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Judgment
Raju, J.—The above appeal has been filed under clause 15 of the Letters Patent by the E.S.I. Corporation against the order of a learned
single Judge of this Court dated 27.6.1994 in A.A.O. No. 332 of 1996 which in turn has been filed by the Appellant herein against the order of the
Principal District Judge of North Arcot District at Vellore, exercising jurisdiction as Employees State Insurance Court, dated 4.5.1985 in
E.S.I.O.P. No. 1/1984 whereunder the E.S.I. Court came to the conclusion that the Equipment Maintenance Department of the respondent
hospital is not a factory within the meaning of definition of Section 2(12) of the Employees'' State Insurance Act, 1948 (hereinafter referred to as
the E.S.I. Act""). The relevant facts necessary for appreciating the questions raised before us for our consideration are that the respondent-hospital
is an integral part of the Christian Medical College, Vellore, owned and run by the Christian Medical College, Vellore Association which is a
Charitable organisation said to have been registered under the Societies Registration Act, 1860 with the object of establishing, maintaining and
developing Christian Medical College and Hospitals in India where women and men receive education of the highest grade in the art and science of
Medicine, Nursing etc. and that the Association has been formed by a religious minority and the membership of it is restricted to Christian
Churches and Christian bodies in India. The Christian Medical College is said to be affiliated to the University of Madras, and it has Degree
Courses, Diploma Courses in different'' disciplines and specialities and Post-Graduate Degree as well. It is claimed that one of the statutory
requirements for the training of medical students is the establishment of a teaching hospital and consequently the respondent/hospitals said to
function as an integral part of the Christian Medical College as a teaching hospital where the medical students get their practical training throughout
their educational course. It is also claimed that on an earlier occasion in W.P. Nos. 220 to 222/80 this Court confirmed the position that the
hospital in question is an educational institution. The standard of requirements prescribed by the Medical Council of India are also to be fulfilled in
running the hospital and in fulfilment of the requirement, an Equipment Maintenance Department was said to have been established in the hospital
right from the recognition of the College including its teaching hospital by the Medical Council of India, and the said department is intended to
ensure proper, and uninterrupted functioning of life saving equipment in the hospital and prompt rectification of any malfunctioning thereof and to
avert any danger to the lives of the patients. As such it is claimed to be a limb of the college and being located in the hospital itself.
While matters stood thus in 1978 the E.S.I. authorities appear to have called upon the respondent to comply with the provisions of the E.S.I.
Act, on the view that the Equipment Maintenance Department of the respondent hospital satisfies the definition of Section 2(12) of the E.S.I. Act,
with retrospective effect from 1.9.1969. Representations in person and in writing were said to have been made on 3.7.1978 contending that the
E.S.I. Act would have no application to the department in question. Though it is claimed that initially their stand has been accepted, suddenly on
12.1.1982 a notice was issued which was said to have been received on 2.2.1982 inviting the attention of the earlier communication dated
29.4.1978 calling upon them to comply with the provisions of the E.S.I. Act to which a reply was also said to have been sent on 22.2.1982
reiterating their earlier representations made on 3.7.1978. Thereafter on 30.11.1982 the respondent appears to have received a communication to
the effect that the authorities are not having any exemption application from the respondent. But the respondent-hospital appears to have sent a
reply to the Deputy Regional Director on 5.4.1983 stating that the respondent-hospital was a recognised minority educational institution and it will
not come under the purview of the E.S.I. Act. Despite all these, the authorities appear to have pursued their course of action for ensuring
compliance with the provisions of the E.S.I. Act on threat of coercive action in their letters dated 30.5.1983 and 27.10.1983 driving the
respondent to the necessity of approaching the E.S.I. Court at Vellore, u/s 75(1) of the E.S.I. Act for a declaration that the Equipment
Maintenance Department of the respondent-hospital was not amenable to the provisions of the E.S.I. Act since according to the respondent, it is
not a ''factory'' within the meaning of the E.S.I. Act.
Before the E.S.I. Court, the respondent contended that the main function of the Equipment Maintenance Department is to ensure the efficient
functioning of the machineries like X-ray, E.C.G., E.E.G., Radiation Equipment, Kidney Dialysis, Heart and lung Machines, Operating Table
Equipment etc. and that it is not in any way separate or distinct from the hospital functionary or otherwise and therefore, no manufacturing process
is being carried on in that place and the employees of the said department also are required to merely maintain the machine and carry out the
necessary servicing. In addition thereto, it was claimed that there are also service arrangements with various outside agencies who are responsible
for carrying out the repairs of the machines and equipment belonging to the hospital. It was further claimed that there was no production machines
and no manufacturing process was carried out and the machinery or equipment belonging to the patients or to the public are not taken for
maintenance and the employees of the Department concerned generally carry out maintenance work at the places in the different areas of the
hospital where the machines or equipment are situate or fixed. It was also urged that the employees of the Equipment Maintenance Department
were enjoying the benefits like free medical services including free inpatient bed treatment X-ray and laboratory investigation, operations,
anesthesia and oxygen administrations etc. and they get medical benefits for their dependents also, besides being granted with sick leave. The
employees in the said department also were claimed to have given a written representation to the management on 12.9.1978 that they did not wish
to be converted into the E.S.I. Scheme having regard to the better benefits said to have been enjoyed by them.
