Supreme Court - Daily Orders
Hindustan Unilever Limited vs The Deputy Director Sub Regional Office ... on 6 May, 2025
Author: Sudhanshu Dhulia
Bench: Sudhanshu Dhulia
1
ITEM NO.4 COURT NO.12 SECTION XII
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition(s) for Special Leave to Appeal (C) No(s). 24686/2023
[Arising out of impugned final judgment and order dated 26-06-2023
in WA No. 2836/2022 passed by the High Court of Judicature at
Madras]
HINDUSTAN UNILEVER LIMITED PETITIONER(S)
VERSUS
THE DEPUTY DIRECTOR SUB REGIONAL OFFICE (SALEM) RESPONDENT(S)
(FOR ADMISSION and I.R. )
Date : 06-05-2025 This petition was called on for hearing today.
CORAM :
HON'BLE MR. JUSTICE SUDHANSHU DHULIA
HON'BLE MR. JUSTICE K. VINOD CHANDRAN
For Petitioner(s) Mr. Mr. V Giri, Sr. Adv.
Mr. Sandeep Prabhakar, Sr. Adv.
Mr. Pravin Bahadur, Adv.
Mr. Amit Agarwal, Adv.
Mr. S. Anjani Kumar, Adv.
Mr. Eshan Banduni, Adv.
Mr. Nihar Dharmadhikari, Adv.
Mr. Amit Kumar, Adv.
Ms. Prerna Mehta, AOR
For Respondent(s) Mr. Santosh Krishnan, AOR
Mr. Ashwin Joseph, Adv.
UPON hearing the counsel the Court made the following
O R D E R
Leave granted.
2. The appellant before this Court is a Company which has a factory Signature Not Verified Digitally signed by Nirmala Negi Date: 2025.05.15 11:02:47 IST Reason: presently engaged in the manufacturing of coffee as also its blending and packing and is known as Hindustan Unilever Limited. The question 2 before this Court is whether appellant is liable to make its contribution under the Employees State Insurance Act, 1948 (hereinafter called “the ESI Act”) or not?
3. Mr.V.Giri, learned Senior Counsel for the appellant would claim exclusion from the purview of the ESI Act on the ground that it is a seasonal factory since it is a factory engaged in the manufacture of coffee. The appellant relied upon sub-section (4) of Section 1 of the ESI Act which reads as under:
“(4) It shall apply, in the first instance, to all factories (including factories belonging to the Government other than seasonal factories:
[Provided that nothing contained in this sub-section shall apply to a factory or establishment belonging to or under the control of the Government whose employees are otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act].” Mr. Giri, learned Senior Counsel then relied upon Section 2 (19A) of the ESI Act. He would then argue that a seasonal factory as defined under Section 2 (19A) of the ESI Act, includes a factory which is manufacturing coffee.
4. Initially, the definition of factory and seasonal factory as given in Section 2(12) of the ESI Act read as under: -
“2 (12) “factory” means any premises including the precincts thereof whereon twenty or more persons are employed or were employed 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 is ordinarily so carried on but does not include a mine subject to the operation of the Kines Act, 1952, 3 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, decortication 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.”
5. An amendment has been brought in the year 1966 and the following was included in the definition clause i.e. in Section 2(12). What is included by the said Amendment Act of 44 of 1966 reads as under:
“...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 repacking of tea or coffee; or
(b) in such other manufacturing process as the Central Government may, by notification in the Official Gazette, specify”;
6. A further amendment was brought in the year 1989 and now the definition of seasonal factory under Section 2(12) has been transposed bodily to Section 2(19A) of the ESI Act and the definition is in pari materia to the amendment of 1966. Section 2 (19A) which defines seasonal factory, reads as under:
“2(19A) 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, decortication 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 4 which is engaged for a period not exceeding seven months in a year —
(a) in any process of blending, packing or repacking of tea or coffee; or
(b) in such other manufacturing process as the Central Government may, by notification in the Official Gazette, specify;”
7. The appellant-factory got a notice from the authority under the ESI Act on 05.08.2013 directing them to pay the contribution under the ESI Act and with effect from the year 2006. The appellant challenged it before the learned Single Judge of the Madras High Court, where the grounds taken by the appellant was that it is a seasonal factory, which did not find favour with the learned Single Judge and the writ petition was dismissed and so was their writ appeal by the Division Bench of the High Court. Now, they are before this Court.
8. Mr.Giri, learned senior counsel would argue that this case stands covered by a three Judge Bench decision of this Court in the case of “Regional Director, Employees State Insurance Corporation v. High Land Coffee Works of P.F.X. Saldanha and Sons & Anr. reported in (1991) 3 SCC 617, which held that the amendment which was brought into the definition of seasonal factory in the year 1966, as retained in the year 1989, was inclusive in character and it only included such factories where the work was carried on for less than seven months. It did not touch upon the earlier definition of seasonal factory where inter-alia manufacturing of coffee was held to be a seasonal work and 5 therefore a seasonal factory. The finding given by the three Judge Bench in the case of High Land Coffee (supra) is as under:
“6.The sole question for consideration is whether the respondents' factories in view of the amendment to the definition of seasonal factory have lost the benefit of exclusion from the Act. The High Court on this aspect has observed that the purpose of the amendment was to enlarge and not to restrict the statutory concept of “seasonal factory” and the position of respondent’s establishments as seasonal factories under and for the purpose of the Act remained unaltered even after the amendment.”
