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Mahalakshmi Oils Mills Vs. Employees' State Insurance Corporation (22.01.1970 - MADHC) - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtChennai High Court
Decided On
Judge
Reported in(1970)IILLJ528Mad
AppellantMahalakshmi Oils Mills
RespondentEmployees' State Insurance Corporation
Cases ReferredState Insurance Corporation v. C.
Excerpt:
.....salary for the staff, which must mean the staff in office as well as in the..........earlier application was filed by the proprietor of mahalakshmi oil mills against the employees' state insurance corporation for a declaration that the employees' state insurance act is not applicable to the mill because the mill had no more than 14 persons working in the premises thereof. the later application was filed by the employees' state insurance corporation against the mahalakshmi oil mills claiming employees' contribution on the ground that on the date of inspection of the premises by the inspector of the employees' state insurance corporation, 20 persons were found working in the premises and, consequently, the mill was liable to pay contribution. the contention of the mahalakshmi oil mills was that only 14 out of the 20 persons were employed in the factory and the remaining.....
Judgment:

Maharajan, J.

1. These two appeals are directed against a common order passed by the Employees' Insurance Court, Madras, in E.I.O.P. Nos. 2 of 1962 and 44 of 1962. The earlier application was filed by the proprietor of Mahalakshmi Oil Mills against the Employees' State Insurance Corporation for a declaration that the Employees' State Insurance Act is not applicable to the mill because the mill had no more than 14 persons working in the premises thereof. The later application was filed by the Employees' State Insurance Corporation against the Mahalakshmi Oil Mills claiming employees' contribution on the ground that on the date of inspection of the premises by the Inspector of the Employees' State Insurance Corporation, 20 persons were found working in the premises and, consequently, the mill was liable to pay contribution. The contention of the Mahalakshmi Oil Mills was that only 14 out of the 20 persons were employed in the factory and the remaining 6 were employed only in the sales organization of the company which is unconnected with the factory. Originally, the Tribunal allowed the Corporation's application and dismissed that of the mill, whereupon W-6 appeals were filed in A.A.O. Nos. 222 and 223 of 1963 on the file of this Court. Venkatadri, J., disposed of those appeals on the 27th October 1965, reported in : (1966)IILLJ1Mad remanding the matter to the Tribunal for a decision as to whether the persons working in the office of the company are employees within the meaning of the Employees' State Insurance Act. It is unfortunate that though the remand was specifically made for the purpose of enabling the parties to lead additional evidence, neither party cared to lead any evidence, with the rasult that the Tribunal proceeded to dispose of the matter upon the evidence previously on record and dismissed E.I.O.P. No. 2 of 1962 filed by the mill and allowed E.I.O.P. No. 44 of 1962 filed by the Corporation, fixing the amount of contribution payable at Rs. 519-14, with interest thereon from the date of remand. As against these orders, the proprietor of the mill has now preferred these appeals.

2. Dhakeswari Rice and Oil Company (P) Ltd., is the proprietor of Mahalakshmi Oil Mills. This company, according to the evidence, is engaged not only in running the Mahalakshmi Oil Mills but also in buying and selling all kinds of vegetable oils and exporting the same. Admittedly, the oil mill and company office are located in the same compound in Zinda Saheb Street, G.T. Madras. Exhibit A-2, the plan, shows that the office premises are situate in the southern portion of the compound whereas the factory premises are situate in the eastern and northern portions of the compound. In the premises of the factory is installed the machinery relating to the oil mill, and an electric motor of 25 H.P. is used for crushing and preparing the oil. When R.W. 1, the Employees' State Insurance Corporation Inspector, inspected the factory on 6th September, 1960, he found that 14 persons were actually working in the factory portion of the premises whereas 6 persona were actually working in the office of the company. As 20 persons were working in the same compound, he came to the conclusion that they were employees of a factory within the meaning of Section 2(9) of the Employees' State Insurance Act. Section 2(9) defines 'employee' to mean 'any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies'. Clause (12) of Section 2 defines a factory to mean 'any premises, including the precincts thereof, whereon twenty or more persons 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 or is ordinarily so carried on but does not include a mine'. Para 3 of Clause (12) says that the expression 'manufacturing process' shall have the meaning assigned to it in the Factories Act, 1948. Section 2, Clause (k) of the Factories Act, 1948, defines 'manufacturing process' to mean 'any process for making, faltering, 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.' This definition makes it clear that the use, sales, transport, delivery, or disposal of a manufactured product does not come within the ambit of the expression 'manufacturing process'. Reading the definition of 'employee' in Section 2, Clause (9) of the Employees' State Insurance Act along with the definition of 'factory' in Clause (12) of Section 2 of the same Act and in conjunction with the definition of 'manufacturing process' contained in Section 2(k) of the Factories Act, there can be little doubt that only persons who are in some way or other connected with the work of the factory, namely, the manufacturing process, can be said to be employees within the meaning of the definition. In fact, a Division Bench of this Court has in Employees' State Insurance Corporation v. Ganapathia Pillai (1960) 19 F.J.R. 279, authoritatively interpreted the definition of the word 'employee'. That was a case where the question arose whether the persons employed in the managing agent's office of the Lotus Mills Ltd., Coimbatore, could be regarded as employees within the meaning of the Act. Their Lordships while considering this question, made the following observations (at page 285), which are relevant for the purposes of this case:

