Skip to content


Madurai Mosaic Industries Through Its Partner G. Ramakrishnan Vs. the Regional Director, the Regional Office, Tamil Nadu State Insurance Corporation and anr. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtChennai High Court
Decided On
Reported in(1982)2MLJ9
AppellantMadurai Mosaic Industries Through Its Partner G. Ramakrishnan
RespondentThe Regional Director, the Regional Office, Tamil Nadu State Insurance Corporation and anr.
Cases ReferredBank Silver Co. v. Employees
Excerpt:
- - 1. the interesting point of law arising in this appeal is whether section 2(12) of the employees' state insurance act (xxxiv of 1948) is to be in consonance with the preamble of the said act or is it that section 2(12) of the act has to be interpreted in the strict sense of the rules of interpretation so as to saddle the responsibility of paying the contribution contemplated for the benefit of the employees in the factory. i do find that the argument is very interesting and attractive; ramakrishnan as well as from r. ramakrishnan for whom the period is specified as from 1st june, 1967 to 30th june, 1967. as a matter of fact, the evidence on record by way of oral evidence is nothing but a reiteration of the things stated by either side as per their petition as well the contents of.....orders. swamikkannu, j.1. the interesting point of law arising in this appeal is whether section 2(12) of the employees' state insurance act (xxxiv of 1948) is to be in consonance with the preamble of the said act or is it that section 2(12) of the act has to be interpreted in the strict sense of the rules of interpretation so as to saddle the responsibility of paying the contribution contemplated for the benefit of the employees in the factory.2. the factory in question is a partnership concern dealing in mosaic industries known as 'madurai mosaic industries'. according to the petitioner and which is also admitted by the respondents that action had been taken for the period commencing from 28th august, 1967 to 11th may, 1972 during which time, it is submitted by the respondents that the.....
Judgment:
ORDER

S. Swamikkannu, J.

1. The interesting point of law arising in this appeal is whether Section 2(12) of the Employees' State Insurance Act (XXXIV of 1948) is to be in consonance with the preamble of the said Act or is it that Section 2(12) of the Act has to be interpreted in the strict sense of the rules of interpretation so as to saddle the responsibility of paying the contribution contemplated for the benefit of the employees in the factory.

2. The factory in question is a partnership concern dealing in mosaic industries known as 'Madurai Mosaic Industries'. According to the petitioner and which is also admitted by the respondents that action had been taken for the period commencing from 28th August, 1967 to 11th May, 1972 during which time, it is submitted by the respondents that the concern in question, namely, the partnership firm, though it is represented by G. Ramakrishnan, one of the partners, the said partnership consisted of two partners, that they are to come under the definition of Section 2(12) of Act, in that, though they are partners, yet inasmuch as they do receive remuneration, one, to the tune of Rs. 250 and the other to the tune of Rs. 150 as evidenced by the contents of Exhibit A-1, they should be considered only as employees, and as such they should also included as individuals doing work in the precincts of the factory so as to get the benefits of the Act and in doing so, to see whether it exceeds the number 20 or not, it is but necessary that all the heads also should be counted so as to saddle the resposibility of the contribution by the partnership firm towards the benefit of the scheme contemplated by the Act XXXIV of 1948. In this regard, it is but necessary that we have to evince interest in the ingredients of the definition Section 2 with special reference to Clauses (9) and (12) which read as follows:

2. (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; or

(iii) whose services are temporarily lent or let on hire to the principal-employer by the person with whom the person whose services; are so lent or let on hire has entered into a contract of service (and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment; but does not include)-

(a) any member of (the Indian Naval, Military or Air forces; or

(b) any person so employed whose wages (excluding remuneration for overtime work) exceed a month;

Provided that an employee whose wages (excluding remuneration for overtime work) exceed a month at any time after (and not before) the beginning of the contribution period, shall continue to be an employee-until the end of that period:

2. (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 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;

'Seasonal factory' means a factory which is exclusively engaged in one or more of the following manufacturing, processes, namely, cotton ginning, cotton or jute pressing, decortication of groundnuts, the manufacture of coffee, indigo, lac, rubber, sugar (including gur) or tea or any manufacturing process which is incidental to or connected with any of the aforesaid processes and includes a factory which is engaged for a period not exceeding seven months in a year-

