The Management of Kumar Medical Centre vs Employees State Insurance Corporation

Mr. Justice Vinod K. Sharma

The petitioner has approached this court, with a prayer for issuance of a writ, in the nature of certiorari, to quash the notice, covering the

petitioner under ESI Act.

The impugned notice reads as under:

Web site:www.esiindia.org www.esic.nic.in

Phone:0462-2332106

0462-2332105

E-mail: esicsrothi@dateone.in

Fax: 046202332107

SUB-REGIONAL OFFICE (TIRUNELVELI)

EMPLOYEES'' STATE INSURNCE CORPORATION

MINICIPAL SHOOPING COMPLEX

SALAI STREET, SINDUPPONTHURAI

TIRUNELVELI-627 001.

No/66/30706/34/INS/SRO/TLI Date: 13/10/08

To,

M/s. Kumar Medical Centre,

51, East of Tower,

Nagercoil-629001.

Sir,

Sub: Coverage of the Unit under ESI Act 1948-Reg.

Ref: Your letter, dated 1/9/2008.

With reference to your letter cited, above it is informed that preserving medicines under refrigeration amounts to manufacturing process with the aid

of power u/s 2(k) of the Factories Act. Therefore, the unit is coverable u/s 2(12) read with section 2(14AA) of the ESI Act.

It is hereby confirmed that your unit is coverable under the ESI Act as stated in this office letter, dated 6/6/08. Immediate compliance is requested.

Yours faithfully,

sd/-xxxx

ASSITANT DIRECTOR

(INSURANCE BRANCH)

The petitioner is a practicing Doctor, who is practicing in medicine. The petitioner in addition to practice also started business of wholesale

distributorship, for the products of various pharmaceutical companies, like Glaxo India Limited, Cipla Limited, Torrent Pharmaceuticals Limited,

Ranbaxy Laboratories Limited, Zudus Cadila Limited, Lupin Pharmaceuticals Limited, Abbot Labs Limited, Anglo French Limited, Workhardt

Limited, Eli Lilly & Company (I) Pvt. Limited, etc. The petitioner is a licensed stockist under the Drugs & Cosmetics Act, 1940.

The petitioner stores the medicines in refrigerators and two coolers, and has employed 16 employees, including three pharmacists. The shop of

the petitioner is established under the Tamil Nadu Shops & Commercial Establishments Act.

The petitioner is not covered under the Employees'' Provident Fund & Miscellaneous Act, as employees working with him are less than 20.

The impugned order has been passed, by invoking section 2(12) of the ESI Act, which defines the ''Factory'' to mean as under:

(a) wherein ten 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 it ordinarily so carried on or

(b) whereon twenty or more persons are employers or were employed for wages on any date of the preceding twelve months and in any part of

which a manufacturing process is being carried on without the aid of power or is ordinarily carried on.

The term ""manufacturing process"" shall have the same meaning as assigned to it in the Factories Act, 1948, Section 2(k) of the Factories Act,

defines the terms ""manufacturing process"" to mean that;-

(i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing or otherwise treating or adopting

any article or substance with a view to its use, sale transport, delivery or disposal; or

(ii) pumping oil, water sewage or any other substances; or

(iii) generating, transforming or transmitting power; or

(iv) composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding; or

(v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels; or

(vi) preserving or storing any article in cold storage.

The pleaded case of the petitioner is that though number of employees working with the petitioner are less than 20, the Inspector of ESI, visited

the premises of the petitioner and reported, that as the refrigerators and coolers are used for storing some of the medicines, it amount to

manufacturing process, therefore, the premises are covered under ESI Act.

The learned counsel for the petitioner challenged the impugned order, on the ground that there is no manufacturing process, carried out by the

petitioner, therefore, premises of petitioner do not come under definition of ''factory''.

The refrigerators and coolers are only used to store the medicines for distribution/sell, under a license.

The learned counsel for the petitioner contends that the impugned order on the face of it is outcome of non-application of mind, and perverse,

thus, hit by Article 14 of the Constitution of India.

The learned counsel appearing on behalf of the respondent, has challenged the maintainability of the writ petition, on the ground that the writ is

premature, as notice has only been issued. It will be open to the petitioner, to take all the defenses available in reply.

