Civil Appeal No 2904 of 1987
From the Judgment and order dated 291986 of the Rajasthan High Court in DB Civil Special Appeal No 43 of 1986
M Chandrasekhran VJ Francis and NM Popli for the Appellant
BD Sharma for the Respondent
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
Special leave granted
This appeal arises out of the judgment and order of the Division Bench of the Rajasthan High Court dated 2nd September 1986
The judgment under appeal was rendered in an appeal under section 822 of the hereinafter called the Act 
The respondent Ram Chander was the proprietor of Ms Commercial Tailors Sojati Gate Jodhpur
At all material times he used to run a tailoring shop where clothes were stitched
The shop employed at the relevant time about 10 or 12 persons as tailors
The number of employees however never exceeded 20
The clothes were 
supplied by the customers and these were stitched according to the different sizes of the customers
Such stitchings were done at the shop of the respondent herein manually by electric iron which was also used in the process of stitching
There were ironing of finished clothes also
The Employers State Insurance Court Rajasthan came to the conclusion as follows The applicant is a tailoring shop which has employed more than 20 persons on one occasion and less on other days and makes use of power in the shape of electric press which is used for ironing of stitched clothes for customers
The electric iron is also used during the process of stitching in addition to the ironing of finished clothes 837 The question before the Rajasthan High Court
was whether such A establishment was covered by the Notification dated 20th September 1975 and came within the mischief of the Act
The answer to that question would depend on the relevant notification being the Notification dated 20th September 1975 issued under section 15 of the Act
The schedule which extends the scheme to different establishments inter alia provided by clause 1b as follows B DESCRIPTlON OF ESTABLISHMENTS AREAS IN WHICH THE ESTABLISHMENTS ARE SITUATED
Any premises including the precincts thereof 1Alwar whereon ten or more persons but in any case 2Ajmer less than twenty persons are employed or were 3Bikaner employed for wages on any day of the preced 4Jaipur ing twelve months and in any part of which a 5Jodhpur manufacturing process is being carried on with 6Kota the aid of power or is ordinarily so carried 7Udaipur on but excluding a mine subject to the operation of the 35 of 1952 or a rail way running shed or an establishment which is exclusively engaged in any of the manufacturing processes specified in clause 12 of section 2 of the 34 of 1948 emphasis supplied In order to answer the question whether the establishment of the respondent comes within the mischief of the Act it is necessary therefore in view of the facts found as noted before to determine only whether manufacturing process was carried on with the aid of power
It is manifest that there is use of electric power in the process of stitching
This is a finding of fact that the establishment of the shop employed more than 10 but less than 20 persons
It cannot also be disputed that by stitching commercially different goods are brought into existence
These are known differently stitched shirt is indubitably a different commodity than unstitched cloth
It is so commercially known and treated
If by a process a different entity comes into existence then it can be said that this was manufactured
See in this connection the observations of this Court in Empire lndustries Limited  H 838 others etc
vs Union of India  others etc  1985 Suppl
1 SCR 292
It was observed therein that manufacture is complete as soon as by the application of one or more process the raw material undergoes some change
If a new substance is brought into existence or if a new or different article having a distinctive name character or use result from particular processes such process or processes would amount to manufacture
Whether in a particular case manufacture has resulted by a process or not would depend on the facts and circumstances of the particular case
There is no doubt that the process must bring into existence a new item or a new commodity known differently in the market as such by people who use or deal with that good
In that process the ironing of clothes as has been found to be an essential part and for that power is used
These are facts found and are not disputed
If that is the position then in our opinion it comes clearly within the purview of the Act in view of the other facts noted before and the employees are covered by the Act
Our attention was drawn by learned counsel appearing on behalf of the respondent to the observations of this Court in Deputy Commissioner Sales Tax Law Board of Revenue Taxes Ernakulam vs Pio Food Packers  and the decision of this Court in Chowgule  Co Pvt Ltd  Anr
vs Union of India  others  1981 2 SCR 271
The effect of both these decisions have been considered in the aforesaid Empire Industries s case supra
Learned counsel drew our attention to the decision of this Court in Ardeshir H Bhiwandiwala vs The State of Bombay  where the question arose under the Factory Act
