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Osmania University v. Regional Director, E...
Factual and Procedural Background
The appeal arose from a certificate granted by the High Court of Andhra Pradesh. A learned Single Judge of that court had allowed a writ petition filed by Osmania University, holding that the Employees' State Insurance Act, 1948 (“the Act”) did not apply to the University’s Department of Publications and Press. On intra-court appeal, a Division Bench reversed that view, ruling that the Act was applicable. The University then appealed to the Supreme Court, which delivered the present decision.
Legal Issues Presented
- Whether the Department of Publications and Press of Osmania University constitutes a “factory” under Section 2(12) of the Employees' State Insurance Act, 1948, thereby bringing its employees within the coverage of the Act.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| CA 204 of 1973 (Supreme Court of India) | Held that the same Department of Publications and Press carries on a “manufacturing process” for purposes of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. | The Court adopted its conclusion in CA 204 of 1973 to find that the Department carries on a “manufacturing process,” satisfying the definition of “factory” under Section 2(12) of the ESI Act. |
Court's Reasoning and Analysis
1. Section 1(4) of the ESI Act extends the Act to all “factories,” including government-owned factories, other than seasonal factories.
2. Section 2(12) of the Act defines “factory” as premises where twenty or more persons have been employed for wages and where a “manufacturing process” with the aid of power is carried on.
3. “Manufacturing process” is to be understood in the sense given in Section 2(k) of the Factories Act, 1948. Sub-clause (i) covers any process for “making, altering, repairing … or otherwise treating or adapting any article or substance” for use, sale, transport, delivery, or disposal.
4. In the connected appeal CA 204 of 1973, the Supreme Court had already determined that the University department’s activities—printing text books, journals, forms, and stationery—constitute a “manufacturing process.”
5. Because those activities meet the statutory definition, the Department of Publications and Press is a “factory” under Section 2(12) of the ESI Act. Accordingly, the employees working there fall within the Act’s coverage.
6. Given this finding, the High Court’s Division Bench was correct in holding the Act applicable, and no ground exists for interference by the Supreme Court.
Holding and Implications
Appeal Dismissed with Costs.
The Supreme Court affirmed that the Employees' State Insurance Act, 1948 applies to employees of the Department of Publications and Press of Osmania University because the department is a “factory” under the Act. The immediate consequence is that those employees are entitled to the benefits and are subject to the obligations contemplated by the ESI Act. The decision reinforces the broad reach of the statutory definition of “factory” but does not announce a new legal standard beyond applying settled definitions.
V. Balakrishna Eradi, J.— The short question that arises for our determination in this appeal, which has been filed on the basis of a certificate granted by the High Court of Andhra Pradesh is whether the provisions of the Employees' State Insurance Act, 1948 are applicable in respect of the employees working in the Department of Publications and Press of the Osmania University. A Division Bench of the High Court has answered the said question in the affirmative differing from the contrary view expressed by a learned Single Judge, who had allowed a writ petition filed by the University. In the light of the said conclusion, the Division Bench set aside the judgment of the learned Single Judge and dismissed the writ petition. Under clause (4) of Section 1 of the Employees' State Insurance Act, 1948 (for short “the Act”) the Act will apply to all “factories” including factories belonging to the Government other than seasonal factories. The expression “factory” has been defined in Section 2(12) of the Act in the following terms:
“2(12) ‘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 (35 of 1952), or a railway running shed;
‘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
(b) in such other manufacturing process as the Central Government may, by notification in the Official Gazette, specify;]
The expression “manufacturing process” and ‘power’ shall have the meaning respectively assigned to them in the Factories Act, 1948 (63 of 1948).”
2. Clause (k) of Section 2 of the Factories Act defines the expression “manufacturing process”. For the purposes of this case we need refer to only sub-clause (i) of the said definition clause. That sub-clause stages that manufacturing process means any process for — “making, altering, repairing, ornamenting, finishing, 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”.
3. In the connected appeal — CA 204 of 1973 filed by the same appellant, we had occasion to consider whether the Department of Publications and Press run by the University is liable for coverage under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 together with Schemes and notifications. In our judgment in that appeal we have taken the view that the said department is engaged in carrying on a “manufacturing process” in the printing of text books, journals, forms and other items of stationery. The definition of “manufacturing process” contained in Section 2(i-c) of the Employees' Provident Funds and Miscellaneous Provisions Act is identical in all respects with that contained in Section 2(k)(i) of the Factories Act.
4. In the light of the aforesaid conclusion recorded by us in CA 204 of 1973 it must be held that the department in question is a “factory” within the meaning of the said expression as defined in Section 2(12) of the Act. The judgment under appeal does not, therefore, call for any interference.
5. This appeal is accordingly dismissed with costs.
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