Per contra, the E.S.I. Corporation contended that the earlier representation of the respondent made on 3.7.1978 was never accepted and the
activities undertaken by the Equipment Maintenance Department of the hospital satisfies the definition of Section 2(12) of the E.S.I. Act and
therefore, the provisions of the Act would apply. It was also claimed for the Corporation that even the repairs of medical equipments were in the
nature of manufacturing process and the respondent-hospital themselves have registered the department under the Factories Act and have obtained
a license too, and since the hospital is not doing any free service and all facilities including Air-conditioned room were being provided on
commercial lines, the provisions of the Act are attracted. The definition contained in Section 2(12) of the E.S.I. Act since applied they are entitled
to apply for exemption and till then (the grant of exemption) the Corporation has every right to recover the arrears also with retrospective effect.
On the above claims and counter claims the petition came to be tried and the respondent herein who was petitioner before the E.S.I. Court
marked certain documents and there was no other evidence before the Court. Learned Judge in the E.S.I. Court, as noticed earlier, came to the
conclusion that the Equipment Maintenance Department is not a factory within the meaning of Section 2(12) of the E.S.I. Act and on coming to the
said conclusion the E.S.I. Court recorded a finding that since the College hospital itself is not a factory any department forming part of the same is
also not a factory within the definition of the Factories Act.
Aggrieved the Corporation filed A.A.O. No. 332/86 before this Court. A learned single Judge of this Court concurred with the findings of the
learned trial Judge and expressed the view that the Equipments Maintenance Department being a vital part of the hospital which in turn is a limb of
the Medical College and the same could not be a factory and inspiration was also drawn for coming to such a conclusion on the decision reported
in P.S.S. Sundar Rao (General Superintendent) Christian Medical College and Hospital, Vellore (Now Professor and Head of The Department of
Biostatistic of The Christian Medical College) Vs. Inspector of Factories Vellore, where the laundry Section of the very Medical College was held
also to be not coming within the definition of the Factory. Not satisfied, the above appeal has been filed by the E.S.I. Corporation.
Mr. G. Desappan, learned Counsel appearing for the appellant Corporation while elaborating the grounds urged in the memorandum of grounds
of appeal, contended that having regard to the indisputable nature of activities carried on in the department concerned which answer the
description of manufacturing process as defined and the further fact that more than 20 employees were engaged at all time in the said department,
learned trial Judge as also the learned single Judge of this Court could not have come to the conclusion that the Equipment Maintenance
Department is ""not a factory'''' and that the reliance placed on the decision reported in P.S.S. Sundar Rao (General Superintendent) Christian
Medical College and Hospital, Vellore (Now Professor and Head of The Department of Biostatistic of The Christian Medical College) Vs.
Inspector of Factories Vellore, was inappropriate and on the other hand the learned single Judge of this Court ought to have applied the ratio of
the decision reported in Andhra University Vs. Regional Provident Fund Commissioner of Andhra Pradesh and Others, and upheld the stand of
Corporation
Per contra Mr. S. Ramasubramaniam, learned Senior Counsel appearing for the respondent/institution, while reiterating the stand taken before
the E.S.I. Court as also before the learned single Judge of this Court, contended that the decision reported in P.S.S. Sundar Rao (General
Superintendent) Christian Medical College and Hospital, Vellore (Now Professor and Head of The Department of Biostatistic of The Christian
Medical College) Vs. Inspector of Factories Vellore, , pertaining to the very institution in question sets at rest the controversy in this regard and
that being a vital part of an hospital which in turn is run as limb of the Medical College having regard to the statutory obligations, the same cannot
be treated as a factory for the purpose of the E.S.I. Act and consequently the provisions of the Act will have no application to the Equipment
Maintenance Department of the respondent/institution and that therefore, the learned single Judge as also the trial Judge were well within rights in
sustaining the claims of the respondent/institution and consequently no interference is called for in this appeal. Certain decisions relevant to the
subject have also been adverted to our notice and we shall refer to them before undertaking an adjudication of the issue raised before us Strong
reliance has been placed for the respondent on the decision reported in P.S.S. Sundar Rao (General Superintendent) Christian Medical College
and Hospital, Vellore (Now Professor and Head of The Department of Biostatistic of The Christian Medical College) Vs. Inspector of Factories
Vellore, It is a decision rendered by a learned single Judge of this Court on a petition filed u/s 482 Cr.P.C. to quash the proceedings initiated by
the Inspector of Factories, Vellore, under the Factories Act. In allowing the application, the learned single Judge observed while dealing with the
definition under the Factories Act, that being part and parcel of the Christian Medical College Hospital, the laundry cannot be separated from the
main institution, namely, the Hospital and in order to ensure high degree of hygienic standard the hospital is having its own laundry for washing the
linen used in the hospital. Therefore, it was held therein that the laundry is to be treated only on a subsidiary minor or incidental establishment of the
hospital and not a factory. It was further observed by the learned single Judge that one department of the hospital, established for the efficient
functioning of the hospital cannot therefore, be disjoined from the main institution and termed to be a factory and the paramount or the primary
character of the main institution alone has to be taken into consideration and accordingly when the main institution is not a factory, a department
thereof cannot become so, even though a manufacturing process is carried on there. The learned Judge also was of the view that unless required
number of workers are employed exclusively in the particular manufacturing process concerned they have to be treated as employees of the
hospital generally and on that ground also, they cannot be termed to be workers within the meaning of Section 2(1) of the Factories Act.
