Case: Hyderabad Asbestos Cement Products Ltd Vs. The Employees Insurance Court &amp; Anr

was introduces and it appears the amendment was introduced for the purpose of covering cases which were held to be outside the scope of S. 2(9) by the two decisions. The amended section includes any person employed for wages on any work connected with the administration of the factory or any part, department or branch thereof or with the purchase of raw materials or for the distribution or sale of products of the factory. It will be seen that the work connected with the administration of the factory, the purchase of raw materials and the distribution or sale of products are brought within the scope of the definition. After the amendment, therefore, the plea that employment in connection with the administration of the factory or with the purchase of raw materials or distribution or sale of products cannot be contended to be as not falling within the definition. 12. The contention of the learned counsel for the appellants is that the word "factory" is confined only to persons who are employed with the manufacturing process. The definition of the word factory is as follows :"factory" means any premises including the precincts thereof whereon twenty 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 but does not include a mine subject to the operation of the Mines Act, 1952 or a resting shed;" The word factory is confined to the premises including the precincts thereof where the manufacturing process is carried on. The submission on behalf of the appellants is that an employee of the factory should not only be an employee falling within the definition of the word "employee" but also an employee of the factory, i.e., of a factory as defined in S. 2(12). In support of their plea reference was made to S.38 of the Act which requires that all employees of the factories should be insured. Section 38 lays down that all employees in factories, or establishments to which this Act applies shall be insured in the manner provided by this Act. It was submitted that to fall within the charging S. 38 employees should be employees in factories and not employees connected with the work of the factory Anil Dewan appearing for the Indian Chemical Industries submitted that the word "employees in factories" are significant and that only employees who are employed in the factory are required to be insured and not employees who are employed in connection with the work of the factory. The learned counsel proceeded to point out that the amendment is confined only to persons employed on any work connected with the administration and not employed in the factory and submitted that the applicability should be strictly confined to the employees in factories. The contention put forward it was pleaded is more reasonable as the Act through out maintains a distinction between factory and establishments and it is against the tenor of the Act to bring employees in establishments within the meaning of employees of the factories. The learned counsel also pointed out that in various firms the employees themselves are against their being included within the scope of the Act and the resultant position will be that as between two establishments which are functioning under the same conditions one establishment which is connected with the sale of finished product of the factories will come within the scope of the Employees State Insurance Act whereas the other establishment would be outside the purview of the Employees State Insurance Act. On a careful consideration of Ss. 2(9) S. 2(12), Ss. 38 and S. 31 we are unable to accept the restricted interpretation sought to be put upon the words "Employees in factories". Even before the amendment the word "employee" included persons connected with the work of the factory. The Supreme Court has laid down that a person employed in connection with the work of the factory would fall within the definition as it stood before the amendment and it may not be open to the learned counsel to contend that it is only employees that are employed in the factory that would fall within the definition. The definition before the amendment as well as after the amendment would include not only persons employed in the factory but also in connection with the work of the factory. The S.39 of the Act makes the position clear It provides that the contribution payable under the Act is in respect of an employee. It is not confined only to employees in factories. We see in justification for reading the words employees in factories in S. 38 as meaning persons employed in factories only. We are unable to accept the contention that the employees that are required to be insured under the Act are only those employed in factories defined under S.2(12) of the Act. 13. It was submitted that the test as to whether an employee is an employee "in a factory" is the test of not physical presence or absence outside the precincts of the factory but the test is whether he is under the control of the factory and is on the factory wage roll, or other similar tests. We are unable to accept the contention for on a reading of the relevant section it is clear that the word "employee" would include not only persons employed in the factory but also persons connected with the work of the factory. The employee may be working within the factory or outside the factory and may be employed for administrative purposes or for purchase of raw materials or for sale of the finished goods all such employees are included within the definition of "employee". A recent decision of the Bench of the Madras High Court in W.Ps. 144-149 and 331 of 1971 dated 14th October, 1976 has also taken a similar view. 14.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]The law, therefore, is clear that any employee who is connected with the works of the factory would be an employee under S. 2(9) whether the work within the factory or outside its premises11. The amendment to S. 2(9) introducing the inclusive definition referred to above was enacted by Act 44 of 1966 which came into force on 28-1-1968. It may be noted that the decisions of the Bombay and the Madras High Courts referred to above (supra), were rendered before the amendment was introduces and it appears the amendment was introduced for the purpose of covering cases which were held to be outside the scope of S. 2(9) by the two decisions. The amended section includes any person employed for wages on any work connected with the administration of the factory or any part, department or branch thereof or with the purchase of raw materials or for the distribution or sale of products of the factory. It will be seen that the work connected with the administration of the factory, the purchase of raw materials and the distribution or sale of products are brought within the scope of the definition. After the amendment, therefore, the plea that employment in connection with the administration of the factory or with the purchase of raw materials or distribution or sale of products cannot be contended to be as not falling within the definitionThe word factory is confined to the premises including the precincts thereof where the manufacturing process is carried onWe are unable to accept the contention for on a reading of the relevant section it is clear that the word "employee" would include not only persons employed in the factory but also persons connected with the work of the factory. The employee may be working within the factory or outside the factory and may be employed for administrative purposes or for purchase of raw materials or for sale of the finished goods all such employees are included within the definition of "employee". A recent decision of the Bench of the Madras High Court in W.Ps. 144-149 and 331 of 1971 dated 14th October, 1976 has also taken a similar viewWe are unable to accept the contention for on a reading of the relevant section it is clear that the word "employee" would include not only persons employed in the factory but also persons connected with the work of the factory. The employee may be working within the factory or outside the factory and may be employed for administrative purposes or for purchase of raw materials or for sale of the finished goods all such employees are included within the definition of "employee". A recent decision of the Bench of the Madras High Court in W.Ps.9 and 331 of 1971 dated 14th October, 1976 has also taken a similar