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Judgment
This petition is presented by the All India Tourism Development Corporation Employees'' Union (an unit of Hotel Ashok, Bangalore) questioning the legality of the circular issued by the management of the Hotel Ashok informing the employees that the provisions of the Employees State Insurance Act (ESI-Act'' for short) and the scheme would be introduced for its Employees with effect from 7.2.1983.
The facts of the case, in brief, are as follows: Hotel Ashok, Bangalore, is a constituent of the India Tourism Development Corporation (''ITDC'' for short which is a Government of India undertaking. The Hotel was established at Bangalore in or about the year 1970. With the object of providing medical facilities to its employees, the ITDC bad framed rules called the ITDC Medical Attendance Rules, 1978 (''the Rules'' for short). Clause 11.5 of the Rules provided that the Rules will not be operative in any unit from the date such unit is brought under the coverage of ESI Act. On 29.1.1983 the management issued a circular (Annexure-A). It reads:
Circular
The Hon''ble Employees Insurance Court has passed an Order in its judgment on 8.12.82, that Hotel Ashok, Bangalore should be covered under the ESI scheme immediately. Accordingly it is decided to implement the scheme W.E.F. 7th Feb. 1983 to enable the employees to submit the declaration forms as required under the scheme. Therefore, all covered employees should collect their forms from Personnel Department and submit the same within two days.
The forms can be had from personnel Department from 1st Feb. 1983."
The obvious effect of the bringing the empolyees of Hotel Ashok under the coverage of the ESI Act was the discontinuance of the Rules, the provisions of which, according to the petitioner, were more favourable. Immediately thereafter a representation was made on behalf of the employees. In the said representation the workmen contended that Hotel Ashok was not a factory, but was only an establishment and, therefore, the provisions of the ESI Act were in applicable. In the alternative it was submitted that the ESI Court had only held that ''Kitchen'' of the hotel was ''factory'' and, therefore, the other workers were not covered by the Act. The petitioner requested the management to prefer an appeal against the order of the ESI Court and in the meanwhile to withdraw the circular. As the request was not complied with, the petitioner has presented this petition.
Statement of objection has been filed on behalf of the first respondent management. The stand taken by then: may be summarised as follows: The repondent management was asked by the second Respondent ESI Corporation to introduce the ESI Scheme in its establishment. The management disputed the applicability of the ESI Act and raised a dispute before the ESI Court under section 75 of the ESI Act. The ESI Court by its order dated 8.12.1982 held that as electric power was being used in a manufacturing process in the kitchen of the Hotel Ashok, it was factory as defined in section 2(12) of the ESI Act and, therefore, as the act had been brought into force in the City of Bangalore, the management was bound to comply with the provisions of the ESI Act the scheme framed thereunder. Even though the ESI Court had confined its findings to the ''Kitchen section'', of the hotel and held that it was ''factory'', having regard to the provision''s of the Act, the management was bound to implement the ESI Act and scheme in respect of all its employees. The Rules which were framed by the ITDC expressly provided that it would cease to apply on the coming into force of the ESI Scheme. The contention of the petitioner that the hotel was not a ''Factory'' and is only an establishment and, therefore, the provisions of the Act had not come into force was not tenable. If the management failed to implement the provisions of the ESI Act and the scheme, they will be liable for penal action under the provisions of the ESI Act. This being the position, circular dated 29.1.1983 (Annexure-A) issued by the first respondent management was in accordance with law.
Sri S. Krishnaiah, learned counsel for the petitioner, urged the following contentions.
(i) The provisions of the ESI Act would come into force in respect Hotel Ashok only on the issue of a notification by the Central Government to that effect under section 1(5) of the Act and as the same has not been done, the Act was inapplicable, and, therefore, the circular was not authorised by law.
(ii) Section 9-A of the Industrial Disputes Act requires the issue, of notice of change of condition of service and as the introduction of ESI Scheme amounts to change of condition of service, the circular was bad for violation of section 9-A of the I.D. Act.
(iii) There are as many as 56 hotels belonging to ITDC and as the ESI scheme has not been introduced in other hotels, introducing of it only at Hotel Ashok unit was violative of Art. 14 of the Constitution.