Per contra, learned counsel appearing for the appellant, placed reliance upon the decision of the apex Court reported in AIR 1986 S.C.466
(Osmania University v. Regional Director E.S.I. Corpn. A.P.) That was a case which arose directly under the E.S.I. Act as to the meaning of the
word ''Factory'' as defined in Section 2 (12) of the E.S.I. Act which came to be construed in the context of the Department of Publications and
Press of Osmania University by the Apex Court while adverting to the earlier decision reported in 1986 Lab. I.C.L.P. 103 = Andhra University
Vs. Regional Provident Fund Commissioner of Andhra Pradesh and Others, elating to the very Osmania University, but of a dispute arising under
the Employees'' Provident Funds and Miscellaneous Provisions Act 1952, their lordships of the Apex Court also held that the Department of
Publication and Press of the University is engaged and carrying on manufacturing process in the printing of text books, journals, forms and other
items of stationery and that therefore, it is a factory within the meaning of Section 2(12) of E.S.I. Act. The decision relating to the matter arising
under the Employees Provident Funds and Miscellaneous Provisions Act which has been applied to the case arising under the E.S.I. Act
considered at great length the meaning of the expressions ''Factory'', ''Manufacture'' and ''Manufacturing process'' and observed as hereunder:-
We are, unable to see how this provision is of any assistance to the appellants. Section 2-A was inserted in the Act merely for the purposes of
clarifying the position that the Act applies to composite factories. It is not intendment of the Section to lay down even by remotest implication that
an establishment, which is a factory engaged is an industry specified in Schedule I will not be liable for coverage under the Act merely because it is
part of a larger organisation carrying on ''some other activities also which may not fall within the scope of the Act. In construing the provisions of
the Act, we have to bear in mind that it is a beneficent piece of social welfare legislation aimed at promoting and securing the well being of the
employees and the Court will not adopt a narrow interpretation which will have the effect of defeating the very object and purpose of the Act.
Once it is found that there is an establishment which is a ''factory'' engaged in an ''industry'' specified in Schedule I and employing 20 or more
persons, the provisions of the Act will get attracted to the case and it makes no difference to this legal position that the establishment is run by a
larger organisation which may be carrying another additional activities falling outside the Act.
Our attention was drawn to a decision of learned single Judge of the Calcutta High Court in Visva Bharati v. Regional Provident Fund Commr.
West Bengal (1983) 1 Lab. L.J. 332 : (1983 Lab IC 38) wherein it was held that the provisions of the Act were inapplicable in respect of a ""Silpa
Sadan,"" Agricultural Farm and a Hospital run by the Visva Bharati University. The learned Judge was of the view that ""if the University as an
establishment does not come under the provisions and/or the purview of the Act, the different branches of departments of the University which the
University is empowered and/or entitled to maintain under the provision of the Visva Bharati Act cannot be brought within mischief of the Act"". We
have no hesitation to hold that the aforesaid view expressed by the learned Judge is not correct and sound and that the said decision does not lay
down correct law.
In the cases before us there cannot be any doubt that the establishments namely, the Departments of Publications and Press are ''factories'' as
defined in clause (g) of Section 2 of the Act. Under the said definition factory means any premises in any part of which any manufacturing process
is being carried on. The printing of text books, journals, registers, forms and various items of stationery clearly constitute ''manufacture'' within the
meaning of the said expression as defined in clause (i-c) of Section 2 of the Act. That printing is one of the industries specified in the Schedule is
not in dispute. It is also not disputed that many more than 20 persons are employed in the concerned establishment of the two Universities. Thus all
the requirements of clause (3)(a) of Section 1 of the Act are fully satisfied in these cases and hence the conclusion recorded by the High Court that
the establishments in question are liable for coverage under the Act is perfectly correct and justified.
