E S I CORPORATION Vs. J C O PRODUCTS

JUDGEMENT

(1.) This appeal under Section 82 of the Employees State Insurance Act 1948 (hereinafter referred to as 'the Act') is preferred by the Employees State Insurance Corporation, Hyderabad (hereinafter referred to for the sake of brevity as 'the Corporation') against the order of the Employees Insurance Court at Hyderabad, in E.1. Case No. 50 of 1978 declaring that M/s. Jayalakshmi Cotton & Oil Products (P)Ltd , Perecherla, Guntur District, the respondent herein is a seasonal factory and hence not covered by the provisions of the Act.

(2.) The facts relevant for the purpose of this appeal are these: The respondent-Factory is situated at Perecherla 11 K.Ms, away from Guntur in an area of 28 acres of land. Initially the factory started cotton ginning in March, 1973 and to that was added cotton pressing in January, 1974, Cotton seed decortication and oil milling were later on added. The seed obtained by ginning is decorticated and oil is extracted. The oil that is still left over in the cake is further extracted by means of solvent process. The factory is claimed to be seasonal in that it functions only from December to June every year during the cotton season. It is admitted that the solvent extract plant works continuously throughout the year.

(3.) It appears on 19-5-1977 and once again on 20-7-1977 R.W.t the Office Manager of E.S.I, Corporation, Guntur visited the factory. During both the visits, he inspected the factory records. He wrote a letter Ex.P-1 informing P.W-1, manager of the respondent factory that the factory falls within the purview of the E.S.I. Act and threatened with criminal prosecution in the event of non-coverage. The respondent-factory by their letter dated 1-4-1977 informed the Corporation that the E.S.I. Scheme was not applicable to their factory. Once again they affirmed the same by their letter dated 24-6-1977 by furnishing all the data required to prove that the respondent-Factory is a seasonal factory and, therefore, does not fall under the ambit of the Act. In spite of it, the Corporation by their letter dated 18-1-1978 informed the respondent-Factory that the factory would be covered by the E.S.I. Scheme from 23-7-1977. Aggrieved by the said action the respondent- Factory filed an application under Section 75 of the Act seeking declaration that the respondent-Factory is a seasonal factory within the meaning of Section 2(12) of the Act and is, therefore, exempted from the provisions of the Act as per Section 1(4) of the Act. The main contention of the respondent-Factory was that the primary and dominant activity of the factory is cotton ginning and pressing, that the otner activities including the cotton seed decortication and extraction of oil from the cake are totally connected with the cotton ginning and therefore the factory is a seasonal factory within the meaning of Section 2 (12) of the Act. The corporation resisted the application contending that as per sub-section (12) of Section 2 of the Act the process of cotton ginning and pressing are seasonal in nature but that the respondent-Factory is not exclusively engaged in the process of cotton ginning and pressing but in addition the respondent is havingcotton seed decortication, cotton seed oil mill and solvent extraction plant, that the process of cotton ginning and pressing is ancillary to the work of cotton seed decortication and oil mill and thus the factory is engaged in multifarious activities and manufacturing process throughout the year employing more than 200 persons for wages. Therefore, it is argued that the respondent factory is a factory within the meaning of Section 2 (12) of the Act.