E.S.I. CORPORATION, REP. BY THE REGIONAL DIRECTOR versus M/S. ENDOCRINOLOGY AND IMMUNOLOGY LAB
[2023] 11 S.C.R. 159, Supreme Court of India, 2023
Outcome: Dismissed (Dismissed)
Segment: Issues
[2023] 11 S.C.R. 159 : 2023 INSC 665 
159
CASE DETAILS
E.S.I. CORPORATION, REP. BY THE REGIONAL DIRECTOR
v.
M/S. ENDOCRINOLOGY AND IMMUNOLOGY LAB
(Civil Appeal No.3368 of 2012)
AUGUST 02, 2023
[HIMA KOHLI AND RAJESH BINDAL, JJ.]
HEADNOTES
Issue for consideration : Date from which the respondent 
establishment, a pathological laboratory will be covered under the 
Employees’ State Insurance Act, 1948.
Employees’ State Insurance Act, 1948 – s.1(5) – Notiﬁ cation 
dated 06.09.2007 issued in terms of the power conferred u/s.1(5) –High 
Court held that the provisions of the 1948 Act will be applicable to the 
respondent w.e.f. 06.09.2007 and not from 22.11.2002 – Legality:
Held : Respondent would be covered under the Act in terms of the 
Notiﬁ cation dtd.06.09.2007 issued by the Government of Kerala covering 
medical institutions including pathological laboratories from that date, 
where 20 or more persons were employed – The Notiﬁ cation was issued 
in terms of the power conferred u/s.1(5) of the Act in consultation with 
the Corporation and with the approval of the Central Government – If the 
pathological laboratories were already covered under the Act, as urged by 
the appellant-Corporation, there was no occasion to issue such a notiﬁ cation 
– Order passed by the High Court is in terms of the aforesaid notiﬁ cation 
directing coverage of the respondent establishment from that date onwards, 
as undisputedly, 20 or more persons were found to be employed in the 
establishment –
Appellant argued that the respondent would fall within 
the term “shop” and the same is covered in terms of the notiﬁ cation dtd. 
27.05.1976 –The argument that the respondent should be deemed to be 
covered in terms of the said notiﬁ cation r/w the Circular dtd. 22.11.2002, 
rejected – Appeal dismissed.[Paras 10, 12-16]
160
SUPREME COURT REPORTS 
[2023] 11 S.C.R.
Employees’ State Insurance Act, 1948 – ss.1(4), 2(12), 14(AA) – 
Respondent establishment, a pathological laboratory if covered u/s.1(4) 
providing that the Act shall apply to all factories (including factories 
belonging to the Government) other than seasonal factories: 
Held : No – The term “factory” has been defined u/s.2(12) – 
“manufacturing process” has been deﬁ ned in s.14 (AA) to give it a meaning 
as assigned to it u/s.2(k), Factories Act, 1948 – Respondent establishment 
will not be covered u/s.1(4) as it will not fall within the deﬁ nition of a 
“factory”, since no manufacturing process is carried on therein. [Paras 
7(iii), (iv) and 8]
OTHER CASE DETAILS INCLUDING IMPUGNED 
ORDER AND APPEARANCES
CIVIL APPELLATE JURISDICTION  : Civil Appeal No.3368 of 
2012.
From the Judgment and Order dated 21.08.2008 of the High Court 
of Kerela at Ernakulam in IA No.4 of 2008.
Appearances:
Kumar Rajesh Singh, Mrs. Niranjana Singh, Advs. for the Appellant.
Ms. Ritika Sinha, Siddhartha Jha, Advs. for the Respondent.
JUDGMENT/ORDER OF THE SUPREME COURT
JUDGMENT
RAJESH BINDAL, J.
1. Order dated 21.08.2008 passed by the High Court of Kerala has 
been challenged by the Corporation1 by which the appeal2 ﬁ led by the 
respondent was allowed. It was held that the provisions of the Act3 will be 
applicable to the respondent establishment w.e.f. 06.09.2007 and not from 
22.11.20024.
1 
T e Employees State Insurance Corporation
2 
Ins. App. No.4
of 2008(A)
3 
T e Employees’ State Insurance Act, 1948 (hereinaf er ‘the Act’)
4 
Wrongly typed in the impugned order as 24.11.2002
161
E.S.I. CORPORATION, REP. BY THE REGIONAL DIRECTOR v. 
M/s. ENDOCRINOLOGY AND IMMUNOLOGY LAB [RAJESH BINDAL, J.]
2. Brieﬂ y stated, as per the facts available on record, the respondent 
establishment is a pathological laboratory. Inspection of the premises of 
the respondent was carried out by the Inspector on 01.04.1999. Having 
found that there were 19 employees working in the establishment, a show 
cause notice was issued to the respondent. The respondent establishment 
challenged coverage of the establishment by ﬁ ling an application under 
Sections 75 and 77 of the Act before the Employees’ Insurance Court. The 
Court vide order dated 19.04.2007, passed in I.C. No.13/2003 declared 
that the establishment of the respondent is a ‘shop’ as per Section 1(5) of 
the Act and the provisions of the Act would extend to the respondent w.e.f. 
22.11.2002. A review application5 ﬁ led by the respondent before the E.S.I. 
Court, was dismissed vide order dated 21.12.2007. The orders of the E.S.I. 
Court were challenged by the respondent by ﬁ ling an appeal before the High 
Court which was allowed vide impugned order.
3. Learned counsel for the appellant submitted that the order passed 
by the High Court is not in conformity with the law as the respondent 
establishment will be covered under the provisions of the Act in terms of 
the notiﬁ cation dated 27.05.1976 issued by the Government of Kerala in 
exercise of the powers conferred under the Act. In terms of the aforesaid 
notiﬁ
cation, if 10 or more persons are employed in an establishment on any 
day in the preceding 12 months which included a “shop”, it will be covered 
under the provisions of the Act. The respondent establishment being a shop, 
was clearly covered. After inspection, a notice was issued to the respondent 
for coverage w.e.f. 01.04.1999. However, in view of the Circular dated 
22.11.2002, issued by the Corporation for the coverage of pathological 
laboratories and diagnostic centres, the establishment was covered from 
22.11.2002. It is stated that the ﬁ ndings of the High Court that the respondent 
establishment shall be covered under the Act w.e.f. 06.09.2007, is erroneous. 
4. On the other hand, learned counsel for the respondent submitted 
that there is no error in the order passed by the High Court. Notiﬁ cation 
dated 27.05.1976, issued by the Government of Kerala, does not cover the 
establishment of the kind that the respondent has, which is pathological 
laboratory. By no stretch of imagination can it be termed as a shop, where 
merely buying and selling activities take place, and not the kind of work 
executed by experts engaged by the respondent. In fact, medical institutions 
5 
M.P. No.159/2007
162
SUPREME COURT REPORTS 
[2023] 11 S.C.R.
which included nursing homes, diagnostic centres and pathological 
laboratories employing 20 or more persons were brought under the ambit 
of the Act vide notiﬁ cation6 issued by the Government of Kerala. The order 
passed by the High Court is in line with the said notiﬁ cation. Hence, the 
present appeal deserves to be dismissed.
5. We have heard learned counsel for the parties and perused the 
material placed on the record.
6. The short question which requires consideration by this Court is, the 
date from which the respondent establishment, which is undisputedly carrying 
on the business of a pathological laboratory, will be covered under the Act.
7. (i) Section 1(4) of the Act provides that the Act shall apply to all 
factories (including factories belonging to the Government) other than 
seasonal factories. Proviso to the aforesaid section provides that this sub-
section does not apply to the factory or establishment belonging to or under 
the control of the Government whose employees are otherwise in receipt of 
beneﬁ ts substantially similar or superior to the beneﬁ ts provided for under 
the Act.  
(ii) Section 1(5) of the Act provides that the appropriate Government 
may, in consultation with the Corporation and where the appropriate 
Government is a State Government, with the approval of the Central 
Government, can extend the provisions of the Act by issuing a 
notiﬁ cation in the oﬃ  cial gazette, to any other
establishment or class 
of establishments.
