Case: Regional Director Employees State Insurance Corporation Vs. Ram Chander

2. 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 82(2) of the Employees State Insurance Act, 1948 (hereinafter called the Act ). The respondent, Ram Chander, was the proprietor of M/s. 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 clothes3. The question before the Rajasthan High Court was whether such 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 of September, 1975 issued under Section 1(5) of the Act. The Schedule which extends the scheme to different establishments, inter alia, provided by Clause (1)(b) as follows1. Any premises including the precincts thereof whereon ten or more persons but in any case less than twenty 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 excluding a mine subject to the operation of the Mines Act, 1952 (35 of 1952) or a railway running shed or an establishment which is exclusively engaged in any of the manufacturing processes specified in Clause (12) of Section 2 of the Employees State Insurance Act, 1948 (34 of 1948)

Court's reasoning:
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, marriage and 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 v. Collector of Customs [1978 (2) E.L.T. 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 readymade garments) and therefore was classified under Item 22D of Central Excise Tariff. Ironing with electric iron amounted to aprocess 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 case7. Our attention was drawn to the unreported decision of the Andhra Pradesh High Court in Employees State Insurance Corporation v. M/s. New Empire Tailors and Others, where the aforesaid reasoning was accepted by the High Court8. 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 E.S.I. Court must be upheldThe decision is of no assistance to the respondent in resolving the contentions involved in this appeal.