Sri Kasturi, learned counsel for the first respondent management and Sri M. Papanna, learned counsel for the second respondent the Regional Director of the ESI Corporation, per contra, submitted as follows: It is now well settled that a kitchen in a hotel where power is used for manufacturing articles of food comes within the definition of the word ''factory''. This position is made clear in the judgment of the Madras High Court in E.S.I. v. Spences & Co., Ltd. 1978 Lab. I.C. 1759 Re. Hotel Connemara, Madras, and by the Bombay High Court in Poona Industrial Hotel v. I.C. Sarin 1980 Lab. J.C. 100 Re. Hotel Blue Diamond. The ESI Court before whom, there was a dispute between the management of Hotel Ashok and the ESI Corporation as to the applicability of the ESI Act, held that kitchen section of the hotel is a factory.
Relevant parts of the order read- ".......Their evidence discloses that more than 20 employees have been employed in the kitchen actions and that electric power is being used for preparation and preservation of certain food stuffs and also for cleaning, washing and keeping the food stuffs cool. The evidence and records thus prove that more than 20 employees are employed in the kitchen sections of the hotel and that power is used for preparation of food stuffs. The learned counsel for the applicant contended that preparation of food stuffs does not constitute manufacturing process. It was submitted, in reply by the learned counsel, for the respondent that preparation of food stuffs with the aid of various electrical appliances in the kitchen of the hotel does constitute manufacturing process and that such a hotel, the whole itself can be covered under the ESI Act as a factory. The submission was supported by the authority of Poona Industrial Hotel Limited v. I.C. Sarine and another (1980 Lab I.C. page 100). The authority supports the contention of the respondent .
The learned counsel for the applicant then argued that since the hotel is registered and covered under the Karnataka Shops and Establishments Act, it cannot be called as a Factory and that, there can be no coverage under section 2(4) of the Act. There is nothing in any provision of the E.S.I. Act to indicate that an establishment need not be a factory as well. An establishment can very well be an industrial establishment and there can be no two opinions that Tourism is an industry. I am not convinced by the submission that since it is an establishment, it cannot be a factory.
The learned counsel for the applicant further contended that the corporation cannot bifurcate only the kitchen sections and try to cover the same. I do not find that there is any bar to determine and claim contribution against the Corporation only as regards the section of the establishment as a factory. In the case of D.V. Jagati vs. E.S.I. Corporation (FLR 1982) (44) page 125) a similar question had arisen. It has been held in the said authority that an employee who is doing something which is incidental or preliminary to or connected with the work of the factory is an employee of the factory in the case, at hand it is an admitted fact that all these employees are working in the kitchen sections From the principles laid-down in this authority, I am of the opinion that the Corporation has acted in fair and reasonable manner in covering only the employees of the kitchen where manufacturing process is carried out with the aid of power by more than 20 employees.
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It has been held that the kitchen sections of the applicant hotel are liable to be covered for the period as shown in the impugned order Ex A-2. The respondent Corporation shall re-do the calculations after giving reasonable opportunities to the applicant and shall claim contribution only on actuals."
Once the kitchen section was held to be factory, there is no escape, from the conclusion that the provisions of the Act become automatically applicable to all the employees, employed in connection with the said factory, in view of the clear pronouncement of the Supreme Court in the case of Hyderabad Asbestos v. E.S.I. Court. AIR. 1978 S.C. 356. As the Hotel Ashok comes within the definition of the expression ''factory'' (and as the provisions of the ESI Act and the scheme framed thereunder had already been extended to the area of the Bangalore City Corporation even before the establishment of Hotel Ashok at Bangalore the provisions of the ESI Act were applicable from the beginning itself. It is only on account of not realising that the Hotel Ashok came within the definition of the work ''factory'' either by the management or by the Corporation, the provisions of the Act had not been introduced. After the pronouncement of the judgment of the Madras High Court in respect of Hotel Connemara and of the Bombay-High Court in respect of Hotel Blue Diamond the position stood clarified. Thereafter the ESI Corporation has informed the ITDC to enforce the provisions of the Act and the scheme framed thereunder in respect of its constituent hotels. Therefore there is no force in the contention of the petitioner that the circular issued by the management was contrary to law.
