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Judgment
P. Govindan Nair, C.J.—Writ Appeal Nos. 150 and 151 of 1974. These appeals are directed against a common judgment disposing of
Writ Petitions Nos. 1473 and 1474 of 1971. The Appellants are th-3 two Respondents in those writ petitions. The two petitions were taken by
the Respondent in, Writ Petition No. 1473 of 1971 for the issue of a writ of certiorari to quash the direction in the order of the Appellant, No. 51-
3192-09/ESC, dated 19th January 1971, and Writ Petition No. 1474 for the issue of a writ of prohibition or any other appropriate writ, order or
direction restraining the Appellants from applying and enforcing any of the provisions of the Employees State Insurance Act, 1948, against the
Respondent. Ramaprasada Rao J., allowed the two petitions, holding that the Employees State Insurance Act, 1948, would not apply to the
Respondents. Hence these appeals.
The short question for determination is whether the Employees State Insurance Act, 1948, hereinafter referred to as the Act, will apply to the
Respondent or not. The facts on which this question must be determined may be stated thus.
The Respondent is a company carrying on the business of hoteliers, and the company is running a hotel called Hotel Connemara, situated at
Binny''s Road, in the City. It is a Four Star Hotel with 95 fully air-conditioned rooms and affords other facilities consistent with its position as a
Four Star Hotel. Admittedly a 1/4 h.p. motor is used for operating an electric potato peeier, and this apparatus is used for peeling potatoes.
Further there are other electrical appliances which are also used. There is a dish-washer, electric urn and an electric oaster. Electric ironing is also
done. It is admitted that there are 33 persons who are employed in the kitchen. Four persons work as dish-washers and six work in the pantry.
Apart from the above, there is also a coffee boiler and a Baina Malic. In the kitchen food is prepared for lodgers as well as for those who visit the
restaurant. According to the Appellants, manufacturing process is carried on in the kitchen with the aid of power and in the premises more than 20
persons are employed throughout the year and that, therefore, the hotel is a factory to which the Act would apply. On the other hand, the
contention of the Respondent was that there was no manufacturing process earned on with the aid of power, that 20 or more persons were not
engaged in the manufacturing process, that the number of persons who operated the potato peeier or coffee boiler and the dish-washer were less
than 20 and that they were not engaged in any manufacturing process. The learned Judge held:
Effectually it cannot be said that without peeling potatoes or toasting bread food cannot be prepared. It could be said'' of oil or ghee which is
certainly a product which is indirectly connected with such a process, but it cannot equally be asserted that without toasting the bread or peeling
the potato no manufacturing process involving the preparation of food is complete. What is urged is that all are engaged in the service to the
boarders and, therefore, there, is an integration as between the above activities. This test is a dangerous test, because it would be to understand a
subject-matter with reference to the result it achieves but without applying one''s mind to the means adopted for achieving that result....Here food is
prepared and in that process who are all involved is the query? The 13 workers are not involved in the manufacturing process with which the
Petitioner is concerned. The persons actually engaged in the culinary process which is carried on without the aid of power are 20 in number.
After referring to certain decisions, the learned Judge came to the conclusion:
...there is no nexus between the manufacturing process and the work done by 13 workers with the aid of power inside the premises.
Advertence was made to the difference between the definition of worker in the Factories Act and the definition of employee in the Act, and it
was emphasised that only persons who were in some manner or other connected with the manufacturing process could be said to be employees
within the meaning of the definition. It was held that the 13 persons, were not so connected, as seen from the portion of the judgment extracted
above. The question to be considered is whether this view is correct.
Section 1(4) of the Act makes the provisions thereof applicable to all factories, other than seasonal factories. Factory, is defined in Section
2(12) of the Act in these terms:
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 a ay 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, decortications 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 re-packing of tea or coffee; or
(b) in such other manufacturing process as the Central Government may, by notification in the Official Gazet e specify.
The expressions, manufacturing process and power shall have the meaning respectively assigned to them in the Factories Act, 1948.
Manufacturing process and power have not been defined in the Act, but the last paragraph of Section 2(12) stipulates that manufacturing process
and power shall have the, meanings respectively assigned to them in the factories Act. Now turning to Section 2(k) of the Factories Act, the
relevent part of the definition of manufacturing process is in these terms:
Manufacturing process'''' means any process or:
(i) making, altering, repairing, ornamerting, finishing packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting
any article or substance with a view to its use, sale, transport, delivery Or disposal;
''Power'' has been denned in the Factories Act as meaning electrical energy or any other form of energy which is mechanically transmitted and is
not generate by human or animal agency. The only other definition to be noticed is that of the term employees which is defined in Section 2(9)(i) of
the Act, which runs as follows:
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....
We are leaving out the rest of the definition, as it is unnecessary for our purpose.
