A. K. SEN, B. C. Chakrabarti, JJ. ( 1 ) THIS is an appeal under S. 82 of the Employees' State Insurance Act, 1948 (hereinafter referred to as the said Act ). The appellant is S. K. Biswas who carries on business under the name and style of s. K. Biswas and Company. ( 2 ) ONE R. N. Chatterji, an Inspector of the E. S. I. Corporation held an inspection of the manufacturing units and the other establishments of the appellant and submitted a report dated November 13, 1969, o the basis where of it was decided by the authorities under the aforesaid statute that the appellant's manufacturing unit is a factory within the meaning of the said Act and all his employees are thus covered by the provisions of the said Act with effect from January 28, 1969. The appellant disputed the said decision in a proceeding initiated before the Employee's State Insurance Court, West Bengal and claimed for a declaration that he does not come within the purview of the Act. He failed before the Employees' State Insurance Court and his application being dismissed by an order dated May 21, 1971, passed by the learned Judge Employees' State Insurance Court, West Bengal he has preferred the present appeal. This appeal being limited to substantial questions of law we will proceed on the findings of the learned Judge, Employees' State Insurance Court so far as facts are concerned. On the evidence adduced, the learned Judge has found that the appellant carries on his manufacturing process at 3 units, namely,: - 1) 9, Serpentine Lane . . . . (6 employees) 2) 16a, Serpentine Lane . . . . (5 employees) 3) 1/h/1, Muraripukur Road . . . . (4 employees) The learned Judge further found that the appellant maintains 3 other non-manufacturing units, namely: - 1) Head Office at 137, Bepin Behari Ganguly Street . . . . (8 employees) 2) Accounts Office at 1/1a, Williams Lane . . . . (3 employees) 3) A godown at 26, Serpentine Lane . . . . (2 employees) Such a finding, it appears was arrived at by the learned Judge on acceptance of the evidence led on behalf of the present respondent and report of the Inspector R. N. Chatterji referred to hereinbefore. . . . (3 employees) 3) A godown at 26, Serpentine Lane . . . . (2 employees) Such a finding, it appears was arrived at by the learned Judge on acceptance of the evidence led on behalf of the present respondent and report of the Inspector R. N. Chatterji referred to hereinbefore. ( 3 ) THE appellant did not really dispute the number of employees employed in the above 6 units but raised two contentions in support of his claim that he does not come within the purview of the Act. In the first place, it was contended by the appellant before the learned Judge, Employees' State Insurance Court that since the three manufacturing units are situated at three different and distinct premises, each constituting an independent unit by itself and none employing more than 20 employees therein, none of them is within the purview of the Act. Secondly, it was contended on behalf of the appellant before the learned Judge in the court below that even taking the three manufacturing units to be one, even then the total number of employees employed therein being only 15 the same cannot come within the definition of factory as defined in S. 2 (12) of the said Act. An objection was raised to the effect that the respondent could not have added the employees employed in the non-manufacturing units situate in different premises altogether to the employees employed in the three manufacturing units to hold that the appellant employed twenty or more persons in such a manner that he runs a factory within the meaning of S. 2 (12) of the said Act. ( 4 ) SO far as the first point raised by the appellant is concerned, the learned Judge overruled the same on a finding that the manufacturing processes carried on by the appellant in the three units are not independent of each other but that the process of manufacture is being carried on at stages at the three units. According to the learned Judge though such a manufacturing process is carried on in three distinct premises there being a functional integrity the three units must be taken to be one. According to the learned Judge though such a manufacturing process is carried on in three distinct premises there being a functional integrity the three units must be taken to be one. So far as the second point raised by the appellant is concerned, the learned Judge held that though in the non-manufacturing units no part of the manufacturing process was carried on yet when in those units the appellant conducted work in connection with and in aid of the manufacturing process it must be held that those units are also inter-connected and inter-dependent with the units where manufacturing process was being carried on. As such, employees employed therein could legitimately be counted along with those employed in the manufacturing units for determining whether the appellant runs a factory within the meaning of S. 2 (12) of the said Act. It appears that the learned Judge gave two reasons in support of his latter conclusion. In the first place, he took the view that on the definition clause the employees employed need not all be employed in the manufacturing process to make it a factory. It would be sufficient if