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2013 DIGILAW 50 (JK)

Union of India & Ors. v. Jammu Development Authority & Anr.

2013-02-01

HASNAIN MASSODI, M.M.KUMAR

body2013
Per Massodi, J.;— 1. Assistant Regional Director, Employees State Insurance Corporation, Sector-A, Chandigarh between 11th December, 1994 and 30th March, 1995 served three notices on Jammu Development Authority ("Authority" for short) signifying its intention to determine and recover the amount of contribution in respect of employees of the Authority, under section 45-A of the Employees State Insurance Act, 1948 (hereinafter called the Act) read with Employees State Insurance (General) Regulation, 1950. The authority was informed that it was running a hotel at Main Bus Stand, Jammu and in terms of aforesaid Act and regulations, the Authority was required to make contribution for the employees working in the hotel towards Employees Insurance Fund. Notice dated 30.3.1995, called upon the Chief Administrative Officer of the Authority to show cause within fifteen days from the date of issue of the notice, as to why the Authority should not be prosecuted for commission of offence punishable under section 85 of the Act. 2. The Authority aggrieved with the notice dated 30.3.1995 issued by the Assistant Regional Director, filed Writ Petition being OWP No.243/95. 3. The case set up by the Authority in the writ petition was that facility run by the Authority at Jammu Bus Stand was not a hotel but a night shelter for the passengers who board buses from General Bus Stand, Jammu provided at nominal charges. The authority insisted that no element of profit was involved in running facility and that a few daily wagers were employed to serve the passengers in shifts who avail the facility. It was pleaded that notices issued by the Assistant Original Director, Employees State Insurance Corporation impugned in the petition, were void and illegal for the reasons that the Act was applicable to the factories as defined under Section 2 (12) of the Act; 'and premises' to be declared as 'factories' in terms of the Act must have 20 or more employees in case of manufacturing process without aid of power or it must have 10 or more persons if the manufacturing process is undertaken with the aid of power. It was pleaded that as JDA Hotel was not involved in any manufacturing process with or without aid of power and thus it did not fall within the definition of expression 'factory' or premises to be declared as factory within the meaning of the Act. It was pleaded that as JDA Hotel was not involved in any manufacturing process with or without aid of power and thus it did not fall within the definition of expression 'factory' or premises to be declared as factory within the meaning of the Act. It was further urged that the Authority did not employ 10 or more persons to maintain and run the facility. 4. The Authority further pleaded that employees working in JDA Hotel, were provided all facilities, amenities and allowances as admissible in case of State Government employees including contribution 8.33% of their pay towards C.P. Fund with equal contribution from the employees and therefore, the Act was not applicable to JDA, Hotel. 5. The Employees State Insurance Corporation, the Authority pleaded, has not set up any hospital, dispensary and maternity ward as required under Sections 28, 56 and 59 of the Act at Jammu for the insured people and therefore it had no right to claim contribution from the Authority to provide insurance cover to the employees working in Jammu Development Authority. 6. The respondents in the writ petition and appellant herein took a threshold objection to the maintainability of the petition, on the ground that grievances set out in the petition was required to be projected before the Employees State Insurance Court set up in terms of SRO 157 dated 10.8.1994; and further that the controversy being factual in character, cannot be dealt with in exercise of writ jurisdiction under Article 226 of Constitution of India read with Section 103 of Constitution of Jammu and Kashmir. The Corporation in its counter affidavit controverted all the averments made in the petition and refuted the claim put forth by the Authority, that it did not come within purview of the "factory" as defined under Section 2 (12) of the Act. The respondents/appellants pleaded that JDA Hotel was engaged in manufacturing process with the help of electricity as the hotel included kitchen where food was being prepared for the guests/customers who stayed in the hotel. It was pleaded that on inspection and survey made by the officers of the Corporation, 45 employees were found to be working in JDA Hotel as on 1.3.1991 and the Act, therefore was applicable to the JDA hotel run and maintain by the respondent Authority. 7. It was pleaded that on inspection and survey made by the officers of the Corporation, 45 employees were found to be working in JDA Hotel as on 1.3.1991 and the Act, therefore was applicable to the JDA hotel run and maintain by the respondent Authority. 7. The writ court vide judgment dated 22.2.2000 allowed the writ petition and set aside the demand for contribution raised against the JDA. The learned Single Judge took the view that notification was required to be issued in terms of Section 1 (5) in the event establishment run by the Authority was to be brought within the purview of the Act and that as such a notification was not issued, the demand notice could not be served on the Authority. In the said background, the learned Single Judge while allowing the petition and setting aside the notice dated 30.3.1995, gave liberty to the appellants to approach the State Government for issuance of requisite notification in terms of Section 1(5) of the Act. 8. The writ court order is questioned in the present appeal on the grounds set out in the counter affidavit filed in the writ petition and also on the ground that the writ court failed to notice Division Bench judgement dated 26.5.1995 passed in OWP No. 146/1994 and connected petitions whereby the Act has been held applicable to the hotels, as a hotel falls within the definition of factory under Section 2 (12) of the Act. It is insisted that the view taken by the learned Single Judge that the Act would be applicable to the JDA Hotel, only after a notification was issued by the State Government under Section 1 (5) was not sustainable under law. 9. We have gone through the appeal as also the writ records. We have heard the learned counsel for the parties. 