Regional Director, Employees State Insurance Corporation v. M/s. Kohinoor

learned E.S.I. Court was not shaken in cross-examination. However, Smt. A. Agni, the learned Counsel appearing on behalf of the Corporation has submitted that this conclusion is perverse. Learned Counsel pointed out to the evidence of AW3/Mohammed Yasin Bhat. This witness stated in his affidavit in evidence that no power was used in the process of making of the jewellery and all the work was done with manual labour with the manually operated instruments and machines. However, in cross-examination, he admitted that the establishment made jewellery of all types manually. At the same time, he 9 admitted that soldering of jewellery was done by means of a gas lighter. He stated that jewellery which is made is normally of gold and some times silver, He stated that two to three persons are engaged in manufacturing jewellery. He denied the suggestion that the manufacturing of the jewellery was not done with manual labour or with manually operated instruments. In re-examination he further admitted that a gas lighter was only used to melt gold and join the gold ornaments. Smt. Agni, the learned Counsel on behalf of the Corporation submits that the admission secured in the evidence of AW3/Bhat have entirely been overlooked by the learned E.S.I. Court, and in my opinion, it is rightly so. There is no dispute that a gas lighter with a flame was being used in the establishment of the Respondent by about two to three persons engaged in the making of jewellery and a gas lighter with flame was used for melting and soldering the gold and other ornaments.

13. Shri V. Palekar, learned Counsel on behalf of the Respondent submits that the said gas lighter with flame is used only to ignite coal and with coal fire the melting of gold was done, and, therefore learned Counsel submits that more power is used in the manufacturing process. That is not the explanation given by the witness. Learned Counsel further submits that it cannot be conceived that with a gas flame it will be possible to melt any gold. Learned Counsel further submits that in the manufacturing unit only two to 10 three employees were employed but at least minimum of 10 such employees were required to bring the establishment under the coverage of the Act. Smt. Agni, the learned Counsel submits that gas energy which is not generated by human or animal agency was used for the purpose of heating gold or silver ornaments and to melt the same and as such the Respondent's establishment was carrying out manufacturing process with the aid of power. The learned Counsel has placed reliance on a Division Bench Judgment of this Court in the case of The Usha Prints India Private Ltd. v. The Employees State Insurance Corporation and another(AIR 1964 Bombay 94). That was a case where a boiler was used to generate steam and the pressure in the boiler drove the hot steam through pipes to the drying tables. The learned Division Bench held that clause (g) of Section 2 of the Factories Act, 1948 defined “power” to mean “electrical energy or any other firm of energy which is mechanically transmitted and is not generated by human or animal agency” and the question was whether the said case fell within that definition. It was argued that the steam like water is tangible thing which can be seen and felt by anyone and everyone. Mere use of steam or water cannot be regarded as use of power even if it is used for the manufacturing process. The learned Division Bench then observed that one must bear in mind that the word “power” includes any other form of energy which must be transmitted mechanically. It cannot be gainsaid, and would be proved to be so by any elementary book of science, that heat is always considered to be a form of energy. In that case, the heat energy was 11 transmitted to the drying tables through the vehicle of steam though it need not always to be so. Even hot air can transmit heat for the same purpose. The learned Division Bench further noted that a boiler was used to generate steam and the pressure in the boiler drives the hot steam through pipes to the drying tables since steam in the boiler is not generated by human agency, the only question was whether it is transmitted mechanically. According to science of elementary mechanics, mechanical process of transmission may consist of a sudden or steady pull from the front or a sudden or steady push from behind. In that case, if constant pressure is maintained in the boiler which transmits the steam and along with it the heat energy to the printing tables then it follows that the definition is satisfied.