(a) in any process of blending, packing or repacking of tea or coffee; or

(b) in such other manufacturing process as the Central Government may, by notification in the Official Gazette, specify;

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

3. The petitioner' who is the appellant herein had filed the petition before the learned District Judge, Madurai praying for exemption from contributing towards the scheme because, the partnership firm is not actually run with 20 persons but it has employed less than 20 persons as per the records and as such, they are not liable to pay any contribution under the Employees' State Insurance Act. It is common ground that the petitioner-appellant herein had received Exhibits A-28 to A-32 various letters from the first respondent, the Regional Director, the Regional Office, Tamil Nadu State Insurance Corporation, Madras-34 directing the appellant herein to pay contributions. Subject to objections, the appellant herein had paid Rs. 1,047.

4. It was averred that the first respondent, namely the Regional Director, the Regional Office, Tamil Nadu State Insurance Corporation, Madras-34, has included the appellant herein and the other partner, Muthukrishnan as workers wrongly to make up the figures, which in the circumstances, is not correct. Reiterating the above position, Mr. Chidambaram, the learned Counsel for the appellant herein states that the decision arrived at by the lower Court is not in consonance with the concept that is actually contemplated under Clause (9) of Section 2 of the Act together with the observations made by the Supreme Court in Commissioner of Income-tax v. R.C. Chidambaram Pillai : [1977]10ITR292(SC) . In this regard, paragraphs 5 to 15 of the judgment of the Supreme Court referred to above is pointed out and read to the benefit of this Court by Mr. Chidambaram. As a matter of fact, much stress has been laid by Mr. Chidambaram that the introduction of the word 'employees' as per Section 2(12) of the Act should be so construed in consonance with the observations made in Lindley on Partnership, Fourteenth Edition, the observation in which has been extracted in extenso by the Supreme Court and it is submitted that in turn this Court is bound to follow the said concept while applying the ingredients of Section 2(12) of the Act. In this regard Mr. Chidambaram also contends that the approach to Section 2(9) cannot be in a different manner than the approach to which this Court has to resort while interpreting Section 2(12) of the Act. In other words, the substance of his argument can be couched in one single sentence and that is this, namely, a partner cannot be an employee of the partnership and as such whatever might be there on record by way of documentary evidence - perhaps what he refers to is the contents of Exhibit A-1 - the approach should be to exclude the partner while computing the number of workers actually employed in the precincts of the factory. I do find that the argument is very interesting and attractive; but the same cannot be upheld.

5. Craies on Statute Law, 7th Edition at page 216 observes as follows:

Another important rule with regard to the effect of an interpretation clause is,. that an interpretation clause is not to be taken as substituting one set of words for another, or as strictly defining what the meaning of a term must be under all circumstances, but rather as declaring what may be comprehended within the term where the circumstances require that it should be so comprehended. If, therefore, an interpretation clause gives an extended meaning to a word, it does not follow as a matter of course that, if that word is used more than once in the act, it is on each occasion used in the extended meaning, and it may be always a matter for argument whether or not the interpretation clause is to apply to the word as used in the particular clause of the Act which is under consideration. 'It appears to me', said Lord Selborne in Meus v. Jacobs (1875) L.R. 7 H.L. 481, 493, 'that the interpretation clause does no more than say that, whore you find these words in the Act, they shall, unless there be something repugnant in the context or in the sense, include fixtures'.

So the words 'any person' in the Solicitors Act, 1932, were held not to include a body corporate, but only such person as could become a solicitor, in spite of Section 2 of the Interpretation Act, which enacts that 'person' shall include a body corporate 'unless a contrary intention appears'.

The preamble to the Act, namely, The Employees' State Insurance Act (XXXIV of 1948), reads as follows:

An Act to provide for certain benefits to employees in case of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto: Whereas it is expedient to provide for certain benefits to employees in case of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto:

So far as this Section 2(12) of the Act is concerned, a portion of the same had been amended by Act XXXV of 1952. But that amendment has no effect on the point that has been raised in this appeal, because we are now concerned in this appeal only with respect to the consideration of workers who were actually working in the precincts of the factory.