Now, 'the work' which is the prime factor, is the work of the factory, 'Factory' means the premises wherein a manufacturing process is being carried on. It follows that only persons who are in some manner or another connected with the said work, viz., manufacturing process, that can be said to be 'employees' within the meaning of the definition. There are, no doubt, the words 'incidental or preliminary to' but both these have to be understood in conjunction with the words 'with the work of the factory'.... While we recognize that there is a difference between the definition of 'worker' in the Factories Act and the definition of 'employee' in the Employees' State Insurance Act, what we have to decide in each case is whether a particular person is one who will fail within the definition in the Employees' State Insurance Act. Of the seven persons from whom contribution is demanded, in our opinion, only of them, namely, Sri T.N. Kanthanathan, can be brought under the definition, interpreting its language as widely as we can. Sri Kanthanathan disburses not only the pay of the officers and staff, but also the wages to the workers of the mill. It may be said that the payment of wages to the workers employed in the factory is in a sense incidental to, or connected with, the work of the factory, We hold that Sri T.N. Kanthanatban will be liable for insurance contribution. Of the other persons sought to be made liable, it cannot be said in any sense that they are employed on any work of, or incidental or preliminary to, or connected with, the work of the factory. They are all persons employed in the managing agents' office.

3. Applying the principles laid down above to the facts of this case, we find that there can be no doubt that the 14 persons actually found by the Inspector, working in the factory, are employees. As for the six persons that were found working in the office of the company, some difficulty arises. The office, as I have already stated, is connected with purchase, sale and export of all varieties of vegetable oil, besides in some way connected also with the management of the factory as well.

4. The evidence of P. W. 1 shows that the six persons in the office are; one typist, one salesman attending to shipment, one, malee, one driver for the secretary, one office peon and P. W. 1, the manager himself. According to P.W. 1, these six persons have nothing to do with the Mahalakshmi Oil Mills Factory. But in cross-examination, P.W. 1 admits that though there are two attendance registers, one for the factory and the other for the office, both the registers bear the same heading of Mahalakshmi Oil Mills. He further admits that there is a common ledger and day book for the office and factory and that the manager is manager of both the office and the factory. He further admits that one of the office staff is disbursing the salary for the staff, which must mean the staff in office as well as in the factory. It is in the light of this evidence that we have to scrutinize whether all or any of these six persons in the office are doing any work incidental or preliminary to, or connected with, the work of the factory. In my view, most of them play a dual role. But, so far as one of them is concerned, he is, according to the evidence, exclusively concerned as a salesman attending to shipment of goods belonging to the Dhakeswari Rice and Oil Co. (P) Ltd., and he has nothing to do with the factory work as such. It is unnecessary for me to consider the nature of the work done by the remaining five, for if one out of the six is excluded, then the total number will fall below 20, and under Section 2(12) of the Employees' State Insurance Act, unless 20 or more persons are working on any day in the premises, Mahalakshmi Oil Mills cannot be regarded as a 'factory' liable to pay contribution.

5. Learned Counsel for the respondent says that even the salesman concerned with shipment is a person falling within the mischief of Section 2(12) of the Employees' State Insurance Act, because he is working in the premises, in a part of which a manufacturing process is being carried on. But this is an argument which has been negatived not only by a Division Bench of this Court in Employees' State Insurance Corporation v. Ganapathia Pillai (1960) 19 F.J.R. 279, but also by a Division Bench of the Bombay High Court in Employees' State Insurance Corporation v. C.H. Raman (1956) II F.J.R. 462. The distinguishing principle is that it is no part of the work of a factory to sell the products of the factory. The work of the factory in the present case ended with the production of finished articles. If that be so, it is impossible to accept the argument that the work of selling the products of the factory is connected with the work of the factory because such work is neither incidental nor preliminary to the work of the factory.

6. Learned Counsel for the respondent relies upon the ruling of the Supreme Court in Nagpur Electric Light & Power Co. Ltd v Employees' State Insurance Corporation : (1967)IILLJ40SC , as having by implication overruled the decisions of the Division Bench of this Court in Employees' State Insurance Corporation v. Ganapathia Pillai (1960) 19 F.J.R. 279 and the Division Bench of the Bombay High Court in Employees' State Insurance Corporation v. C.H. Raman (1956) II F.J.R. 462. I am unable to agree. In the said decision of the Supreme Court, the question that arose for consideration was whether clerical and other non-manual workers connected with the work of a factory could be regarded as employees within the meaning of Section 2(9)(i) or not. In fact, their Lordships referred, in the course of their discussion, to the decision in Employees' State Insurance Corporation v. C.H Raman (1956) II F.J.R. 462, and without overruling it, merely distinguished it. The two Division Bench rulings relied upon by me have considered a question which directly arises for determination in this case and not decided by the Supreme Court.

7. I, therefore, follow the Division Bench rulings and hold that Mahalakshmi Oil Mills is not a 'factory' within the meaning of Section 2(12) of the Act and is, therefore, not liable to pay contribution to the Employees' State Insurance Corporation. The direction of the Tribunal in respect of payment of contribution is set aside.

8. Both the appeals are allowed with costs throughout.


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