some of them are so employed. The second reason given by the learned Judge is that such a contention is based on a limited view of the term "factory" as defined in S. 2 (12), acceptance of which view would bring in repugnancy with the term "employee" as defined in S. 2 (9 ). According to the learned Judge such a conflict can be avoided if it be accepted that all persons working for wages in co-ordinated units of the appellant shall be counted for determining whether the appellant runs factory within the meaning of the Act or not. ( 5 ) IN this appeal Mr. Ghosh appearing in support thereof has challenged both the conclusions of the learned Judge as a erroneous in law. According to Mr. Ghosh when upon the finding of the learned Judge the manufacturing process is being conducted in three units, each unit being situate at an independent and distinct premises the employees therein employed can not be counted together for determining whether the appellant's manufacturing process is a factory within the meaning S. 2 (12) of the said Act or not. Alternatively, it has been contended by Mr. Alternatively, it has been contended by Mr. Ghosh that even assuming the three manufacturing units to be one since the total number of employees employed there are less than 20, the learned Judge could not have held that the manufacturing process therein conducted by the appellant is a factory within the meaning of S. 2 (12) of the said Act. He has strongly contended that the learned Judge erred in law in adding up the employees employed in the non-manufacturing units to those employed in the manufacturing units for holding that the requirements of S. 2 (12) being fulfilled what the appellant runs is a factory within the meaning of the Act. According to Mr. Ghosh even if the employees of such non-manufacturing units were employed in works in connection with or in aid of the manufacturing process even then they not being so employed on the factory premises such employees could not in law be counted in the manner done by the learned Judge for determining whether what is run by the appellant was a factory within the meaning of the Act. According to Mr. Ghosh, the learned Judge failed to appreciate that the term employee as defined in S. 2 (9) has a wider connotation than the persons employed on the factory premises within the meaning of S. 2 (12) of the Act. Such wider connotation really does not lead to any repugnancy and the learned Judge, according to Mr. Ghosh, went wrong in law in thinking that an employee within the meaning of S. 2 (9) must necessarily be a person employed on the factory premises within the meaning of S. 2 (12) of the Act for avoiding an alleged repugnancy. ( 6 ) MR. Mukherji appearing on behalf of the respondent has contested both the points raised by Mr. Ghosh. So far as the first point raised by Mr. Ghosh is concerned, it has been contended by Mr. Mukherji that the learned Judge in the court below as right in his conclusion that in order to constitute a factory the premises whereon the manufacturing process is carried on need not necessarily have geographical contiguity. It would be sufficient, according to Mr. Muherji, if there is a functional integrity and a process of manufacture is being carried on in one or more than one premises. So far as the second point raised by Mr. It would be sufficient, according to Mr. Muherji, if there is a functional integrity and a process of manufacture is being carried on in one or more than one premises. So far as the second point raised by Mr. Ghosh is concerned, it has been contended by Mr. Mukherji that though in the three non-manufacturing units the appellant carries on work other than manufacture, since works therein conducted are intrinsically connected with the manufacturing process itself those units must be counted as a part of the manufacturing process, so too the employees therein employed. ( 7 ) BOTH the points raised by Mr. Ghosh involve substantial questions of law. In our view, however, when Mr. Ghosh must succeed on the second point raised by him, it is not necessary for us to decide the first one though it must be observed that there are some authorities to support the contention raised by Mr. Mukherji in reply thereto. ( 8 ) THERE is no dispute that the appellant would come within the purview of the said Act only if the manufacturing process run by him constitutes a factory within the meaning of S. 2 (12) thereof. Section 2 (12) in its material part defines factory as follows: -"factory means any premises including the precincts thereof whereon 20 or more persons are employed or were employed for wages on any day of the preceding 12 months and in any part of which any manufacturing process is 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, 1962 or a railway running shed. " ( 9 ) IN our view in order to constitute a factory so defined two things are required to be fulfilled namely, (i) 20 or more persons are to be employed for wages on the premises, and (ii) a manufacturing process must be carried on with the aid of power in any part of such premises. It is evident, therefore, that on the very same premises, where such a manufacturing process is being carried on, 20 or more persons must be employed for wages - of course all those 20 need not actually