also used for purposes of tanning as a supplemental source. There was a well within the premises which was not worked by electric power. The question arose whether the establishment was a factory under the Act. The learned Judge Veeraswami, J., in rejecting the contention that the tannery is a factory, remarked:

'It may be assumed that cleaning is a manufacturing process. But that by itself is not sufficient. Can it be said that because water which is pumped out with the aid of power is used in the process of cleaning the hides and skins, cleaning is done with the aid of power The respondent urges that such cleaning with such water conformed to the requisites of the definition of a factory. But as I understand the definition, it is not sufficient to carry on cleaning with water pumped out from a neighbourhood premises or precincts with the aid of power.'

The learned Judge observes that cleaning that is done with water pumped out with electric power is not cleaning done with the aid of power; but however distinguishes an earlier case M.H. Ismail Sahib & Co. v. Regional Director, E. S. I. Corporation, : (1960)IILLJ428Mad remarking only:

'But it may be seen that in that case the pump-installation was within the precincts of the tannery and in that sense the learned Judge regarded it as part of the tanning process. But that is not the case here. The respondent has not been able to show that the pumping of water is done within the precincts of the factory.'

In : (1960)IILLJ428Mad referred to above, a decision of the present Chief Justice as he then was, where electric power was employed in the establishment for the pumping and storage of water which was subsequently used for several of the processes in tanning, the reasoning for the finding that the establishment is a factory runs thus:--

'Water is required for the manufacturing process, presumably, at a particular spot and in particular flow of force. This is not merely a case of a small quantity of water being utilised in the ordinary way, for, in that' event, the employer would not take the trouble to use electrical energy to pump and store water in large quantities, and at a height But, since the use of the electrical energy enables the employer to utilise the water in such manner as is required in the manufacturing process itself, in effect he is using power for conducting a part of that process.'

Ot course if water is desired for tanning at a particular phased flow or at a given velocity and if electric power is employed for the purpose of securing water at the required flow or velocity, clearly the power is utilised in aid of the manufacturing process. But, such a requirement is not made out in the cases now before us. The reasoning in the case just cited must therefore be confined to the facts of that case.

14. In the above case the establishment in question was held to be a factory on another ground also. It was observed therein that the very pumping and storage of water in the establishment amounted by itself to a manufacturing process as defined hi the Act. The learned judge followed for the proposition the decision of Ramachandra Iyer, J., (as he then was) in Moosa Kazimi v. K. M. Sheriff, : (1959)IILLJ344Mad . With great respect to the learned Judges we are unable to hold that the very pumping and storage of water as found should amount to manufacturing process as denned in the Act. True, Section 2(k) of the Factories Act, while defining manufacturing process includes in the process, pumping oil, water or sewage. Section 2(k) contains several Sub-clauses, Clauses (i) to (v). Sub-clause (i) itself is very wide in its scope and coverage; and any one of the works enumerated therein where power is used would make the process a manufacturing process carried on with the aid of power. Pumping oil, water or sewage in the context of the several Sub-clauses of Section 2(k) can only refer to the operation of pumping itself as a substantial activity. Pumping itself must be the process. There are pumping installations where oil, water or sewage etc. are pumped and power is used for the purpose of pumping. The reference must be to cases where the process of pumping is intended to aid the adaptation of the liquid for use or disposal. The manufacturing process of the establishments under consideration is tanning. Pumping is not the objective or work of these establishments. Water is not processed in the establishments for storage and distribution through water mains at pressure. It cannot be contended that the place where the pumping is carried on can itself be regarded as an independent factory. At that place there may be only one man.