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 Section 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 Section 2(12) of the Act, and, by virtue of Section 1(4), the Act would apply to all those
employees. It cannot be gainsaid 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, that 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 palatable will 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 peeled before the potatoes are
used for the preparation of food. The peeling of potato (sic) will be a work incidental to or connected with the preparation of food, The persons
engaged in that work would be employees and, alongwith the other employees, who lire also engaged in the preparation of food, can be taken into
account for the purpose of deciding whether 20 or more persons, mentioned in Section 2(12) of the Act exist or not. What we have said above
applies 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 often toasted before it is used and it is a form of adoptation 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 is toasting or adapting bread with a view to its use. On a reading of the
definition of manufacturing process, alongwith the definition of the 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.
What we have said above is in accordance with the decisions that have been referred to in the judgment under appeal. The two Supreme Court
decisions, in Nagpur Electric Lights and Power Co. Ltd. Vs. Regional Director Employees State Insurance Corporation, etc., and The Works
Manager, Central Railway Workshop, Jhansi Vs. Vishwanath and Others, . proceed on the basis that we have indicated above. The decision of
this Court in Moosa Kazimi Vs. K.M. Sheriff and Another, . is also on the same lines. Reliance was, however, placed by the learned Judge on a
ruling of this Court in Employees'' State Insurance Corporation with its Regional Office at Coimbatore Vs. Ganpathia Pillai and Others, , which is a
Division Bench ruling. The question that arose for consideration in that case was whether the persons employed in the Managing Agent''s Office of
a Mill, which was concerned purely with the administrative side of the mill and sale of finished products, aid who were not in any way connected
with the manufacturing process or with the work of the factory were or were not workers within the meaning of Section 2(9)(i) of the Act. It was in
dealing with this question that the learned Judges considered the difference between the definition of the term worker in the Factories Act and the
definition of the term employee in the Act, and it was in this connection that the Court observed:
Now, the work, which is the prima factor, is the work of the factory. ''Factory'' means the premises wherein a manufacturing process is being
carried on. It follows that only persons who are in some manner or another connected with the said work, viz., manufacturing process that can be
said to be, ''employees'' within the meaning of the definition. There are no doubt the words ''incidental or preliminary to'', but both these have to be
understood in conjunction with the words ''with the work of the factory''.
So the work done by the persons in question should be work incidental or preliminary to the work of the factory as such.
It was possible, on the facts of that case, to find that the work done by the persons employed in the Managing Agent''s Office of the Mill were
not connected with the work of the factory. But we consider that it is impossible to say that the peeling of potatoes or toasting of bread or making
of coffee with the aid of power is work not connected with the work of the kitchen, where admittedly manufacturing process of preparing food is
being carried on. If the work done by the persons-peeling potatoes, toasting bread and boiling water for preparing coffee is done with the aid of
power, that work being closely connected with the manufacturing process of preparing food, we will have to say that manufacturing process is
being carried on with the aid of power, and such a conclusion would attract the definition of the term factor.
We have to notice two more decisions, which have been referred to by the learned Judge in the judgment under appeal. These are N.T.M.
Cafe v. Insp. of Factories AIR 1956 Mad. 600, and Madurai Co-operative Milk Supply Union Ltd. v. Employees State Insurance Corporation.
39 F.J.R. 452. In the former case the question was whether a certain restaurant run by the person, who moved the writ petition fall within the
Factories Act or not What the authorities did was to count the total number of persons employed in each of the establishment without deciding,
whether every one of them or every class of them came within the definition of worker in Section 2(1) of the Factories Act. They did not appear to
have decided whether manufacturing process was being carried on in each of the restaurants with or without the aid of power. Reliance was placed
on the use of a frigidaire. It was with reference to these facts that the learned Judge held:
No doubt a frigidaire is worked by electric power, but every place where a frigidaire is used will not become a factory, even if the requisite number
of persons are engaged in work on the premises where a refrigerator is in use. If a refrigerator was the only appliance driven by power that was
used in the restaurant, what the statutory authorities had to decide was whether any manufacturing process was carried on with the aid of that
refrigerator, that is, with the aid of the power that was needed to work that refrigerator. The aspect of the case does not appear to have been
considered at all.
Normally a refrigerator is used for the purpose of storage. Even in a restaurant articles are kept in the refrigerator till they are required for sale.
More storage as such will not be part of the manufacturing process as defined by Section 2(k), Factories Act of 1948: it will not even amount to
treating or adapting any article with a view to its sale or disposal. If, however, a refrigerator is used for treating or adapting any article with a view
to its sale, than the test required by Section 2(k) would be satisfied.
It was found that there was no manufacturing process carried on with the aid of power, as the refrigerator was not used for adapting or treating
any article with a view to its sale. The principle of this decision cannot apply to the facts of the case before us.
