Judgment :- 1. This appeal is directed against the order of the Employees State Insurance Court, Nagapattinam, in E.S.I.O.P. No. 33 of 1988. The petitioner before the E.S.I. Court is the appellant in this appeal. 2. According to the appellant, the petitioner is a Co-operative Milk Supply Society, registered under the Co-operative Societies Act. The object of the Society was to purchase and sell the milk to the residents of Velipalayam and Nagapattinam. The milk is purchased from cattle owners and sometimes from other societies according to the needs of the customers. Normally the entire milk will be sold every day and if there was any excess milk it will be stored in a cooler for storage and will be sold to the customers. The Society was carrying on business for the past 25 years. In the beginning the number of employees of the Society was very meagre and they worked sometimes in shift system. While so, the E.S.I. Corporation proposed to apply the provisions of the Employees State Insurance Act (hereinafter called “the Act) from December, 1982 and the Society has been paying the contribution regularly. At that time, it was represented by the Inspector of the Corporation that there may not be any liability for me payment of contribution prior to December, 1982. However, the Corporation issued a show-cause notice dated 28.9.1988 proposing to determine and recover damages under Section 85(B)(1) of the Act. The notice did not contain any particulars. Therefore, the petitioner was waiting for the proper notice with particulars. However, an order was passed on adhoc basis directing the petitioner to pay a contribution of Rs. 21,385/- for the period from 14.5.1978 to 30.11.1982. The said order was totally void. It was further stated that the petitioner society was not a factory as defined under Section 2(12) of the Act as no manufacturing process was being carried out. Cold storage was installed only recently in the year 1984. The Corporation was not entitled to collect any contribution even if the society was liable to pay. The Corporation did not render any benefit or assistance to the employees from 14.5.1978 to 30.11.1982. The Special Officer of the Society made representation to the respondent requesting that the proposed action may be withdrawn. However, the respondent Corporation sought to proceed under the Act. Hence the petition. 3. The Corporation did not render any benefit or assistance to the employees from 14.5.1978 to 30.11.1982. The Special Officer of the Society made representation to the respondent requesting that the proposed action may be withdrawn. However, the respondent Corporation sought to proceed under the Act. Hence the petition. 3. In the counter filed by the Corporation, it was contended that the Society was involved in the manufacturing process within the meaning of Section 2(12) of the Act and the meaning assigned to the expression “manufacturing process” under the Factories Act, 1948, By an amendment to the Factories Act, 1948 the process of storing any article in cold storage, deep freezer etc. had been brought under the definition of manufacturing process under Section 2(k)of the Factories Act with effect from 26.10.1976. The Inspector of the Corporation had surveyed the petitioners factory on 22.12.1981 and found that the society was liable to pay contribution. The Inspector collected the particulars from personal inspection as well as the records produced by the society. From the records, he had collected the particulars of number of employees employed during the period from May, 1978 to 1982. An amount of Rs. 21,384.38 was arrived at on a calculation of wages totalling Rs. 3,05,491.58. The order passed by the E.S.I. Corporation was in conformity with the provisions of the Act and hence the petition was liable to be dismissed. 4. The E.S.I. Court held that the establishment had not substantiated its contention that the cooler was purchased only in the year 1984 and that since there was evidence to show that more than 20 persons had been employed to work in the year 1978, the establishment was liable to pay the contribution for the period from 14.5.1978 to 30.11.1982. Hence the appeal. 5. Mr. Srinath, learned counsel for the appellant had raised the very issue of liability of the appellant establishment under the Act and on his interpretation of the relevant provisions, the liability of any industry involved in preserving or storing any article in a cold storage to pay contribution under the Act arose only in the year 1989 and hence the demand raised for the period long prior to 1989 was totally incompetent. 6. To appreciate his contention, it is necessary to extract the relevant provisions under the E.S.I Act, 1948 and the Factories Act, 1948. 6. To appreciate his contention, it is necessary to extract the relevant provisions under the E.S.I Act, 1948 and the Factories Act, 1948. Under Section 1(4) the Act is made applicable to all factories other than seasonal factories. ‘Factory’ is defined under Section 2(12) of the Act as follows as it stood prior to Amending Act 29 of 1989. 