15. The case in : (1959)IILLJ344Mad which was followed in : (1960)IILLJ428Mad was concerned with the definition of 'factory' in the Factories Act 1948 read with Payment of Wages Act. The establishment in question was a restaurant to which a bakery was attached and the question arose whether the use of electric power for the purpose of lifting water used in the bakery and restaurant would convert the premises into a factory when more than the required number of persons worked in the premises. Referring to the presence of an electric motor for the purpose of lifting water, it was observed in that case that the definition of the term 'manufacturing process' would comprehend such a case. Reliance was placed on the decision of the Bombay High Court in Laxmibai v. Chairman and Trustees, Bombay Port Trust, : (1954)ILLJ614Bom where it was observed 'On the evidence it is clear that in the pumping station in question a process was employed for the purpose of pumping water and if such a process was employed it was a manufacturing process.' That was a case under the Workmen's Compensation Act which also adopted the definition of 'manufacturing urocess' in the Factories Act and may be the evidence in that case warranted the conclusion that the pumping itself was a manufacturing process. In Moosa Kazimi's case, : (1959)IILLJ344Mad where the establishment was a hotel with a bakery annexed the distribution of water pumped by electric power was integrally connected with the hotel and baker/ business of the establishment in question. A reference to Section 7 of the Factories Act gives some help in the interpretation of Section 2(k). Under Section 7 the occupier shall, 15 days before his occupation or use of any premises as a factory, send to the Chief Inspector a written notice containing certain particulars inter alia the name and situation of the factory, the nature of the manufacturing process carried on in the factory during the previous 12 months in the case of a factory In existence and during the next twelve months hi the case of all factories and the nature and quantity of power to be used. We do not think that hi describing the nature of manufacturing process carried on hi the factories hi question a proper answer would be the pumping of water. In Maxwell on Interpretation of Statutes, 7th Edn., at page 183 it is said;

'In determining either the general object of the Legislature or the meaning of its language in any particular passage, it is obvious that the intention which appears to be most in accord with convenience, reason, justice and legal principles should in all cases of doubtful significance be presumed to be the true one.'

In W. P. No. 691 of 1959 (Mad) above cited, dealing with the argument that as water used in the tannery was pumped out with the aid of electric power and pumping of water was a manufacturing process as defined by Section 2(k)(i) of the Factories Act 1948 the tannery was a factory, the learned Judge Veeraswami, J., observed:

'The difficulty In accepting the first ground pressed for the respondent lies in the fact that, although the electric pump is used as a supplemental source for supply of water to the tannery its location is not in the premises or the precincts thereof. Nor was it said that 20 or more persons are working the pump, if that alone is to be taken as the manufacturing process within the meaning of the Factories Act. In the circumstances, it cannot, therefore, be held that only because of the pumping of water with the aid of power from the land lying to the north of the premises and precincts of the tannery, the tannery is a factory Within the statutory definition under the Employees' State Insurance Act.'

In Latheef Hameed & Co. v. Regional Director, E. S. I. C., W. P. No. 1023 of (1962 (Mad) again a case of tannery where electric power was employed for lifting water from a well, the learned Judge, the present Chief Justice, following his earlier decision in : (1960)IILLJ428Mad said:

'Learned Counsel for the writ petitioner is unable to show me any data wherefrom I can draw my inference that the force of flow of water; the height from which it is made to flow, and, the impact of water hi cleaning, which is clearly due to the power of gravity depending on the height of storage, are matters not vital to the washing process. Obviously they are vital parts of it, and It is for these excellent reasons that the manufacturer, who knows best, has used electric energy to store up water at a height, so that he may have flow of water which has force and Impact on the skins as part of cleaning.'

This decision proceeds on the basis that the establishment has taken to electric power for storing of water for greater convenience and effective utilisation of water for the purpose of cleaning. On the facts as taken clearly electric power was utilised for manufacturing process. The decision stands on its own facts as the former one. In line with this decision we may refer to Newton v. John Stanning & Son Ltd., (1962) 1 All LR 78. In that case there was a pump house within the curtilage of the factory premises and the factory was carrying on the work of bleaching and finishing of textiles. Transmission machinery was used in the pump house to pump water under pressure into the mill in the factory. The question was whether the pump house was a factory under the English Factories Act 1937. It was held that it was impossible to say that the pump house must be treated as separate from the factory, since a process was being carried on therein which was undoubtedly for or incidental to the working of bleaching and finishing of textiles. It was found as a fact in that case that the pump was an essential part of the works. There was no question of the pump house in that case being a separate factory on its own and it was held that the pump house was an integral part of the works.