6. Even at the outset, it is to be understood that so far as computing the number of workers in the factory, it is not the concept of the relationship of those persons who are working in the factory and persons in the factory as workers and their dual capacity as partners of the firm who run that factory or which part had been conferred on them by means of the contract of partnership that had been entered into as per section 6 of the Partnership Act. As a matter of fact, reference has been made in this regard by Miss. Radha Srinivasan to section 6 of the Partnership Act and that while interpreting Sections 2(12) and 2(9) of the Employees' State Insurance Act (XXXIV of 1948), it is but necessary that a reference must also be borne in mind with respect to various terms of the partnership contract that might have, been entered into between these two persons whose names are now sought to be included as persons working as workers in the precincts of the factory. To justify the action of the first respondent, Miss. Radha Srinivasan vehemently contends that the learned District Judge has came to a correct conclusion after having gone through the contents of Exhibits A-1 to A-32 and also Exhibits B-1 to B-9 with a specific reference to the evidence that has been actually recorded from P.W. 1 G. Ramakrishnan as well as from R.W. 1 A.G. Ramanathan, Manager, Local Office, E.S.I. Corporation, Madurai. It is not necessary for me at this stage to go in detail with regard to the contents of either the entire details contained in Exhibits A-1 to A-32 or Exhibits B-I to B-9 which have been dealt with comprehensively and about the appreciation of which no comment has been adduced by either side. But for our purpose, it is necessary that the contents of Exhibit A-1 is noted in its perspective in that, it is seen from that the petitioner appellant herein had received a sum for the month of June, 1967, as could be seen from the acquittance roll. Mr. G. Ramakrishnan, the appellant had received a sum of Rs. 250 as the rate of wage for the period from 1st June, 1967 to 30th June, 1967, and that he did receive the said sum in cash to which effect he had also signed his name on the revenue stamp as against the said entry in Exhibit A-l. For the month of July, 1967, also, a sum of Rs. 250 has been received by the appellant herein. G. Ramakrishnan had received Rs. 250 for the months of July, September, October, November and December, 1967, and for the months of January, February and March, 1980, for the period mentioned therein and has signed his name as against the entry. G. Muthukrishna has received Rs. 150 for the months of June, July, September, October, November and December, 1967, and for the months of January, February and March, 1968. Of course so far as this Muthukrishnan is concerned, for the month of June, 1967, the period is not mentioned as in the case of G. Ramakrishnan for whom the period is specified as from 1st June, 1967 to 30th June, 1967. As a matter of fact, the evidence on record by way of oral evidence is nothing but a reiteration of the things stated by either side as per their petition as well the contents of counter and as such needs no repetition.

7. It is relevant in this connection to note that in his cross-examination P.W. 1, the present appellant had admitted that there were four partners to start with, that he was the Managing Partner and that for occupying that position as Managing Partner in the partnership, there was no special remuneration given to him. Though he has flatly denied that in the attendance register his name as well as the name of the other partner Muthukrishnan finds a place, yet it is evident from the contents of the documentary evidence as seen from the contents of Exhibit A-1 that they did receive some remuneration as workers. We, are not concerned whether Muthukrishnan is the Managing Partner or not. That is not the scope of the enquiry at all which is contemplated under Sections 2(12), 1(4), 44, 45-A or 45-B of the Act. The concentrated and proper application of judicial mind will show that these provisions are to be seen only in the light of the preamble to the Act as a whole interpreting together with the various concepts of interpretation as designed by authorities like Craies and Maxwell.

8. P.W. 1 has admitted that Exhibits B-1 to B-3 were sent by their Manager Yusuff Alikhan as quarterly returns and that in Exhibits B-2 and B-3 he has signed. So far as Exhibits B-1 to B-3 are concerned, we find that the number, namely, Employees Code No. 51/5234/48 has been actually referred to. The same is admitted by P.W. 1 in his cross-examination. It is also admitted by P.W. 1 that only on the basis of persons who are actually receiving their remuneration towards work that they had imparted to the institution that Exhibits B-l to B-3 were submitted. It is also the admission of P.W. 1 that E.S.I. Inspectors had scrutinised the accounts periodically. Exhibits R-4 and B-6 are the quarterly returns submitted by the appellant to the E.S.I. Corporation.

