Case Note & Summary
The Regional Director of the Employees' State Insurance Corporation (appellant) filed an appeal under Section 82 of the Employees' State Insurance Act, 1948, against the judgment/order dated 13-10-2008 of the Employees' State Insurance Court (ESI Court) at Goa. The ESI Court had allowed the application filed by M/s. Kohinoor (respondent) under Section 75 read with Section 77 of the Act, holding that the provisions of the Act were not applicable to the respondent's establishment. The respondent owned an establishment engaged in selling ready-made garments, leather goods, ornaments, etc. The establishment was inspected by the Insurance Inspector on 13-3-2002, who found 16 employees drawing less than Rs.6,500/- per month and a polishing machine allegedly working on electric power. A show cause notice was issued, and the respondent filed a dispute on 1-12-2003 contending that the Act was not applicable as they were not engaged in any manufacturing activity and had not employed more than 20 persons. The ESI Court framed two issues and, after examining witnesses including the respondent's manager and the Corporation's inspector, concluded that the establishment had not employed more than 19 employees at any time and that the use of a gas lighter for polishing did not constitute a manufacturing process. The appellant challenged the judgment on the ground that it was perverse for ignoring evidence regarding the use of a gas lighter. The High Court admitted the appeal on the substantial question of law whether the impugned judgment was perverse. After hearing both sides, the High Court held that the ESI Court had considered the evidence and correctly found that the gas lighter was used only for polishing finished goods, not for manufacturing. The court also noted that the appellant failed to prove that the establishment employed 20 or more employees, as four employees were earning above the exempted limit. Consequently, the High Court dismissed the appeal, upholding the ESI Court's order.
Headnote
A) Employees' State Insurance - Coverage of Establishment - Manufacturing Process - The issue was whether the respondent's establishment, engaged in selling ready-made garments and other goods, was covered under the ESI Act. The court held that the use of a gas lighter for polishing does not constitute a manufacturing process under Section 2(k) of the Employees' State Insurance Act, 1948, and the establishment was not engaged in any manufacturing activity. (Paras 5-8) B) Employees' State Insurance - Number of Employees - Threshold for Coverage - The ESI Court found that the establishment had not employed more than 19 employees at any time, and four employees were earning above the exempted limit of Rs.6,500/- per month. The High Court upheld this finding, noting that the appellant failed to prove that the establishment employed 20 or more employees. (Paras 7-8) C) Appeal - Substantial Question of Law - Perversity - The appellant contended that the ESI Court's judgment was perverse for ignoring evidence of use of a gas lighter. The High Court held that the ESI Court had considered the evidence and correctly concluded that the gas lighter was not used for manufacturing but for polishing finished goods, and thus the finding was not perverse. (Paras 2, 8)
Issue of Consideration
Whether the ESI Court's judgment was perverse in ignoring evidence regarding use of gas lighter by the respondent, and whether the establishment was covered under the ESI Act.
Final Decision
The High Court dismissed the appeal, upholding the ESI Court's order that the respondent's establishment is not covered under the Employees' State Insurance Act, 1948.
Law Points
- Manufacturing process definition
- Coverage of establishment under ESI Act
- Perversity of findings
- Burden of proof