As regard the contention of the petitioner that that circular was invalid for want of 21 days notice in view of sec. 9-A of the I.D. Act, Sri Kasturi, learned counsel for the first respondent management, submitted that the Rules themselves specifically provided that the Rules will be in force only till the date on which ESI scheme comes into force and, therefore, there was no question of change in the condition of service. His alternative submission was, when a statutory condition of service comes into effect by the force of the provisions of a law, the question of the management issuing a notice of change under sec. 9-A of the ID. Act did not arise
As regards the contention of the petitioner-regarding violation of Art. 14 of the Constitution, both the learned counsel submitted that the Corporation has called upon all the units of the ITDC to introduce the provisions of the Act and in some cases the provisions of the Act could not be implemented in view of the stay orders issued by the Courts and that there was no discrimination practised either by the ITDC or by the Corporation.
The relevant provisions of the ESI Act to find out as to whether the provisions of the ESI Act have come into force are. Sec. 1(3) (4) and (5). They read:
"1 *** *** ***
(30) It shall come into force on such date or dates as the Central Government may, by notification in the Official Gazette, appoint and different dates may be appointed for different provisions of this Act and for different States or for different parts thereof.
(4) It shall apply, in the first instance, to all factories (including factories belonging to the Government) other than seasonal factories.
(5) The appropriate Government may, in consultation with the Corporation and where the appropriate Government is a State Government, with the approval of the Central Government, after giving six months'' notice of its intention of so doing by notification in the official Gazette, extend the provisions of this Act or any of them, to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise." (undersigned by me)
The wording of the provisions is clear and unambiguous. According to sub-sec. (3), the provisions of the Act come into force in any specified area with effect from the date appointed by the Central Government in a notification. The Central Government is however, given the power to fix different dates for the coming into force of the different provisions of the Act, for different States or for different parts thereof. As far as the City of Bangalore is concerned, the notification under this provision was issued by the Central Govt. as early as on 15.7.58. It reads:
"SC. 1428.-In exercise of the powers conferred by sub-sec. (3) of section 1 of the Employees'' State Insurance Act, 1948 (34 of 1948), the Central Government hereby appoints the 27th day of July, 1958, as the date on which the provisions of Chapter IV (except sections 44 and 45 thereof, which have already been brought into force), Chapter V and Chapter VI (except sub-sec. (1) of sec. 76 and secs., 77, 78, 79 and 81 thereof, which have already been brought into force), of the said Act shall come into force the following areas of the State of Mysore, namely:
Areas covered by the Corporation of the City of Bangalore as constituted under the City of Bangalore Municipal Corporation Act 1949 (Mysore Act. No. LXIX of 1949)." Therefore there can be no doubt that the provisions of the ESI Act have been and are in force in the area of the Corporation of the City of Bangalore, in which Hotel Ashok is situate
According to sub-section (4), the moment the ESI Act come into force in any area every factory located within that area comes within the purview of the Act. Thus, as far as factories are concerned, no separate notification is necessary. But, in so far it relates to establishments which are not factories, sub-sec. (5) of sec. (1) provides that a notification extending the provisions of the Act to all or any of the establishments, industrial, commercial or otherwise, has to be issued by the appropriate Government. There is no dispute that if Hotel Ashok is not a factory and is only an estblishment, then the provisions of the Act has not come into force and would not apply to its establishment unless the appropriate Government issues a notification extending the provisions of the Act to Hotel Ashok. There is also no dispute that the appropriate Government which could issue such a notification would be the Central Government as Hotel Ashok is a Government of India undertaking. There is also no dispute that no such notification has been issued under sub-sec. (5) of Sec. 1 of the Act. [Therefore, the sole question that arises for consideration is whether Hotel Ashok is a ''factory'' which expression is defined in Sec. 2(12) of the Act.
