IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH F . A . O . N o . 7 0 8 o f 1 9 8 4 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