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2013 DIGILAW 130 (JHR)

Jamshedpur Blood Bank (JBB) v. State of Jharkhand

2013-01-24

JAYA ROY, PRAKASH TATIA

body2013
ORDER 1. Heard learned counsel for the parties. 2. The petitioner was served with a demand notice dated 18.6.2007 issued under the provisions of the Employees State Insurance Act, 1948 (ESI Act of 1948) demanding Rs. 4,99,820/- which is amount of contribution for the period from April, 2002 to April, 2007. The petitioner challenged the said demand notice by preferring this writ petition being WP (C) No. 4810 of 2007 which has been dismissed by learned single Judge vide judgment dated 27.9.2012 holding that petitioner who is running a Blood Bank is covered under the provisions of the Employees' State Insurance Act, 1948 because of the reason that the Blood Bank falls under the definition of "Factory" under Clause (12) of Section 2 of the Act of 1948. Learned single Judge also held that in view of specific coverage of the petitioner's unit under the definition of "Factory" under Clause (12) of Section 2 of the Act of 1948, no further notification was required so as to include the petitioner's establishment or the similar establishment under the coverage of the Act of 1948. 3. Learned counsel for the appellant Shri Rajeev Ranjan vehemently submitted that appellant is a charitable institution and running a Blood Bank for the purpose of its own employees and is not charging any amount from any employee for the blood given by the Blood Bank. It is also submitted by learned counsel for the appellant that they are also giving blood from their Blood Bank to various other hospitals for which also they are not charging any consideration. It is also submitted that there is a provision of seeking exemption from the applicability of the ESI Act of 1948 in the ESI Act of 1948 itself. However, in the petitioner's writ petition, since interim order was granted, therefore, the petitioner neither paid the contribution nor sought any exemption from the applicability of the Act of 1948. 4. Learned counsel for the appellant seriously. questioned the finding of the learned single Judge whereby learned single Judge held that the petitioner's Blood Bank is a "Factory" as it is engaged in the manufacturing process as defined under the Factories Act, 1948 [read with Section 2(14)(AA) of the ESI Act of 1948]. 4. Learned counsel for the appellant seriously. questioned the finding of the learned single Judge whereby learned single Judge held that the petitioner's Blood Bank is a "Factory" as it is engaged in the manufacturing process as defined under the Factories Act, 1948 [read with Section 2(14)(AA) of the ESI Act of 1948]. It is also submitted that the decision of the Gujarat High Court delivered in the case of Subodh SO Shah & others vs. Director, Food & Drugs Control Office, Ahmedabad reported in AIR 1997 Gujarat 83 has been considered by the Division Bench of Calcutta High Court in the case of Employees' State Insurance Corporation and other vs. Duncan Gleneagles Hospital Ltd. and another reported in 2005(106) FLR 1029. In said judgment of Duncan Gleneagles Hospital Ltd. and another it has been specifically held that Blood Bank catering to the needs of the patients admitted in the hospitals and to the hospitals attached to the Blood Bank are not covered under the ESI Act of 1948. 5. Learned counsel for the appellant further submitted that even if it is held that petitioner's unit was covered under the ESI Act of 1948 then it can be from the date of notification issued by tile State of Jharkhand dated 11.2.2011 and in view of such notification, prior to 11.2.2011 petitioner's unit was not covered under the ESI Act of 1948. 6. In alternate, it has been submitted by learned counsel for the appellant that in view of judgment of the Hon'ble Supreme Court delivered in the case of Employees' State Insurance Corporation and other vs. Jardine Henderson Staff Association and others reported in (2006)6 SCC 581 , the petitioner has not obtained any facility from the E.S.I. Hospital under the ESI Act of 1948 and therefore, the petitioner cannot be held now liable to pay the contribution for the period 2002 to 2007 and the petitioner's liability may be declared to be from a future date. 7. Learned counsel for the respondents Shri Rajan Raj supported the judgment under challenge. 8. We considered the submissions of the learned counsel for the parties and perused the facts of the case. It is not in dispute that petitioner is running a Blood Bank. 7. Learned counsel for the respondents Shri Rajan Raj supported the judgment under challenge. 8. We considered the submissions of the learned counsel for the parties and perused the facts of the case. It is not in dispute that petitioner is running a Blood Bank. It is also not in dispute that petitioner is collecting blood from the donors and packing it carefully and keeping it for the purpose of administering in the body of the patients as per the requirement of the patients. It is the case of the petitioner/appellant that it is not charging anything for the blood nor it is paying anything to the donor of the blood. It is also the case of the petitioner that the petitioner is even supplying the blood free of cost to the other hospitals. It is also the case of the petitioner that petitioner has not availed any facility from the E.S.I. Hospital under the ESI Act of 1948 or any other facility which can be made available to the employees of the petitioner's Blood Bank which can be provided under the ESI Act of 1948 for entire period. 9. The core question involved in this controversy is whether the Blood Bank which is not charging any amount from the patients and is not paying anything to the donors and is giving the blood to its own patients and to other hospitals free is covered under the definition of "Factory" as given in Clause (12) of Section 2 of the Employees State Insurance Act, 1948. 10. The definition of "Factory" as given in Section 2(12) of the Employees State Insurance Act, 1948 is as under:– 2(12) "factory" "means any premises including the precincts thereof – (a) Whereon ten 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, or (b) 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 without 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 or a railway running shed. 11. 11. Therefore, from the definition of the "Factory" it is clear that factory means a premises wherein manufacturing process is carried. 12. What is "manufacturing process" has been defined in Section 2(14)(AA) which is as under: – 2(14)(AA) "manufacturing process" shall have the meaning assigned to it in the Factories Act, 1948. 13. Therefore, the manufacturing process is the process as defined in the Factories Act, 1948. 14. The manufacturing process is defined in the Factories Act, 1948 in Clause (k) of Section 2 which is as under:– (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 or sewage, or any other substance, or (iii) Generating, transforming or transmitting power; or (iv) Composing types for printing, printing by letter press lithography, photogravure or other similar process or book binding; (v) Constructing reconstructing, repairing, refitting, finishing or breaking up ships or vessels; (vi) Preserving or storing any article in cold storage; 15. A bare perusal of the definition of the manufacturing process as given in Clause (k) of Section 2 of the Factories Act, 1948 makes it clear that all possible activities which are undertaken by a unit for 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 (a) its use, (b) sale, (c) transport, (d) delivery or disposal, are included in the manufacturing process. 16. Admittedly, the petitioner/appellant is obtaining the blood from the donors and packing it in a suitable container for its use by the recipient for the purpose of treatment etc. Therefore, the Blood Bank is fully covered under the definition as given in Clause (k) of Section 2 of the Factories Act, 1948 consequentially under the definition as given in Section 2(14)(AA) of the Employees State Insurance Act, 1948. 17. In that view of the admitted fact situation, the petitioner's unit falls in the definition of "Factory" as given in Clause (12) of Section 2 of the Employees State Insurance Act, 1948. 18. So far as consideration for the blood is concerned, that is absolutely irrelevant in view of wide definition of manufacturing process given under the definition of "Factory". In that view of the admitted fact situation, the petitioner's unit falls in the definition of "Factory" as given in Clause (12) of Section 2 of the Employees State Insurance Act, 1948. 18. So far as consideration for the blood is concerned, that is absolutely irrelevant in view of wide definition of manufacturing process given under the definition of "Factory". Neither the definition of "Factory" nor the "manufacturing process" provides that all those units which are engaged in commercial activities of purchasing and selling of the manufactured goods shall only be covered. Therefore, non-taking of any consideration from the recipient of the blood by the Blood Bank will not take out the Blood Bank from the coverage of definition of "Factory" under sub-section (12) of Section 2 of the Employees State Insurance Act, 1948. Therefore, the petitioner was rightly held to be covered under the ESI Act of 1948 by virtue of sub-section (12) of Section 2 itself and for that purpose no other notification was required from the State Government. 19. So far as 'judgment of the Calcutta High Court which has been relied upon by learned counsel for the appellant is concerned, that has considered the judgment of the Gujarat High Court delivered in the case of Subodh S. Shah & Others (supra). The judgment, in substance also, does not help the appellant in any manner, rather say, it goes against the appellant. Firstly, the issue involved in the Duncan Gleneagles Hospital Ltd. and another was with respect to the applicability of the Employees State Insurance Act, 1948 to the pathological lab and was not an issue whether it applies to the Blood Bank or not. Working and nature of activities in Pathologic Lab and Blood Bank are different and that has also been noticed in the Duncan Gleneagles Hospital's case by Calcutta High Court also. In the judgment of the Duncan Gleneagles Hospital Ltd. and another, it has been held for the pathological lab that the outcome of the test is recorded through various machineries electronically operated or otherwise. In some cases, these are recorded in special kind of papers of any photo plates or X-ray plates or certain kind of devices recording Ultra-sonographic tests. In the judgment of the Duncan Gleneagles Hospital Ltd. and another, it has been held for the pathological lab that the outcome of the test is recorded through various machineries electronically operated or otherwise. In some cases, these are recorded in special kind of papers of any photo plates or X-ray plates or certain kind of devices recording Ultra-sonographic tests. The process of these tests were not carried on either for making, altering, repairing, ornamenting, finishing or otherwise treating or adapting any article or substance, namely the X-ray plates or the papers or the sonographic records with a view to its use, sale, transport, delivery or disposal. These articles or substances were used in aid of the process for the examination or the tests carried on. It is the report of the test, which is produced. It is the service of preparing the report or diagnosis is the services rendered. The process is not undertaken for the purpose of production of any article or substance in. the form of developed X-ray films or sonographic records or anything else. So, for pathological lab it has been held that the articles which have been collected they are not processed for manufacturing of anything but they are tested and the production of the reports, which may include the X-ray report plates or it may be a sonography report, therefore, it has been held that pathological labs are not covered under the definition of manufacturing. 20. In addition to above, it has been held that, if the pathological lab undertakes tapping of blood and process the same and use the same for the purpose of sale or transfusion or otherwise use thereof the same may be a manufacturing process. But the pathological tests would not amount to manufacturing process even though the production of the developed X-ray films or sonography reports may amount to manufacturing process otherwise in some other context. 21. But the pathological tests would not amount to manufacturing process even though the production of the developed X-ray films or sonography reports may amount to manufacturing process otherwise in some other context. 21. However, in the same judgment i.e. Duncan Gleneagles Hospital Ltd. and another, in para 8 it has been held that – "In these circumstances, in our view, the pathological tests carried on by a laboratory attached to a hospital would not amount to a manufacturing process for the purpose of attracting the application of the ESI Act and blood bank catering to the needs of the patients admitted in the hospitals by such blood bank attached to a hospital would also not attract the application of the ESI Act. But as soon it is established that it caters to the needs of the outsiders other than the patients admitted in the hospital the application of the ESI Act cannot be overruled." (Emphasis supplied) 22. A distinction has been drawn in the Blood Banks engaged in providing the blood (free) to its own hospital and patients and is not giving it to outsiders or selling it to outsiders vis-a-vis a Blood Bank which is engaged in collecting bloods and then selling it to others. 23. We are of the considered opinion that we cannot subscribe to the distinction drawn by the Calcutta High Court in the case of Duncan Gleneagles Hospital Ltd. and another. The manufacturing process is not dependent upon the nature of the activity whether it is commercial or it is non-commercial activity. The consideration has not been mentioned in the definition of the "Factory" in the Employees State Insurance Act, 1948 or even in the definition of "manufacturing process" as defined in the Factories Act, 1948. Therefore, once a process of manufacturing is undertaken by any unit then it is covered by the Act of 1948 and it falls in the definition of sub-section (12) of Section 2 of the Act of 1948. 24. In view of the above reasons, the petitioner's unit is held to be a "Factory" for the purpose of it being covered under the Employees State Insurance Act, 1948. 25. 24. In view of the above reasons, the petitioner's unit is held to be a "Factory" for the purpose of it being covered under the Employees State Insurance Act, 1948. 