It is also the contention of the learned counsel for the respondent that the use of refrigerators and coolers, in the premises of the petitioner

amounts to manufacturing process, in view of the law laid down by the Hon''ble Division Bench of this court, in the case of The Kumbakonam Milk

Supply Cooperative Society Vs. The Regional Director, Employees'' State Insurance Corporation, , wherein this court has pleased to lay down as

under:

Sec. 2(14AA) of the Act ''manufacturing process'' shall have the meaning assigned to it in the Factories Act, 1948. Sec. 2(k) of the Factories Act,

1948 defines the expression ""manufacturing process"" and we have already referred to the insertion of Clause (vi) of Sec. 2(k) by Act 94 of 1976

which makes it clear that preserving or storing any article in cold storage is deemed to be a manufacturing process. Though it is stated that only two

persons are being engaged in cold storage and others are messengers and their main work is to procure milk from its members, in the light of the

definition of the words ""employees"", ""factor"" and ""manufacturing process"", as referred to in the Employees State Insurance Act, and the Factories

Act and in the light of the details furnished in the documents produced by the society, that the appellant society is an establishment which comes

within the ambit of Employees'' State Insurance Act and that the learned District Judge was perfectly right in arriving at a conclusion, confirming the

action initiated by the Employees'' State Insurance Corporation.

The Employees'' State Insurance Act is a piece of social welfare legislation enacted primarily with the object of providing certain benefits to

employees in case of sickness, maternity and employment injury and also to make provisions for certain other matters incidental thereto. In an

enactment of this nature, the endeavour of the Court should be to interpret the provisions liberally in favour of the persons for whose benefit the

enactment has been made. In the light of the statutory provisions of the Employees'' State Insurance Act, 1948 and the Factories Act, 1948,

complied with the factual details available in the case on hand, the Court do not want to take a different view than that taken by the District Judge,

and hence the Court in agreement with the conclusion arrived at by the learned District Judge.

The stand of the respondent is totally misconceived. The order impugned is not merely a notice, but an order confirming that the shop of the

petitioner is covered under the ESI Act, as in the letter, dated 6th June 2008, directions have been issued to take steps under the ESI Act. The

writ petition, therefore, cannot be said to be premature.

The contention of the learned counsel for the petitioner, is that keeping of the refrigerator and cooler would amount to manufacturing process,

is again misconceived. The refrigerators or coolers are not used by the petitioner for carrying out any manufacturing process, but for storage for

sale, in view of the nature of particular medicine, for the benefit of the customer. The judgments relied upon is regarding preserving the article in

cold storage, which cannot be equated to the ordinary refrigerator.

If the contention of the respondent is accepted, then every household would become a manufacturing process, as the refrigerators are keeping

for storage of household goods for use. The judgment relied upon by the learned counsel for the respondent, can have no application to use of

refrigerator or cooler for the purposes of storage of medicine, nor it can be termed as a manufacturing process.

The learned counsel for the respondent challenged the maintainability of the writ, on account of alternative remedy u/s 75 of the ESI Act, by

placing reliance on the Division Bench Judgment of this court, in the case of The Tuticorin Thermal Power Station Industrial Co-operative Society

Ltd. Vs. The Deputy Regional Director, Sub-Regional Office, E.S.I. Corporation and Others,

There can be no dispute with the proposition laid down by the Hon''ble Division Bench judgment of this court that alternative remedy is a

ground to no suit the petitioner. It is always equally well settled that alternative remedy is not a complete bar, especially when writ petition, is

admitted.

The writ petition was admitted in the year 2008, therefore, at this stage, it would not be appropriate to relegate the petitioner to alternative

remedy, u/s 75 of the ESI Act, to challenge, the order which on the face of it is perverse, and also without jurisdiction, as the premises of the

petitioner on admitted facts can not be covered under ESI Act.

It is an imagination of the respondent that storing of medicine in the refrigerator will amounts to manufacturing process, by equating ordinary

refrigerator with cold storage, which in itself is an industry.

The impugned order on the face of it is perverse, arbitrary and outcome of colorable exercise of power, thus, hit by Article 14 of the

Constitution of India.

While rejecting the plea of the respondent, that the writ petition deserves to be dismissed, for alternative remedy, it is appropriate to notice that

inspite of the Hon''ble Division Bench judgment of this court, in the case of the The Tuticorin Thermal Power Station Industrial Co-operative

Society Ltd. Vs. The Deputy Regional Director, Sub-Regional Office, E.S.I. Corporation and Others, , writ petitions are filed, in this court, by not

disclosing the statutory remedies available to the petitioner and all the writ petitions are entertained and admitted by ignoring the availability of

alternative statutory remedy. The objection to maintainability is only taken at final hearing that is after number of years. The office should make a

note about availability of alternative statutory remedy, so that question of maintainability of writ can be decided at the time of admission of writ.

As already observed, the impugned order on the face of it, is arbitrary and outcome of non-application of mind and thus, hit by Article 14 of

the Constitution of India.

The writ petition is allowed, the impugned order is set aside.

Consequently, connected Miscellaneous Petition is closed. But with no order as to costs.