- (1.) THE controversy here is whether M/s. Laxmi Ginning and Oil Mills, which is engaged in the process of decortication of groundnuts as also extraction of groundnut oil is a 'seasonal factory' in terms of section 2 (19-A) of the Employees' State Insurance Act, 1948 (hereinafter referred to as 'the Act' ). If so, it would be exempt from contributions under the Act. It is such contributions that this mill seeks to contest.
(2.) SECTION 2 (19-A of the Act defines 'seasonal Factory' to mean: "a factory which is exclusively engaged in one or more of the following manufacturing processes, namely, cotton ginning, cotton of jute pressing, decortication of groundnuts, the manufacture of coffee indigo, lac, rubber, sugar (including gur) or tea of 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) is such other manufacturing process as the Central Government may, by notification in the official Gazette, specify"
(3.) THE contention for the counsel for the appellants being that the extraction of groundnut oil is incidental to or, at any rate, connected with the process of decortication of groundnut and the appellants must therefore, be held to come within the ambit of 'seasonal factory as defined in the Act. This is, indeed, an interpretation that cannot be sustained. On a plain reading of the definition. We cannot but wholly concur with the view expressed by G. C. Mittal, J. in F. A. O. 183 of 1976, Employees State Insurance Corporation v. The D. M. Oil and General Industries, decided on December 22, 1991, that: "if a factory has to extract oil and gets unshelled groundnuts, then it would first have to do the job of decortication and then it would be taken through the process of extraction of oil and in this sense decortication may be called a manufacturing process, incidental to or connected with the extraction of oil but the reverse would certainly not be true. A factory may carry on the business of decortication of groundnuts which would be a complete process by itself. After decortication, it can sell the shelled groundnuts. It that case, the factory would not be covered by the Act because it would be considered a 'seasonal factory'. But if after decortication, the shelled groundnuts are subjected to the process of extraction of oil by the concern which carries on decortication, then by no stretch of imagination can the oiling process be called incidental or connected with the decortication of groundnuts. ";