2(12). “Factory” means any premises including the precincts thereof whereon twenty or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being 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, 1952(35 of 1952) or a railway running shed; “Seasonal factory” means a factory which is exclusively engaged in one or more of the following manufacturing processes; namely, cotton ginning, cotton or jute pressing, decortication of groundnuts the manufacture of coffee, indigo, lac, rubber, sugar (including gur) or tea or any manufacturing process which is incidental to or connected with any of the aforesaid process 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 re-packing of tea or coffee; or (b) in such other manufacturing process as the Central Government may, by notification in the Official Gazette, specify. The expressions “manufacturing process” and “power” shall have the meanings respectively assigned to them in the Factories Act, 1948 (63 of 1948);” 7. “Manufacturing process” has been defined under Section 2(k) of the Factories Act which is as follows:— 2(k) “Manufacturing Process” means any process for- (i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal, or (ii) pumping oil, water, sewage or any other substance, or (iii) generating, transforming or transmitting power, or (iv) composing types for printing, printing by letter press, lithography, photogravure of other similar process or book binding, or (v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships of vessels, or (vi) preserving or storing any article in cold storage; Of the six sub-clauses above mentioned, sub-clause (vi) brings in the establishment involved in preserving or storing any article in cold storage. The definition came to be inserted in the year 1976 by Amendment Act (Factories Act) 94 of 1976. In the E.S.L Act, the definition of ‘factory’ under Section 2(12) underwent certain changes under the Amendment Act 29 of 1989 whereby the definition of seasonal factory was excluded and separately defined under Section 2(19-A) of the Act. By the same Amendment Act 29 of 1989 Section 2(14AA) was introduced by incorporating a separate definition of ‘manufacturing process’ as follows:— “manufacturing process” shall have the meaning assigned to it in the Factories Act, 1948 (63 of 1948)” Likewise, the expression “power” was separately defined and incorporated under Section 2(15C) and it was defined that the said expression shall have the meaning assigned to it in the Factories Act, 1948. 8. The extracts of the provisions as above, would show that the E.S.I. Act had adopted the definition of “manufacturing process” as in the Factories Act even as it originally stood and prior to the insertion of Section 2(14AA). But the contention of Mr. Srinath is two-fold. 9. Firstly, though the E.S.L Act adopted the definition of “manufacturing process” as occurring in the Factories Act, such adoption or incorporation was made long prior to the insertion of clause (vi) in Section 2(k) of the Factories Act. The said clause was inserted only in the year 1976 and therefore, such subsequent amendments unless and otherwise are specifically endorsed by the borrowing Legislation cannot be taken up as part of the borrowing Legislation. In other words, the Legislature should have carried out a specific amendment in the E.S.I. Act also so as to include or to approve inclusion of clause (vi) to Section 2(k) of the Factories Act defining “manufacturing process”. 10. Secondly, any such endorsement or inclusion of the definition as in the Factories Act into the provisions of the E.S.I. Act could be presumed only with effect from 20.10.1989 as a result of inserting Section 2(14AA) of the E.S.I. Act by Amending Act 29 of 1989. Therefore, according to the learned counsel, clause (vi) of Section 2(k) of the Factories Act can take effect only from 20.10.1989 for the purpose of the E.S.I. Act. 11. For the above two propositions dealing with the Legislation by incorporation or adoption or referential Legislation as it is generally described, learned counsel for the appellant relies on the following judgments:— 12. 11. For the above two propositions dealing with the Legislation by incorporation or adoption or referential Legislation as it is generally described, learned counsel for the appellant relies on the following judgments:— 12. In Secy, of State v. H.C.I. Society (A.I.R. 1931 Privy Council, 149), the Privy Council held that any subsequent addition to former Act, not expressly made applicable to the subsequent Act, cannot be deemed to be incorporated in the subsequent Act. “It seems to be no less logical to hold that where certain provisions from an existing Act have been incorporated into a subsequent Act, no addition to the former Act, which is not expressly made applicable to the subsequent Act, can be deemed to be incorporated in it, at all events if it is possible for the subsequent Act to function effectually without the addition”. 13. In Bajya v. Gopikabai (A.I.R. 1978 S.C. 793=91 L.W. 131 S.N.), the Supreme Court held as follows in paragraph No. 27 of its Judgment. “Broadly speaking, legislation by referential incorporation falls in two categories: First, where a statute by specific reference incorporates the provisions of another statute as of the time of adoption. Second, where a statute incorporates by general reference the law concerning a particular subject, as a genus. In the case of the former, the subsequent amendments made in the referred statute cannot automatically be read into adopting statute. In the case of latter category, it may be presumed that the legislative intent was to include all the subsequent amendments also, made from time to time in the generic law on the subject adopted by general reference”. 14. In Mahindra and Mahindra Ltd. v. Union of India ( 1979 (2) S.C.C. 529 . the Supreme Court made a distinction between different types of adoptive legislations namely, a mere reference to a provision of one statute into another and on the other hand, incorporation in which the provision of one enactment becomes part of another enactment. 15. Reference is also made to the judgment of a Constitutional Bench in M/s. Ujagar Prints v. Union of India ( 1989 (3) S.C.C. 488 ) and reliance is placed on certain general observations contained in paragraph 93 of the judgment reported in 1989 (3) S.C.C. 488 by S. Ranganathan, J. in his separate, but concurring judgment holding as follows:— “Referential legislation is of two types. One is where an earlier Act or some of its provisions are incorporated by reference into a later Act. In this event, the provisions of the earlier Act or those so incorporated, as they stand in the earlier Act at the time of incorporation, will be read into the later Act. Subsequent changes in the earlier Act or the incorporated provisions will have to be ignored because, for all practical purposes, the existing provisions of the earlier Act have been re-enacted by such reference into the later one, rendering irrelevant what happens to the earlier statute thereafter. Examples of this can be seen in Secretary of State v. Hindustan Co-operative Insurance Society, AIR 1931 PC 149, Bolani Ores Ltd. v. State, AIR 1975 SC 17 , Mahindra and Mahindra Ltd. v. Union of India, AIR 1979 SC 798 . On the other hand, the later statute may not incorporate the earlier provisions. It may only make a reference of a broad nature as to the law on a subject generally, as in Bhajiya v. Gopikabai AIR 1978 SC 793 , OR contain a general reference to the terms of an earlier statute which are to be made applicable. In this case any modification, repeal or re-enactment of the earlier statute will also be carried into in the later, for here, the idea is that certain provisions of an earlier statute which become applicable in certain circumstances are to be made use of for the purpose of the latter Act also. Examples of this type of legislation are to be seen in Collector of Customs v. Nathella Sampathu Chetty, AIR 1962 SC 316 , New Central Jute Mills Co., Ltd. v. Assistant Collector , AIR 1971 SC 454 and Special Land Acquisition Officer v. City Improvement Trust 1977 (1) SCR 569. Whether a particular statute falls into the first or second category is always a question of construction. In the present case, in my view, the legislation falls into the second category. S. 3(3) of the 1957 Act does not incorporate into the 1957 Act any specific provisions of the 1944 Act. It only declares generally that the provisions of the 1944 Act shall apply “so far as may be”, that is, to the extent necessary and practical, for the purposes of the 1957 Act as well”. 16. S. 3(3) of the 1957 Act does not incorporate into the 1957 Act any specific provisions of the 1944 Act. It only declares generally that the provisions of the 1944 Act shall apply “so far as may be”, that is, to the extent necessary and practical, for the purposes of the 1957 Act as well”. 16. Learned counsel also placed reliance on the judgment of Shanmukham, J. in K.V. Gnanasambandam v. State of Tamil Nadu represented by Commissioner and Secretary to Government, Home Department, Madras-9 (1984 T.L.N.J. 314). In that case, dealing with the proceedings under Tamil Nadu Civil Supplies Disciplinary Proceedings Tribunal Rules, 1955, a charge sheet had been framed against the petitioner under Section 5(1)(e) of the Prevention of Corruption Act, 1947. Section 5(1)(e) was incorporated in the Central Enactment (the Prevention of Corruption Act, of 1947) only by virtue of Amendment Act 40 of 1964. But there was no consequential amendment to the Tamil Nadu Civil Services (Disciplinary Proceedings Tribunal) Rules, 1955. It was held that the delinquent cannot be charged under Section 5(1)(a) of the Prevention of Corruption Act. 17. Mrs. Radha Srinivasan, learned counsel representing the Corporation would however contend that both the Factories Act and the E.S.I. Act are in pari materia legislations at least to the extent of the definition of “factory” and “manufacturing processs” and by reference both the Acts have been made supplemental to each other. The requirement to issue amendment to the borrowing Act, each and every time there was a change in the borrowed provisions, cannot be blindly insisted ignoring the nature and purpose of both the legislations. She would also strongly rely on the following passage in the judgment of the Supreme Court in State of M.P. v. M.V. Narasimhan ( AIR 1975 S.C. 1835 ); Paragraph No. 16 of the said judgment is as follows:— “On a consideration of these authorities, therefore, it seems that the following proposition emerges: Where a subsequent Act incorporates provisions of a previous Act then the borrowed provisions become an integral and independent part of the subsequent Act and are totally unaffected by any repeal or amendment in the previous Act. This principle, however, will not apply in the following cases: (a) where the subsequent Act and the previous Act are supplemental to each other; (b) where the two Acts are in pare materia; (c) where the amendment in the previous Act, if not imported into the subsequent Act also, would render the subsequent Act wholly unworkable and ineffectual; and (d) where the amendment of the previous Act, either expressly or by necessary intendment, applies the said provisions to the subsequent Act”. 18. She would further submit that both are welfare legislations and any interpretation should reflect the purpose of the legislation and not to result in depriving the benefits intended to the working class. 19. I have considered the mutual submissions of both the learned counsel. 20. The second point raised by learned counsel for the appellant may be dealt with first, namely, since the definition of “manufacturing process in the Factories Act was incorporated in Section 2 (14AA) of the E.S.I. Act, for the first time only in 1989, the inclusion of clause (vi) of Section 2(k) of the Factories Act can be given effect to only subsequently. I am unable to sustain this contention having regard to the fact that even prior to the insertion of Section 2(14AA) in the E.S.I. Act, under Section 2(12) of the Act defining ‘factory’ apart from defining seasonal factory, it was also specifically incorporated that the expression ‘manufacturing process” and ‘power’ shall have respective meaning assigned to them in the Factories Act, 1948. Therefore, the addition of two different sub sections namely, Section 2(14AA) defining “manufacturing process” as in the Factories Act and Section 2(19-A) defining “seasonal factory” are not new provisions, but they are only re-numbered provisions. Similarly, Section 2(15C) was also inserted defining “power” to have the meaning assigned to it in the Factories Act. Those provisions are already available in the Act itself, and therefore, this contention is liable to be rejected. 21. Similarly, Section 2(15C) was also inserted defining “power” to have the meaning assigned to it in the Factories Act. Those provisions are already available in the Act itself, and therefore, this contention is liable to be rejected. 21. The first point which is the crucial point raised by the learned counsel for the appellant is as regards the effect of the original incorporation of the definition of “manufacturing process” as in the Factories Act, and whether the subsequent amendment in 1976 by adding clause (vi) under the said definition will have the effect of automatic incorporation into the E.S.I. Act or whether a specific amendment would be required ratifying or adopting the amendment carried out in the Factories Act. On this is sue whatever was the pronouncement of the Privy Council in A.I.R. 1931 P.C. 149, the judgment of the Supreme Court reported in A.I.R. 1975 S.C. 1835, supra and the propositions enunciated thereunder in paragraph No. 16 which are extracted above, appear to hold the field. In the subsequent judgments of the Supreme Court cited by the learned counsel for the appellant himself also, the same view had been approved and followed. In 1989 (3) S.C.C. 488 , the same principle was followed. In fact, on the facts of that case, S. Ranganathan, J. in his concurring judgment held that both the Central Excise and Salt Act, 1944 and the Additional Duties of Excise (Goods of Special Matters) Act, 1957, was in pari materia and that the later Act was also supplemental. 22. Therefore, the principle cited in A.I.R. 1931 Privy Council 149, that where certain provisions of an existing Act are incorporated in a subsequent Act, no addition to the former Act, which is not made expressly applicable to the subsequent Act, cannot be deemed to be incorporated in the subsequent Act, has now been made subject to certain exception as could be seen from subsequent judgments of the Supreme Court. With the result, the line of enquiry has to be as to whether the Acts are in pari materia or supplemental to each other or whether if the amendment to the previous Act if not imported into the subsequent Act would make it unworkable or whether the amendment either expressly or by necessary intendment would apply to the subsequent Act. 23. 23. Of all the four exceptions envisaged in paragraph No. 16 of the judgment in A.I.R. 1975 S.C. 1835, at least, one of them, namely, exception (d) would very much apply to the present case, namely, the amendments to the Factories Act by necessary intendment would apply to the provisions of the E.S.I. Act. 24. It has to be borne in mind that both the Aets were legislated contemporaneously during the same year. While the object of the Factories Act was to consolidate, amend and to regulate the labour in the factories, the E.S.I. Act was intended to provide certain benefits to the employees in case of sickness, maternity, employment injury etc. and to make the provisions in relation thereto. Section 1 (4) of the E.S.I. Act itself discloses how the Act was applicable to all the factories other than seasonal factories. Section 1(5) of the Act enables the appropriate Government to notify other establishments or class of establishments, to be brought under the Act. The definition of “factory is also identical in both the Acts, except for the usage of different verbs having the same meaning namely, “working” and “employed”. The qualifying requirements such as “manufacturing process and “power” are mentioned in the definition under both the Acts. In the E.S.I. Act the definition of “factory” in Section 2(1) has specified that the expression “manufacturing process” and “power” shall have the same meaning assigned to them in the Factories Act, 1948. Therefore, the Parliament while defining the word “factory” in the E.S.L Act by a specific and express intendment incorporated the definition of “manufacturing process” and “power” as in the Factories Act. It is very clear that the Parliament had in its mind and was of the view that as far as the scope of the definition of the two words were concerned, the E.S.I. Act has to merely adopt and incorporate the definitions under the Factories Act. The specific expression used in the E.S.I. Act is that the respective expressions shall have the same meaning assigned to them in the Factories Act. The said expression is very significant and clearly envisages incorporation concerning a particular subject or as a genus or as a word which shall have the same meaning. The specific expression used in the E.S.I. Act is that the respective expressions shall have the same meaning assigned to them in the Factories Act. The said expression is very significant and clearly envisages incorporation concerning a particular subject or as a genus or as a word which shall have the same meaning. The Parliament apparently felt that the definitions of “manufacturing process” and “power” were best left to the provisions under the Factories Act which was the specific and specialised legislation in the matter of classifying the factories and industries run by power and involving manufacturing process etc. 25. To hold otherwise, would result in excluding a section of employees from acquiring the benefits under the E.S.L Act who were entitled to be included as a class of persons employed in the establishment involved in manufacturing process or industries run by power. Therefore, I am of the view that the definitions of “manufacturing process” and “power” as in the Factories Act were at the inception itself specifically incorporated into the E.S.L Act expressly and by necessary intendment and hence the intent ion of the legislature was to include all the subsequent amendments also. I am not inclined to sustain the contention that there should have been a specific amendment in the E.S.L Act also ratifying the inclusion of clause (vi) to Section 2(k) of the Factories Act. 26. Learned counsel for the appellant also contended that even on facts the mere activity of keeping the articles under cold storage cannot by any stretch of imagination amount to a manufacturing process. In support of his contention, learned counsel had relied on the following judgments:— (1) A.I.R. 1956 Madras 600=69 L.W. 507(N.T.M. Cafe v. Insp. of Factories) 2. A.I.R. 1957 Madras, 755 (In re Chenniah v. Manager, Sangu Soap Works) 3. (1971) 39 F.J.R. 452 (Madurai Co-op. Milk Supply Union v. E.S.I. Corpn.) 4. A.A.O. 766 of 1986 dated, 21.11.1994 by Govardhan, J. (The Karaikal Co-operative Milk Supply Society Limited, Karaikal v. The Regional Director, Employees State Insurance Corporation, Madras). Of the above judgments, the first three judgments had been rendered prior to the Amendment Act (Factories Act), 1976 in and by which the clause (vi) of Section 2(k) was inserted, by including in the definition of manufacturing process, the activity of preserving or storing any article in cold storage. Of the above judgments, the first three judgments had been rendered prior to the Amendment Act (Factories Act), 1976 in and by which the clause (vi) of Section 2(k) was inserted, by including in the definition of manufacturing process, the activity of preserving or storing any article in cold storage. Assuming that such activity will not amount to a manufacturing process, the subsequent amendment had brought into existence, a legal fiction or a deeming provision and hence the statutory provision has to prevail. In the present case, this Court is not requested to adjudicate the validity of the said amendment. As far as the fourth judgment is concerned, the insertion of clause (vi) by virtue of the Amending Act of 1976, has not been brought to the notice of the learned Judge. 27. Learned counsel for the appellant also contended that the adoption of the definition in the Factories Act, by ESI Act, amounted to abdication of legislative powers and relied on the judgment of the Supreme Court in Shama Rao v. Union Territory, Pondicherry (A.I.R. 1967 S.C. 1480). That was a case in which the question arose for consideration was whether the action of the Pondicherry Legislature in extending the Madras General Sales Tax Act, 1959 by the Pondicherry General Sales Tax Act, 1965, as it stood immediately prior to the date on which the Pondicherry Act was to be brought into force, was proper or not. The Supreme Court held that the result was that the Pondicherry Legislature had accepted the amended Act though it was not and could not be aware of what the provisions of the amended Act would be and therefore, there was a total surrender in the matter of Sales-tax Legislation by the Pondicherry Legislature and hence the Pondicherry Act was “still-born”. The said instance, I am inclined to hold, is not to be compared with a legislation by reference or incorporation by the same Legislature which stands on a different footing and had also been recognised as a form of valid piece of legislation, by various judgments of the Supreme Court relied on b y learned counsel himself. 28. Therefore, I do not find any ground to interfere with the judgment of the E.S.I. Court and the appeal is dismissed. No costs.