(iii) The term “factory” has been deﬁ ned under Section 2(12) of the 
Act. The same as existed at the relevant time, included any premises 
and part thereof in which manufacturing process is being carried on 
with or without the aid of power. The only diﬀ erence being that the 
number of persons required to be working in the establishment with the 
aid of power was 10 or more whereas in cases without the aid power, 
the number required was 20 or more. It did not include a mine subject 
to the operation of the Mines Act, 1952 or a railway running shed.
(iv) The term “manufacturing process” has been deﬁ ned in Section 14 
(AA) of the Act to give it a meaning as assigned to it in the Factories 
6 
Dated 06.09.2007
163
Act, 1948. The same is deﬁ ned under Section 2(k) of the Factories Act, 
1948 which is reproduced herein below:
“2(k) “manufacturing process” means any process for –
(i) 
making, altering, repairing, ornamenting, ﬁ nishing, 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, reﬁ tting, ﬁ nishing or 
breaking up ships or vessels; or 
(vi) 
preserving or storing any article in cold storage; “ 
8. On a perusal of the aforesaid provisions in the Act, it can safely be 
concluded that the establishment of the respondent will not be covered under 
the provisions of Section 1(4) of the Act as it will not fall within the deﬁ nition of 
a “factory”, since no manufacturing process is carried on therein. It is not even 
the case of the appellant. The respondent establishment is merely a pathological 
laboratory.
9. The stand taken by the appellant is that the respondent establishment 
will be covered in view of the notiﬁ cation dated 27.05.1976 issued by the 
Government of Kerala, the relevant part whereof is extracted below:
“GOVERNMENT OF KERALA
LABOUR (E) DEPARTMENT
NOTIFICATION
16141/E2/75/LBR Dated, Trivandaram 27th May 1976
S R O No.559/76 – In exercise of the powers conferred 1948 (Central Act 
34 of 1948), the Government of Kerala having already given six months’ notice 
as required thereunder. The government of Kerala Notiﬁ cation No.16141/E2/75/
LBR dated 5.11.1975 published as SRO BNO.1070/75 in the State Gazette dated 
18.11.1975 hereby appoints the midnight of 29th shall extend to the classes of 
establishment and in areas as speciﬁ ed in the schedule annexed hereto:-
E.S.I. CORPORATION, REP. BY THE REGIONAL DIRECTOR v. 
M/s. ENDOCRINOLOGY AND IMMUNOLOGY LAB [RAJESH BINDAL, J.]
164
SUPREME COURT REPORTS 
[2023] 11 S.C.R.
SCHEDULE
Description of establishment
Area in which the establishments are 
situated
1
2
xxx
xxx
T e following establishments 10 or 
more persons are employed or where 
employed for any day of preceding 12 
months namely: 
Hotels 
Restaurants
Shops
Road Motor Transport Establishment
Cinema including preview 
T eaters
Newspaper establishment as deﬁ ned 
in Section 2(d) of the Working 
Journalists (Conditions of Service and 
Miscellaneous Provisions) Act, 1955 
(45 of 1955)
Whole of the State of Kerala where the 
beneﬁ t provisions of Chapter IV, V and 
VI of the Act have already been brought 
into force by the Central Government 
under Section(3) of the Employees 
State Insurance Act, 1948 (Central Act 
34 of 1948) except the areas where the 
scheme has already been extended with 
eﬀ ect from the midnight of 29th March 
1975 vide notiﬁ cation No.22877/
E2/73LBR dated 22.03.1975 published 
in the Kerala Gazette dated 25th March 
1975 as SRO No.288/75
10. The argument raised by the appellant is that the respondent 
establishment would fall within the term “shop” and the same is sought to be 
covered in terms of the aforesaid notiﬁ cation.
11. A notice was issued to the respondent establishment on 27.04.2001, 
directing production of certain records. The same was replied to. Though it is 
claimed that the respondent establishment would be covered under the provisions 
of the Act in terms of the Notiﬁ cation dated 27.05.1976, however,
before the 
E.S.I. Court, reliance was placed on a letter issued by the Corporation on 
22.11.2002 through which an earlier Memo dated 06.01.1989, was modiﬁ ed. 
In terms of the aforesaid Memo letter, pathological laboratories and diagnostics 
centres were not covered under the deﬁ nition of “shop”. It was not disputed that 
a “shop” as such is not deﬁ ned under the Act. At the time of hearing, reliance 
was also placed on the Notiﬁ cation dated 06.09.2007, issued by the Government 
of Kerala bringing certain establishments under the ambit of the Act. 
