Allahabad High Court: Stating that the word ‘manufacturing process’ has been expansively defined under the Factories Act even to include Printing Press activity as a manufacturing process whereas in common parlance Printing Press cannot be termed as a ‘manufacturing process’, Pankaj Bhatia, J., held that, the term ‘manufacturing process’ was added to the ESI Act after the 1989 Amendment, hence, there would be no application of the said term prior to the said amendment.
Instant petition was filed to quash certain orders and recovery certificates whereby the demands had been quantified against the petitioners and they had been directed to pay the said amount in the exercise of the powers conferred under the Employees State Insurance Act, 1948.
Factual Background
The petitioner was an apex cooperative society created under Section 2(a—4) Clause 3 of the U.P. Cooperative Societies Act, 1965.
Further, it was stated that the rules, regulations and guidelines issued by the State Government were normally applicable to the employees of the petitioner’s society and they enjoyed certain benefits which were admissible to the employees of the State Government.
Petitioner has been running P.C.F. Press and the persons employed in the accounts section were enjoying the benefits of the State Government from time to time which according to the petitioner were far superior to the benefits flowing to the persons who came under the ‘ESI’ Act.
In 2003, respondent 1 issued a show-cause notice calling upon the petitioner to show cause as to why the petitioner’s society should not be made liable for payment of the contribution to the ESI Fund, to which the petitioners raised their objections.
Point for Consideration
Whether the petitioners’ establishment would be covered within the ambit of ‘ESI Act’ by virtue of the mandate of Section 1(4) of the ESI Act as the parties are not at issue that no notification has been issued under Section 1(5) of the Act?
Analysis and Decision
In the present matter, the demand was raised for an amount of Rs 33,846 for the employer’s contribution for the employees working in the account section of PCF Press for the period January 1981 to September 1986 and from January 1988 to May 1989.
Hence, the demand pertaining to the period prior to 20-10-1989 when the definition of ‘manufacturing process’ under Section 2(14-AA) was inserted under the ESI Act.
After the amended Act No. 29 of 1989, the word ‘manufacturing process’ has been expansively defined under the Factories Act even to include Printing Press activity as a manufacturing process whereas in common parlance Printing Press cannot be termed as a ‘manufacturing process’.
Therefore, the Court held that, the applicability of the provisions of ‘ESI Act’ on the petitioner would clearly not be covered by Section 1(4) of the ‘ESI Act’ for the period prior to 21-10-1989 and thus, the demand was not justified.
In view of the above discussion, petition was allowed. [U.P. Cooperative Federation Ltd. v. Employees State Insurance Corporation, 2022 SCC OnLine All 227, decided on 20-4-2022]
Advocates before the Court:
Counsel for Petitioner:- Shireesh Kumar
Counsel for Respondent:- Shishir Pradhan