16. Securing water required in a factory by electricity may in a given case be so integrated with the other processes in the tannery as to form a part of manufacturing process. The question whether in a particular case power aids the manufacturing process is a question that has to be determined on a conspectus of several factors. The disassociation of the well and pumping from the factory premises will be an element which has to be taken into consideration. The mere fact that water utilised has been pumped by electricity will not connect the pumping process with the manufacturing process carried on in a factory. There must be certain interlinking in the functioning of the pump with the manufacturing process carried on in the factory. One can think of water being forced at pressure through the mains for the purpose of the factory. One can also conceive of water specially treated being pumped into the factory with the use of electric power,

17. In P. R. Abdullah and Co. v. The Regional Director, W. S. I. Corporation, C. M. A. No. 150 of 1959 (Mad) the tannery consisted of two sets of buildings separated by a private road. From a well adjacent to the godown in one of the buildings water was pumped by electricity and carried through pipes under the private road to the part of the factory where skins were tanned. The learned Judge Ramachandra Iyer, J., (as he then was) after noticing the decision in : (1960)IILLJ428Mad referred to the decision of the Division Bench in : (1960)IILLJ699Mad and summarised the ruling in that case thus:

'In that case it was held that the essential requisites of a factory within the meaning of the term in the Act were (1) a premises, geographical area within a certain boundary (2) in a part of which at least manufacturing process was carried on with the aid of power and (3) twenty or more persons should be working in the premises, though it was not necessary that all the twenty persons should be working in the same section of department, so long as the efforts of all the departments were coordinated to achieve the main object of the factory. .........'

Dealing with the case before him, it was observed:

'But that cannot mean that where two buildings constitute a factory from the mere circumstance that a private road intervenes between they should be viewed as two distinct premises in considering the question of the applicability of the Employees' State Insurance Act. The pumping of water is essential to the manufacturing process carried on the side of the road. Between the two buildings, that is, one where water is pumped out and the one where it is received, there is a pipe connection which should be sufficient to constitute the two buildings as one premises.'

In the above case the only question considered was whether the place where water was pumped could be considered part of the premises where tanning process was being carried on.

18. The questions raised and the conflicting views on the matter have been considered by Srinivasan, J., in M. S. Abdulla Basha & Co. v. Regional Director, E. S. I. Corporation, W. P. No. 1487 of 1961 ILR (1965) 1 Mad 293. In that case the well in question was situated at a distance of about 30 yards from the tannery and neither the well nor the pump set belonged to the tannery establishment. For the establishment it was said that water was obtained on payment of a sum of Rs. 20/- per month to the owners of the well and the water was brought into the factory through a channel from the site of the pump set. The learned Judge after noticing that the decision of Veeraswami, J., in W. F. No, 691 of 1959 (Mad) should govern the case while discussing the legal position, observed:

'......... I may express it as my view that the mere fact that water is brought into the premises with the aid of power is not by itself sufficient to establish that a manufacturing process is carried on with the aid of power. If what is adumbrated by the learned Additional Government Pleader is the sole test, it is easy to conceive of a situation where this argument may lead to somewhat startling results. Supposing the water required for the purpose of cleaning is secured from a source of municipal supply, that is, taken from a tap in the premises of the factory, can it be said that since the municipality supplies the water by using power in its installation, the water so received by the petitioner factory and used in some manufacturing process, the process itself is carried on with the aid of power?'

The learned Judge also gives another illustration of water being transported to the factory premises by a lorry or other means of mechanical propulsion, the water being pumped out from a well elsewhere. Pointing out that the illustrations indicate that the construction sought to be placed upon the expression 'with the aid of power' is somewhat strained, the learned Judge goes on to observe;

'What is contemplated by the definition is that power should be used in the carrying on of the manufacturing process. As I understand the process involved, it consists in soaking raw hides and skins in water. It is not stated that any part of the cleaning operation is carried on with the aid of power, such as to say, by storing the water in the tanning vats by mechanical means with the aid of power or by the use of power in scrapping the skins or the like associated operations. The solitary circumstance that water is pumped out of the well and stored in the vats is relied upon by the respondent in his claim that the cleaning process itself must be said to be done with the aid of power.'

