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of <h1>ESI Act applies to factories using LPG gas with 10+ employees under Factories Act definition of power</h1> <h3>Bombay Anand Bhavan Restaurant Versus The Deputy Director, ESI Corporation and Anr. And M/s. Cow & Cane and Anr. Versus The Regional Director, ESI Corporation</h3> Bombay Anand Bhavan Restaurant Versus The Deputy Director, ESI Corporation and Anr. And M/s. Cow & Cane and Anr. Versus The Regional Director, ESI ... ISSUES: Whether the establishment qualifies as a 'factory' covered under the Employees' State Insurance Act, 1948 (ESI Act).Whether the use of liquefied petroleum gas (LPG) constitutes 'use of power' within the meaning of the ESI Act and the Factories Act, 1948. RULINGS / HOLDINGS: The establishment engages in a manufacturing process as defined under the Factories Act, including preparation of food items, and employs the requisite number of workers; therefore, it qualifies as a factory under the ESI Act.The use of LPG gas satisfies the definition of 'power' under Section 2(g) of the Factories Act, 1948, as it is 'electrical energy or any other form of energy which is mechanically transmitted and is not generated by human or animal agency.' The LPG cylinder and associated tube constitute appliances and transmission machinery by which energy is mechanically transmitted.Consequently, the establishments are covered under the ESI Act and liable to comply with its provisions, including payment of contributions. RATIONALE: The Court applied the definitions under the ESI Act and the Factories Act, 1948, particularly Sections 2(12) of the ESI Act and 2(g), 2(j), and 2(k) of the Factories Act, to determine coverage.The Court emphasized that the ESI Act is a 'beneficial legislation' and a 'social security legislation' that must receive 'liberal construction' to promote its objects and prevent subterfuge defeating its provisions.Manufacturing process was interpreted to include cooking and preparation of food, consistent with prior High Court precedents recognizing such activities as manufacturing processes under the Act.The Court analyzed the technical nature of LPG, referencing authoritative sources to establish that LPG is a form of energy stored under pressure and transmitted mechanically via valves and tubes, analogous to electrical energy transmission.The Court rejected the argument that LPG transmission is not mechanical due to absence of machinery, holding that the cylinder and tube apparatus qualify as 'appliances' and 'transmission machinery' under the Factories Act definitions.The Court drew an analogy between transmission of electrical energy and LPG, noting both involve regulated flow through devices ensuring steady supply, thereby satisfying the statutory requirement of mechanical transmission of power.The decision aligns with the principle that social welfare statutes should not be narrowly construed to exclude establishments that fall within their intended scope.
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