[Cites 7, Cited by 0]

Gujarat High Court

Regional Director vs Komal Ceremic Industries on 28 November, 2025

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                             C/FA/2051/2009                                   JUDGMENT DATED: 28/11/2025

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                                     IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                                                 R/FIRST APPEAL NO. 2051 of 2009


                       FOR APPROVAL AND SIGNATURE:


                       HONOURABLE MR. JUSTICE DEVAN M. DESAI
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                                    Approved for Reporting                    Yes           No
                                                                                            ✓
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                                                        REGIONAL DIRECTOR
                                                              Versus
                                                     KOMAL CEREMIC INDUSTRIES
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                       Appearance:
                       MR HEMANT S SHAH(756) for the Appellant(s) No. 1
                       MR PS GOGIA(2751) for the Defendant(s) No. 1
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                          CORAM:HONOURABLE MR. JUSTICE DEVAN M. DESAI

                                                          Date : 28/11/2025

                                                         ORAL JUDGMENT

1. The present First Appeal is filed by the appellant-original

opponent under Section 82(2) of the Employees' State Insurance

Act, 1948 (hereinafter referred to as 'the Act') assailing the

judgment and order dated 07.02.2008 passed by learned Judge,

ESI Court No.1, Rajkot in ESI Application No.25 of 1990.

2. Heard learned advocate Mr. Hemant S. Shah for the

appellant and learned advocate Mr. P.S. Gogia for the

respondent.

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3. The brief facts of the case are as under:-

3.1. The case of the establishment namely Komal Ceremic

Industries is that they are in the business of manufacturing

roofing tiles at Morbi and the Corporation after visiting the

establishment issued a demand under Section 45-A of the

Employees' State Insurance Act, 1948 for the recovery of

unpaid wages and other expenses. The establishment challenged

the determination of the contribution by resorting to Section 75

of the Employees' State Insurance Act, 1948 for quashing and

setting aside the order passed under Section 45-A of the

Employees' State Insurance Act, 1948. The Corporation

contested the application and supported the order passed under

Section 45-A of the Employees' State Insurance Act, 1948.

After considering the evidence, the application of the

establishment was allowed and it was further held that the

establishment is not liable to pay any contribution as demanded

by the Corporation.

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3.2. Being aggrieved and dissatisfied with the impugned

judgment and order, the Corporation-appellant has filed present

First Appeal.

4. Following substantial questions of law have been proposed

by the appellant for consideration.

"A.Whether the unit is a seasonal factory or not? B.Whether the applicant is entitled to any relief? C.Whether the application is time barred?

D.Whether the Lower Court has jurisdiction to entertain and deal with the application?"

5. Learned advocate for the appellant contended that the

decision of the Corporation under Section 45-A of the

Employees' State Insurance Act, 1948 is justifiable for the

reason that the establishment is not a seasonal factory, and

therefore, the provisions of the Employees' State Insurance Act,

1948 is applicable. Once the provisions of the Act are attracted,

the establishment is liable for unpaid contribution as demanded

by the Corporation. The establishment did not produce any

material to the Insurance Inspector to show that the

establishment is a seasonal factory. In absence of any material

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placed before the Insurance Inspector, the demand of the unpaid

contribution is legal and valid. Except above, no other

submissions are made by learned advocate for the appellant.

6. Per contra, learned advocate for the respondent has

contended that the establishment has been declared as a seasonal

factory by learned Labour Commissioner, State of Gujarat and

therefore, the Act does not apply to the establishment. In view

of this, the demand of so-called unpaid contribution does not

arise.

7. In support of his contention, learned advocate for the

respondent has relied upon the order in the case of Amul

Potteries Vs. Employees State Insurance Corp. reported in

[2006] 11 G.H.J. (362). Learned advocate for the respondent

has further relied upon the order dated 29.08.2008 in the case of

Paras Horoligical Industries Vs. Employee State Insurance

Corporation passed in First Appeal No.2913 of 2006 and allied

matters by Co-ordinate Bench of this Court. It is further

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contended that it has been held by the Co-ordinate Bench of this

Court that when the establishment is falling within the definition

of Section 2(19-A) of tthe Employees' State Insurance Act,

1948, the Act does not apply and therefore, the question of

demand of unpaid contribution is illegal. Except above, no other

submissions are canvassed by learned advocate for the

respondent.

