- (1.) In an inspection held on May 7, 1991, the officers of the Employees' State Insurance Corporation found that there were 15 persons working as employees in the appellant-establishment, called M/s. Hotel New Nalanda. They also found a refrigerator and an electric grinder in use there in the 'manufacturing process'. On the basis of the inspection the officers of the Corporation took the view that the appellant-establishment was a factory within the meaning of section 2(12) of the Employees' State Insurance Act, 1948 and it came within the purview of the Act. They, accordingly, asked the Managing Director of the establishment to comply with the provisions of the Act provisionally with effect from May 7, 1991, the date of the inspection.
(2.) The appellant did not accept the findings recorded in course of the inspection and filed an application under section 75 read with section 77 of the Act (E.I.C. 55/91) before the Employees' Insurance Court, Kozhikode, seeking a declaration that the establishment in question was not covered by the Act and that the applicant/appellant was not bound to observe the provisions of the Act. According to the applicant/appellant, the establishment called M/s. Hotel New Nalanda was a tourist home where rooms were let out to people on monthly or daily rent basis. The establishment never employed more than 8 persons. No manufacturing process was carried on there, much less with the aid of power. The establishment did not constitute a factory as defined under section 2(12) and it was not covered by the E.S.I. Act. The applicant/appellant also pleaded that at the time of inspection there were only 8 persons working as employees in the establishment; the other 7 persons whose names were mentioned in the inspection report were actually brokers/agents/errand boys who brought prospective clients to the tourist home from the railway station and bus stand etc. for small commission and used to hang around there for carrying out errands for the residents staying there on payment of tips by them.
(3.) The Regional Director, ESI Corporation, the opposite party in the application filed an objection relying upon the findings recorded in the inspection report. On behalf of the opposite party reliance was also placed on a written statement submitted by the applicant to the Insurance Inspector at the time of inspection stating the names with designation of the 15 persons working as employees in the establishment.;