IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) Date: 03-03-2011 PRESENT THE HONOURABLE SRI JUSTICE G. KRISHNA MOHAN REDDY C.M.A. No.938 OF 2006 BETWEEN Davar & Co. through its Proprietor Syed Iftakaruddin, S/o.Syed Basheeruddin, Aged 57 Years, Business, R/o.M.C.H. No.6-3-252/A/8 & 9, Mount Castle Apartment, Erramanzil Colony, Hyderabad. - - - Petitioner. AND The Deputy Director Employees, State Insurance Corporation, 5-9-23, Hill Fort Road, Hyderabad and another. - - - Respondents The Court made the following : THE HONOURABLE SRI JUSTICE G. KRISHNA MOHAN REDDY C.M.A. No.938 OF 2006 JUDGMENT: 1. This Civil Miscellaneous Appeal is directed against order passed in E.I.C No. 61 of 2001 dated 03-02-2006 on the file of the Court of Employees Insurance Court and Chairman Industrial Tribunal-I, Hyderabad, filed under Section 75(1)(g) of the ESI Act, 1948 (for short, ‘the ESI Act’) to declare that the provisions of the ESI Act will not be applicable to the petitioner and also declare Prohibitory Order dated 13-06-2001 and other proceedings claiming penalty interest etc., as illegal and void under Law and consequently to set aside the demand of the respondents with a plea to pay a sum of Rs.49,158/- (Rupees forty nine thousand and one hundred fifty eight only) in Certificate No.AP/INS-07/52-12310 dated 27-07-1998, 28-05-1999 and 16-07- 1999 respectively. 2. The appellant herein is the petitioner and the respondents herein are the respondents in the matter before the Tribunal. For the convenience sake, I refer the parties as arrayed before the Tribunal. 3. It is the contention of learned counsel for the petitioner that the establishment does not come within the ambit of the ESI Act because no power supply was used for manufacturing rubber stamps which in fact not needed any power supply and further in fact there were no workmen whereas only the family members of the proprietor of the establishment, used to assist him in the business and without any basis, the lower Court dismissed the claim of the petitioner and upheld the claim of the respondent. It is also his contention that no opportunity was given to him of being heard in the matter before the issuance of notice which is mandatory. 4. It is to be shown as to whether there is record to the effect that there was power supply to the unit apart from establishing the fact that ten or more workmen were employed in the unit for the said purpose. 5. On the other hand, it is the contention of learned counsel for the respondent that Ex.R-4 Inspection Report provides that there were more than 10 workers in the unit being run by power to bring it under the purview of the Act and it was signed by the petitioner and Ex.R-2 Employees Registration Form issued by the petitioner also provides that power was used in the factory and in Ex.R-12 which is list of employees acknowledged by the petitioner 10 names were given as employees and therefore the case comes within the purview of the Act and the Tribunal properly considered the matter and there is no reason to interfere with the same. 6. In reply it is the contention of learned counsel for the petitioner that the respondent authorities obtained the signature of the petitioner in the Inspection Report by force and hence the same can not be taken into consideration and further in Ex.R-2 it is only stated that power was given to the building of the petitioner for general use, it does not mean that it was given for the purpose of running the establishment and therefore it is not proved that the establishment would come within the definition of factory as envisaged in Section 2 (12) of the Act . 7. Therefore it is to be mainly examined as to : 1. Whether the establishment of the petitioner would come within the purview of the Act? 2. Whether the notice issued by the respondent is valid or not? 3. Whether the Tribunal examined the matter properly and arrived at correct conclusions and its order is sustainable or not? 8. Section 2 (12) of the Employees State Insurance Act, 1948 provides : “factory” means any premises including the precincts thereof — (a) whereon ten or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on, or (b) whereon twenty or more persons are employed or were employed for wages on any day of preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1992 (35 of 1952) or a railway running shed;] Therefore, if there were ten or more then ten workers in the establishment and it was being run with the help of power certainly it comes within the purview of the definition of the Act. It is significant to note here that in the Inspection Report and other relevant records marked as exhibits, it is clearly admitted that there were more than 10 workers in the establishment being run with the help of power generation. If it happened to be only for the purpose of preparing stamps without using any machinery there was no need of employing ten persons for that purpose. Further, having signed the inspection report and also filed other relevant documents before the respondent admitting the claim of the respondent it is not open for the petitioner to speak differently. He did not take any plea in the petition at the earlier point of time that by force his signature was obtained in the inspection report by the Inspecting Authority and the other documents referred by him were not signed by him and those documents happened to be not valid for one reason or the other. Further, if the electricity connection was given only to his house and it was not intended for running the establishment there was no need for him to note in Ex.R-2 that it was supplied with power. He failed to place satisfactory evidence to establish his claim. On the other hand he went to the extent of saying that only 5 family members used to assist him in the business, having admitted that he engaged 10 workers to run the establishment which clearly proves that he is such a person who can go to any extent to achieve his object. 9. Therefore, the claim of the petitioner is to be dismissed and it is to be held that the establishment comes within the purview of the definition of ‘factory’ and the respondent properly issued the notice which is binding upon the petitioner and there is no merit in the Appeal. The Tribunal examined the matter properly and there was no reason to interfere with the same. In the result, the Appeal is dismissed with costs. ___________________________ G. KRISHNA MOHAN REDDY, J Dated: 03-03-2011. Dsh/Sp.