10. The Employees State Insurance Act, 1948 in terms of Section 1 (4) of the Act is applicable to "factories" and to other premises to which it may be extended by the State Government by notification under Section 1 (5) of the Act. We have heard the learned counsel for the parties. 10. The Employees State Insurance Act, 1948 in terms of Section 1 (4) of the Act is applicable to "factories" and to other premises to which it may be extended by the State Government by notification under Section 1 (5) of the Act. It is only where an establishment does not fall within the purview of the "factory" as defined under Section 2 (12) of the Act, that one is to look for a notification under Section 1(5) of the Act to conclude that the Act is applicable to such establishment and the employer is under statutory duty to make the contribution contemplated by the Act. Where an establishment falls within the definition of the "factory", as defined under Section 2(12) of the Act, there is no need to visit Section 1(5) of the Act and make an effort to find out whether any notification has been issued by the State Government to bring the establishment within the purview of the Act. 11. To deal with the controversy involved, it would be advantageous to reproduce Section 2(12) of the Act. It reads as under:- "Factory means any premises including the precinct therefore— (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 (35 of 1952) or a railway running shed;" 12. A bare look at the above definition would reveal that a hotel having kitchen/catering facilities for the guests/customers who stay in the hotel and employs ten or more persons and the kitchen is run with the aid of power (electricity) then it would fall within the definition of factory as defined under Section 2(12) of the Act. A bare look at the above definition would reveal that a hotel having kitchen/catering facilities for the guests/customers who stay in the hotel and employs ten or more persons and the kitchen is run with the aid of power (electricity) then it would fall within the definition of factory as defined under Section 2(12) of the Act. However where the kitchen/catering is not run with the aid of power(electricity), the hotel would come within the definition of 'factory' only if twenty or more persons are employed. In the present case, the inspection conducted on 23rd April, 1991 revealed that 45 persons were employed by JDA hotel and that the kitchen/catering was run with the aid of power (electricity). 13. The Writ Court, against the above backdrop, had no reason to go to section 1(5) of the Act and opine that JDA Hotel would fall within the ambit of the Act only in case it was so included by a notification issued by the State Government. The notification in terms of section 1(5) of the Act would be required only in respect of premises/facilities that do not fall within the definition of "factory" as defined under section 2(12) of the Act. The conclusion drawn by the Writ Court, therefore, cannot be accepted. The Writ Court Judgment impugned in the present appeal, in the circumstances, deserves to be set aside. 14. Above discussion apart, the Act provides for a mechanism whereby a dispute like the one agitated in the writ petition is to be settled. Chapter VI of the Act deals with the adjudication of disputes and claims. Section 74 of the Act authorizes the State Government to constitute an Employees Insurance Court. The matters to be decided by the Employees Insurance Court are catalogued in section 75 of the Act. Section 82 of the Act makes room for appeal against the order of Employees Insurance Court to the High Court where the matter in controversy involves substantial question of law. The Employees Insurance Court is competent to make reference to the High Court and submit any question of law for the decision of the High Court. Section 82 of the Act makes room for appeal against the order of Employees Insurance Court to the High Court where the matter in controversy involves substantial question of law. The Employees Insurance Court is competent to make reference to the High Court and submit any question of law for the decision of the High Court. The State Government in exercise of powers under the Act, has issued SRO 157 dated 10.8.1994 establishing Employees Insurance Court(s) in the State The respondent- Authority, therefore, had alternate remedy available to it under the Act to insist that having regard to the nature of its activities, the Act was not applicable to JDA Hotel, Bus Stand, Jammu and it was not under an obligation to make any contribution towards Employees State Insurance Fund. The State Government having already vide Notification SRO 157 dated 10.8.1994 set up Employees Insurance Court, there was no reason for the respondents not to make use of the forum available, to question jurisdiction of Assistant Regional Director, Employees State Insurance Corporation to slap demand notice on the respondent-Authority. The writ petition therefore, was not maintainable because of availability of an alternate efficacious remedy under the Act. 15. For the reasons discussed, appeal is allowed and the Writ Court judgment dated 22.2.2000 is set aside. The respondent-Authority however, shall not be precluded from working out its remedy available under the Act against the demand notices served on it and in the event, the Authority decides to pursue remedy under the Act before Employees Insurance Court or any other forum, the Court/Forum before which the matter is brought, shall deal with it uninfluenced by the observations made while allowing the Letters Patent Appeal on hand.