be engaged in the manufacturing process itself. It is evident, therefore, that on the very same premises, where such a manufacturing process is being carried on, 20 or more persons must be employed for wages - of course all those 20 need not actually be engaged in the manufacturing process itself. Now in the present case, on the finding of the learned Judge 15 persons were employed in the three premises where the manufacturing process was being carried on. Even accepting the three premises to be one we find the number of persons employed therein to be less than 20 and as such it does not constitute a factory within the meaning of the definition clause as aforesaid. Now, the learned Judge adds to the aforesaid number the 13 employees employed by the appellant in three other non-manufacturing units, namely, the head office, the accounts office and the godown although such units are on the finding of the learned Judge situate at different premises distinct from the premises where the manufacturing process is being carried. He seems to think that since in those non-manufacturing units the appellants carries on work connected with and in aid of the manufacturing process the employees therein should be so added taking those units to be part of the premises where the manufacturing process is being carried on. He has given two reasons referred to hereinbefore to hold as such and we shall consider those reasons hereinafter. But in our view the learned Judge is basically in error. Upon his own finding the manufacturing process was being carried on by the appellant in 3 premises, namely, Nos. 9 and 16a, Serpentine Lane and No. 1/h/1, Muraripukur Road. The other three units, namely, the head office, the accounts office and the godown are situate in distinct and different premises and when no part of the manufacturing process with aid of any power was carried on in any of them, those premises in our opinion, cannot be counted as part of the premises where the manufacturing process was being carried on since that would be extending the meaning of the term 'any premises' to an unreasonable extent and would introduce an unreality in the interpretation of S. 2 (12) of the Act. We shall presently show that the Act itself makes a distinct between an employee as defined by S. 2 (9) and a person employed on the factory premises as envisaged by S. 2 (12 ). ( 10 ) SO far as the two reasons given by the learned Judge are concerned, while the first one hardly supports his conclusion, the second one is clearly erroneous. The learned Judge may be right in holding that it is not necessary that the manufacturing process must be carried on the entire geographical area constituting the factory premises and that all the employees employed thereon need be engaged in the manufacturing process itself because the definition clause itself shows that it would be sufficient if such a process is carried on in any part of such premises whereon 20 or more persons are employed either in the process itself or otherwise. This, however, does not support the conclusion of the learned Judge that the employees of the three non-manufacturing units of the appellant which are situate at premises different and distinct from the premises where the manufacturing process being carried on, should go in for counting and be added to the employees engaged in the manufacturing units to bring it within the statutory limit of 20 or ore; the fact that they are not employed in the manufacturing process itself though not relevant, what is relevant is that those employees not being employed on the factory premises itself cannot be counted for the purpose of determining whether the appellant's manufacturing process constitutes a factory or not. So far as the second reason given by the learned Judge is concerned, the same is clearly erroneous. In our view there would arise no repugnancy even if we do not assign the same meaning to the term "employee" as defined by S. 2 (9) and the term "person employed" o the factory premises are used in S. 2 (12 ). Once it is found that the appellant runs a factory by employing 20 or more persons on the premises thereof, all his employees whether so employed or not would be entitled to the benefits under Act as they would answer the definition of an employee as in S. 2 (9) which has a wider connotation. Once it is found that the appellant runs a factory by employing 20 or more persons on the premises thereof, all his employees whether so employed or not would be entitled to the benefits under Act as they would answer the definition of an employee as in S. 2 (9) which has a wider connotation. The learned Judge is in error in thinking that unless the term "employee" as defined in S. 2 (9) bear the same concept as a "person employed" on the factory premises within the meaning of S. 2 (12), there would arise a repugnancy. The learned Judge's process of reasoning appears to us to be that since the employees of the appellant employed in the non-manufacturing units come within the purview of the definition employee in S. 2 (9) they must necessarily answer the description of a person employed for the purpose of S. 2 (12) of the Act. There he is not right. On the scheme of the Act, one must run a factory within the meaning of S. 2 (12), that is, a