Madras High Court
Hindustan Unilever Limited vs The Deputy Director on 10 August, 2022
WP No.13712 of 2014
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 10-08-2022
CORAM
THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM
WP No.13712 of 2014
And
MP No.1 of 2014
Hindustan Unilever Limited,
50 & 51 SIPCOT Industrial Complex,
Hosur 635 126 Represented by its
Senior Legal Executive. .. Petitioner
vs.
The Deputy Director,
Sub Regional Office (Salem),
Employees' State Insurance Corporation,
39/57, Theerthamalai Vaniga Valagam,
Three Roads,
Salem – 636 009. .. Respondent
Writ Petition is filed under Article 226 of the Constitution of India,
praying for the issuance of a Writ of Certiorari, callilng for the records of
the repsondent in proceedings No.63000466860000008/MEC/SRO/SLM
and quash its order dated 25.03.2014.
1/18
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WP No.13712 of 2014
For Petitioner : Mr.Anand Gopalan for
M/s.T.S.Gopalan and Co.
For Respondent : Ms.G.Narmadha for
Mr.G.Bharadwaj for ESI.
ORDER
The order issued under Section 45-A of the Employees
Insurance Act, 1948 (As Amended) [hereinafter referred to as the 'ESI Act,
1948, in short], is under challenge in the present writ petition.
2. The writ petitioner, namely, Hindustan Uniliver Ltd., is a
Company and they are in the process of manufacturing 'Conventional and
Instant Coffee' under the brand name of M/s.Brooke Bond India Ltd.
3. The learned counsel for the petitioner-Company contended
that the order impugned and the reasonings furnished for arriving a
conclusion is not in consonance with the provisions of the ESI Act, 1948
(As Amended). The only reason attributed for bringing the establishment
under the cover of ESI Act, is that the petitioner-Company is having a
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WP No.13712 of 2014
Canteen with employees and security personnel in the factory and those
employees are governed under the ESI Act and therefore, the entire
establishment is to be covered. Such a reasoning is untenable in view of the
'Exclusion Clause', which is in favour of the petitioner-Company.
4. In order to substantiate the said contention, the learned
counsel for the petitioner drew the attention of this Court with reference to
Section 2 (19-A) of the ESI Act, 1948. The petitioner-Company is falling
under the definition of 'Seasonal Factory' as they are the manufacturers of
Coffee. The petitioner-Company has established that they are the
manufacturers of Coffee and falling under the 'Exclusion Clause'
contemplated under Section 2 (19-A) of the ESI Act and therefore, the order
impugned is liable to be set aside.
5. With reference to the Amendment, the learned counsel for
the petitioner reiterated that the petitioner-Company has not involved in any
process of blending or packing and therefore, they are not falling under the
expanded Amended Clause of Section 2 (19-A) of the ESI Act, 1948. Thus
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WP No.13712 of 2014
the order impugned is liable to be set aside.
6. In support of the above contention, the learned counsel for
the petitioner relied on the judgment of the Hon'ble Supreme Court of India
in the case of Regional Director, Employees' State Insurance
Corporation vs. High Land Coffee Works of P.F.X. Saldanha and Sons
and Another [1992 (1) LLJ 287], wherein it has been held in paragraph-7
with regard to the Amendment issued to Section 2 (19), which reads as
under:-
“7. The view taken by the High Court seems
to be justified. The statement of Objects and
Reasons of the Bill which later became the Act 44
of 1966 indicates that the proposed amendment
was to bring within the scope of the definition of
‘seasonal factory’, a factory which works for a
period of not exceeding seven months in a year-
(a) in any process of blending, packing or
repacking of tea or coffee; or (b) in such other
manufacturing process as the Central Government
may, by notification in the Official Gazette,
specify. The amendment therefore, was clearly in
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WP No.13712 of 2014
favour of the widening the definition of ‘seasonal
factory’. The amendment is in the nature of
expansion of the original definition as it is clear
from the use of the words ‘include a factory’. The
amendment does not restrict the original definition
of “seasonal factory” but makes addition thereto
by inclusion. The word “include” in the statutory
definition is generally used to enlarge the meaning
of the preceding words and it is by way of
extension, and not with restriction. The word
‘include’ is very generally used in interpretation
clauses in order to enlarge the meaning of words
or phrases occurring in the body of the statute;
and when it is so used, these words or phrases
must be construed as comprehending, not only
such things as they signify according to their
natural import but also those things which the
interpretation clause declares that they shall
include. (See: (i) Stroud’s Judicial Dictionary, 5th
edn. Vol.3, p.1263 and (ii) C.I.T. Andhra Pradesh
vs. M/s Taj Mahal Hotel, Secunderabad: [1971 (3)
SCC 550:AIR 1972 SC 168 : (1972) 1 SCR 168].