9. It is relevant in this connection to note that mosaic tiles are prepared by the partnership and that they used to undertake also the work on contract by actually installing these mosaic tiles prepared by them in the building. It is not the work of the partnership to affix the bricks. Even for mosaic polishing, the partnership used to send its workers. According to P.W. 1, they used to enter into contract on the basis of remuneration for polishing in a mosaic fashion and the remuneration is fixed per 100 sq. ft. They are clearing their salary on monthly basis to the employees. For permanent workers, according to P.W. 1, they were paid on weekly basis. They used to prepare also muster roll for the temporary workers. For those who are actually engaged in the mosaic flooring work, their salaries were disbursed at the spot itself on weekly basis. It is also pointed out by P.W. 1 during the course of his cross-examination that at page 261 in Exhibit A-21, ledger on 31st August, 1967 a sum of Rs. 780 had been disbursed towards monthly salaries. One Ramalingam was employed as a driver of the partnership during the year 1967-68. One night-watchman drawing a monthly salary of Rs. 750 was also employed by the partnership. Exhibit A-7 shows that about 10 persons were employed during the month of August, 1967, on weekly remuneration basis. There was no separate muster roll maintained during the relevant time. A suggestion to the effect that muster roll was maintained during the relevant time had been denied by P.W. 1. It is also admitted that mosaic contract works were undertaken as per the instruction of the party.

10. As a matter of fact, it is relevant to note that Exhibit A-1 was the subject-matter of severe cross-examination on behalf of the department and a perusal of the cross-examination of P.W. 1 shows that during the relevant time, both the appellant who is representing the partnership, as well as one Muthukrishnan were receiving remuneration, one at the rate of Rs. 250 and another at the rate of Rs. 150. It is not disputed that the partners, namely, the appellant herein as well as the other man by name Muthukrishnan were receiving remuneration. But the only stress and vehement argument underlying the concept in the observation of Lindley extracted by the Supreme Court in. the above decision referred to above, is that a partnership cannot be his own creditor or debtor especially when he as acting as a partner of the partnership and that a partner cannot be an employee of the business which is run by the said partnership. This, as a matter of fact, as already indicated is the sum of the argument advanced on behalf of the appellant by Mr. Chidambaram.

11. It is relevant in this connection to mention that R.W. 1, the Manager of the E.S.I., Local Office, Madurai has stated in his evidence inter alia that Exhibit B-6 is the report given by one Madhavan who was his predecessor and who had inspected the factory in question and that subsequently, he had himself given Exhibit B-7 on 28th August, 1967. The' contents of Exhibit B-7 is not at all the subject-matter of comment by the learned Counsel for the appellant. As a matter of fact, it is conceded that whatever is contained therein may be correct; but yet he is obliged to put forward to this Court that the contents of the same are not germane to the point at issue. I am unable to uphold the contention raised by the learned Counsel for the appellant in this regard and in the above manner.

12. The one and the only point that has been stressed on behalf of the appellant herein is that though the appellant herein did receive Rs. 250 as remuneration for the work that he had done as a worker in the precincts of the factory, yet, his head should not be counted as one among the workers so far as the definition under Section 2(12) of the Act is concerned because the Supreme Court has referred to the observation of Lindley on Partnership and has followed the principles imbedded therein in that case and as such, the said principle has to be applied so far as the facts of this case are concerned. But unfortunately, the said argument is not weighing with this Court inasmuch as there are decisions apart from the same and inasmuch as this Court is guided by the most important principle so far as the approach to an appeal is concerned that each and every case has to be judicially weighed with reference to the evidence available on record by means of the oral evidence as well as documentary evidence and a decision has to be arrived at on the basis of the same with special reference to the issues at points that are confronting this Court. Therefore, while certainly guided by the ratio decidenti that had been laid down by the Supreme Court in Commissioner of Income-tax v. Chidambaram Pillai : [1977]10ITR292(SC) , when the facts of this case are approached, we find that apart from being partners, both the appellant, Ramakrishnan herein as well as Muthukrishnan, did receive remuneration only as workers in the precincts of the factory to which the provisions of this enactment are now sought to be applied and benefits by means of payments towards contribution relating to the Provident Fund are sought to be collected by the first respondent. Section 1(4) of the Employees' State Insurance Act (XXXIV of 1948) reads as follows:

It shall apply, in the first instance, to all factories (including factories belonging to the Government) other than seasonal factories

Section 45-A of the Act reads as follows:

45-A. (1) Where in respect of a factory or establishment no returns, particulars, registers or records are submitted, furnished or maintained in accordance with the provisions of Section 44 or any Inspector or other official of the Corporation referred to in Sub-section (2) of Section 45 is obstructed by the principal or immediate employer or any other person, in exercising his functions or discharging his duties under Section 45, the Corporation may, on the basis of information available to it, by order, determine the amount of contributions payable in respect of the employees of that factory or establishment.