manufacturing process with the aid of power in part of a premises whereon he employs 20 or more persons in order to bring him within the purview of the Act as an employer and once he is so brought within the purview of the Act all his employees not only employed in the factory itself by employed in any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for or the distribution of sale of the products of the factory would be entitled to all the benefits under the Act even though many of them may not be the persons employed in the factory itself. This position has been made clear by the amendment of 1966. Before the aforesaid amendment conflicting views were taken by the different High Courts as to whether the term "employee" as defined should be limited to the employees in the factory itself or should be extended to cover other employees in establishments where work connected with the administration of the factory itself was being carried on or not. While some High Courts preferred to accept the wider view, some interpreted the term "employee" in the restricted meaning to include the employees in the factory itself. While some High Courts preferred to accept the wider view, some interpreted the term "employee" in the restricted meaning to include the employees in the factory itself. Such a conflict has been brought to rest by the amendment which has recognized the wider connotation of the term "employee" by incorporating the same in the definition clause of the term "employee" itself. It would be pertinent to note that if the establishments where work connected with the administration of the factory or any part, department or branch thereof are carried on or the establishments which deal with the purchase of raw materials distribution and sale of the products constitute a part of the factory premises itself employees employed therein would automatically become employees within the meaning of the term and there would have been no necessity of extending the connotation of the term 'employee' either by interpretation as done prior to the amendment or by the amendment of 1966 itself. That the term 'employee' as defined in S. 2 (9) does not bear the same connotations as the "person employed" on the factory premises within the meaning of S. 2 (12) is borne out by the decision of the Supreme Court in the case of Hyderabad Asbestos v. Employees' Insurance Court, AIR 1978 SC 356 . In that case in determining the true connotation of the term "employees in a factory" within the meaning of S. 38, the Supreme Court observed: "on a careful consideration of S. 2 (9),s. 2 (12), S. 33 and S. 39 we are unable to accept the restricted interpretation sought to be put on the words 'employees in factories". . . . . . definition before the amendment as well as after the amendment would include not only the persons employed in the factory but also in connection with the work of factory. Section 39 of the Act makes the position clear. It provides that contribution payable under the Act in respect of an employee. It is not confined only to employees in the factories. We see no justification for reading the words 'employees in factories' in S. 38 as meaning persons employed in factories only. We are unable to accept the contention that the employees that are required to be insured under the Act are only those employed in factories defined under S. 2 (12) of the Act. We see no justification for reading the words 'employees in factories' in S. 38 as meaning persons employed in factories only. We are unable to accept the contention that the employees that are required to be insured under the Act are only those employed in factories defined under S. 2 (12) of the Act. " If we accept the conclusion of the learned Judge on the reasoning given by him and hold that employees in establishment connected with the administration of the factory are themselves employees in the factories within the meaning of S. 2 (12), such establishments being part of the factory premises itself it would have been unnecessary for the Supreme Court to emphasize the aforesaid distinction. In our view, an employee employed on the factory premises would necessarily be an employee within the meaning of S. 2 (9), but all the employees within meaning of S. 2 (9) need not be the employees employed on the factory premises. This distinction, the learned Judge failed to appreciate, and in the present case when the number of employees employed on the factory premises is less than 20 upon the finding of the learned Judge, it would not come within the purview of the Act. The appellant's claim, therefore, should prevail. ( 11 ) THE appeal, therefore, succeeds and is allowed. The judgment and order of the learned Judge, Employees' Insurance Court, West Bengal, impugned in this appeal are set aside. The appellant's application before the said court succeeds and it is declared that the appellant did not come within the purview of the Act on January 28, 1969, on the basis of the inspection held by the Inspector on November 13, 1969. Parties are directed to bear their costs throughout. Since the appeal succeeds on the other point raised, Mr. Ghosh does not press the application dated 18. 7. 78 for additional grounds which stands dismissed. B. C. Chakrabarti, J. : i agree. Appeal allowed.