Punjab-Haryana High Court
Micro Alloys & Castings vs Union Of India (Uoi) And Ors. on 8 June, 1991
Equivalent citations: (1999)IIILLJ1448P&H
JUDGMENT Naresh Chander Jain, J.
1. The twin short questions of law falling for determination before this Court are whether the Chandigarh Administration through the Chief Commissioner, Union Territory, Chandigarh, respondent No. 2, can in law extend the provisions of Section 1(5) of the Employee's State Insurance Act, 1948 (hereinafter called 'the Act') and whether the notification under the aforesaid provisions can be issued to a factory which is engaged in manufacturing business by considering it to be an establishment irrespective of the fact whether such concern has got in its employment 20 employees or less. The facts of the case being neither complicated nor disputed need be noticed in short.
2. The petitioner a partnership concern is, admittedly, a factory having less than 20 and more than 10 employees at the time, the notification under Section 1(5) of the Act was extended to it by the issuance of notification annexure P. 1. The legality and validity of the notification in the first instance has been challenged by the petitioner on the ground that respondent No. 2 has got no jurisdiction to extend the provisions of Section 1(5) of the Act. Secondly, the constitutionality of the notification has been attacked on the ground that Section 1(5) of the Act applies only to an establishment and not to a factory engaged in manufacturing business.
3. Learned counsel for the petitioner Shri A.P. Bhandari during the course of arguments was fair enough to concede the first point in view of law laid down by Division Bench of this Court in Punjab Financial Corporation v. Union Territory, Chandigarh, (1990-II-LLJ-825) (P&H) in which it has been authoritatively held that the Central Government was the State Government and that the Administrator of the Union Territory has to be taken to be the Central Government and in view thereof this Court is straightaway inclined to hold that the Chandigarh Administrator through the Chief Commissioner or the Administrator is fully empowered to extend the notification under Section 1(5) of the Act, the same being a Central Government.
4. In order to appreciate the second point, it is necessary to have a look at the definition of the word 'factory' as given in Section 2(12) of the Act and the provisions of Sections 1(3), 1(4) and 1(5) of the Act which read as under:
" Section 2(12):
"Factory" means any premises including the precincts thereof whereon twenty 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 is ordinarily so carried but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952), (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 ground-nuts, 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 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;) The expression "manufacturing process" and "power" shall have the meaning respectively assigned to them in the Factories Act, 1948 (63 of 1948);
"Section 1(3): It shall come into force on such date or dates as the Central Government may, by notification in the official gazette, appoint, and different dates may be appointed for different provisions of this Act and (or different States or for different parts thereof).
"Section 1(4): It shall apply, in the first instance, to all factories (including factories belonging to the Government) other than seasonal factories.
"Section 1(5): The appropriate Government may, in consultation with the Corporation and (where the appropriate Government is a State Government, with the approval of the Central Government), after giving six months' notice of its intention of so doing by notification in the Official Gazette, extend the provisions of this Act or any of them, to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise."
On the second point, with reference to the afore-mentioned provisions, the petitioners' counsel contention is that the provisions of Section 1(3) of the Act would apply to the case of a factory and not the provisions of Section 1(5) of the Act. According to the counsel, the notification could not cover the petitioner's factory by describing the same to be an establishment under the provision of Section 1(5) of the Act as it does not fulfil the conditions of having 20 or more than 20 persons as given in the definition of the factory. While elaborating the point, the learned counsel for the petitioner, Mr. A.P. Bhandari has argued that if a manufacturing concern tike the petitioner employing less than 20 persons is to be covered by extending the provisions of Section 1(5) of the Act by describing the petitioner an establishment, the very definition of the factory would stand changed. It would mean that an establishment employing even two persons can be covered under Section 1(5) of the Act. According to him the factum of the petitioner concern having employed less than 20 employees at the time of the issuance of the notification is a fact which has remained undisputed in the return filed by the respondents.
5. Mr. K.L. Kapur, learned counsel appearing for the respondents while countering the aforementioned arguments has submitted that the Government has got the powers to extend the provisions of the Act to an establishment which in its employment has got less than 20 but more than 10 employees and this having been done, it cannot successfully be maintained that the concerned authorities had committed any illegality simply because a particular establishment is also a manufacturing concern and falls within the definition of the word 'factory'. Mr. Kapur in support of his argument has cited Andhra Pradesh Handloom Weavers Co-operative Society Ltd. v. Employees' State Insurance Corporation Hyderabad, (1988-II-LLJ-515) (AP).