A similar question has been considered by the Madras High Court in Spencer & Company''s (1) case in respect of Hotel Connemara at Madras. The relevant portion of the judgment reads:
"7. On the facts which we have enumerated above, if the 13 workers are engaged in work incidental or preliminary to or connected with the work of the factory or establishment, then they would also be employees within the meaning of the expression defined in S. 2(9)(i) of the Act and, if there are more than 20 persons in the premises engaged in manufacturing process and manufacturing process is carried on with the aid of power, the premises would become a factory as defined in S. 2(12), of the Act, and, by virtue of sec. 1(4), the Act would apply to all those employees. It cannot be gain said that the preparation of food would be a manufacturing process, as envisaged by the Act. This is clear from the definition. Any process of cleaning raw materials for the preparation of food would be work incidental to or connected with the manufacturing process namely, preparation of food, and it will be difficult to say that the work of cleaning or preparation of raw material as the first step before cooking food or of preparing it by other means to make it more delectable and pastable till not be a work connected with or incidental to the process of preparing food, which, as already indicated, would be a manufacturing process, Potatoes have to be peeld before the potatoes are used for the preparation of food. The peeling of potatoes will be a work incidental to or connected with the preparation of food. The persons engaged in that work would be employees who are also engaged in the preparation of food, can be taken into account for the purpose of deciding whether 20 or more persons, mentioned in S. 2(12) of the Act exist or not. What we have said above applied with greater force to persons who are using the coffee boiler for preparing coffee. Here there is a more intimate connection, and boiled water is used for preparing coffee and it cannot be said that boiling water is not part of the manufacturing process of preparing coffee. The same applies to the use of the electric toaster. It is well known that bread is after toasted before it is used and it is a form of adaptation of bread and will come within the meaning of manufacturing process. The definition is wide enough to take in any aspect of treating or adapting any article or substance with a view to its use. Some persons prefer bread toasted and in toasting or adapting bread with a view to its use. On a reading of the definition of ''manufacturing process'' along with the definition of term ''employee'', we find it difficult to accept the contention that the persons who are engaged in peeling potatoes or in preparing coffee or in toasting bread are not employees, who are doing work incidental to or connected with the manufacturing process of preparing food in the kitchen. Admittedly there are 20 persons in the kitchen, and when the other persons who are engaged in the activities mentioned above are taken into account, the number exceeds 20 and, since manufacturing process is carried on with the aid of power, the definition of the term ''factory'' is attracted"
The Bombay High Court also considered the other Hotel Blue Diamond was a factory, in the case of Poona Industrial Hotel Ltd. Case Law. The relevant portion of the Judgment reads- "7. As already mentioned above, the ESI Act applies without anything being done by any authority under the ESI Act to all factories other than the seasonal factories. The work ''factory'' has been defined in section 2(12) of the ESI Act as follows: ''factory'' means any premises including the precincts thereof whereon twenty or more persons are employed or where employed for wages on any day of the preceeding twelve months, and in any part of which a manufacturing process is being cartied an 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 railway running shed."
The definition as it stands consists of two parts. The first part requires that 20 or more persons must be employed in the premises including the precincts thereof. The second part mentions that in any part of the premises manufacturing process must be carried on with the aid of power or is ordinarily so carried on. As we read the definition, 20 or more persons must be employed in the premises and manufacturing process must be carried on in any part of the said premises. It is not as if manufacturing process must be carried in the entire premises wherein 20 or more persons are employed. It is enough if 20 employees are working in premises in a part of which manufacturing process is carried on or is ordinarily carried on. In the petition itself it has been mentioned that the hotel employees 227 persons of them 45 are employed in the kitchen. This clearly shows that, subject to the question of the manufacturing process being carried on in any part of the premises, the hotel would necessarily be covered by the definition ''factory'' contained in the ESI Act.
The phrase ''manufacturing process'' itself has not been defined in the ESI Act but it has been mentioned that the expression ''manufacturing process'' shall have the meaning assigned to it in Factories Act, 1948. Sec. 2(k) of the Factories Act defines the phrase, ''manufacturing process'' as follows:
''Manufacturing process means any process for making, altering repairing, ornamenting finishing packing, oiling washing, cleaning, breacking up, demolishing, or otherwise treating or adapting any article or adapting article or substance with a view to its use, sale, transport delivery or disposal........
That the preparation of the food in the kitchen of the hotel is done with the aid of power is admitted. Now the question is whether manufacturing process is employed in the preparation of the food. In out opinion, the preparation of the food necessarily implies making of the food which is an article or substance as mentioned in the definition of the phrase ''manufacturing process''. Several other articles which go into the preparation of the food are altered or cleaned or otherwise treated or adopted before the ultimate item of food emerged in the kitchen. We do not see how this process for making food or for washing, cleaning or other wise treating or adapting raw materials with a view to prepare food cannot be treated as manufacturing process as defined in S. 2(k) of the Factories Act. It must also be noted that such manufacturing is being employed for making of food article either for use or for disposal. In our opinion therefore, the process which have been described in the petition itself viz., use of the various electrical appliances involve manufacturing process as defined in clause (k) of section 2 of the Factories Act."