The learned Judge distinguishes the decision, in : (1960)IILLJ699Mad with the observation that it principally turned upon the question whether the two premises constituted a single unit, and that it was not decided therein that the use of the water derived with the aid of power would amount to the use of power in manufacturing process. Referring to the decision in : (1960)IILLJ428Mad where it was observed that the very pumping and storage of water amounted to a manufacturing process, the learned Judge observed:

'With great respect I am unable to follow this decision. Firstly, it seems to me that the various Sub-clauses of the definition of 'manufacturing process' are mutually exclusive. The first Sub-clause in Section 2(k) which defines 'Manufacturing Process' is itself of very broad amplitude and covers a variety of processes, the carrying out of any one of which with the aid of power would make the process a manufacturing process. Sub-clause (2), which reads 'pumping of oil, water or sewage' is in the context distinct and is intended to deal with mere pumping operations for it might otherwise be contended that since pumping per se does not affect any alteration in the article no process of manufacture is at all involved. There are large pumping installations, which deal with oil, water or sewage, which utilise power for the purpose of pumping and unless this part of the definition is available, such installations could not be brought within the category of factories. : (1954)ILLJ614Bom was a case of that kind. This Sub-clause was not to my mind intended to take in an ancillary operation of pumping water as in the present case and to postulate the use of that power as covering use of power in aid of the manufacturing process itself. It is not the case of the department that water is required in a particular flow or force to serve the purpose of any of the manufacturing process involved. Water in fact is required in a static condition as it were for the purpose of soaking the raw hides and skins to make them pliant and to facilitate the cleaning of the skins. Had it been a case where water had to be directed in a powerful flow which could be achieved only with the aid of power, and that this kind of flow was necessary for the purpose of cleaning or any of the associated processes of manufacture, then undeniably power could be said to be used in the process of manufacture. But where water is pumped for the purpose of securing its supply and nothing more and power is riot used in the process of manufacture itself, it seems difficult to hold that this part of the definition would at all be attracted.'

The learned Judge concludes:--

'Giving the matter my careful consideration, I am of opinion that unless power is directly used in the process of manufacture, the premises cannot come within the definition of 'factory' in the Act. The use of power for pumping water, which water is used for subsequent manufacturing purposes, with nothing more cannot justify the inference that the power is used in the process of manufacture.'

19. Having given the most careful consideration to the differing views expressed in the decisions of the learned Single Judges of this Court which led Srinivasan, J., to refer W. P. No. 1166 of 1962 to a Division Bench, we are inclined to agree with the approach of Srinivasan, J., in the application of the definition of 'factory' to tanneries like those under consideration, that where water is pumped for securing its supply and nothing more, and power is not used in the manufacturing process itself the definition Is not attracted. The mere use of power for pumping water which is used for the subsequent manufacturing purposes cannot be described as the use of power in the manufacturing process. We are in concurrence with Srinivasan, J., in his view that the reference to pumping of, oil, water or sewage under the definition! of manufacturing process is intended to deal only with pumping installations where the main process itself is pumping of oil, water or sewage. The Sub-clause is not intended to cover pumping which is merely ancillary to some other manufacturing process. Only, we would: like to circumscribe the requirement by a limitation. The question whether the manufacturing process is being carried on with the aid of power is ultimately one of inference from facts. It may happen that in a particular establishment the pumping of water and utilisation of it in the manufacturing process is so integrally connected with the manufacturing process that the pumping cannot be disassociated from it. May be that the actual process of tanning is carried on by manual labour. All the same the pumping of water may in a given case be so intimately linked up with the manufacturing process in its location, object and operation, say as envisaged in : (1960)IILLJ428Mad to secure flow of water with force and impact for the cleaning of skins with a view to more efficient and economical working of the tannery, that it would be difficult to disassociate the pumping process from the actual tanning process. The test is not whether power is necessary for the manufacturing process but whether in fact power is used in the manufacturing process. The nature of the definition is such that for its application no principles in the abstract could be laid down We can only indicate the true scope of the several material expressions in the definition.

