EMPLOYEES STATE INSURANCE CORPORATIONMADRAS Vs. S M SRIRAMULU NAIDU

JUDGEMENT

(1.) This appeal raises a question as to the sustainability of a demand for contribution from an employer under the Employees' State Insurance Act (Act 34 of 1948), which, for the sake of brevity, will be referred to hereafter as the Act. The respondent was the proprietor of Pakshiraja Studios in Coimbatore. The Studio was engaged in the production of cinematograph films. A number of buildings constituted this "Studios," all of them being situate in the same compound. The work in the studio was done in the following departments: (1) Electrical, (2) Camera, (3) Sound, (4) Setting, (5) Moulding, (6) Carpentry, (7) Laboratory, (8) Editing, (9) Office and watch and ward, (10) Art and (11) Make up. Electric power was utilised in connection with some of these items of the work in the studio. If all the departments were taken into account, the number of persons employed would admittedly exceed 20. But the same could not be said if each of the departments was taken by itself. The carpentry department, which employed more than ten but less than twenty persons, was notified as a factory under the Factories Act. As the other departments employed less than ten persons, none of them was brought within the purview of the Factories Act.

(2.) The workers of the Studio were paid off on 28-9-1955 and the studio itself was closed on 25-9-1956. The Employees' State Insurance Act was extended to Coimbatore in the year 1953. The appellant, claiming that the Pakshiraja Studios was a factory within the meaning of the Act, called upon the respondent to pay the employers' contribution under S. 40 of the Act for the period from 23rd June 1955 to 22nd June 1956 and special contribution for four quarters, ending with 31st March 1956. The latter repudiated the claim. Thereupon proceedings were initiated under S. 77 of the Act by the appellant in the Employees' Insurance Court, Coimbatore, for a declaration that the Pakshiraja Studios, Coimbatore, comprising the departments mentioned above, was a factory within the meaning of the Act, and that the respondent was liable to pay the employers' contribution and special contribution in respect of all the employees employed in the various departments, and for other reliefs. The respondent contested the claim, pleading that he was under no liability to contribute, as no one of the departments would come within the scope of the term "factory" under the Act. The learned District Judge of Coimbatore, who presided over the Employees' State Insurance Court, held that the Pakshiraja Studios was a "factory" within the meaning of the Act, and that the respondent was liable to pay the contribution demanded. Aggrieved by that decision, the respondent filed an appeal to this Court, C. M. A. No. 269 of 1957. The appeal was disposed of by Basheer Ahmed Sayeed J. who held that a factory within the meaning of the Act should connote the same idea as that coming under the Factories Act. Relying on the principle of the decision in In re K. V. V. Sarma, ILR (1953) Mad 775: (1953 Mad 269), the learned Judge held that each of the various departments should be held to be distinct, and that, as in the present case the various departments located in different buildings, though within the same compound, they were capable of being treated as separate, and that, as in each department the employees numbered less than 20, not one of them could be held to be a factory within the meaning of the Act. The basic for the learned Judge's opinion was that the word "factory" under the Act bore a definition substantially as the one under the Factories Act. In that view, the learned Judge set aside the order of the Employees' Insurance Court. In this appeal, which is filed against the judgment of the learned Judge, the principal question for determination is, whether Pakshiraja Studios would be a factory within the meaning of the term "factory", in the Employees' State Insurance Act.

(3.) Section 2(12) of the Act defines: