Kerala High Court · 2008

K. PADMANABHAN NAIR ,J.-------------------------------------------------M.F.A.No.625 of 2002-------------------------------------------------Dated, this the 25th day of February, 2008REFERENCE ORDERThe employer has filed this appeal challenging a decision ofEmployees' Insurance Court, Palakkad by which it was held that to apply theprovisions of Employees' Insurance Act to the employees in a factory inwhich ten or more persons are engaged in the manufacturing process withthe aid of power, it is not necessary that all the ten or more employeesshall be working at the place of manufacturing itself. The EmployeesInsurance Court took a view that if employer has got a factory and a salesdepot and if the number of persons working in the manufacturing place aswell as sales depot put together exceeds ten it satisfies the definition offactory given under the Act and the same is coverable. When the matterwas argued, learned counsel for the appellant relied on a decision of aDivision Bench of this Court reported in Choisons v. E.S.I. Corporation(2005(3) KLT 1039) in which it was held that the manufacturing place canbe called as a factory which is liable to be covered under the ESI Act if tenor more persons employed in the premises or precincts of that unit. It washeld as follows: MFA No.625/20022“In view of the very wide definition, ifpetrol pump is a factory and a coveredestablishment, three employees working in theoffice may also be covered as they also, amongother things, do some accounting works in respectof the pump. For that petrol pump should be a'factory'. But, pump can be said to be a factory ifonly ten or more persons are employed in thepremises or precincts of the pump. Since office isnot in the premises or precincts, these threeemployees are not working in the pump andappellant's petrol pump is not a factory.”2.Learned counsel for ESI Corporation relying on the decisionsreported in Employees' State Insurance Corporation v. Bengal PrintingWorks (1984 Lab.I.C . 1), The Yemmiganur Weavers' Co-operativeProduction and Sale Society Ltd. v. The Regional Director, E.S.I.C.Hyderabad and another (1977 Lab.I.C. 1514) and HyderabadAsbestos . Employees Insurance Court (AIR 1978 SC 356) has arguedthat the Division Bench of this Court has not considered the effect ofamendment to the definition of word 'employee' in the ESI Act whileconsidering the issue. In Choisons' case (supra) the finding of this Courtwas to the effect that if only ten or more persons are working at themanufacturing place and is engaged in manufacturing process with the aidof power then only the employees working in the establishment can also beclubbed. In Bengal Printing Works' case (supra) the firm was engaged in MFA No.625/20023the work of printing with the aid of power and it was housed in threeseparate buildings. The number of employees working in each building wasless than twenty but the total number of employees working in the threebuildings put together exceeded twenty. The department clubbed the threepremises together and held that employees were coverable. Learnedcounsel for the respondent has argued that a reading of the definition willshow that the definition does not indicate that the factory will have to belocated within a single premises or building and it may be housed in three ormore separate buildings and it lays emphasis on the use of power formanufacturing products. In Yemmiganur Weavers' Co-operative Productionand Sale Society Ltd.'s case (supra) there were two separate premises. ADivision Bench of Andra Pradesh High Court after considering thequestion took a view that it is not necessary that all ten persons should beemployed in one manufacturing place and it is sufficient it themanufacturing process is being carried on in any part of the premises orprecincts. 3.Learned counsel for the appellant placed reliance on a DivisionBench decision of the Madras High Court reported in In re K.V.V.Sarma(AIR 1953 Madras 269 (Vol.40, C.N.101)) and argued that precincts MFA No.625/20024means an enclosed place. In paragraph 34 of the decision the DivisionBench considered the meaning of the premises and precincts and held thatprecincts is a place enclosed by walls. It is argued that in Bengal PrintingWorks' case (supra) manufacturing process was being carried out in all thethree units and it was not a case where the workers in the manufacturingplace and establishments were clubbed together. In Hyderabad Asbestos'case (supra) it was held that an employee may be working within the factoryor outside the factory or may be employed for administrative purposes or forpurchase of raw materials or for sale of the finished goods, but all suchemployees are included within the definition of employee in Section 2(9) ofthe Act. It was further held that the provisions of Sections 2(9), 2(12), 38and 39 do not warrant the restricted interpretation that in order to bring anemployee within the scope of the Act, he should not only be an employeewithin the meaning of Section 2(9) of the Act but also that he should be anemployee of a factory as defined in Section 2(12) of the Act. 4. Learned counsel for the respondent has argued that for thepurpose of Section 38 he may be an employee but to consider whether therecan be a factory which is coverable the total number of employees must bemore than ten or more in the manufacturing place itself. 5. In view of the principles laid down in Hyderabad Asbestos's MFA No.625/20025case (supra), I am of the view that the matter requires re-consideration. Sothe case is adjourned to be heard and determined by a Bench of two Judges.In the result, appeal is adjourned to be heard and determined by aBench of two Judges. Registry is directed to place the matter before theHon'ble Chief Justice for orders as this matter is likely to recur in manyother cases.K. PADMANABHAN NAIR, JUDGE.cks MFA No.625/20026K.PADMANABHAN NAIR, J.M.F.A.No.625 of 2002REFERENCE ORDER25th February, 2008.