1984 (12) TMI 334 - HC - Indian Laws

Summary

Issues Involved:
1. Applicability of the notification under G.O. Ms No. 297, Health, dated March 25, 1975, to the respondent tailoring firms.
2. Whether the respondent tailoring firms qualify as establishments under Section 1(5) of the Employees' State Insurance Act, 1948.
3. Whether ironing of stitched garments with the aid of power constitutes a manufacturing process.
4. Whether the respondent tailoring firms are "factories" under Section 2(m) of the Factories Act.
5. Whether the respondent tailoring firms are "shops" under Section 2(21) of the Andhra Pradesh Shops and Establishments Act, 1966.
6. Validity of the notification itself under Section 1(5) of the Employees' State Insurance Act, 1948.

Detailed Analysis:

1. Applicability of the Notification:
The central issue is whether the notification in G.O. Ms No. 297, Health, dated March 25, 1975, issued under Section 1(5) of the Employees' State Insurance Act, 1948, applies to the respondent tailoring firms. The notification was intended to extend the provisions of the Act to establishments employing between ten and twenty persons where a manufacturing process is carried out with the aid of power.

2. Establishments under Section 1(5) of the Act:
The Act aims to provide benefits to employees in cases of sickness, maternity, and employment injury. Section 1(5) allows the government to extend the Act's provisions to various establishments, including industrial, commercial, and agricultural ventures. The notification issued under this section is intended to include establishments employing ten or more persons where a manufacturing process is carried out with the aid of power.

3. Manufacturing Process:
The core question is whether ironing stitched garments with the aid of power constitutes a manufacturing process. The definition of "manufacturing process" under Section 2(k) of the Factories Act includes processes such as finishing or adapting any article with a view to its use or delivery. The court concluded that ironing stitched garments with the aid of power for ornamentation or giving an elegant appearance is part of the manufacturing process, even if no new product emerges. This interpretation aligns with the broad definition of manufacturing processes intended to cover diverse activities.

4. Factories under Section 2(m) of the Factories Act:
A "factory" under Section 2(m) includes premises where ten or more workers are employed, and a manufacturing process is carried out with the aid of power. The court found that the respondent firms employed ten or more persons and used power for ironing stitched garments, making them factories under this definition.

5. Shops under Section 2(21) of the Andhra Pradesh Shops and Establishments Act:
The respondents argued that their firms should be considered "shops" under the Andhra Pradesh Shops and Establishments Act, which would require employment of twenty or more persons for the Act to apply. However, the court held that the definition of "shop" in the Shops Act does not govern the meaning under the Employees' State Insurance Act. The court emphasized that the notification's clause (1) applies directly to establishments employing ten or more persons where a manufacturing process is carried out with the aid of power, making clause (3) inapplicable.

6. Validity of the Notification:
The respondents contended that the notification was ultra vires. However, the court held that the notification has stood the test of time and that the ESI Court cannot question its validity. The court upheld the notification, stating that it was issued in accordance with the Act and is valid.

Conclusion:
The court allowed the appeals, set aside the orders of the ESI Court, and dismissed the respondents' applications under Section 75 of the Employees' State Insurance Act. The court concluded that the respondent tailoring firms are establishments under the Act, and the use of power for ironing stitched garments constitutes a manufacturing process, making the firms subject to the Act's provisions. The notification was upheld as valid, and the demands for contributions by the Corporation were deemed proper and valid.