VELIPALAYAM CO OPERATIVE MILK SUPPLY SOCIETY Vs. REGIONAL DIRECTOR EMPLOYEES STATE INSURANCE CORPORATION MADRAS

JUDGEMENT

(1.) THIS appeal is directed against the order of the Employees State Insurance Court, Nagapattinam, in E.S.I.O.P. No. 33 of 1988. The petitioner before the E.S.I. Court is the appellant in this appeal.

(2.) ACCORDING to the appellant, the petitioner is a Co-operative Milk Supply Society, registered under the Co-operative Societies Act. The object of the Society was to purchase and sell the milk to the residents of Velipalayam and Nagapattinam. The milk is purchased from cattle owners and sometimes from other societies according to the needs of the customers. Normally the entire milk will be sold every day and if there was any excess milk it will be stored in a cooler for storage and will be sold to the customers. The Society was carrying on business for the past 25 years. In the beginning the number of employees of the Society was very meagre and they worked sometimes in shift system. While so, the E.S.I. Corporation proposed to apply the provisions of the Employees State Insurance Act (hereinafter called "the Act) from December, 1982 and the Society has been paying the contribution regularly. At that time, it was represented by the Inspector of the Corporation that there may not be any liability for me payment of contribution prior to December, 1982. However, the Corporation issued a show-cause notice dated 28.9.1988 proposing to determine and recover damages under Section 85(B)(1) of the Act. The notice did not contain any particulars. Therefore, the petitioner was waiting for the proper notice with particulars. However, an order was passed on adhoc basis directing the petitioner to pay a contribution of Rs. 21,385/- for the period from 14.5.1978 to 30.11.1982. The said order was totally void. It was further stated that the petitioner society was not a factory as defined under Section 2(12) of the Act as no manufacturing process was being carried out. Cold storage was installed only recently in the year 1984. The Corporation was not entitled to collect any contribution even if the society was liable to pay. The Corporation did not render any benefit or assistance to the employees from 14.5.1978 to 30.11.1982. The Special Officer of the Society made representation to the respondent requesting that the proposed action may be withdrawn. However, the respondent Corporation sought to proceed under the Act. Hence the petition.

(3.) "Manufacturing process" has been defined under Section 2(k) of the Factories Act which is as follows:- 2(k) "Manufacturing Process" means any process for- (i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal, or (ii) pumping oil, water, sewage or any other substance, or (iii) generating, transforming or transmitting power, or (iv) composing types for printing, printing by letter press, lithography, photogravure of other similar process or book binding, or (v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships of vessels, or (vi) preserving or storing any article in cold storage; Of the six sub-clauses above mentioned, sub-clause (vi) brings in the establishment involved in preserving or storing any article in cold storage. The definition came to be inserted in the year 1976 by Amendment Act (Factories Act) 94 of 1976. In the E.S.L Act, the definition of "factory" under Section 2(12) underwent certain changes under the Amendment Act 29 of 1989 whereby the definition of seasonal factory was excluded and separately defined under Section 2(19-A) of the Act. By the same Amendment Act 29 of 1989 Section 2(14AA) was introduced by incorporating a separate definition of "manufacturing process" as follows:- "manufacturing process" shall have the meaning assigned to it in the Factories Act, 1948 (63 of 1948)" Likewise, the expression "power" was separately defined and incorporated under Section 2(15C) and it was defined that the said expression shall have the meaning assigned to it in the Factories Act, 1948.