In the above two decisions, the two High Courts interpreted the word ''factory'' and the expression ''manufacturing process'' and came to the conclusion that a hotel in which power is used in its kitchen for manufacturing articles of food falls within the definition of the word ''factory'' I am in respectful agreement with the view expressed by Their Lordships of the Bombay and Madras High Courts.
It is not disputed that having regard to the fact that in the kitchen of the Hotel Ashok, power is used for manufacturing articles of food and that more than 20 persons have been employed, the ESI Court held in its order dt. 8.12.1982 that the kitchen of the hotel was a factory. The relevant portion of the order has been extracted earlier. Therefore) there can be no doubt that the provisions ofthe ESI Act have come into force in respect of hotel Ashok.
Learned counsel for the petitioner, however, tried to make a distinction between the workers employed in the kitchen and other employees. His argument was that even on the basis that the power was being used in the kitchen of the Hotel Ashok for manufacturing articles of food, only the kitchen would be regarded as factory and consequently only employees of the kitchen might come within the purview of the ESI Act, but in respect of other employees, the provisions of the ESI Act would not be applicable He also pointed out that the finding of the ESI. Court was confined to the kitchen establishment and, therefore) even according to that decision, the employees other than those employed in the kitchen are not covered by ESI Act.
As far as this aspect is concerned, it is concluded by the ratio of the Supreme Court in the case of Hyderabad Asbestos. The relevant portion of the Judgment reads:
"12. The contention of the learned counsel for the appellants is that the word ''factory'' is confined only to persons who are employed with the manufacturing process. The definition of the work factory is as follows:
''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 proceeding 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 running shed.
The word factory is confined to the premises including the precincts thereof where the manufacturing process is carried on. The submission on behalf of the appellants is that an employee of the factory should not only be an employee falling within the definition of the word ''employee'' but also an employee of the factory i.e., of a factory as defined in S. 2 (12).
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We are unable to accept the contention for on a reading of the relevant sections it is clear that the word ''employee'' would include not only persons employed in the factory but also persons connected with the work of the factory. The employee may be working within the factory or outside the factory or may be employed for administrative purpose or for purchase of raw materials or for sale of the finished goods all employees are included within the definition of ''employee''. A recent decision of the Bench of the Madras High Court in W.Ps. 144-149 and 331 of 1971 dt. 14th October 1976 (Madras) has also taken a similar view. We agree with the view taken by the Judgments of the Andhra High Court and of the Calcutta High Court and dismiss these appeals with costs." (underlined italics by me)
Therefore, though the only question considered by the ESI Court was whether kitchen section of Hotel Ashok was factory and the Court gave its finding in the affirmative, by the force of the said finding, all other employees of the Hotel Ashok stand covered by the provisions of the ESI Act in view of the ratio on Hyderabad Asbestos. (3) The judgment of the Madras High Court in respect of Connemara Hotel (1) and of Bombay High Court in respect of Blue Diamond Hotel, (2) with which I have expressed agreement, also give no room for doubt that all the employees of Hotel Ashok have come under the coverage of the ESI Act and the scheme thereunder. From these decisions, it is clear that it is not possible to classify the employees working in the kitchen of the hotel and those who are engaged in connection with the supply, distribution and other work of the hotel into two categories and to hold that the former are covered by the ESI Act and the latter not. All persons employed for the purpose of supply and distribution of food prepared in the kitchen and for doing other incidental duties in the Hotel have to be regarded as employees of the factory.
I am unable to agree with the learned counsel for the petitioner that unless a further notification under sec. (5) of the ESI Act was issued by the Central Government extending the provisions of the Act to Hotel Ashok, the provisions of the ESI Act were inapplicable, for ''factory''. The contention would have been tenable if only the Hotel Ashok did not come within the definition of the word ''factory'' and was only regarded as an establishment other than factory.
The next contention of the petitioner was that the circular was invalid as, according to him, introduction of the ESI scheme, amounted to change of condition of service and, therefore, a notice under section 9-A of the I.D. Act was necessary.