It was held therein that the salt works was a factory within the definition given in the Act and the appellant therein was rightly convicted for working it without a licence
The decision is of no assistance to the respondent in resolving the contentions involved in this appeal
Our attention was also drawn to the decision of this Court in Ms Hindu Jea Band Jaipur vs Regional Director Employers  State Insurance Corporation Jaipur   where it was held that it was not that a place where goods were sold was only a shop
A place where services were sold on retail basis was also a shop
The facts of that case were entirely different from these in this case
But the ratio of that decision is apposite to the issue in dispute here
There this Court reiterated that it was not that a place where goods were sold was only a shop
But a place where services were sold on retail basis was also a shop
The place of business of a firm carrying on the business of playing music on occasion such as marriages and 839 Other social functions which made available on payment of the stipulated price the services of the members of the group of musicians employed by it on wages was a shop to which the Act was applicable by virtue of the notification
The fact that the services were rendered by the employees engaged by the firm intermittently or during marriages did not entitle the firm to claim any exemption from the operation of the Act
In Metro Readywear Company vs Collector of Customs  1978 2 Excise Law Times 520 of the High Court of Kerala at Ernakulam it was held that the brassieres were undoubtedly undergarments falling within the description articles of ready to wear apparel known commercially as ready made garments and therefore was classified under Item 22D of Central Excise Tariff
Ironing with electric iron amounted to a process of manufacture with the aid of power
It was held that ironing of stitched brassieres is incidental or ancillary to their manufacture since the said process was intended to give a finishing touch in order to render them marketable
In our opinion the ratio or the reasoning of the said decision is applicable to the facts of this case
Our attention was drawn to the unreported decision of the Andhra Pradesh High Court in Employees State Insurance Corporation vs M section New Empire Tailors and others where the aforesaid reasoning was accepted by the High Court
In the light of the aforesaid we are of the opinion that the High Court in the instant case was in error and the decision of the ESI Court must be upheld
The appeal is accordingly allowed and the judgment and order of the High Court are set aside and the order of the ESI Court restored
In the facts and circumstances of the case the parties will pay and bear their own costs
This judgment will apply to the facts as pertinent to the facts in the relevant year in question
SL Appeal allowed


Summary:
 The appellants filed applications for renewal of their stage carriage permits on a route in Rajasthan under section 58 of the Motor Vehicles Act
At the same time the Rajasthan State Road CorporationCorporation moved applications for the grant of fresh permits to it for the same route
Both the applications for renewal of permits and the applications for fresh permits were heard together by the Regional Transport Authority RTA which reserved its orders thereon
The RTA passed orders in the matters after a year of the hearing rejecting the renewal applications of the appellants and granting fresh permits to the Corporation
The RTA had during the intervening period of one year held several other proceedings and meetings in connected matters of which no notice and no opportunity had been given to the appellants whereas the Corporation was a party to all those meetings and discussions before the RTA
Against the orders of the RTA the appellants filed appeals before the State Transport Appellate Tribunal STAT
The STAT dismissed the appeals
The appellants moved the High Court by writ petitions against the order of the STAT
The High Court Single Judge dismissed the writ petitions
Further appeals by the appellants to the Division Bench of the High Court were also dismissed
The appellants moved this Court by special leave
Allowing the appeals the Court  HELD The principal issue to be decided by the RTA was whether the claims of the Corporation for fresh permits had precedence over the claims of the appellants for the renewal of their permits
643E 642 The appellants have not had an opportunity of putting forward their contentions and of being heard before the RTA in the various proceedings meetings held by the RTA during the period of one year following the reservation of orders by it on the applications of the Appellants and the Corporation
The principles of natural justice were flouted by the RTA by its failure to apprise the appellants of what had transpired at the meetingsdiscussions held in their absence
646D F The appellants  applications and the applications of the Corporation require to be considered and disposed of afresh by the RTA in the light of the observations made by the Court
648H 649A Sher Singh vs Union of India AIR 1984 SC 200 referred to