14. Learned Counsel on behalf of the Corporation had also relied on the case of Bombay Anand Bhavan Restaurant v. Deputy Director, Employees' State Insurance Corporation and another(supra). That was a case where the number of workers in the establishment was 12. The establishment was preparing sweets, savouries and other beverages. LPG was stored in a cylinder fitted with a tube. The Apex Court held that the LPG cylinder would qualify as an appliance which provides power. This power is transmitted by a tube which upon careful reading of the definition qualifies as “transmission machinery” as it is an appliance or device by which the motion 12 of a primary mover is transmitted. The Apex Court noted that a analogy between the transmission of electricity and transmission of LGP can be drawn. The movement or transfer of electrical energy takes place over an interconnected group of lines and associated equipment between points of supply and points at which it is transformed for delivery to consumers or is delivered to other electric systems. Transmission is considered to end when the energy is transformed for distribution to the consumer. In many countries transmission of LGP also takes place in a similar manner from a large fixed tank. In case of LGP stored in a cylinder the mechanism of transmission is essentially the same as the gas travels from the cylinder where it is stored to the gas cooking stove. While transmission of electricity involves a switch, transmission of LGP involves a valve mechanism or a regulator to ensure smooth flow. The Apex Court therefore held that LGP is a source of energy which is mechanically transmitted by way of the tube attached to the machinery. The Apex Court also noted that the definition of “power” is wide enough to include all forms of energy which is mechanically transmitted. The use of LGP satisfies the definition of power as it is mechanically transmitted and is not something generated by human or animal agency. Since the establishments of the appellants involve a manufacturing process with the aid of LGP, which can now be termed as power, the establishments of the appellants can be termed as factory, and, therefore the ESI Act would apply to such establishments. 13

15. The law laid down by the Apex Court in Bombay Anand Bhavan Restaurant v. Deputy Director, Employees' State Insurance Corporation and another(supra) is applicable with equal vigor to the facts of the case at hand. A gas lighter with a flame is a miniature appliance compared to a LGP with regulator and tube and cooking stove. In a gas lighter with flame the cylinder, the tube and the stove are all rolled in one. There is generally a provision to control the flame. Its functions are essentially the same as that of a gas stove i.e. heating. In the case at hand, the gas lighter with a flame was used to solder gold and silver ornaments and also to melt the same. In other words, it was used in the process of manufacturing gold and silver ornaments. In my view, it is not necessary that all the 10 employees should be engaged in such activity. Suffice it to say, that some of the employees are engaged in the process of manufacturing of gold and silver ornaments with the aid of power. It is true that the Insurance Inspector had not found the polishing machine being used with electric power at the time of inspection on 13-2-2002. But he had found an electric polishing machine. The inference would be that the same was also being used, in the absence of any other explanation, in connection with manufacture of gold and silver ornaments. This is a case where the Respondent himself had applied to the Court contending that their establishment was not a factory and they were not making use of any power in the manufacturing process. The onus to prove the same was on the Respondent but in the course of their own evidence, through 14 their witnesses admissions were obtained by the Respondent to show that they were preparing gold and silver ornaments and using a gas lighter with flame to melt and/or join the gold. The Respondent had failed to prove the case set out by him. The Respondent's establishment was a factory where manufacturing process was going on with aid of power. The learned E.S.I. Court did not at all consider the admissions secured by the Corporation through the Respondent's witness, and in that the finding has to be considered as perverse.

16. Consequently, the appeal succeeds and the impugned Order is hereby set aside.

17. Learned Counsel on behalf of the Respondent submits that there is no evidence to show that manufacturing activity with the aid of power was going on prior to 13-3-2002 i.e. prior to the inspection, and, therefore the provisions of the Act be made applicable from that date. This submission is opposed by Smt. Agni, the learned Counsel on behalf of the Corporation stating that once the Respondent had failed to prove that the provisions of the Act are not applicable, the coverage of the establishment must be considered from 1-2-2001 being the date of notice issued to the Respondent. 15

18. In my view, since the Respondent has failed to prove that their establishment cannot be covered under the Act then the consequence of that should be that they should be covered from the date the claim was made on behalf of the Corporation.

19. With the above observations, the appeal is allowed, the impugned Order is set aside and consequently the application filed under Section 75 r/w Section 77 of the Act is hereby dismissed. N. A. BRITTO, J. RD