(2) An order made by the Corporation under Sub-section (1) shall be sufficient proof of the claim of the Corporation under section 75 or for recovery of the amount determined by such order as an arrear of land revenue under Section 45-B.

13. The above provisions of the Act XXXIV of 1948, when read together and the point raised in this appeal is approached, we find that the analogy that is resorted to at page 594 of the decision reported in Bank Silver Co. v. Employees' State Insurance Corporation : AIR1965Bom111 , is relevant to the point and the said observation made by the Bench of the Bombay High Court is more or less guiding this Court in the approach that has to be resorted to by this Court for meeting the points raised by either side relating to the exposition of Jaw on the subject.

14. Miss. Radha Srinivasan, learned Counsel appearing on behalf of the first respondent very much relies on the decision in B.M. Works v. Employees' State Insurance Corporation 1971 Lab. I.C. 243, wherein Ramaprasada Rao, J., as he then was, has observed as follows:

As the words used are 'working inside or within the precincts of a factory', the emphasis is only on the exercise of the labour by the person concerned. He may be an apprentice, paid or otherwise. He may be one who works inside the factory for love of labour or he may be a person who is receiving consideration therefor. Nevertheless, he satisfies the literary meaning of the words employed by the Legislature in Section 2(12), namely, a person working in the precincts of the factory. In my view, no more consideration appears to be necessary and it would not be proper to draw in analogies from similar definitions in other enactments the purposes of which are different and varied from that of the Act under consideration. It would sometimes lead to an anomaly to interpret the definition of a particular subject with reference to and with the language adopted in similar or allied legislative enactments. I, therefore, concientiously refrain from referring to other enactments which refer to the words 'factory' and 'workmen'. Thus interpreted, it appears to me to be clear and plain that if in any premises or precincts, there are persons whose numerical strength is more than 20 on a particular day of the preceding twelve months referred to in Section 2(12) of the Act, then such a factory would undoubtedly be one which satisfies the meaning, requisites and spirit of Section 2(12).

The next decision that is relied on by the learned Counsel for the first respondent is the decision in Andhra Pradesh State Electricity Board v. Employees' State Insurance Corporation 1978 Lab. I.C. 1107 : 1 L.L.J. 44. The following are the observations relied on by the learned Counsel for the first respondent in support of her contention.

It is seen from the definition of 'factory' under Section 2 (12) that what is required is that twenty or more persons are employed or were employed for wages on any day of the preceding twelve months. It is submitted by Sri Anantha Babu that as the expression 'wages' is defined in Section 2(22) as remuneration paid or payable in cash to an employee, it would follow that the 'persons employed for wages' referred to in Section 2 (12) should be 'employees' within the meaning of Section 2(9). As the junior Engineer cannot be an employee within the meaning of that Sub-section as his salary is more than Rs. 500, he should be excluded while determining the number of persons 'employed for wages'. In other words, the substance of his arugment is that the expression 'person employed for wages' occurring in Section 2(12) has the same meaning as 'employee' in Section 2(9). We are unable to agree with this contention. In our view it is not proper to substitute, the entire definition clause in regard to wages in Sub-Section 2(12) and then say that wages are only those which are paid to an employee, and, therefore, the person employed in the precincts must be employee. The expression 'wages' under Section 2(12) must be understood in a wider sense as meaning any remuneration paid to any person who is employed in the factory and cannot be restricted only to the remuneration paid to the employees who come within the definition of Section 2(9). Though whenever there is an interpretation clause the meaning of any word occurring in a statute would normally be construed according to that clause, it is not necessary that the meaning of every word should in every case be defined or restricted only to the meaning given to it by the interpretation clause. As pointed out in Craies on Statute Law, Seventh Edition, at page 216 the interpretation clause is not to be taken as substituting one set of words for another or as strictly denning what the meaning of a term must be under all circumstances, but rather as declaring what may be comprehended within the term where the circumstances required that it should be so comprehended. If, therefore, an interpretation clause gives an extended meaning to a word, it does not follow as a matter of course that, if that word is used more than once in the Act, it is on each occasion used in the extended meaning, and it may be always a matter for argument whether or not the interpretation clause is to apply to the word as used in the particular clause of the Act which is under consideration. We are of the view that the expression 'wages' under Section 2(12) of the Act cannot be construed literally, as meaning only wages as defined under Section 2(12), viz., remuneration paid to employees but would mean wages to any person employed in the precincts of the establishment. There is no warrant for holding that twenty persons employed in the factory referred to in Section 2(12) should be employees within the meaning of Section 2(9) of the Act. If really the Legislature desired that in computing the number twenty referred to in Section 2(12) only employees should be taken into consideration it could have easily used the expression 'where twenty or more' employees are working in the precincts'. But it has deliberately used the expression 'whereon twenty or more persons are employed or were employed for 'wages'. It is therefore, clear to us on a plain reading of Section 2(12) of the Act that in computing the number twenty all persons employed for wages should be taken into consideration and not merely those who strictly fall within the definition of employees under Section 2(9) of the Act.