The same is the position with reference to the later decision in Madurai Co-op. Milk Supply Union Ltd. v. Employees State Insurance
Corporation 39 F.J.R. 45. In that case a co-operative society carried on the business of purchasing milk from surrounding villages, preserving it in
a refrigerator and selling it to the consumers in the town. The surplus milk was converted to milk products for which two cream separators were
used and two persons were employeed for that purpose. On these facts, the learned Judge (Maharajan, J) held that the purchase and sale of milk
was not a manufacturing process, that preserving milk by refrigeration was not a manufacturing process and that, though the manufacture of milk
products may be a manufacturing process, only the persons employed in such manufacture could be said to be employees within the meaning of the
Act and, as the number of persons employed was much less than the number of employees required for the Act to apply, the provisions of the Act
could not be applied to the co-operative society.
This is another instance of a case where the work done in the manufacturing process was distinct and separate from the other work. In such a
case only the persons employed in the manufacturing process can be taken into account, unless the work is done by others incidental to or
connected with the manufacturing process. We have already found, on the facts of the case before us, that, there is a connection between the work
carried on by the use of power and the manufacturing process of preparing food. This decision too, therefore, cannot apply to the facts of the
present case.
Our attention was drawn to the Madras Catering Establishments Act, 1958, and it was emphasised that the Respondent''s establishment is a
catering establishment falling under that Act. That cannot affect the question whether the Act would apply to the premises of the Respondent.
The only other point to be clarified is that the Employees State Insurance Act would apply only to the 33 employees, who are working in the
kitchen and the pantry and not to the other employees, who are doing work unconnected with the manufacturing process.
The Respondent had approached this Court direct and the learned Judge dealt with the writ petitions, though the Respondent had not
approached the authorities under the statute. We have also dealt with the case on the merits, since & judgment on merits had been given by this
Court. We would, however, like to add that, whenever there is a remedy available under the statute, approach to this Court must be made only
after exhausting those remedies, and that normally we would not be inclined to deal with the matter in the first instance.
In the light of the above, with great respect, we have to disagree with the judgment under appeal. Accordingly we set aside the judgment, allow
the appeals and dismiss the writ petitions. The Appellants will have their costs from the Respondent one set.
Letters Patent Appeal No. 25 of 1977--The question that we have to consider in this Letters Patent appeal is similar, if not the same, to that
we have h; d to consider in our judgment in Writ appeals Nos. 150 and 151 of 1974.
The appeal here is taken by the Regional Director of the Employees State Insurance Corporation and the Manager of the Employees State
Insurance Corporation, against the judgment of Ramanujam J., in substance dismissing the appeal taken by them from the decision of the
Employees Insurance Court at Nagercoil. The question was whether the proprietor of the Amirthapradayani Vydiasala was covered by the
Employees State Insurance Act.
The Respondent owned the Vydiasala which manufactured Ayurvedic preparations in the premises called Amirthapradayani Vydiasala, where
more than 20 persons were employed. For pumping water from a well nearby a 2 h.p. electric motor was being used. The Inspector, who
inspected the premises on 26th February, 1966, came to the conclusion that a two-horse power electric motor was used and that, as it was being
used for the manufacture of medicines, a manufacturing process could be said to be carried on with the aid of power. The Respondent, however,
contended that the Vydiasala was not manufacturing Ayurvedic preparations with the aid of power, that the water pumped out from the well was
not at all used for the preparation of Ayurvedic medicines, and that it was used only for cleaning bottles and for lavatory purposes. The learned
Judge found that the water pumped out from the well was not used for manufacturing medicine, that it was only used for cleaning bottles after the
medicines had been prepared, and for lavatory purposes and also for soaking herbs before they were utilised for the manufacture of medicines.
We have adverted to the relevant provisions of the Employees State Insurance Act in our judgment in Writ Appeal Nos. 150 and 151 of 1974 and
we have emphasised that the work that is attributed be work connected with the work of the factory or incidental to the work of the factory. If
power is used for cleaning herbs, in the light of what we have stated in our judgment, there will be a nexus between manufacturing process of
preparing Ayurvedic medicines and the cleaning of the herbs that are to be utilised for the preparation of the medicine, and if the cleaning is done
with the aid of power, the premises would become a factory. But, if the cleaning or, as in this case, soaking, was done with water, which was
mainly used for other purposes and for which water was being pumped out by using an electric motor, it is difficult to say that the soaking was
tarried on with the aid of power. The nexus is not only remote, but almost non-existent. This view the learned Judge has taken on the facts of the
case and we are not prepared to say that the conclusion reached by the learned Judge is not a correct conclusion to take on the facts of the case.
The manufacturing process of preparing medicines cannot in this case be said to be carried on with the aid of power.
This appeal was argued along with Writ Appeal Nos. 150 and 151 of 1974, and for the reasons we have already elaborated in our judgment
therein, we dismiss this appeal with costs.