IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
F.A.O. No. 708 of 1984
Date of Decision : November 19, 2008
Municipal Corporation of Amritsar
....Appellant
Versus
Employees' State Insurance Corporation
.....Respondent
CORAM : HON'BLE MR. JUSTICE T.P.S. MANN
Present : Ms. Ravinder Kaur, Advocate
for the appellant.
Mr. Vikas Suri, Senior Standing Counsel
for respondent-E.S.I.C.
T.P.S. MANN, J.
Petition filed by the appellant through Electrical Engineer
under Section 75 of the Employees’ State Insurance Act, 1948 (for short
‘the Act’) with a prayer for quashing the order dated 17.4.1970 issued by
Employees’ State Insurance Corporation (hereinafter referred to as ‘the
Corporation’) was dismissed by learned Employees’ Insurance Court,
Chandigarh on 31.5.1984, which order has been challenged by the
appellant by filing the present appeal under Section 82 of the Act.
According to the appellant, it was engaged in a public utility
service of supplying electricity to the residents of Amritsar City under a
licence issued by the State government. The appellant had been purchasing
electric energy from the Punjab State Electricity Board (for short ‘the
Board’) for the purpose of use and distribution, within the area of supply.
F.A.O. No. 708 of 1984 -2-
The electric energy was supplied by the Board on certain points in three
phases A.C. at a normal voltage of 11 KV for H.T. supply and the supplier
was also at liberty to supply 400 volts for L.T. supply. All points upto the
supply were installed by the Board. The appellant had been purchasing
electric energy from the Board and supplying the same to the consumers
in the city of Amritsar. It was an establishment, engaged in the supply of
the electricity and not engaged in either manufacturing or producing the
electricity. The supply was given by the Board on various points in the
city and the same distributed and supplied by the appellant by laying
various supply lines in the city. The appellant had established sub stations
and administrative office, known as Municipal Power House. In each sub
station, maximum number of persons employed for wages never exceeded
nine. It was only the head office where administrative work was done,
which was employing more than 20 persons. The electricity was not
manufactured at any place by the appellant and, therefore, it did not fall
within the definition of ‘factory’. Thus, the order dated 17.4.1970 passed
by the respondent-Corporation covering the appellant under the Act was
illegal and liable to be set aside.
While contesting the claim of the appellant before the learned
lower Court, the respondent-Corporation pleaded that survey and
inspection had been carried out by the Corporation, wherein it was found
that the appellant was manufacturing electric energy and transmitting the
same. Though, the appellant was purchasing the electric energy from the
Board and distributing the same thereafter, yet it was transforming the
F.A.O. No. 708 of 1984 -3-
same in the main switch house through various sub stations in the city.
Apart from it, there was a workshop in the main switch building. The
appellant had employed more than 20 persons. Hence, it was rightly
covered under the Act.
The contest between the parties was on the following issues,
which were framed by the learned lower Court :-
1. Whether the impugned order dated 17.4.1970
covering the petitioner is illegal, void and is
liable to be set aside on the grounds
mentioned in the petition ? OPP.
2. Whether the petition is within limitation ?
OPP.
3. Whether the petition has been filed by a
competent and authorised person ? OPP.
4. Relief ?
After going through the evidence led by the parties and
affording hearing to their learned counsel, learned Court below held that
the appellant had been rightly covered under the Act. The petition filed by
the appellant was also held to be barred by time as it had been filed after
the expiry of three years from the date of the order. Accordingly, the
petition was dismissed with costs.
Learned counsel for the appellant submitted that the appellant
did not fall within the definition of ‘factory’ because number of persons
employed had never increased from 20. Moreover, no manufacturing
F.A.O. No. 708 of 1984 -4-
process was going on in the building of the appellant. The appellant had
been purchasing electric energy from the Board and thereafter distributing
the same to the consumers under the licence issued by the State
government.
The stand of the appellant has been opposed by the respondent
by submitting that as the appellant was engaged in the manufacturing
process because of generation, transformation and transmission of electric
energy, it fell within the definition of ‘factory’ and therefore, rightly
covered under the Act.
Before adverting to the arguments addressed by learned
counsel for the parties, the evidence led by them may be analysed. The
appellant had examined K.K. Vohra PW1, Ram Rattan Gupta PW2 and
R.K. Salwan PW3, whereas the respondent-Corporation had examined
only one witness, namely, Hari Mitra RW1. It has appeared in the
testimony of K.K. Vohra PW1, who was Chief Electrical Engineer, that the
strength of the employees of the appellant was 700 in the year 1968 and
kept on increasing till the year 1981 when it was 1000/-. According to
him, the electric energy was being distributed by the appellant through the
distribution lines from one point to the other. As per Ram Rattan PW2, the
electric energy was distributed from the switch house. However, he could
not deny that the electric energy was transformed and transmitted from one
switch house to the other by the appellant. R.K. Salwan PW3 went on to
state that the voltage of electric energy was controlled through setting up
F.A.O. No. 708 of 1984 -5-
of transformers as a result of which the voltage was brought down to the
level as used in residential houses and industrial concerns. There were 86
sub stations in which the said process was going on. The electricity was
supplied by the appellant through these sub stations. The sub stations were
known as switch houses because transformers had been put up there. In
all, 4000 persons were working in the Power House Complex. On the
other hand, in his testimony, Hari Mitra RW1 stated that there was a sub
station in the power house of the appellant where the electricity after being
received from the Board was transformed and transmitted thereafter to the
various consumers.