8. I have considered the submissions canvassed by learned

advocates for the parties and perused Record and Proceedings.

The short question involved in the present appeal is whether the

Act applies to the establishment or not. The contention of the

learned advocate for appellant is that the establishment does not

fall within the definition of seasonal factory as the respondent

did not produce any evidence before the Insurance Inspector at

the time of visit of the establishment. As against this, the

contention of the learned advocate for the respondent that the

establishment has been declared as a seasonal factory by an

order of Labour Commissioner under the Industrial Disputes

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Act, 1947. The question involved in this appeal is no more res

integra in the case of Amul Potteries (supra). In the said

decision, the Co-ordinate Bench of this Court, in paragraph

Nos.11, 12, 12.1 and 12.2, has observed as under:-

"11. It would be appropriate to record, at this stage, that the definition of the 'factory' quoted above came to be amended and introduced as such by virtue of amendments made in the Act with effect from 20th October 1989, by virtue of notification of even date whereas the definition of 'seasonal factory' in Sub-section (19-A) came to be inserted, for the first time, with effect from 20 th October,

12. It is, thus, clear that the law recognizes two categories of institutions, (1) factory, and (2) seasonal factory. The definition of 'factory' came to be amended and introduced, as such, as narrated above with effect from 20th October, 1983 whereas 'seasonal factory' was defined, for the first time, in 1989. By virtue of provision contained in Section 1(4), it is clear that provisions of the law would not apply to seasonal factories. The question, therefore, would be whether the applicant-factories are factories or seasonal factories, as contemplated under the Act. In this regard, it would be appropriate to note that the applicant-factories are regarded and declared as seasonal factories by order dated 28.11.1991 by Labour Commissioner, State of Gujarat. It is nobody's case that nature of work in the applicant's factories has changed only with effect from 28.11.1991, which would convert them into seasonal factories., Differently put, it is nobody's case that prior to 28.11.1991, the factories were functioning in a manner which would not be covered in the definition of seasonal factories, meaning thereby that they were not working for. more than seven months in a year. 12.1. Apart from this, it would be appropriate to note that the E.S.I. Court has also given a specific finding to the effect that the applicant-factories are seasonal factories: and are functioning for less than seven months in a year. This specific finding in Paragraph

12 of the judgment of the E.S.I. Court is accepted by the E.S.I. Corporation. The Corporation has not challenged this aspect in the

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appeals' preferred by it, though the contention regarding non-grant of interest and penalty is raised. In light of provision contained in Section 82(2) of the Act, an appeal shall lie only if a substantial question of law arises. When a finding of fact is not challenged, it attains finality and, therefore, the applicant-factories have to be and are accepted as seasonal factories.

12.2. Thus, there is no material to show that there is a change of period of work during the period between 1989 and 28.11.1991 and the period thereafter. The nature of work is the same and by order dated 28.11.1991, it is accepted that the factories are seasonal factories. Added to this is the fact that the Trial Court has also given a verdict to the effect that the applicant-factories are seasonal factories and, in light of Section 1(4) of the Act, the provisions of the Act cannot be made applicable to seasonable factories."

9. In the case of Paras Horoligical Industries (supra), the Co-

ordinate Bench of this Court, also relied upon the case of Amul

Potteries (supra) and further relied upon paragraph Nos.11, 12,

12.1 and 12.2 of the decision rendered in Amul Potteries

(supra).

10. At this stage, it would be apposite to refer Section 1(4) of

the Act which is reproduced as under:-

"1. Short title, extent, commencement and application.-

(1) **** (2) **** (3) **** (4) It shall apply, in the first instance, to all factories (including factories belonging to the government) other than seasonal factories:

The Act shall apply to all factories other than the seasonal

factory. Therefore, if the establishment / factory has been

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declared by the Labour Commissioner as a seasonal factory, the

provisions of the Act would not be made applicable. "Seasonal

Factory" has been defined under Sub-clause (19A) of Section 2

of the Employees' State Insurance Act, 1948, which is

reproduced as under:

"(19A) "seasonal factory" means a factory which is exclusively engaged in one or more of the following manufacturing processes, namely, cotton ginning, cotton or jute pressing, decortication of groundnuts, the manufacture of coffee, indigo, lac, rubber, sugar (including gur) or tea or any manufacturing process which is incidental to or connected with any of the aforesaid processes and includes a factory which is engaged for a period not exceeding seven months in a year-