Nagpur Electric Light & Power Co.
Ltd Vs. Regional Director Employees State Insurance Corporation  INSC 53
(2 March 1967)
02/03/1967 BACHAWAT, R.S.
CITATION: 1967 AIR 1364 1964 SCR (3) 92
CITATOR INFO :
RF 1970 SC 488 (8) RF 1973 SC 365 (17) D 1974
SC 759 (27,29) R 1978 SC 356 (9) R 1984 SC1916 (9) R 1987 SC1166 (4) RF 1992 SC
Employees State Insurance Act (34 of 1948),
ss. 2(9) and 2(12)--Factory, area comprised in-Company transferring and
transmitting electricity-Workers doing non-manual work whether 'employees'
within the meaning of s. 2(9).
The appellant company carried on the work of
transforming And transmitting electrical energy. There was dispute between the
company and the respondent whether certain employees of the company like
engineers, draughtsmen, clerks, accountants etc. mentioned in Appendices III,
IV and V of the company's petition before the Employees' Insurance Court, were
'Employees' or not within the meaning of s. 2(9) of the Employees Insurance
Act, 1948. The Employees Insurance Court held the said workers to be employees
under s. 2(9) and this finding was confirmed by the Single Judge as well -as
the Division Bench of the High Court. The company appealed to this Court by
HELD : (i) The premises of the company were a
factory within the meaning of the Employees State Insurance Act but the High
Court was wrong in laying down the proposition that every inch of the area over
which the transmission lines were spread was a factory within the meaning of s.
The company's factory had a fixed site and
was located within the compound wall of its premises. [96 E, H] (ii)All the
employees of the disputed categories clerks or otherwise were employed in
connection with the work of the factory, that is to say, in connection with the
work of transforming and transmitting electrical power. Some of the employees
were not engaged in manual labour. But a person doing non-manual work can be an
employee within the meaning of s. 2(9) (i) if he is employed in connection with
the work of the factory. The duties of the administrative staff are directly
connected within the work of the factory. [99 C, G] Even those employees who
worked outside the factory but whose duties were connected with the work of the
factory were employees within the meaning of s. 2(9)(i). Among such employees
were to be included those attending to substations of the factory. [100 A]
Ardeshir H. Bhiwaniwala v. The State of Bombay,  3 S.C.R.542, State of
Uttar Pradesh v. M. P. Singh,  2 S.C.R. 605 and Employees' State
Insurance Corporation, Bombay v. Raman,  1 L.L.J. 267. referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 491 and 492 of 1965.
Appeals by special leave from the order-,
dated September 17, 1963 of the Bombay High Court Nagpur Bench in Letters
Patent Appeals Nos. 14 and 15 of 1963, 93 S. V. Gupte, Solicitor-General and I.
N. Shroff, for the appellant (in C.A. No. 491 of 1965).
A. G. Ratnaparkhi, for the appellants (in
C.A. No. 492 of 1965).
Bishan Narain, M. L. Kapur and I. S. Sawhney,
for the respondents Nos. 1 and 2 (in C.As. Nos. 491 and 492 of 1965).
1. N. Shroff, for respondent No. 1 (in C.A.
No. 492 of 1965).
The Judgment of the Court was delivered by
Bachawat, J. The question in issue in these appeals is whether certain
employees of the Nagpur Electric Light & Power Co. Ltd.,am employees within
the meaning of s. 2(9) of the Employees State Insurance Act, 1948 (34 of 1948).
The company and the employees filed two separate applications before the
Employees' Insurance Court under s. 75 of the Act for the determination of the
question. Their case is that out of the five categories of staff mentioned in
appendices 1 to 5 to the company's petition, those connected with the receiving
station and workshop (appendices 1 and 2) were employees within the meaning of
s. 2(9), but those connected with the engineering, stores and outdoor work,
meter,consumers and allocation departments and administration (appendices 3, 4
and 5) were not such employees. The Regional Director, Employees State
Insurance Corporation contested the applications, but he admitted that the
workers of the categories mentioned in items 5 to 14 of appendix 4 and items 1,
7 and 8 of appendix 5 were not employees within the meaning of s. 2 (9). The
Employees Insurance Court found that those workers and also the workers
mentioned in item 12 of appendix 5 were not such employees. The correctness of
this finding is not in issue in these appeals and we express no opinion on it.
The categories of workers mentioned in appendix 111, items 1-4 in appendix TV
and items 2-6 and 9-11 of appendix V are as follows 'Appendix III Mains Senior
: (1) assistant engineers, (2) supervisors, (3) electricians, (4) overseers.
Mains junior : (1) cable jointers, (2)
mistries, (3) sub-mistries, (4) lineman-H.T.O.H. mains, (5) mains coolies, (6)
mains coolies temporary, (7) wireman temporary, (8) sub-mistries, (9) substation
Clerical staff : (1) clerk to asstt.
engineers, (2)draughtsman, (3) mains office peons.
