1991 (7) TMI 367 - SC - Indian Laws

1966 amendment broadens 'seasonal factory' to include up to seven-month operations, removing ESI Act exclusion entitlement

SC dismissed the appeal, upholding the HC's view that the 1966 amendment broadened the statutory definition of 'seasonal factory' by adding factories ... Claim of the appellant-Corporation for covering the factories the respondents under the provisions of the Employee's State Insurance Act, 1948 (the Act) - concept of 'seasonal factory' - amendment to the definition of 'seasonal factory' - Whether the respondent's factories in view of the amendment to the definition of 'seasonal factory' have lost the benefit of exclusion from the Employee's State Insurance Act, 1948? Held that:- The view, taken by the High Court seems to be justified. The statement of Objects and Reasons of the Bill which later became the Act 44 of 1966 indicates that the proposed amendment was to bring within the scope of the definition of 'seasonal factory', a factory which works for a period of not exceeding seven months in a year- (a) in any process of blending, packing or repacking of tea or coffee; or (b) in such other manufacturing process as the Cenrtral Government may, by notification in the Official Gazette, specify. The amendment therefore, was clearly in favour of the widening the definition of 'seasonal factory'. The amendment is in the nature of expansion of the original definition as it is clear from the use of the words 'include a factory'. The amendment does not restrict the original definition of 'seasonal factory' but makes addition thereto by inclusion. The word 'include' in the statutory definition is generally used to enlarge the meaning of the preceding words and it is by way of extension, and not with restriction, The word 'include' is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occur- ring in the body of the statute; and when it is so used, these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import but also those things which the interpreta- tion clause declares that they shall include. Appeal dismissed. Issues:1. Interpretation of the definition of 'seasonal factory' under the Employees' State Insurance Act, 1948.2. Impact of the amendment to the definition of 'seasonal factory' on the exclusion of certain factories from the Act.3. Validity of the demand made by the Employees' State Insurance Corporation for contributions from the respondents.4. Whether the respondents' factories lost the benefit of exclusion from the Act after the amendment.Detailed Analysis:The Supreme Court heard appeals against the Karnataka High Court's judgment regarding the exclusion of certain factories from the provisions of the Employees' State Insurance Act, 1948. The issue revolved around the definition of 'seasonal factory,' which was initially excluded from the Act under Section 1(4). The factories of the respondents were declared as seasonal factories based on the definition provided in the Act. However, an amendment in 1966 expanded the definition of seasonal factory to include factories engaged in specific processes for a period not exceeding seven months in a year. The Employees' State Insurance Corporation demanded contributions from the respondents post-amendment, leading to a legal challenge (para 1-7).The primary question before the Court was whether the respondents' factories lost the exclusion benefit under the Act due to the amendment in the definition of 'seasonal factory.' The High Court opined that the amendment aimed to widen the scope of seasonal factories rather than restrict it. The Court noted that the amendment was intended to encompass factories working for a limited period in specific processes, thus expanding the definition. The use of the term 'include a factory' in the amendment indicated an extension, not a limitation, of the original definition (para 8-13).The Court emphasized that the amendment did not curtail the original definition of seasonal factory but added to it. The term 'include' in statutory definitions typically broadens the meaning of preceding words. Citing legal precedents, the Court explained that interpretation clauses using 'include' aim to encompass not only the natural meaning of words but also additional elements specified. Therefore, the High Court's decision aligning with this interpretation did not warrant interference (para 14-15).In conclusion, the Supreme Court dismissed the appeals and special leave petition, upholding the High Court's decision. The Court affirmed that the respondents' factories retained the status of seasonal factories under the Act even after the amendment to the definition. The judgment highlighted the legislative intent behind the amendment and the broadening of the seasonal factory concept, ultimately supporting the respondents' position (para 16).