15. The decision in Bank Silver Co. v. Employees' State Insurance Corporation 1965 M. L.J. 157 : (1964) 2 L.L.J. 591, is relied upon by the learned Counsel for the first respondent for the following proposition:

Section 2(12) of the Employees' State Insurance Act, 1948, defines 'factory' not with reference to the number of employees who work in the factory. The word 'persons' occurring in Section 2(12) of the Act could not be construed to mean 'employees'. For the purposes of determining whether an establishment is a factory within the meaning of Section 2(12) of the Act, the partners of the firm who work in the establishment could not be excluded from consideration. It could not be contended that for this purpose only those persons could be taken into consideration who work in the establishment as employees.

16. The language used in Section 2(12) of the Act shows that the sole test which must be applied for determining whether an establishment is a factory or not, is whether twenty or more 'persons' are working in the factory and whether a manufacturing process is being carried on with the aid of power in any part of the establishment. If these two tests are satisfied, the establishment must answer the description of a factory under the Employees' State Insurance Act and it is immaterial that some of the persons who work in the factory are either the proprietors of the establishment or are partners in the firm which owns the establishment. It is also immaterial that if such proprietors or partners are excluded the number of the remaining workers would fall below twenty.

17. The next decision that is referred to by the learned Counsel for the first respondent in support of her contention is the decision in M.P. and W. Proof Limited v. Employees' State Insurance Corporation 1974 Lab. I.C. 85, for the following proposition:

There is no reason to incorporate 'employees' properly so-called in the Act within the definition in Section 2(12). All the 20 or more persons or any of them who are employed for wages may or may not be employees within the meaning of the definition found in Section 2(9) of the Act. The General Manager, who has in his charge overall management of the establishment including that part where the manufacturing process was being carried on, could be included under Section 2(12) amongst the: twenty or more; persons mentioned in Section 2(12), although he was not an 'employee' as defined in Section 2(9)'.

18. The decision in Employees' State Insurance Corporation v. M.A.K. Siddique A.I.R. 1965 Mys. 71, has been relied upon by the learned Counsel for the first respondent in support of her contention that it is clear from the definition contained in Section 2(12), that it does not speak of persons working for wages as such. So long as the number of persons working on the premises, is twenty or more, the premises is a 'factory' falling within the definition, it being immaterial whether those persons so working are paid wages or not Paragraphs 4 and 5 of the above decision may usefully be referred to which run as follows:

It is clear from the definition contained in Section 2(12) of the Act, that it does not speak of persons working for wages. It makes every premises on which twenty or more persons are working, a 'factory', provided the other conditions referred to in that part of the section exist. It is not disputed that those other requirements of the section exist. But what is seriously disputed by Mr. Srikantiah appearing on behalf of the respondent is that the unpaid apprentices are persons working on the premises.

On a proper interpretation of Section 2(12), it appears to me that we should take the view that so long as the number of persons working on the premises is twenty or more, the premises is a factory falling within the definition, it being immaterial whether those persons so working are paid wages or not. That, in my opinion, is the plain interpretation flowing from the language of Section 2(12) which does not admit of any other construction.