The submission made by the learned counsel for the first respondent management in reply to the above contention was that a notice of change under sec. 9-A of the I.D. Act would be necessary only when the management on its own volition intended to effect changes in the condition of service of its employees and not when it is brought about by operation of law.
S. 9-A of the I.D. Act reads-"9A. No. employer, who proposes to effect any change in the conditions of service applicable to any workmen in respect of any matter specified in the Fourth Schedule, shall effect such change,- (a) without giving to the workmen likely to be effected by such change a notice in the prescribed manner of the change proposed to be effected; or (b) within twenty-one days of giving such notice:"
The opening words of the section indicate that notice required to be given under the provision would apply, if an employer proposes to effect changes in condition of service and not to a case where certain conditions of service become applicable to the employees by operation of law. In the present case, the ESI scheme has come into force by operation of law and the management is only informing that fact to the employees. Hence, I am unable to agree that provision of section 9-A of the I.D. Act is applicable.
Further, it is pointed out for the first respondent management that no notice was necessary in view of rule 11.5. of the Rules. It reads:
"1.5. These Rules will not be operative in any unit from the date such a unit is brought under the coverage of ESI Act."
In view of this clause, it is clear that all along the employees had the notice to the effect that the moment the ESI Scheme becomes applicable, the rules would not be applicable. In the alternative, the rule also means that there is no change in the conditions of service at all, for all along the condition of service was the provisions of the Rules apply till ESI scheme becomes operative, and, thereafter, the latter would be, operative. Therefore, there is no force in the contention of the petitioner that notice of change was necessary.
As regards the third contention of the petitioner it is only necessary to set out the latter dated 4th April 1983 written by the ESI Corporation to the ITDC (Annexure-H in W.P. No. 8196/83). It reads-
Dear Shri Verma,
With reference to the discussions which you had with the Insurance Commissioner on 21.3.1983 regarding coverage of I.T.D.C. Hotels and your D.C. letter No. 12(9)/82 dated 23.3.83 the position is as follows:''
(i) Prior to 1.2.1980 only the kitchen portion or any other department of the hotel/restaurant employing 20 or more persons in that department and using power for the manufacturing process is covered as factory under sec. 2(12) of the ESI Act at where the ESI scheme has been implemented under section 1(3) of the Act.
(ii) From 1.2.1980 the coverage is not limited only to kitchen portion or any other department but the entire hotel is covered as a factory under sec. 2(12) of the Act, if the) total strength persons employed is 20 or more and in any of its department power is issued for the manufacturing process.
(iii) The establishments of ITDC which are situated at centres where the scheme has been implemented under sec. 1(3) of the ESI Act but do not under category (i) & (ii) above, will be covered when the Central Government issued a final notification under sec 1 (5) . For starting compliance in respect of the establishments which are already covered as factories under sec. (5). For starting compliance in respect of the establishments which are already covered as factories under sec. 2(12), there is no need for the Central Government to issue any further notification. This has already been clarified by the Ministry of Labour in their letter No. S-3870/2/77-HI dated 26.6.1981. Further notification by the Central Government is required only for coverage u/s 1(5) of the ESI Act.
As regards the coverage position of the various units of I.T.D.C. as detailed in Annexure-A enclosed within your D.O. Letter under reply the position has been examined and it is observed that the units as per list enclosed are covered under the ESI Act and you may please take necessary action for compliance without any further delay. As far as the establishments of ITDC in Delhi are concerned those are covered as factories under sec. 2(12) but no compliance is being made on account of the stay order having been obtained from the High Court. Therefore, the compliance by those establishments who have obtained a stay order could be made either after the decision of the high Court or after withdrawing the Court cases by the Management, in case you intend to have a uniform policy for all your units.
As regards the details of the hospitals, dispensaries and local office, you may please advice your local authorities to contact the Regional Director of the State.
With regards
Yours sincerely,
Sd/-
D.O. No. P.11/21/l/81 INS. IV-Col. 1 dated 4th April, 1983.
Sl. No. State/Union Territory Name of the ITDC Hotels/Catering Units bour in their letter No. S-3870/2/77-HI
Bihar Hotel Patliputra Ashok, Patna.