6. Having given our thoughtful consideration to the respective arguments of the learned counsel for the parties, we are of the view that even the second contention of the petitioner's counsel does not carry any conviction in view of the dictum of law laid down in Andhra Pradesh's case (supra). In Andhra Pradesh's case (supra) a similar notification extending the provision of Section 1(5) of the Act to an establishment employing more than 10 but less than 20 employees and wherein manufacturing process was carried on with the aid of power was upheld. The relevant part of the judgment noticing the contention and the discussion reads as under:-
"The next contention of the learned counsel for the appellant is that under Section 1(4), the Act extends in the first instance, to all factories (including factories belonging to the Government) other than seasonal factories. Under Section 2(12) of the Act, factory is defined as any premises including the precincts thereof whereon 20 or more persons are employed or were employed for wages on any day of the preceding 12 months and in any part of which the 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 Mines Act, 1952 or a Railway Running shed. It is argued that inasmuch as the provisions of the Act in Section 1(4) read with Section 2(12) extend the provisions of the Act only to factories employing 20 or more persons, the Act can likewise be extended to factories with less than 10 persons but that such a provision has to be made only by amending Section 1(4) or the definition of 'factory' in Section 2(12) and that such a result cannot be obtained by issuing a notification under Section 1(5) of the Act extending the provisions to establishments where there are 10 or more persons and less than 20 persons employed. In the present case G.O. Ms. No. 297 Health dated March 25, 1975 above referred to extends the provisions of the Act to "any premises including the precincts thereof whereon 10 or more persons but in any case less than 20 persons, are employed or were employed for wages on any day of the preceding 12 months, and in any part of which a manufacturing process is being earned on with the aid of the power or is ordinarily so carried on but excluding the Mines subject to the operation of the Mines Act, 1952 or a Railway running shed etc." It is pointed out that such an extension of the provisions of the Act can be made only by an appropriate amendment of Section 1(4) read with Section 2(12) and not by exercising the power under Section 1(5) of the Act to issue notification.
In my view this contention cannot be accepted. The provisions of Section 1(4) read with Section 2(12) were contemplated by the Legislature as referable to certain factories wherein the employees were 20 or more and that was because the Legislature intended that such factories should straightaway come within the purview of the Act. The provisions in Section 1(5) of the Act enabling the Government to issue a notification in respect of any other establishment or class of establishment industrial, commercial, agricultural or otherwise was introduced in the Act with the specific purpose of enabling the Government to extend the provisions even to factories wherein the employees were less than 20. It was in that context that the notification in question was issued applying the Act to factories wherein the employees were 10 or more and less than 20. In my view, the impugned notification is clearly within the powers of the Government under Section 1(5) of the Act. This contention is, therefore, rejected.
The authoritative judicial pronouncement of the Hon'ble Supreme Court in the Regional Director, Employees' State Insurance Corporation v. Ram Chander, AIR 1988 SC 113 is also very much relevant for upholding the notification. Before the Apex Court in the Regional Director's case (supra) a tailoring shop where clothes were stitched employed about 10 to 12 tailors. The stitching was done at the shop manually and electric iron was used in the process of stitching, the ironing of finished clothes was done by electric iron. It was held by The Apex Court that there was use of electric power in the process of stitching and, therefore, the manufacturing process was carried on and the tailoring shop came within the purview of the notification under Section 1(5) of the Act. The notification under Section 1(5) of the Act employing more than 10 but less than 20 persons was upheld. Although the precise point involved before us was not discussed by the Apex Court in so many words but nonetheless the notification extending the provisions of Section 1(5) of the Act to a tailoring shop employing more than 10 but less than 20 persons was upheld by the Apex Court.
7. In view of the law laid down in the aforementioned judicial pronouncement, we are of the firm view that notification under Section 1(5) of the Act can be issued to a factory which has got less than 20 but more than 10 persons by describing it to be an establishment and that the definition of the word 'factory' in such a situation will not be deemed to have changed. The argument of the learned counsel for the petitioner that in such a situation the appropriate Government may extend the provisions of Section 1(5) of the Act to an establishment employing even two persons cannot really be gone into in the present case as on the facts laid down before us, the only question is whether a factory engaged in the manufacturing process and having more than 10 persons but less than 20 persons can be covered by Section 1(5) of the Act or not. On this question, the position of law, as has been discussed above, is clear and, therefore, while repelling the second contention, we order the dismissal of the writ petition with no costs.