(iii) State of Bombay vs. The Hospital Mazdoor
Sabha & ors. : AIR 1960 SC 610 : (1960) 2 SCR
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866 : (1960) 1 LLJ 251)."
7. At the outset, the learned counsel for the petitioner reiterated
that the reasons furnished for forming an opinion by the Authorities are not
in consonance with the provisions of the Amendment and thus the matter is
to be revisited and consequently, the writ petition is to be allowed.
8. The learned Standing Counsel appearing on behalf of the
respondent objected the said contentions raised on behalf of the writ
petitioner by stating that the writ petitioner-Company has admitted the fact
that they are the manufacturers of conventional and instant coffee.
Therefore, they are not falling under the main clause of exemption granted
to the manufacture of coffee. They are not the manufacturers of coffee and
even during the inspection by the Competent Authorities, they found that
they are manufacturing the Conventional Instant Coffee which requires
additional processes.
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WP No.13712 of 2014
9. The petitioner-Company is in the process of manufacturing
the Instant Coffee also, which requires blending and packing to be done in
the factory premises, which was recorded in the report conducted by the
Field Inspection Officer. Thus based on the report of the Field Inspection
Officer, the order under Section 45-A of the ESI Act, was passed. The
additional reason provided is that the canteen and security personnel have
already covered under the Act and that apart, the nature of manufacturing
Unit was also taken into consideration by the Competent Authorities, while
passing the orders under Section 45-A of the ESI Act and thus there is no
infirmity.
10. The learned Standing Counsel for the respondent relied on
the judgment of the Division Bench of this Court in WA No.1971 of 2011
dated 14.03.2019, wherein the observations made in the paragraphs-29 to 31
of the said judgment of the Davison Bench, cited supra, reads as under:-
“29. As pointed out earlier, the Hon'ble Supreme
Court in the case of M/s.Highland Coffee Works, (supra),
had not dealt with the restriction of working for a period
not exceeding seven months in a year and the judgment
cannot be relied on by the first respondent to support their
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stand that the factory engaged in blending and packing of
tea exceeding seven months in a year is also included within
the definition of seasonal factory. Furthermore, the decision
does not state that blending and packing of tea is a
manufacturing process and even assuming, if it is so, as the
first respondent's factory works throughout the year, they
will not fall within the definition of a “seasonal factory”.
30. To be noted that the provisions of the ESI Act
applies to all factories other than seasonal factories. The
submission of the learned Senior counsel for the first
respondent is that seasonal factories are outside the
purview of the Act and the appellant is not justified in
assigning a code number and compelling them to register
under the Act. The ESI Act is a labour welfare legislation
intended to protect the workmen. Therefore, liberal
interpretation should be given so that the objects of the Act
are achieved. The interpretation should also lean in favour
of the working force for whose welfare the legislation was
enacted. We do not agree with the submission that by being
a seasonal factory, automatically the provisions of the Act
cannot be made applicable to the first respondent.