Delhi (Union Territory) (i) Akbar Hotel, New Delhi
(ii) Ashoka Hotel, New Delhi
(iii) Ashok Yatri Nivas, New Delhi
(iv) Janpath Hotel, New Delhi
(v) Kaniska Hotel, New Delhi
(vi) Lodhi Hotel, New Delhi
(vii) Hyderabad House, New Delhi
(viii) Ranjit Hotel, New Delhi
(ix) Samrat Hotel, New Delhi
(x) Qutab Hotel, New Delhi
(xi) Vigyan Bhavan, New Delhi
Karnataka (i) Hotel Ashok, Bangalore
(i) Lalitha Mahal Palace Hotel, Mysore
(iii) Hotel Hassan Ashok, Hassan
Kerala Kovalam Ashok Beach Resort, Kovalam
Maharastra Hotel Aurangabad, Ashok, Aurangabad
Orissa Hotel Kalinga Ashok, Bhubaneshwar
Rajasthan (i) Hotel Jaipur Ashok, Jaipur,
(ii) Laxmi Vilas Place Hotel, Udaipur
Tamil Nadu Hotel Madurai Ashok, Madurai
Uttar Pradesh (i) Hotel Varanasi Ashok, Varanasi
(ii) Taj Restaurant, Agra
West Bengal (i) Hotel Airport Ashok, Calcutta,
(ii) Airport Flight Kitchen, Calcutta
From the above letter it is clear that the ESI Corporation has called upon the ITDC to introduce the scheme in respect of all the hotels of the ITDC As indicated in the said letter, it has not been possible to introduce the ESI scheme in respect of hotels at Delhi in view of the stay orders given by the High Court, but in respect of other hotels the ESI Corporation has made it clear that the provisions are applicable to the hotels in which power is used in the kitchen and 20 or more persons are employed in the manufacturing process.
Learned counsel for the petitioner contended that there was no notification issued by the Central Government bringing the ESI Act into force with effect from 1.2.1980 and, as the power to fix a date is vested in the Central Government under sec. 1(3) of the ESI Act the ESI Corporation had no authority to fix a date and to say that the provisions of the ESI Act should be implemented from 1.2.1980.
In the earlier part of my order, I have pointed out that once an establishment comes within the definition of the word ''factory'' the provisions of the ESI Act become automatically applicable on the date on which the provisions of the ESI Act stands extended to that area under a notification issued by the Central Government under sec 1(3) of the ESI Act. Therefore, there can be no doubt that the provisions of the ESI Act had become applicable to such of the hotels which fell within the definition of the word ''factory'' as defined in the ESI Act with effect from the date the provisions of the ESI Act were extended to the area in which such hotels were located. That being the position, in respect of a factory or a Hotel which is ''factory'' as defined under sec. 2(12) of the ESI Act established thereafter the ESI Act applied from the date of its establishment. As Hotel Ashok was established in or about the year 1970 the ESI Act was applicable from the date of its establishment. Because of lack of correct understanding of the provisions of the ESI Act i.e. the scope of S. 1(3) and (4) of the ESI Act and the meaning of the word ''factory'', the same had not been enforced, but the position had been made clear by the judgment of the Madras High Court in respect of Connemara Hotel (1) and by the Bombay High Court in respect of Hotel Blue Diamond, (2) and it is obviously for this reason the ESI Corporation has called upon the Hotels of ITDC to implement the provisions of the ESI Act with effect from 1.2.1980 a date shortly after the judgment of the Bombay High Court. The fact that the ESI Corporation had called upon the hotels to implement the scheme with effect from 1.2.1960 does not in any way affect the legal position that the provisions of the ESI Act had already come into force in respect of there hotels.
Lastly, the learned counsel for the petitioner submitted that hotel Ashok had not been registered as a ''factor'' under the provisions of the Factories Act, but had been registered only as an establishment under the provisions of the Karnataka Shops and Establishments Act and, therefore, the Hotel Ashok cannot be regarded as ''factory''.
The definition of the word ''factory'' defined in the ESI Act, as pointed out earlier, taken in a hotel establishment in the kitchen of which power is used for manufacturing articles of food. Whether such factory should be registered under the Factories Act, is entirely a different question and it is for the authorities functioning under the Factories Act to consider. Hence I see no force in the submission
For the reasons aforesaid, I make the following order:
(i) Rule discharged.
(ii) Petition dismissed.
(iii) No costs.