25. Now the question arises whether in a fact situation when petitioner did not pay the contribution for the period 2002 to 2007 and when petitioner's employees did not take any benefit under the Act of 1948, whether the petitioner can be absolved from payment of contribution in the light of the reasons given in the judgment of Jardine Henderson Staff Association and Others (supra). In the case of Jardine Henderson Staff Association and other, the Hon'ble Supreme Court held that respondent Companies have spent large amounts of money on the employees and provided medical facilities in view of the order of the High Court granting stay/injunction, etc. If the High Court had not passed the order of injunction, the respondent companies would have contributed the ESI contribution instead of spending moneys on providing medical facilities and allowances to its employees. In that fact situation, it has been observed that High Court was fully justified in passing the judicious order after considering the equities by directing the employer and the employees to make ESIC contribution for the future and should not bear with the liability for the past inasmuch as the employees of the respondents have not availed any medical facilities from ESIC and at the same time the employer was providing the medical facilities due to interim orders of the High Court. 26. We are of the considered opinion that the petitioner is a charitable organization and running a Blood Bank and it has no other unit nor it has its own hospital for its own employees. The petitioner was under impression that petitioner was not covered under the Act of 1948, therefore, petitioner did not pay the contribution and consequently the petitioner's employees could not get the benefit under the Act of 1948. The petitioner's challenge was found to be wrong and, therefore, the petitioner's writ petition has been dismissed and consequentially the interim order stands vacated. The question of equity in favour of the petitioner does not arise inasmuch as the petitioner, who may have even bona fide impression that its unit is not covered under the Act of 1948 but that will not change the law. The question of equity in favour of the petitioner does not arise inasmuch as the petitioner, who may have even bona fide impression that its unit is not covered under the Act of 1948 but that will not change the law. The beneficial law i.e. Employees State Insurance Act, is for the benefit of all employees covered under the Act of 1948 and has no principle of quid pro quo applies and, therefore, it is not an Act which provides the facility equivalent to the contribution paid by the employees or their employer. If any establishment is covered under the Employees State Insurance Act, then the said unit is under obligation to contribute its share for the larger benefit of all employees who are covered under the Act of 1948. At the cost of repetition we may hold that such contribution has no equivalence with the benefit given to employee of contribution. If the proposition, as advanced by the learned counsel for the appellant is accepted, then in that situation, anybody can declare that it will not take any of the facility and service of any of the institution established under the ESI Act of 1948 and, therefore, he be absolved from the purview of the Act of 1948 and then there will be no contribution frustrating the very aim and object of enacting welfare Act of 1948. The equity always lies in favour of following the law and particularly, when the law is for the benefit of the weaker section then in that situation, avoidance of the contribution on the plea that the person was under impression that it is not liable to pay contribution is not a just reason and cannot be said to be an equitable ground to avoid the contribution which ultimately reaches to all the employees covered under a particular statute. In addition to above, in case in hand the fact that it has utilized the amount of contribution for the welfare of its own employees by providing the hospital facility is missing and, therefore, the judgment of the Hon'ble Supreme Court delivered in the case of Jardine Henderson Staff Association and others has no application. 27. Therefore, in the present case, it cannot be held that the petitioner shall not be liable to give its contribution for the period 2002 to 2007. 28. 27. Therefore, in the present case, it cannot be held that the petitioner shall not be liable to give its contribution for the period 2002 to 2007. 28. So far as notification of the State Government dated 11.2.2011 is concerned, that has been issued to cover medical institution including corporate, joint sector, trust, charitable and private ownership hospitals nursing homes diagnostic centers pathological labs. This notification nowhere has included the Blood Bank in its purview for obvious reason that Blood Bank is already included in the definition of "Factory" under the Act of 1948. Even if any view was taken that pathological labs are not manufacturing anything and, therefore, they are not "Factory" in the definition as given in the Act of 1948, then such pathological labs also stand included by this notification dated 11.2.2011. Therefore, petitioner cannot get any benefit out of this notification of State of Jharkhand dated 11.2.2011. 29. In view of the above reasons, we do not find any merit in this Letters Patent Appeal and the Letters Patent Appeal is dismissed and the stay petition (I.A. No. 188 of 2013) is also dismissed. No order as to cost.