31. This argument would be sustainable, if seasonal
factory had not been defined under the Act. Section 2(19A)
defines “seasonal factory”, and a person who claims to be
a seasonal factory should fall within the four corners of
such definition. Therefore, the Act carves out an exception
more or less akin to an exemption in respect of seasonal
factories, provided the factory falls within the definition of
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WP No.13712 of 2014
'seasonal factory' as defined under Section 2(19A).
Therefore, there is no automatic exemption available as
pleaded by the first respondent. Thus for all the above
reasons we are of the considered view that the order passed
in the Writ Petition requires to be interfered."
11. Considering the arguments as advanced between the
respective learned counsel appearing on behalf of the parties to the lis on
hand, let us now consider the scope of Section 2 (19-A) of the ESI Act,
which reads 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 —
(a) in any process of blending, packing or
repacking of tea or coffee ; or
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(b) in such other manufacturing process as
the Central Government may, by notification in
the Official Gazette, specify"
12. A close reading of the first portion of the 'Exclusion
Clause', it is unambiguous that factory which is exclusively engaged in the
manufacturing processes of coffee alone is excluded. The 'Amended Clause'
indicates "and includes a factory, which is engaged for a period not
exceeding seven months in a year — (a) in any process of blending, packing
or repacking of tea or coffee".
13. Thus, the pre-amended definition for 'seasonal factory'
indicates that manufacturers of coffee is excluded from the provisions of the
ESI Act, 1948. However, the subsequent amendment expands the scope by
including the manufacturers of any other process of blending and packing or
repacking of tea or coffee within the ambit of the ESI Act, 1948. Therefore,
the exclusion is applicable only in respect of the establishment falling under
the manufacturers of coffee alone and if any establishment/Company
involves in any other process of blending, packing or repacking of coffee,
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for more than 7 months in a year, they are not excluded from the provisions
of the ESI Act, 1948.
14. Let us now consider the facts and the reasonings furnished
in the order impugned issued under Section 45-A of the ESI Act, 1948. The
Authorities have stated that they have carefully applied their mind to the
facts in issue and the documentary evidences adduced in support of the
objections. It is stated that the Social Security Officer carried out the survey
of the factory on 06.12.2010 and found that the factory is coverable under
the provisions of the ESI Act, 1948 and recommended for allotment of
Code. The Social Security Officer, who in turn, has explained that the
factory is functioning throughout the year (beyond seven months) and
confirmed his recommendations.
15. The representative of the petitioner-Company appeared in
person and made a representation that the Act is not applicable to the
factory, as it is seasonal according to Section 2 (19-A) of the ESI Act, 1948.
To substantiate the said contention, the representative of the writ petitioner-
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Company raised three grounds, which read as under:-
“(1) The factory is carrying out the
manufacture of conventional and instant coffee
including roasting, granulizing, extracting, spray
drying and packing. The sale of the product is
carried out by M/s.Hindustan Uniliver Ltd.,
Uniliver House, BD Sawanth Mark, Chakkala,
Anderi East, Mumbai-400 099, which is covered
under Section 1(5) of the ESI Act and the
compliance is made through Code
No.35000100670000304.
(2) The expanded provisions of the term
Seasonal factory under Section 2 (19-A) that is
manufacturing process which is engaged for a
period not exceeding seven months in a year (a) in
any process of blending, packing or repacking of
tea or coffee or (b) in such other manufacturing
process as the Central Government may by
notification in the Official Gazette specify is not
applicable to him as the coffee bean are procured
from various parts of the country and conventional
and instant coffee is manufactured including
roasting, granulizing, extracting, spray drying and
packing.
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(3) The manufacturing activity is falling
within the first part of the definition for which he
has cited the rulings of the Honourable High
Court of Calcutta in ESIC vs. Highland Coffee
Works of PFX Saldanha and Sons [(1991) 3 SCC
617] and Manager ESIC vs. Narasus Coffee
Company.”
