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3. Aggrieved, the appellant filed a petition in the ESI Court which, by a judgment dated 25.11.1986, while allowing the petition of the appellant-club, held that preparation of eatables does not fall under “manufacturing process” and hence, ESI Act is not applicable to the appellant-club and the appellant was not liable to pay contribution. Aggrieved by the same, respondent-corporation preferred appeal before the High Court. The High Court allowed the appeal and held that the kitchen is an integral part of the club and that cooking of foodstuffs amounts to ‘manufacturing process’ falling within the meaning of sub-section (14AA) of Section 2 of the ESI Act, thereby falling within the meaning of ‘factory’ as defined under Section 2(12) of ESI Act. Being aggrieved, the appellant-club is in appeal before us.

5. Per contra, learned counsel for the respondent submitted that the purpose is to extend the benefit of the scheme to the employees working in the appellant-club and while doing so, the object of welfare legislations, like the ESI Act, ought to be kept in mind. Refuting the appellant’s contention that preparation of foodstuffs in the kitchen does not amount to ‘manufacturing process’, the respondent placed reliance on the decision of this Court in G.L. Hotels vs. T.C. Sarin (1993) 4 SCC 363, wherein it was held that cooking forms part of manufacturing process, as it alters and treats or otherwise adapts an article of food or substance with a view to its use, sale, delivery or disposal in the club. It was submitted that the High Court rightly held that the kitchen of the appellant falls within the meaning of ‘factory’ as defined under Section 2(12) of the ESI Act.

9. The word “factory” has been defined in Section 2(12) of ESI Act as under:-
”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 if 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 (35 of 1952), or a railway running shed.” The above definition is prior to the amendment Act 29/1989. In this appeal, we are concerned with the definition of “factory” as it existed prior to October 20, 1989.

20. Even though the term “kitchen”, “catering” of a club may not be called a factory in common parlance, having regard to the definition of “manufacturing process” and that ESI Act is a beneficial legislation, a liberal interpretation has to be adopted. Therefore, so long as manufacturing process is carried on with or without the aid of power by employing more than twenty persons for wages, it would come within the meaning of “factory” as defined under Section 2(12) of the ESI Act. The contention that the appellant-club is a non-profit making organization would not take away the same from the purview of the Act.