The learned Counsel appearing on behalf of the first respondent also referred to the decision in Bank Silver Co. v. Employees' State Insurance Corporation (1965) M. L.J. 157 : (1964) 2 L.L.J. 591, for the following proposition:

If twenty or more persons work in an establishment and if a manufacturing process is being carried on in any part thereof, the place would be a factory. The further question which would then arise is whether the benefits conferred by the Act can be availed of by all the persons who work in the factory. In order to determine that question it would be necessary to consider each one of the provisions relating to the various benefits. If the benefits can be availed of only by the employees properly so called, the proprietors of the establishment or the partners of the firm which owns, the establishment would not be entitled to the benefits, because they are not 'employees'. That is, however, no reason why the benefits conferred by the Act cannot be given to employees who work in the establishment in which twenty or more persons are, in fact, working. In other words, the mere circumstances that the Act applies to an establishment would not necessarily mean that all the benefits conferred by the Act could be given to each and every person working in that establishment. The Act would apply to an establishment because twenty or more persons work therein and yet the benefits conferred by the Act could' be given to only such persons who are employees within the meaning of the Act.

19. I am unable to appreciate the contention of Sri Chitale that to apply the Act to an establishment and not to give the benefit thereof to all persons who work therein is a procedure devoid of meaning and substance. It would be possible to test the validity of this argument by reference to a specific provision in the Act. Section 2(9) of the Act defines the word 'employees'. It provides that the word 'employees' shall not include a person who is employed on a remuneration exceeding in the aggregate four hundred rupees per month. If in any establishment twenty or more employees are working the Act would admittedly apply, according to the argument of Sri Chitale himself, regardless of the salary drawn by them or by any of them. It is, however, clear that those drawing a salary exceeding Rs. 400 per month will not be entitled to claim the benefits conferred by the Act. The particular provision to which I have drawn attention would show that no-absurdity or contradiction is involved in applying the Act to an establishment but not extending the various benefits conferred by the Act to each one of the persons working in the establishment.

20. Sri Chitale has taken a hypothetical case to demonstrate that the view which I am inclined to take may result in an absurd consequence. He takes an instance of a firm consisting of twenty partners all of whom, and who alone, work in the establishment. The difficulty of Sri Chitale is that in such a case, applying the Act would be wholly meaningless, for none of the persons could possibly get any benefit under the Act. I cannot appreciate this difficulty, because if the policy of law is to confer special benefits on 'employees' only, chose who work in the establishment but are not 'employees' as defined by the Act will not be entitled to claim the benefits. To accept Sri Chitale's argument would be to hold that the Act cannot apply to an establishment in which twenty persons, each drawing a monthly salary exceeding Rs. 400, are working. Such a construction seems to me to be against the plain meaning of Section 2(12) of the Act.

21. As it is common ground that more than twenty persons are working in the establishment of the appellants and a manufacturing process is being carried on in a part of the establishment, the establishment must be held to be a factory within the meaning of Section 2, Clause (12) of the Employees' State Insurance Act. The application of the Act, however, cannot mean that the several benefits provided for in the Act could be availed of by the partners of the firm who are also working in the establishment. In determining the [question whether a person working in the factory is entitled to any particular benefit, regard must be had to the language of the section which confers that benefit and if the language shows that the benefit can be given I only to 'employees', the benefit cannot be availed of by the 'partners'.

22. Thus, the point that arises for consideration in this appeal is, whether the names of the two partners are also to be included while counting the number of employees as per Section 2(12) of the Act. In the instant case, the names of the appellant as well as the other partner should be included among other employees. That is the finding which this Court gives with respect to the point raised. The incidental and the ancillary result that [follows is, that the factory run by the partnership concern comes within the definition of Section 2(12) of Act XXXIV of 1948 as well as the liability Sections 44, 45, 45-A and 45-B of the Act and as such it is bound to contribute to the fund for which demand and collections had been made by the first respondent herein. There is no merit in this appeal. The order of the learned District Judge under the circumstances requires confirmation by this Court and is hereby confirmed and the appeal is dismissed. But in the circumstances, there will be no order as to costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //