Bombay Anand Bhavan Restaurant versus the Deputy Director, Esi Corporation and Anr.

Employees' State Insurance Act, 1948- s. 2(12), 2(15c) - Establishments engaged in preparing sweets and savories tea and other beverages - Use of LPG gas for operating bottle c cooler and coffee roaster - 10 or more persons employed - Applicability of ES/ Act to the establishments - Held: ES/ Act applies to the said establishments - Said establishmfJnt involves manufacturing process with the aid of LPG gas, which is mechanically transmitted and can be termed as power - D Hence, establishment termed as factories - Order of High Court that the said establishments liable to pay contributioh under ES/ Act, not interfered with - Factories Act, 1948 - s. 2(g), (k), (j) and (i).

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E Appellant-proprietorship concern in the first appeal is engaged in the activity of making and selling coffee, tea and other beverages, and also sweets and savories. U purchased a bottle cooler and also a coffee roaster and is using LPG gas for operating the same. The Deputy Director of ESI Corporation directed the appellant to pay F contribution under the Employees' State Insurance Act, 1948 since it had employed 10 or more employees and was using LPG gas for the coffee roasting machine and the bottle cooler. Aggrieved, appellant challenged the same. Both the tribunal and the High Court dismissed the G matters. Appellants in the other appeal is engaged in manufacturing sweets and savories by using cooking gas and the number of employees employed by them was not more than 17. They were also unsuccessful before

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1140 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

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A all the forums.

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The question which arose for consideration in these appeals is whether the establishment of the appellants' is covered under the provisions of the Employees' State 8^{Insurance Act, 1948 and whether the useof LPGgas is} use of power as defined under the Act.

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Dismissing the appeals, the Court

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HELD: 1.1 Both the appellants prepare sweets, C savories and other beverages in their establishments. Cooking and preparing food items qualifies as manufacturing process. Hence, it is beyond doubt that there is manufacturing process involved in the establishment of the appellants. [Para 23] [1150-E-G]

¶27

D ES/ v. Spencer and Co. (1978) L.l.C 1759; Poona Industrial Hotel Limited v. I. C. Sarin (1980) Ll.C. 106, referred to.

¶28

1.2. Section 2(g) of the ~actories Act, 1948 defines E the meaning of the expression 'power'. The definition of 'power' is 'in two parts. Firstly, it is electrical energy, and includes any other form of energy which is mechanically transmitted. The second part provides for exclusion from the definition of power, i.e., it does not include power F generated by human or animal energy. The definition is wide enough to include all forms of energy which is mechanically transmitted. [Paras 20 and 25] [1149-C-D; 1151-8-C]

¶29

1.3. Mechanical transmission is as opposed to G manual transmission where human agency is involved in the process of transmission. The word 'Machinery' is defined under section 2(j) of the Factories Act. 'Machinery' includes prime movers, transmission machinery and all other appliances whereby power is generated, H transformed, transmitted or applied. The expression

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BOMBAY ANAND BHAVAN RESTAURANT v. DEPUTY1141 DIRECTOR, ESI CORPORATION

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'prime mover' means any engine, motor or other A appliances which generates or otherwise provides power and the definition of transmission machinery under section 2(i) of the Factories Act means any shaft, wheel drum, pulley, system of pulleys, coupling clutch, driving belt or other appliance or device by which the motion of B a prime mover is transmitted to or received by any machinery or appliance. [Para 30) [1152-G-H; 1153-A-C]

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Collins Discovery Encyclopedia, 2005 (1st ed.), referred to.

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1.4. LPG is stored in a cylinder fitted with a tube. Upon careful perusal of the definitions, it is clear that an LPG cylinder would qualify as an appliance which provides power. This power is transmitted by a tube which upon careful reading of the definition qualifies as D transmission machinery as it is an appliance or device by which the motion of a primary mover is transmitted. In fact an analogy between the transmission of electricity and transmission of LPG can be drawn. The movement or transfer of electrical energy takes place over an E interconnected group of lines and associated equipment between points of supply and points at which it is transformed for delivery to consumers or is delivered to other electric systems. Transmission is considered to end when the energy is transformed for distribution to the F consumer. In many countries transmission of LPG also takes place in a similar manner from a large fixed tank. , In case of LPG stored in a cylinder the mechanism of transmission is essentially the same as the gas travels from the cylinder where it is stored to the gas cooking G stove. While transmission of electricity involves a switch, transmission of LPG involves a valve mechanism or a regulator to ensure smooth flow. Hence, LPG is a source of energy which is mechanically transmitted by way of the

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1142 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

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A tube attached to the machinery. The use of LPG satisfies the definition of power as it is mechanically transmitted and is not something generated by human or animal agency. [Paras 31 and 32] [1153-C-H; 1154-A]

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1.5. The establishment of the appellants involves a B manufacturing process with the aid of LPG gas, which can now be termed as power, and as such the establishment of the appellants can be termed as factories, and therefore, the Employees' State Insurance Act, 1948 will apply to these establishments. There are no c grounds to interfere with the impugned judgment of the High Court. [Para 33] [1154-B]

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ES/ Corporation, Hyderabad v. Jayalakshmi Cotton and Oil Products (P) Ltd. (1980) Lab IC 1078; ES/ Corpn. v. Bhagat D Ram and Sons and Anr., 2001 (2) Labour Laws Journal 9.73; Corporation of Calcutta v. Chairman of Cossipore and Chitpore Municipality AIR 1922 PC 27; CIT v. Mir Mohammed Ali AIR 1964 SC 1693; The Workmen of Mis. Firestone Tyre and Rubber Co. of India (Pvt.) Ltd. v. The Management and E^{Ors.(1973)1 SCC813;G.}^{Giriyappa and Ors.v.Anantharai} L. Parekh and Anr. (1994) 3 sec 489, referred to.

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New Encyclopaedia Britannica, 15th Edition, referred to. Case Law Reference: + F 2001 (2) Labour Laws Journal 973 referred to. Para 9 " AIR 1922 PC 27 Referred to. Para 12 AIR 1964 SC 1693 Referred to. Para 12 . · G (1973). 1 sec 813 Referred to. Para 12 y (1994) 3 sec 489 Referred to. Para 12 -1 (1980) Lab IC 1078 Referred to. Para 16 H

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BOMBAY-A.NANO BHAVAN(.RESTAURANT v.' bEPUTY1"f43 DIRECTOR, ESI CORPORATION

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~ : (1978-) LtC 1759' ':. 1..•-1 Refe'rred. to:. · "'-Para '2·3' A ~ t • .,,' :."]c,,.1 ! a.... • ,., t - •• r:: , , ~ • , - : , • '! , ,,. I ,.C \l lJ"" c, :.. <; .(1980h"L~tc. ~06 -- , _:-_ \ , Referred to.~1'.-n .£:::Para:·23 CIVIL APPELLATE JURISDICTi0N : Ci~il Adp1~~(" Ne;: 5~40 .of ·200~.~ .. :, .: '- _:_ _ _,, ., _·:1 c ··1:.:,_:::;r_ 1 • •. -.i ... . ,. er: .,, 4 ,""' t ', ', .r~ Fro~ _C,_ thev _"l_ Judgment y-,. .. ,i, ~-" _·r_ f"' & Cl._r)~ Or~er ·t~ ·_ aateCt · · .. 17,. ""'. ~· 7 .2093· · •J of the .~ ,~ ~ ~igh : .... ~ ·e ~ ~oSl~Jo! .. ~ ! i~ ~ ~as~~-t?~a·tfl~~~.galo~~ '•·•. · , ' ' _.t_ . !~-,:~~~·A., •· {~ . ~' I~~ ~8c.~152,?J}9Q~ • · '' · ·• ••• ...~ ;. ,:;.,.-c__,,....;......,.1 :.,;o~., •~ ""; lo'!:Q -~ ~"'" ' •.., ... 1 ~.: • ...,, '- ~ ~' '~,r;.~i '' ·"~~ _....._ i~ _j,;; .. ' ':) :.. ·.··~:;~·.df ~ hWfTH ::>1; , ~~·! •-r --;.,. ~ :~~ .. : , '~ ~J- ·j·::(·; .... :t ·"'.v ·~C..J°t r.·;·.j . .1;ii,.. __ ~ .t-.. _ ... ~~-.. ~ -i1 .J .. ~z 1 .. t. c C.A !NO;t5639 .Of2004:. tO rncii '.:' _ .:• ,; <rv• . j • : : ] :,;;,, ,.-:- , ; ' \ '•JJ....:l., .. -01 .. ., I~~ r1Jiv1 ot·· !iMOJ c~~!!b~~ I L·' ~ _tr·r~: .• :r 3,-'Jf --· - :·i.I Sudhir Chandra, Parijat Sinha, Reshmj Rea Sipha, S.C. Ghosh and Debapriya Sa manta for the Appellant.'"' '"' -· '-·

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·, :'r ,.,,.r 11:10L: \td .nn ... t;·1:.."Ch:o ,~~~ - :-.. ._' ....... ,,; (\J __ ~~c t. ··;· t: D :t;:;;{·J·c,ran2j~, fprJ~~ ... ~~~P,ment~ .. , .'. , -"'., ·k M:q: i "' ·, · ·The ;Judg'meh(ot ttt.iqLrrf:was diivered 6y_ ·: :>.\ · •• r::o ~ · t,"·nr•'.:?.'1. d ..•. 1 '. ::\tJn··: ~ .. t. ~ ·-, ··fl,..;_'-i--!81 .': .. :.- -·t'.H.t.:DAPTU;j/1. if'liese appeals'are-direeted:against the judgment ·mdrder. passed by1heiHigh:Gourt:-ofKatnataka .rat E Bangalore;· in .Miscr-First-Apptal~ No.4152 of ;2001:'and :Misc.' F.irst Appeal',No.C1954 of··2oo2:dated 1 f7.07:2003;:t:·::,: s'-l'.·-:; ;:'' 6;;~ i:, c r,;1i~,,.ttsin r,·;·· .:Jbr.u t .. --:⁴ !- i:_ t( .-. =n -'"1,·> :.,c-i:,i5e ,, ,,.2:: rjeflx s!atecj the_Jcts __ are ,as 1fo/l9ws:-.,1~ •. ·;: i:11s J"l·. The appellant in Misc. First Appeal is:1t4.pr8prfl1tf§h1 F con.c~,rlJ aoci is is _e{lgage~ .. in ·_the. aGtivity in ·_the. aGtivity ·_the. aGtivity aGtivity of mking .and slling coffee,. tea· and otepbeverages,' and ;also sweets ,and svortes;)Jt ·iS11registerectr·under Shops· c;1nd • Comme(cial c;1nd • Comme(cial • Comme(cial Est?b!is.hments Act. ,Sometime in the, year, 199.71 and ·1998,: Act. ,Sometime in the, year, 199.71 and ·1998,: ,Sometime in the, year, 199.71 and ·1998,: in the, year, 199.71 and ·1998,: the, year, 199.71 and ·1998,: year, 199.71 and ·1998,: 199.71 and ·1998,: and ·1998,: ·1998,: th~~ appellant1 had , , purchased, a rb.olUe-rb.olUe- coolr andt:_ls.o andt:_ls.o a , coffee ·G roastr:Acco.rcling to the appellant, even after the appellant, even after appellant, even after even after after uch ,p4rchase;, ithad.:nOttrripJoy.ed more than .10, or more,emplqyees. than .10, or more,emplqyees. .10, or more,emplqyees. or more,emplqyees. more,emplqyees. - , -;·1i ..... ~ ~~f.:">; .• ;.Y,.f· ::.d '---nv. -: . ,JL J-.--¹ : ..... • ~ r!; i .... ;. '-\ .,~ j.] J:lk ~ .. lh appe)l!:!,O ta_ts. tt'~~. powr,'!1> '"-!'1 ~~~~)Qr: opfating,c9~fee. i :j , l1l.•: ... _,.1 ... ."'1 roqster .,'. t, .. ,.t iL ar:ic:i.bQttle ii ,:.,... . ,j ,,, . ...., (H c_oqler. J _It ' i. . jt ·' f,urthr • ~·-...'...: ... •) ~ase, \ .....~ ' H

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con.c~,rlJ aoci is is _e{lgage~ .. in ·_the. aGtivity in ·_the. aGtivity ·_the. aGtivity aGtivity of mking .and slling coffee,. tea· and otepbeverages,' and ;also sweets ,and svortes;)Jt ·iS11registerectr·under Shops· c;1nd • Comme(cial c;1nd • Comme(cial • Comme(cial Est?b!is.hments Act. ,Sometime in the, year, 199.71 and ·1998,: Act. ,Sometime in the, year, 199.71 and ·1998,: ,Sometime in the, year, 199.71 and ·1998,: in the, year, 199.71 and ·1998,: the, year, 199.71 and ·1998,: year, 199.71 and ·1998,: 199.71 and ·1998,: and ·1998,: ·1998,: th~~ appellant1 had , , purchased, a rb.olUe-rb.olUe- coolr andt:_ls.o andt:_ls.o a , coffee ·G roast~r:Acco.rcling to the appellant, even after the appellant, even after appellant, even after even after after uch ,p4rchase;, ithad.:nOttrripJoy.ed more than .10, or more,emplqyees. than .10, or more,emplqyees. .10, or more,emplqyees. or more,emplqyees. more,emplqyees. - , -;·1i

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1144 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

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A^{t.hat,since it has not employed 10 or more employees, the} provisions of the Employees' Sta~e Insurance Act, 1948 (hereinafter referred to as 'ESI Act') are not attracted to the appellants' establishment.

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The insurance inspector of the ESI corporation had B visited the business premises of the appellant on 11.12.1998 and 07.01.1999, and inspected the records from April 1994 and had recorded that the appellant had employed more than 10 employees as on 01.04.1994, as per the records and was using power for the coffee roasting machine and the bottle c cooler and as such the appellant's restaurant stood covered under the ESI Act with effect from 01.04.1994, and therefore, the appellant should have started complying with the mandatory provisions of ESI Act.

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D 5. The Deputy Director of ESI corporation, by incorporating the report of the insurance inspector by his letter dated 18.02.1999, had directed the.appellant to pay contributions from April, 1994, and submit Form-01 at the earliest. In response to the aforesaid letter, the appell~nt by its reply letter dated E^{08.03.1999, had brought to the notice of the Deputy Director} of the Corporation, that, after purchase of bottle cooler and coffee roaster, had not employed more than 10 employees and, therefore, they are not covered u.nder the provisions of the ESI Act and, therefore, they are not obliged to pay any. contribution F^{under the ES.IAct.}

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The Deputy Director o(the Corporation by his subs·equent letter dated 09.04.1999, had informed the . appellant, tha(.on·verification.of the.record$ .Produced before the insurance inspector, it was observed that the· appellant is G using LPG gas for preparation of coffee, tea and other beverages and, therefore, covered under the ESI Act and therefore, appellant has to comply with the statutory provisions of ESI Act, failing which contributions would be recovered by resorting to coercive measures as provided under the ESI Act. H The proposal so made was objected. to by the appellant, inter-

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BOMBAY ANAND BHAVAN RESTAURANT v. DEPUTY1145 DIRECTOR, ESI CORPORATION [H.L. DAITU, J.]

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alia, contending that the use of LPG gas cannot be equated with the use of power and as per the provisions of the ESI Act, it is only when electric power is used in manufacturing process with 1 O or more employees, then alone ESI Act could be made applicable and, therefore, requested the authorities to drop the proceedings, as proposed in their letter dated 09.04.1999.

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¶94

Since the explanation offered by the appellant was not satisfactory, the authorities under the ESI Act, issued a demand .notice, inter-alia directing the appellant to pay contribution for the entire period, i.e. from April, 1994 till the date of inspection. c Since the appellant did not comply with the demand so made, the Deputy Director of ESI Corporation, passed an order under Section 45-A of the ESI Act, ordering the payment of contribution under the ESI Act for the aforesaid period.

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The appellant, being aggrieved by the aforesaid order, had filed an appeal before the ESI Court and Additional Industrial Tribunal, Bangalore, as provided under Section 75 of the ESI Act. The ESI Court dismissed the application/appeal, on the ground that use of LPG gas also amounts to use of electrical energy for the purpose of manufacturing activity and that the manufacturing activity is being carried on with the aid of power and since 10 or more employees were employed, the appellant is covered under the provisions of the ESI Act.

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The appellant had carried the matter further by filing Misc. Appeal before the High Court and the same was dismissed following the earlier ruling of the Court in ES/ Corpn. v. Bhagat Ram and Sons and Anr., reported in 2001 (2) Labour Laws Journal 973.

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10, The appellant being aggrieved by the judgment and order pa.ssed by the High Court in Misc. First Appeal No.4152 of 2001, is before us in this appeal.

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The facts in Misc. First· Appeal No.1954 of 2002 are more or less similar to the facts in the other appeal which we

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A hav,e, a!raqyi;·'lttcq, T!l~ _ .o_QIYesJJIPr!J f~.<?U~.A.~~~' t~!: appllant~ ~~ !hi~ .. appI trmr1c!ri.Y"'Et~!.':1~ §.YJ:i1Y1 using "okir;l9:9~~ i'1d tJ~Y'!lfaf ~~P.9.Y~~~ ·,~~glydLY1 thm. ws_nQt}TI9~~Ja!1.1J,s(~~~~~~~~~)i,\ia .... ny .P,int;ie! t1v Th.ee~~ o.~n9~~sJ~!&fn !l;.mif9J:U.'!'..::. &idR011qqs B ,- 1·2. ir1J 1:atrriea' 1~~nior' 1 dBJ'nsFfC>t f11\·1ip~~ini'R .sbJtte.. t.~~~ 1!iqyf!e_d J~~!o!e,ym. ,g~~ :-C'.l:fQ. f9!.il}o.rr> by t.se,lf Js. !)t !:!,rQYir!d: t!J.e. \t')S_mj§~~~hgf i 9?. .l<? _}e,J~!~ url)r:s !.!?t.t~~~rs.n:iJion ... oj. "!Y. ,r~~gy :.;ffi!aJ?ft!!]Q;p_n, c ti_s. f?S}J·: tJ!e ).?JQe~ nip~ .,{ls~! 9_91;\tP,Jl}.t, ;.;J!.9nY1 when ;t 9.J~jgn!t~~ th,r,c;>LI,9h .. t~~. ~~f!1r!I tn~.)Q~~~~ nvn~ into et.~ .. nrgy,~~.n£,:fl.,§~5~~ ~~~!e,g;:ptf!!Jn!~~in..JgtY1 for~. :.,Qf;~!.~rgy: !~~tn_a,t,v.ly; it; J.SJ c9me_'!,d~~cJfJ.J~~~Q; assur11rfg~~h.b.!-.:.,:·9,~~ -;i§, i(cm. 91 ,!J;9Y .,o! JL~,1n9t /mechanically transmitted, because the term· 'mechanically' , D pertairis·toor'.involve:s' r'nachins:;and.a'gas)cyliner.;isnferely :a containertand the:tl.lbis not: a;machirieand,, therefore·, ,the; 'trari·smission 1of)gaS-1through:the'.··tube1is8n6tra-.mechanical; tran$missibn"Jeither:, ff is cfurther.'submittea]hat rtne.meariiffg ;of. the expressiomtpower'sasdefineaundei SectibnL2(g) 0Lthe1 . E Factory rAct; rmeans'Jelectrical.:.·energy; .dr1anyt;.other: fohtNdf,; ·e·nergy,rWhich:isimechanicatly:transmittedhtherleamed;seniot. counsetby·1referringJtO''diCtionary;meanih·g-.of;the··.expressiom 'mechanital'. would submit;,-tt:iat;wm·echanicar.:'pectains!lo:;or~ involves machines operateq or produced by a machine made F ·a'nd 'th~ meanlg7Qf te 'Efpfession jmachi&ilfs"lan~'appifatus made' dr 0rganiz&8~ iteractiiig 'parts:¹ wHich⁰ fuksrrWa mor~ suitati1¥· t ormntor · )0esired 11tundi1bn ft arHifWf brsystem i . ' . ,,. l,c,'i··-l{»c:'• "\f'ii "tit: ?."''!'·.) ,,r-m1~.,..• 1•··-·.4 ,, reserhbling such'an-'apparatas in ·atlng With regulanty·as a result of interaction of its component'pa:rts'anH;ttt\e:rfo(e,cit~;isi G obvi9_1;1s, t.h~! ,h~,-at qy.IJ9,9,~~~~Jli~.Jty,q~;iSQ,et7 tDl3reto is not~ IT!fi !'iitjimrJY,.£'m.rB.;9~~~~!'£M!l·W~n> is not a mactiine. The leJg~~~s..Of1 ;CEYU~~,si9 eir eb;Pi submission invites our attention to the observations made by Privy Councff~;fa ·.th-e\ca~~:. ot~;cocpotation:.of Ca1cutta v . . H Chairman·of Cossipbre and,,Chitpbre' Municip.ality,e[AIR. 19221

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BOMBAY ANA-ND·BHAVAN'"'RESTAURANT v.· DEPtJTY1147 DIRECTOR, ESI CORPpRATION [H.L. DATTU, J.]

¶108

PC'·27], wherein"fhe cC>rt''explalned the· mea'nin'g of A 'Machine,Y 'to mean some mechanical contrivances Which by theinselves.'6f in combiation 'with oni'' or more other mechanical' contrivances, by⁷ the combined movemenf and interdependent operation of their respective parts 1 generate power, , J 'Yl~ H-f'~ or evoke, ,.,. •' "l)-;"""' • modify, ·. "' . 'lo.. • apply I- J . or direct ~ J -, " • natural > forces • with - the B object It is.lo.br9ught , . ""'·~ -, in , .. ' each ! • ... · case ~ o , pur.rypti9e ' of (;i effecting I • i _trat _ ' so , • tb.interprtti9n.of definite , , and ~ specific • ~ ~ the a result. word Y- 'Mphi~~IY' by. !h1 .f>i. Cc;nmcil has. !ben 1 approved by this CQurt (') in ~ t the ' ') · caseof ' . I [ ,> ' C/,T_ t v. Mfr Mohammed • ; - - • ';.. Ali, [AIR 1964 SC 16~3]."'Lstly, it is ~~bmied tat, ie interpretatjgp af beneficial c tegili1!tion.~~~uld 119 e -treth7 .too,e1.to,ropin an industry which WQt,ild ·not fall,within. t~~ ambit. of the Act.. ~~fennce is mad'e. Wor~men. -f l to , ~ the · 'of.. . observations M(s.·.~f.i[e~~pf!e, . · ' ,, • ·of I Tyr~,,a,~c1 · this '...f . Court· '-' ~. Rlfbb,f!f fn the • ~ case 90. • of of India The -"" (Pvt.) Lfd.: 11: T.~e., an,<J,g'!rryent,\apf} 9~., [(197,3) ·1 sec 813) 0 and ~ G. : t'> _Giriyappa_ ,. - . '· _and._ J • _}',.:-)( Ors ..._ .. _v. ... • ••• _Anantharai .J_ • ., ' ' ,,. " ~' _L. Parekh.and_ ; • • - •• c _Anr.,_ [(1 ~~~ .. ~.~~C:~8~]. }h~ :s'i~·a9-~. s_ubstari~e of Jhe.submjssion of ,h~. tearnea . s.er:i1p,r coun,sel. ~~,_that LPG. gas canpot be consider~d - -111)1j .1·"'·f· asJ>ower i' ·-. ·:i. c,¹ '.. as •· defined :11J·J - ~~..1 I in Section.2(g) '.,_, 'V ' of ' the. Factories Act, 1:948., .. , ,' ; .•.. 'cic:.-1 , 1 • :" J: -.-. . . '; . E

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The learned. counet appearingJor respondents submie{t~_af the u~~ ·af LPG gs,~~fi .the _purpos.e of cooking '. ~ haJ? be treated as use.f_f:>olllf~~-.~~~J~~refore,.he appellants are r required J t : J ( fUt< to ,c... comply . ...... f with ~ ltj .J'A the.provisions """" ... , . 'i' , i H ... · " -ofJhe. . ' ESI Act. .14.Tne issues that require fo;be_decided in these appeals are:-"'· ;;:·.r. -., .t;,.'' ,. .··i, ,... iL1 :}·i_ ·- 11'' (I} Whether the establishment of the appellants' is covered under the provisions of the Employees ... ,i · ::.. Statelnsurance .'Xct, 1948. · · - · .; -:-.. . '. ~ ! ~ ·-" :! - ·~ d. ~ 1f1f)· ·.,,.Whether the useotLPG gas is use of power a·s · - . ; K 'r· i0defined under the Act ' ,- ",i ·., '. :~ . . f;_ ~ .... :.:.":)', 'l', i~~ 'r·'. ..... . . 1' I • '1_5.!i"T:he :.F.'!'P'~Y.e.s rState Insurance .Act: is, beneficial

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1148 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

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A^{legislation.Themainpurposeoftheenactmentas the} Preamble sugge.sts, is to provide for certain benefits to employees of a factory in case of sickness, maternity and · employment injury and to make provision for certain otber matters in relation thereto.

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B

¶119

The Employees State Insurance Act is a social security legislation and the cannons of interpreting a social legislation is different from the cannons· of interpretation of taxation law. The courts must not countenance any subterfuge which would defeatthe provisions of social legislation and the courts must c even, if necessary, strain the language of the Act in order to achieve the purpose which the legislature had in placing this legislation on the statute book. The Act, therefore, must receive a liberal construction so as to promote its objects. This Court, in the case of ES/ Corporation, Hyderabad ·v. Jayalak~hmi D Cotton and Oil Products (P) Ltd., (1980) Lab IC 1078 has observed that the ESI Act is a ~ocial security legislation and · was enacted to ameliorate _the various risks and contingencies which the employees face while working. in an establishment or factory. It is thus intended to promote the general welfare of E the workers and, as such, is to be liberally interpreted.

¶120

The ESI Act is made applicable to all factories, including factories belonging to the Government other than seasonal factories. Proviso appended to Section 1(4) of the Act carves out an exception. Sub-~ection (4) of Section (1) of F the Act shall not apply to a factory or establishment belonging to or under control of the Government whose employees are otherwise in receipt of benefits substantially similar or superior benefits provided in ESI Act.

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¶122

G 18. Section 2 of the Act defines the meaning of certain . expressions for the purpose of the Act. Section 2(12) of the Act defines the meaning of the expression 'Factory', to mean any premises including precincts thereof, wherein ten or more persons are smployed or were employed for wages on any day H of the preceding twelve months and in any point of which a

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BOMBAY ANAND BHAVAN RESTAURANT v. DEPUTY1149 DIRECTOR, ESI CORPORATION [H.L. DATTU, J.]

¶130

• ~. manufacturing process is carried on with the aid of power or A is ordinarily carried on or twenty or more persons employed for wages or were employed for wages on any day of the preceding twelve months in the premises including their precincts where manufacturing process is carried on without the aid of power. B 19. Section 2(15c) of the Act is inserted in the Statute Book y by Act No.29 of 1989, with effect from 20.10.1989. The sub- I section defines the meaning of the expression 'Power' to mean as the meaning assigned to it in the Factories Act, 1948. c 20. Seetion 2(g) of the Factories Act, 1948, defines the meaning of the expression 'power' to mean electrical energy or any other form of energy which is mechanically transmitted and is not generated by human or animal agency . --', D 21. Essentially for qualifying the establishment of the appellants as factory, the following conditions needs to be satisfied:(i) Manufacturing process was being carried out in the E establishment. (ii) There was power being used to aid the manufacturing + process being carried out. {iii) 10 or more workers were working in the establishment F any day in the preceding twelve months, if power was being used to aid the manufacturing process, or (iv) 20 or more workers were working in the establishment any day in the preceding twelve months, if power was not being used to aid the manufacturing process. G -... '·22. Therefore, first it needs to be proved as to whether there is manufacturing process carried on in the establishment of the appellants. Manufacturing process is defined under Section 2(k) of the Factories Act as:- . H

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nBS(iii}"-generaling ·,transforming:,or;transmittirig <powst; or 1': 1 ?e
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¶137

(iv) composing types for printing, printing by letter press, ant litliographyr·pfiofog ravure ·or; Cither sirnilaf:pro&ss!or. tfook 'H:P·bihdingiior.Ji:· :"s·· .. ;, '}j ·-·s·t,',Jq' r.rnze:qx.s srit kJ Gnincs"-"i bstl.ni::;nmi vri:dns.".' .. )<"n i1 tiidw vov:-:>'1(; \• r11011srlJo \llG 10 (v) constrtii::tQ r re_con~tt!ng;fP.!~~9•J~~~igQ. :flnis:hir:m 1 t.; or breaking up ships or vessels; :i;;; - {•,..J ,,.._ • ;,'1":i: ·· --·rl· ~ c.,li ;I·., 0 ·11•c1 - - .;)d; · .; Qf'tX1:R'Jf) ... >.'' · -·- . .H \1 ·lj b1Tn· ·'·¹ .:h.:r.1'j - · ·" I'' ; ..., -;rf (Y:i) :.pJsrving. ·:OJ :stqrig ,aQYcrti!~ ,ii~~~lgts!Q.rage.:;: ·,:,qas ·;---,~~.:<:;E-,:

¶138

Both the appellants prepare sweets, savories and otlier' ·- byragesinJir-esbljshmerit§;, lt:.i i s;rttle_ ;p_oit.igp:o_f law E that cooking and preparing food iten:t.squ_IW~~ 3 as manufacturing process. In the case of ES/ v. Spencer and Co. [(1978)lf:l!C -1759],ithe Ml:idras ldigh'.COlJrt¹ held/Whileide'aling with the case of a hotel run by-Spohsoti-'.and Company;•that pearation of coffee, i:>eeling of potatoes, making bread-toast, F::; etc:';in1ci'hotf; ihv0ive1"'manufactoi"ihg) pfocess''S'imiiarly the Sarin, Bdhtbay [(1980) 1H}gh '..99k1i(P~~'flji/nfi,'qttl-7ofiJi1Lfibe3 t:Jt? 1 oaf Held ttiat tile kitttfeR attche<:tft8 v; 1 Hotel }~ C. - Blue"°iamond .is_.:i., ,...~'L;t-"H..;,run.,by ...;.L; •:t ,' ,·, th_e ., .. PetiHoners, therein, , .:...'n. .•• rJI ...... ,._.,;1:....; • -,\jl ~ .. •V ,should ,be \ .. · .• ·~r q9ir,q~~~:,e ;f2WrY' fo~,~~~vP.UJPR,S_~.1.f eiE3\J"}Rt :tte8;· it G.J 1s beyond douU.9,,P,,re;~~·tmn~{9~~!'D .. ~rps~~~. 1.vo1ed in the establishment bf the appellants. '

¶139

BQMBAY ANAND BHAVANrR.ESTf~~NT v'.. Dl;PU:f'1151. r DIRECTOR, ESI CORPORATION [H.L. DATIU, J.] .

¶140

'beyond doubt. So, the essential question which.comes. up forr I_ consiperation is whett,ier thre pa ee!l use of pqwer int~~ .. aid of the manufacturing process. It. is -te ,c9nten_tion ·OfJhe . respondent corporation that use of LPG gas amounts to use of power. , . - · ,,-;· · ·.,.· ,, ?. • ·: · ·- , :· ' l--~ ~ •• - • ~. t :~~, t . \ ·' 'I; 1ud -~ ~ . .. . . Bi ~ f_S.:. The definHiorH)f'Power'..is in .o. par:ts .. firstly, itjs \ elctrical eryergy, ,~~c;!i.ncuVides for exclui.onJr.o~ theefil'!ition of.powef,-i.e.-;:itdoes.:< nqt, incl4de-p?wr generatecLby,human or animal energy.The) C· definition is "V,ie_enough to:include all_forms-of_energy which., · is mechanically transmitted. We will revert back.toJhis definition litfle, later .. after; un.derstandiog what is LPG Gas;,and;the. · mechanism e_mployed vt_h_iLe,ra[lsmitting the energy from,,-LJ?G COOtainerS. ,,· :y'-·'iC;y ;-i r 1 <·, . "'.)(-= .'·;J .. .:.-11 ':'-' v'.:,,;_ ·:.--I - -h=-r- :· ·-{,,.;., ·t~ .·.' ,,;, · ·' -:Cr.rl• • D~: ,:;.,.,; 26. ! . ~ • 'Th·e· ~ ., f ....... New 1- J i , • - ·Encyclop"aeaia· ~- ,. f" - , p .- i . ' Britannica,· 15th, Edition,. : • -· - . - ' t . . . ! . ; • . ~ co,l),t,ir- aiq\e 3on pqu.fieppto/U!Jl9fwhjc~. i~. alq 11 cad Lf. G-· .?f. l.:~:1 ~~e art1cl ,1.~ 1eragJ&~,:., _- ~· . ,, _ =.i-:: "Liquefied petroleum gas, also¹ caUed LP. Gas br PG;1 a:n{'t E- of several liquid mixture"of'ttie'volatile · hydrocariic>ris', .:l ,.-·rf-rly propene, propane, ! '. .s '.~60.orr_a, ,.. · l ·. ~ .•-e.' portable butene, .... ·I fuI_ and. puree butane.Jt , .,,. •. a_:i)rducti£P. . . .was ~ ·...,, · used , • . as 6 ·1· ~ and -! consumption • ' \le for :1:; both r.,; domestic 1f:. '. --. and ''·' .industrial ~ -: ; ............. use.have.: c.t~ 'J~ .... ,' · •r; pa~de~ 1 .Y,erl sm.c. ~ tr,g1cI c?rnme[c,1fi 'Yf Y ii , r:r'f.°- ,c;>,,wnh~~~.-.,a,IJ(!YJe-~ .. ~~-- I! .s,.a vol~~~I,. •' F · . : Q'le~ctrJl·.,P;-Q?J!~m; ~~~~~:s a·1a!,~'¥ pJ~~aution,.: 2^•.

¶141

LPG' or LPG"gas ·is tne ·abbreviatfOri' of liquefied petroleum gas. This group of products includes saturated--·-. hydroa.r,ons, RQpane nd .btn~. whi9h ca~ e stored .and G.) tra~~~~.ttedpate,l_y .9_r a '3-"ilir~. Th,is is.?te,dJiq4ee,,,, petrol_lJm, ga_s, bec;au~~' thee gesJiqu~fy unJ:mqerat:h,. pressure. industrial, horticulture·, prosses. ~ l • LPG F. ..,, ·' ,Cf·' · is p,an used . b ·I . u,d-J~~ ' as· agric1.mu-r1. l•· '.ii·a fuel for'aome$tic {cooking), .. ";..t· ,I an .1 ,.·ti 1 ,atqn:io1ve^,., .?.'l'7J :6eatjflg r·1r' "i ·,.1 ._ .# ~ f>j1 f~~J. til~.d. t r '· J• dry.ing·: ,w j ia. ,,. ~),_. ~ ,... .,• r :•: ~ i H H

¶142

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¶143

1152 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

¶144

A^{propellantforaerosols, in addition tootherspecialists} applications. LPG can also be used to provide lighting through the use of pressure lanterns.

¶145

The·gas cylinder is filled with a liquefied fuel gas, such B^{asliquefied butane or the like, having a relatively low activity.} A portion _of the liquefied fuel gas is enclosed in the body of the gas cylinder which is vaporized, causing the internal pressure of the gas cylinder to be higher than the outside - pressure. Therefore, there is conversion from one form of eneigy to another. A valve mechanism h~ving a stem is c mounted on the body of gas cylinder. The gas cylinder is joined to the gas cooking stove so that the stem is pushed inwards and the valve mechanism is opened. Thus, the fuel gas is discharged owing to the internal pressure. The gas cooking stove incorporates a body, which is provided with a valve D mechanism for supplying fuel gas to the burner and an operating member for opening/closing the valve mechanism. The valve mechanism in gas cooking equipment is to reduce high pressure gas supply to a lower working pressure. This is done to ensure steady supply of the gas at constant pressure. E (Assistance is taken from the internet).

¶146

The submission of the learned counsel for the appellant, is that in view of the definition of power in the Factories Act, any other form of energy requires to be 'Mechanically transmitted', which essentially involves use of F machinery. It is also suggested that 'mechanical' pertains to the use of machines and, as such, the transmission of LPG from the cylinder through a tube connected thereto does not qualify as a machine.

¶147

G

¶148

G 30. Mechanical_ transmission is as opposed to manual transmission where human agency is involved in the process of transmission. Transmission is defined in the Collins Discovery Encyclopedia, 2005 (1st ed.) as "the extent to which a body or medium transmits light, sound or some other form H of the energy". The word 'Machinery' is defined under Section

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BOMBAY ANAND BHAVAN RESTAURANT v. DEPUTY1153 DIRECTOR, ESI CORPORATION [H.L. DATTU, J.]

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of the Factories Act. 'Machinery' includes Prime movers, transmission machinery and all other appliances whereby power is generated, transformed, transmitted or applied. The. expression ·prime mover' means any engine, motor or other appliances which generates or otherwise provides power and the definition of transmission machinery under Section 2(i) of the Factories Act means any shaft, wheel drum, pulley, system, of pulleys, coupling clutch, driving belt or other appliance or device by which the motion of a prime mover is transmitted to or received by any machinery or appliance.

¶167

B

¶168

LPG is stored in a cylinder fitted with a tube. Upon^c careful perusal of the definitions, which we have noticed earlier, it is clear that an LPG cylinder would qualify as an appliance which provides power. This power is transmitted by a tube which upon careful reading of the definition qualifies as . D transmission machinery as it is an appliance or device by which the motion of a primary mover is transmitted. In fact an analogy between the transmission of electricity and transmission of LPG can be drawn. The movement or transfer of electrical energy takes place over an interconnected group of lines and associated equipment between points of supply and points at E which it is transformed for delivery to consumers or is delivered to other electric systems. Transmission is considered to end when the energy is transformed for distribution to the consumer. In many countries transmission of LPG also takes place in a similar manner from a large fixed tank. In case of LPG stored F in a cylinder the mechanism of transmission is essentially the same as the gas travels from the cylinder where it is stored to the gas cooking stove. While transmission of electricity involves a switch, transmissron of LPG involves a valve mechanism or a regulator to ensure smooth flow. Hence, LPG is a source of G energy which is mechanically transmitted by way of the tube attached to the machinery.

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In our view, the use of LPG satisfies the definition of power as it is mechanically transmitted and is not something

¶173

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¶174

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Bombay Anand Bhavan Restaurant v. the Deputy Director, Esi Corporation and Anr.

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Bombay Anand Bhavan Restaurant v. the Deputy Director, Esi Corporation and Anr.

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