7. The view taken by the High Court seems to be justified. The Statement of Objects and Reasons of the Bill which later became the Act 44 of 1966 indicates that the proposed amendment was to bring within the scope of the definition of “seasonal factory” a factory which works for a period of not exceeding seven months in a year-(a) in any process of blending, packing or repacking of tea or coffee or b) in such other manufacturing process as the Central Government may, by notification in the official Gazette specify. The amendment therefore, was clearly in favour of widening the definition of seasonal factory'. The amendment is in the nature of expansion of the original definition as it is clear from the use of words “include a factory”. The amendment does not restrict the original definition of “seasonal factory” but makes addition thereto by inclusion. The word “include” in the statutory definition is generally used to enlarge the meaning of preceding words and it is by way of extension, and not with restriction. The word “include” is very generally used in an interpretation clauses in order to enlarge the meaning of words of phrases occurring in the body of the statute, and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import but also those things which 6 the interpretation clause declares that they shall include. [See
(i) Stroud’s Judicial Dictionary, 5th edn.Vol.3, p.1263 and (ii) C.I.T. v. Taj Mahal Hotel, (iii) State of Bombay v. Hospital Mazdoor Sabha.”
9. Mr.Santosh Krishnan, learned counsel for the Employees State Insurance Corporation would argue that the decision of the three Judge Bench in the case of High Land Coffee (supra) can be distinguished from the present case because the three Judge Bench decision was admittedly relating to a case where there was an exclusive manufacture of coffee. But, in the present case there is no exclusive manufacturing of coffee. Herein, along with coffee, ‘chicory’ is also procured, which is blended with coffee to bring out the final product. Moreover, it has also been pointed out to this Court that the contractual employees in the factory are getting the benefits of the ESI Act and the appellant is giving its contribution for the same. Therefore, Mr.Krishnan would argue that it can never be a case where a part of the workers/employees are getting the benefits and others are not getting the benefits, though they are working in the same factory.
10. As per the original definition of a seasonal factory, as available in the ESI Act, any factory which was exclusively engaged in one or more manufacturing processes or any process of the specified crop products, which is incidental to or connected with the manufacturing processes, qualified as a seasonal factory without any restriction as to the period of actual work. Blending, packing or re-packing of tea or coffee, as per the original definition 7 would be included as an incidental or connected process of the manufacturing process of tea or coffee.
11. We have a different opinion insofar as what was intended by the amendment of 1966. It was to enable factories, involved in the process of blending, packing or repacking of tea or coffee to be considered as a seasonal factory, if only they are engaged for a period of less than seven months. Hence, blending, packing or repacking of tea or coffee was taken out of the first limb of the definition and it is no more an incidental manufacturing process, or one connected to it. As rightly found in the three Judge Bench decision, the word included in a statutory definition is generally used to enlarge the meaning of the preceding words. The portion incorporated in the definition clause as amended in 1966 employs the words includes, but after the amendment the definition clause in the statute read as a whole is one employing the words ‘means and includes’, which is an exhaustive definition encompassing the core meaning of the word along with the specified additions and excludes anything not specifically included.
12. As per the laws of interpretation, hence, as of now, a factory engaged exclusively in the manufacture of coffee or tea would be entitled exemption as a seasonal factory, reading Sections 1(4) and 2 (19A). However, if it is also engaged in blending, packing or repacking of tea or coffee, exclusively or with the manufacture of coffee, then it will fall under the definition of seasonal factory, only if it is working for a period not exceeding seven months. Admittedly, the appellant’s factory is engaged in 8 manufacture of coffee as also manufacturing of chicory, which is blended with coffee and also engaged in packing & repacking. The appellant’s factory works for more than seven months, in which event, it does not fall under the definition of seasonal factory. We say this, with due respect to the three Judge Bench decision which held otherwise. The appellant’s factory, according to us, is not exclusively engaged in the manufacturing of coffee nor is it one working for less than seven months, being engaged in manufacturing alongwith blending, packing and repacking.
13. There is also the much larger issue of a seasonal factory, which in normal parlance, cannot be working for the entire year. No doubt, the Legislature could provide for specific activities to be considered as seasonal, which was provided in the earlier definition where the exclusive manufacture of coffee and the incidental or connected processes were deemed to be seasonal in character; probably realizing that such factories could not be, in reality, operated throughout the year. However, by virtue of the experience acquired over the years and the information gathered, the legislature in its wisdom though it fit to remove blending, packing and repacking from the incidental or connected processes of manufacture of coffee or tea and specified a maximum period of engagement, if engaged in such incidental activities, for the factory to be considered as seasonal. Hence, if the factory is engaged in manufacture of coffee and working only for seven months in reality, it would come within the definition of seasonal factory. But if it works for the entire twelve months and is engaged 9 in the manufacturing of coffee as also blending, packing, or repacking, then it cannot be said to be engaged in the exclusive manufacture of tea or coffee, which takes it away from the first limb of the definition and if it is working for more than seven months, it stands excluded, statutorily from the second limb also.
14. We are a Bench of lesser denomination and in order to get a final, conclusive and unambiguous decision in the matter, it will be necessary in the interest of justice that the present matter be placed before a three Judge Bench for reconsideration as it is difficult for us to accept that the amendment bringing in a maximum working period of seven months; which has been incorporated in 1966 and reiterated in 1989 amendment is an inclusive definition clause and not an exhaustive clause defining what is a seasonal factory. Even now a factory exclusively manufacturing coffee will be a seasonal factory since it is statutorily presumed that it cannot work for the whole year. But when it is engaged in blending and packing, it could work for the entire year, which then would take it away from the definition of seasonal factory and permitted exemption only if it works for less than seven months.
15. In any case this is a matter which needs a final determination and consequently, we request the Chief Justice of India to pass orders on the administrative side for placing it before a Three Judge Bench to decide whether a reconsideration is necessary.
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(NIRMALA NEGI) (RENU BALA GAMBHIR) ASTT. REGISTRAR-cum-PS ASSISTANT REGISTRAR