Case Note & Summary
The appellant, a proprietary concern named Shri Ganesh Bhandar, filed an appeal against the order of the Employees Insurance Court, Nagpur, which dismissed its application under Section 75 of the Employees State Insurance Act, 1948 (ESI Act). The dispute arose from an inspection conducted on 28.07.1992 by an Insurance Inspector of the respondent, Employees State Insurance Corporation. The inspection revealed that 17 employees were working in the establishment, which used LPG cooking gas for preparing edibles and an electric wet grinding machine for grinding. A refrigerator was also present. The Inspector prepared a preliminary investigation report, an observation sheet, and a list of 17 employees countersigned by Lalit Dave, son of the proprietor. The appellant's muster roll for July 1992 showed only seven employees. Based on this, the respondent issued a communication on 01.09.1992 stating that the establishment was covered under the ESI Act. The appellant challenged this before the ESI Court, which dismissed the application. The appellant then appealed to the High Court. The legal issue was whether the establishment fell within the definition of 'factory' under Section 2(12) of the ESI Act, which requires the use of power in a manufacturing process. The appellant argued that LPG is not 'power' and that the establishment was not a factory. The respondent contended that LPG and electricity constitute power, and the preparation of food is a manufacturing process. The court analyzed the definition of 'power' under Section 2(12) and held that LPG and electricity are forms of power. It noted that the use of an electric wet grinder and LPG for cooking clearly involved power. The court also held that the preparation of edibles is a manufacturing process. Therefore, the establishment was a factory covered under the ESI Act, even if the number of employees was less than 20. The court dismissed the appeal, upholding the order of the ESI Court.
Headnote
A) ESI Act - Definition of Factory - Section 2(12) - Power - Use of LPG and electricity for manufacturing process - The court held that the use of LPG for cooking and electric wet grinder for grinding constitutes use of 'power' within the meaning of Section 2(12) of the ESI Act, making the establishment a factory even if the number of employees is less than 20. (Paras 5-10) B) ESI Act - Coverage - Restaurant - Manufacturing Process - Section 2(14-AA) - The court held that preparation of food items using power amounts to a manufacturing process, and the establishment is covered under the ESI Act. (Paras 5-10) C) ESI Act - Evidence - Inspection Report - List of Employees - The court relied on the inspection report and list of 17 employees countersigned by the appellant's son, rejecting the appellant's contention that the list was not voluntarily given. (Paras 2-4, 11)
Issue of Consideration
Whether the appellant's establishment, a restaurant using LPG and electric wet grinder, falls within the definition of 'factory' under Section 2(12) of the Employees State Insurance Act, 1948, and is therefore covered under the Act.
Final Decision
The appeal is dismissed. The order dated 21.02.2004 passed by the Employees Insurance Court, Nagpur in Application (ESI) No. 5 of 1993 is upheld. No order as to costs.
Law Points
- Interpretation of 'power' under Section 2(12) of ESI Act includes LPG and electricity
- Restaurant using power for manufacturing process is a factory
- ESI coverage applicable even if employees are less than 20 if power is used