As is clear from the above, more than 20 person were
employed for wages and ‘manufacturing process’ was going on in the
various sub stations with the aid of power. Therefore, the appellant was
rightly found to be a ‘factory’ and covered under the Act.
The question as to whether the process of transforming and
transmitting electric energy was a manufacturing process or not was
settled by the Hon’ble Supreme Court in The Nagpur Electric Light and
Power Co. Ltd. v. The Regional Director, Employees’ State Insurance
Corporation, A.I.R. 1967 Supreme Court 1364, wherein it was held that in
view of Section 2(k)(iii) of the Factories Act, 1948, the process of
transforming electric energy from high to a low potential and the process
of transmitting the energy through supply lines were both ‘manufacturing
processes’. Moreover, wherein a part of the premises occupied by the
F.A.O. No. 708 of 1984 -6-
company, the two processes were carried on with the aid of power by
means of electrical gadgets and other devices and on the premises more
than 20 persons were working and no part of the premises was used for
purposes unconnected with the manufacturing processes, the premises
constituted a factory within the meaning of Section 2(12) of the Act. The
conclusions arrived at are reproduced here-in-below :-
“In view of S.2(k)(iii), the process of transforming
electrical energy from a high to a low potential and
the process of transmitting the energy through
supply lines are both manufacturing processes. In a
part of the premises occupied by the company, the
two processes are carried on with the aid of power
by means of electrical gadgets and other devices.
On the premises more than twenty persons were
and are working. No part of the premises is used
for purposes unconnected with the manufacturing
processes. The premises therefore constitute a
factory within the meaning of S.2(12) of the
Employees’ State Insurance Act, 1948.”
In Transport Corporation of India v. Employees’ State
Insurance Corporation and another, (2000) 1 Supreme Court Cases 332,
while noticing the object of the Act, which was to provide certain benefits
to the employees, the Hon’ble Supreme Court held that the beneficial piece
of legislation had to be construed in its correct perspective so as to fructify
the legislative intention underlying its enactment. When two views were
possible on its applicability to a given set of employees, the one which
resulted in furtherance of the legislative intention be preferred to the one
F.A.O. No. 708 of 1984 -7-
which would frustrate it. It was observed as follows :-
“Before parting with the discussion on this
point, it is necessary to keep in view the salient fact
that the Act is a beneficial piece of legislation
intended to provide benefits to employees in case of
sickness, maternity, employment injury and for
certain other matters in relation thereto. It is enacted
with a view to ensuring social welfare and for
providing safe insurance cover to employees who
were likely to suffer from various physical illness
during the course of their employment. Such a
beneficial piece of legislation has to be construed in
its correct perspective so as to fructify the legislative
intention underlying its enactment. When two views
are possible on its applicability to a given set of
employees, that view which furthers the legislative
intention should be preferred to the one which
would frustrate it. It is difficult to appreciate how it
could be contended by the appellant with any
emphasis that an employee working at its head
office in Secunderabad would be governed by the
beneficial sweep of the Act as admittedly the head
office employees are covered by the Act, but once
such an employee, whether working on the
administrative side or connected with the actual
transportation of goods, if transferred to the Bombay
branch even with his consent, cannot be governed
by the beneficial provisions of the Act.
Dealing with this very Act, a three-Judge
Bench of this Court in the case of Buckingham and
Carnatic Co. Ltd. v. Venkatiah AIR 1964 SC 1272
F.A.O. No. 708 of 1984 -8-speaking through Gajendragadkar, J., (as he then
was) held, accepting the contention of the learned
counsel, Mr. Dolia that:
“It is a piece of social legislation
intended to confer specified benefits on
workmen to whom it applies, and so, it would
be inappropriate to attempt to construe the
relevant provisions in a technical or a
narrow sense. This position cannot be
disputed. But in dealing with the plea raised
by Mr. Dolia that the section should be
liberally construed, we cannot overlook the
fact that the liberal construction must
ultimately flow from the words used in the
section. If the words used in the section are
capable of two constructions one of which is
shown patently to assist the achievement of
the object of the Act, courts would be
justified in preferring that construction to the
other which may not be able to further the
object of the Act.”
As we have already seen earlier, the express
phraseology of Section 2(9) of the Act defining an
“employee” read with Section 38 of the Act clearly
projects the legislative intention of spreading the
beneficial network of the Act sufficiently wide for
covering all employees working for the main
establishment covered by the Act even though
actually stationed at different branches outside the
State wherein the head office of the establishment is
located. In any case, the said construction can
reasonably flow from the aforesaid statutory
F.A.O. No. 708 of 1984 -9-provisions. If that is so, any other technical or
narrower construction, even if permissible, cannot
be countenanced, as that would frustrate the
legislative intent underlying the enactment of such a
beneficial social security scheme.”
Order dated 17.4.1970 passed by the Corporation while
covering the appellant under the Act was challenged by the appellant by
filing the petition on 26.10.1982. Such an application could have been
made only within a period of three years from the date on which the cause
of action had arisen and not later. As the cause of action arose to the
appellant on 17.4.1970, when the order was passed by the Corporation, the
said order could be challenged within a period of three years from the date
of the order and not beyond.
Resultantly, no case is made out for any interference in the
order passed by learned Employees’ Insurance Court dated 31.5.1984
whereby the petition filed by the appellant under Section 75 of the Act was
dismissed.
The appeal is without any merit, and, therefore, dismissed.
( T.P.S. MANN )
November 19, 2008 JUDGE
satish
Whether to be referred to the Reporters : YES / NO