16. All the three grounds were considered by the Authorities,
including the report submitted by the Social Security Officer, who
conducted the field inspection. The finding of the Competent
Authorities/respondent reveals that the employer has employed direct
employees and indirect employees through various manpower suppliers,
namely, immediate employees within the premises. It is reported by the
Social Security Officer that these employees are engaged for various
activities other than manufacturing activities such as running a canteen,
civil works, security services, house keeping services etc. So it is evident
that that the employer has admitted his liability for employees employed
through immediate employers, but not remitted contribution in respect of his
own employees.
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17. A close reading of the findings would reveal that the Social
Security Officer's report was considered by the Competent Authority. It is
contended that the employees engaged in the petitioner-Company has
involved in various activities other than the manufacturing activities.
Therefore, the reasons furnished indicate that they are employed in the
manufacturing activities also. The very term 'employed by the Competent
Authority' in the impugned order reveals that the employees are engaged for
various activities other than the manufacturing activities, which includes the
manufacturing activities and therefore, the contention of the writ petitioner
that the respondent has not considered the activities of the factory is
incorrect and they considered the entire activities of the petitioner-Company
in their premises. More-so, the reasons stated in the order impugned reveal
that the petitioner-Company has engaged the employees for manufacturing
activities viz., running a canteen, civil works, security services, house
keeping services etc. Thus the very contention raised on behalf of the writ
petitioner that the Authorities have not considered the manufacturing
activities of the petitioner-Company is incorrect and the order is
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unambiguous that they have included the manufacturing activities and also
the other activities in the petitioner-Company.
18. The judgment of the Supreme Court relied on by the
petitioner also made it clear that the amendment therefore, was clearly in
favour of widening the definition of 'seasonal factory'. The amendment is in
the nature of expansion of the original definition as it is clear from the usage
of words 'include a factory'. The amendment does not restrict the original
definition of 'seasonal factory', but makes addition thereto by inclusion.
19. Cogent reading of the provisions of the ESI Act, 1948 and
the facts regarding the nature of manufacturing process undertaken by the
petitioner-Company, this Court has no hesitation in forming an opinion that
the petitioner-Company has been engaged in the manufacturing process as
elaborated under the Amended Clause of Section 2 (19-A) of the ESI Act,
1948.
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20. It is not in dispute between the parties that the petitioner-
Factory has involved in the manufacturing process for more than 7 months.
Even the petitioner-Company has not disputed the same that they are
manufacturing throughout the year and therefore, they are running the
Manufacturing Unit for more than 7 months. Further, it is not in dispute and
even as per the submission made by the representative of the petitioner-
Company before the Authorities that the petitioner-Factory carried out the
manufacture of 'Conventional and Instant Coffee'. The manufacturing of
'Conventional and Instant Coffee' involves the process of blending and
packing of Coffee. When the process of blending and packing is involved
and more-so, the petitioner-Company, being an established Company, has
involved in packing also and running the Manufacturing Unit for more than
7 months in a year and this Court has no hesitation in arriving a conclusion
that the petitioner is not falling under the exclusion clause under Section 2
(19-A) of the ESI Act, 1948 and thus there is no infirmity in respect of the
findings made in the order impugned.
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WP No.13712 of 2014
21. Accordingly, the writ petition is devoid of merits and stands
dismissed. However, there shall be no order as to costs. Consequently,
connected miscellaneous petition is also dismissed.
10-08-2022
Index : Yes/No.
Internet : Yes/No.
Speaking Order/Non-Speaking Order.
Svn
To
The Deputy Director,
Sub Regional Office (Salem),
Employees' State Insurance Corporation,
39/57, Theerthamalai Vaniga Valagam,
Three Roads,
Salem – 636 009.
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WP No.13712 of 2014
S.M.SUBRAMANIAM, J.
Svn
WP 13712 of 2014
10-08-2022
https://www.mhc.tn.gov.in/judis