It now becomes necessary for us to advert to the definition of ''factor'' as it stood prior to its amendment and substitution by the Central Act 29
of 1989
factory means any premises, including the precincts thereof in any part of which a manufacturing process is being carried on or is ordinarily so
carried on, whether with the aid of power or without the aid of power:
The definition of ''manufacturing process'' as in Section 2(k) of the Factories Act, 1948 becomes relevant and applicable in construing Section
2(12) of the E.S.I. Act by virtue of the concluding portion of Section 2(12) of the E.S.I. Act as it stood prior to amendment and Section 2(14AA)
after 1989, which gets attracted and reads thus:
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 or other similar process or book binding;) (or)
(v) Constructing, reconstructing, repairing refitting, finishing or breaking up ships or vessels (or)
(vi) preserving or storing any article in cold storage;
A careful analysis of the provisions contained in Section 2(12) of the E.S.I. Act and Section 2(k) of the Factories Act would go to show that
even repairing, oiling, cleaning; washing or otherwise treating or adapting any article or substance with a view to its use as also preserving and
storing any article in cold storage were defined to constitute and include in the meaning of the definition ""manufacturing process"". Consequently, the
nature of the activities carried on in the Equipment Maintenance Department, as admitted by the respondent at all stages, would by themselves
constitute ""manufacturing process"" within the meaning of Section 2 of the Factories Act and consequently having regard to the fact that the persons
engaged in carrying out the activities of the Equipment Maintenance Department were at all times more than 20, the same would satisfy the
definition of ''factory'' as defined in Section 2(12) of the E.S.I. Act as we could see from the order of the learned trial Judge as also from the order
of the learned single Judge. The ultimate conclusion arrived at by them was not on the ground that the activities as such did not constitute
manufacturing process"" but on the other hand the rationale appears to be that since the Equipment Maintenance Department is a vital part of the
hospital which in turn is a limb of the Medical College it cannot be a factory. In our view, this aspect requires a separate consideration.
Even assuming that the Equipment Maintenance Department is part of the hospital which is a statutory adjunct to the Medical College, can it
legitimately be claimed that it will not constitute, as claimed by the respondent/institution, that the Department in question cannot be considered to
satisfy the definition of ''factory'' within the meaning of Section 2(12) of the E.S.I. Act.
This question is directly answered against the institution in our view, by the decision of the Apex Court noticed supra, relating to the University
Cases. It has been categorically held by the Apex Court that merely because an establishment, indisputably answers the definition of factory, it
cannot be claimed to be outside the purview of the Act or the statutory definition of factory merely because it is part of a large organisation
carrying on some other activities which may not fall within the meaning of the Act or scope of the answer of the description contained in Section
2(12) of the E.S.I. Act. The definition contained in Section 2(12) for ''factory�, is almost similarly construed by their Lordships of the Apex
Court and opined that even any part of an institution in which a manufacturing process is carried on with the stipulated number of persons
employed or found working therein by itself constitute a factory de hors the fact that the totality of other activities, in other spheres or limbs do not
satisfy the definition of ''factory''. Consequently, it is not necessary that the entire premises or entire institution need carry on the manufacturing
process or the institution as a whole should satisfy the requirements of the definition of ''factory'', but it is sufficient if any part of the premises or any
particular establishment of the institution carries on manufacturing process to render that part of the establishment attracted under the provisions of
the E.S.I. Act by virtue of the definition contained in Section 2(12) of the E.S.I. Act and Section 2(k) of the Factories Act. We are therefore,
unable to subscribe to or accord our approval to the view taken by the learned single Judge which as indicated earlier is directly in conflict and runs
counter to the principles laid down by the Apex Court, in the decision cited supra. The further question about the institution being minority or the
fact that they do any service in the interest of general public are in our view alien to the questions which are before us in considering the
applicability or otherwise of a social welfare legislation. If really, the respondent/institution seeks to claim any benefit in this regard on such
considerations, it cannot be in a proceeding like the one before us, but if so advised they may have to seek recourse to the relevant provisions of
the Act in Chapter VIII enabling any one to move for seeking exemption from the provisions of the Act. Except leaving liberty to the
respondent/institution if they so desire to do so, to avail of such remedies we are unable to sustain the order of the learned single Judge passed in
confirmation of the order of the E.S.I. Court. The order of the E.S.I. Court as confirmed by the learned single Judge of this Court, is hereby set
aside. The appeal is allowed. But there shall be no order as to costs.