20. We shall now examine the cases on hand in the light of the above discussion. In W. P. No. 2652 of 1966 which is also the subject of L. P. A. No. 43 of 1964, the Addl. Commissioner for Workmen's Compensation would hold the premises as a factory for the only reason that within the tannery premises there is a well and water from the well is pumped by an oil engine, that is, by the use of power. The contention of the establishment is that the water from this well is not used in the manufacturing process due to technical reasons, and the water used for tanning is brought from a well outside the tanning premises. It is also the contention of the establishment that the well from which water is taken for the tannery, no doubt by the use of power, is situated in the corner of a Coconut Thope owned in common with others at a distance of nearly a furlong from the tannery premises. In the view he has taken that the presence of an oil engine attached to the pump within the tannery would itself be sufficient, the Addl, Commissioner for Workmen's Compensation thought that it was not necessary for him to examine the contention on behalf of the establishment that the water is pumped from a well situated on different premises far away from the tanning premises. There is no finding even that water from the well in the tanning premises was to any extent used in the tanning process. The mere existence of the pump set worked by power cannot make the premises a factory. The requirement of the definition is not just that power is used in any part of the premises. The essential postulate is that power must be used in aid of the manufacturing process in the premises. There being so such finding in this case by the Additional Commissioner for Workmen's Compensation, the order in question has to be quashed.

21. Coming to W. P. No. 1166 of 1962, in the counter-affidavit of the Regional Director, Employees' State Insurance Corporation, it is admitted that the pump set is situated outside the western compound wall of the tannery. All that is stated is that the eastern embankment of the well is connected with the western wall of the tannery. The employer, it is stated, pays rent not only for the tannery but also for the open space where the well is situated. It is not denied that the water from the well is taken only by an earthern channel into the tannery wherein the washing and cleaning process of the skins is done only by hands. Nor is the statement in the affidavit that labourers working in the tannery have no access to the pump set which is in charge of an independent care-taker, denied. The water, it is stated, is first Stored in a tub near the well and the water so stored is used also for personal needs of the labourers and others, that is, for bathing and drinking purposes. It is one horse power motor that pumps the water into the tub. On the facts the pumping of water has little to do with the actual tanning process. It cannot be said that the pumping process is so integrated with the manufacturing process within the tannery premises as to make it part of the manufacturing process. The pumping of water by power is not incidental to the tannery process which goes on within the premises. In the absence of other indicia, it will be making a distinction without difference to hold that as the pump set is just outside the compound wall it must be held to be in aid of the manufacturing process. The absence of distance in a case of this kind without any other clinching features shows no nexus between the manufacturing process and the pumping. To differentiate between tanneries where the pump set is just outside the premises and adjoining the compound wall and tanneries where the pump set is situated at a distance, and make the former liable for contribution, will be to make a classification without any rational basis for the same. It follows that the tanneries in question as worked do not fall within the scope of Section 2(12) of the Employees' State Insurance Act read with the Factories Act 1948 and that the provisions of the Employees' State Insurance Act cannot be applied to the tanneries. A writ will issue as prayed for in W. P. No. 1166 of 1962. The order dated 7-4-1961 made by the Regional Director, Employees' State Insurance Corporation the subject of W. P. No. 2652 of 1966 is hereby quashed and the Rule Nisi therein made absolute. In the circumstances it is unnecessary to examine the maintainability of the appeal, C. M. P. No. 270 of 1961. L. P. A. No. 43 of 1964 is therefore dismissed. Having regard to all the circumstances, there will be no order as to costs in the writ petitions and the Letters Patent Appeal.


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