12. It is not a matter of dispute that such a notiﬁ cation is issued in terms 
of the power conferred under Section 1(5) of the Act in consultation with the
165
Corporation and with the approval of the Central Government. In terms of the 
aforesaid notiﬁ cation, medical institutions including diagnostic and pathological 
laboratories, where 20 or more persons were employed, were covered. The 
relevant part of the said notiﬁ cation is extracted below: 
“GOVERNMENT OF KERALA
LABOUR & REHABILITATION (F) DEPARTMENT
NOTIFICATION
G.O. (P) NO/116/2007/LBR Dated, Thiruvanthapuram 
6TH September 2007
S R O No.749/2007 – In exercise of the power conferred by sub-section 
(5) of Section 1 of the Employees’ State Insurance Act 1948 (Central 
Act 34 of 1948), the Government of Kerala in consultation with the 
Employees’ State Insurance Corporation and with the approval of 
the Central Government and after having given six months’ notice 
of its intention to do hereby extend the provisions of the said Act to 
the classes of establishments speciﬁ ed in Column (1) of the Schedule 
annexed hereto and situated in the areas speciﬁ ed in column (2) thereof 
with immediate eﬀ ect
SCHEDULE
Description of establishment
Areas in which the establishments 
are situated
Medical institution (including 
corporate, joint sector, trust, 
charitable, 
and 
private 
ownership 
hospitals, 
nursing 
homes, 
diagnostic 
centre, 
pathological laboratories wherein 
20 or more persons are employed 
or were employed on any day of the 
preceding twelve months
Areas where the scheme has al-
ready been brought into force un-
der sub-section (2) and (5) of Sec-
tion 1 of
the Act
13. A perusal of the aforesaid notiﬁ cation shows that pathological 
laboratories were speciﬁ cally covered under the provisions of the Act in 
terms of the aforesaid notiﬁ cation. In the case at hand, the respondent is 
running pathological laboratory and would be covered under the Act in 
terms of the Notiﬁ cation dated 06.09.2007,  issued by the Government  of 
E.S.I. CORPORATION, REP. BY THE REGIONAL DIRECTOR v. 
M/s. ENDOCRINOLOGY AND IMMUNOLOGY LAB [RAJESH BINDAL, J.]
166
SUPREME COURT REPORTS 
[2023] 11 S.C.R.
Kerala. The order passed by the High Court is in terms of the aforesaid 
notiﬁ cation directing coverage of the respondent establishment from that date 
onwards, as undisputedly, 20 or more persons were found to be employed 
in the establishment.
14. The argument raised by the appellant that the respondent 
establishment should be deemed to be covered in terms of the Notiﬁ cation 
issued on 27.05.1976 read with the Circular dated 22.11.2002 issued by the 
Corporation, is merely to be noticed and rejected. It is admittedly the case of 
the Corporation itself that the term “shop” as such has not been deﬁ ned under 
the Act. It was sought to be assigned a meaning as per the understanding 
of the “Corporation”. Clause 23 of the aforesaid letter shows that even as 
per the earlier Memo dated 06.01.1989, pathological laboratories were not 
covered as shops under Section 1(5) of the Act. The aforesaid Memo letter 
was subsequently modiﬁ ed vide Memo letter dated 22.11.2002.
15. Further, fact remains that there is a Notification issued on 
06.09.2007 by the Government of Kerala covering medical institutions 
including pathological laboratories from that date. The aforesaid Notiﬁ cation 
was issued in consultation with the Corporation and with the approval of the 
Central Government. If the pathological laboratories were already covered 
under the Act, as is sought to be urged by the Corporation, there was no 
occasion to issue such a notiﬁ
cation. This fact clearly establishes that even 
as per the understanding of the Corporation, pathological laboratories were 
not covered under the Act prior to that date.
16. For the aforesaid reasons, we do not ﬁ nd any merit in this appeal. 
The same is hereby dismissed. There shall be no orders as to costs. 
Headnotes prepared by:  
Appeal dismissed.
Divya Pandey