Stores department : (1) storekeeper, (2)
asstt.store keeper, (3) clerks, (4) coolies.
94 Motor car staff : (1) motor drivers, (2)
Appendix IV Meter senior & junior : (1)
deputy meter superintendent, (2) senior meter mechanic, (3) junior meter
mechanic, (4) meter testers.
Appendix V (2) accounts (department
accountant, chief cashier, asstt.
accountant, account clerks.
(3) Time-keeping department : group head,
clerks, (4) Filing department : group head, clerks.
(5) Typing department : steno-typists,
(6) Telephone operators.
(9) Record-keeper and daftari.
(9a) Station clerk.
(10) Motor car staff : mechanic, drivers,
(11) Menial staff : peons, garden malies,
chowkidars, sweepers, rejas temporary." The, Employees Insurance Court
held that the aforesaid workers were employees within the meaning of S. 2 (9)
of the Act. The company and the employees filed two separate appeals from this
decision to the High Court of Bombay (Nagpur Bench) under S. 82 of the Act.
affirmed the finding of the Employees
Insurance Court and dismissed the appeals. Letters Patent appeals from his
orders were summarily dismissed by a Bench of the High Court. The company and
the employees have now preferred two separate appeals to this Court by special
The Nagpur Electric Light & Power Co.,
Ltd., occupies certain premises at Kamptee Road, Nagpur where it carries on the
work of transforming and transmitting electrical energy.
'Me premises are located within a compound
wall. Inside the premises there are several buildings, yards and open spaces.
The receiving station, the workshop, the
meter testing department, the engineers' quarters, the general office, and
stores are in different buildings inside the premises. The company does not
generate electricity. It maintains a receiving station inside the premises
where it receives electrical energy in bulk from the generating station of the
Maharashtra Electricity Board at Khapparkheda. The energy when received is of
11,000 volts. From the receiving station, the energy is either carried through
electric supply lines to a transformer and is stepped down to 3,300 volts and
is then carried to the sub-stations in the city where it is again stepped 95.
down to 400 volts by other transformers, or
is carried from the receiving station to sub-stations where it is stepped down
directly from 11,000 to 400 volts. From the substations, the energy is
transmitted by electric supply lines and distributed to consumers. The first
question is whether the company maintains a factory and if so, where its
factory is located.
The Employees' State
Insurance Act, 1948 applies in the first instance to all factories other
than seasonal factories [s.1(4)] and may be extended to any other establishment
or class of establishments, industrial, commercial, agricultural or otherwise
[s.1(5)]. Sec. 2(12) defines a factory.The relevant part of that section reads
"Sec.2(12) : "'factory' means any
premises including the precincts thereof whereon twenty or more persons are
working or were working 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 Indian Mines Act, 1923 or a railway running shed;
The expressions 'manufacturing process' and
'power' shall have the meanings respectively assigned to them in the Factories
Act, 1948." Any premises including the precincts thereof (excepting a mine
and a railway running shed) constitute a factory if (1) 20 or more persons are
working or were working thereon on any day of the preceding 12 months, and (2)
in any part thereof a manufacturing process is being carried on with the aid of
power. If these two conditions are satisfied, the entire premises including the
precincts thereof constitute a' factory, though the manufacturing process is
carried on in only a part of the premises. The premises constituting a factory
may be a building or open land or both, see Ardeshir H. Bhiwaniwala v. The
State of Bombay(1). Inside the same compound wall, there may be two or more
premises; the premises used in connection with manufacturing processes may
constitute a factory, and the other premises within the same compound wall may
be used for the purposes unconnected with any manufacturing process and may
form no part of the factory.
Sections 2(g) and (k) of the Factories Act 1948,
define power and manufacturing process.
They are in these terms :
2(g). "'power' means electrical energy,
or any other form of energy which is mechanically transmitted and is not
generated by human or animal agency;" (1) (1961) 3 S.C.R. 542.
96 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/or sewage, 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." In view of s. 2 (k)
(iii), the process of transforming electrical energy from a high to a low
potential and the process of transmitting the energy through supply lines are
both manufacturing processes. In a part of the premises occupied by the
company, the two processes are carried on with the aid of power by means of
electrical gadgets and other devices. On the premises more than twenty persons
were and are working. No part of the premises is used for purposes unconnected
with the manufacturing process The premises therefore constitute a factory
within the meaning of s. 2(12) of the Employees State Insurance Act, 1948.
The High Court said:
"This manufacturing process is carried
on by the Company not only in the building called the workshop or the receiving
station but over the whole area over which the process of transmission is
carried on including the substations where electricity is stored and supplied
to the consumers by further transmission lines. Thus every part over which this
process is carried on will be a factory within the meaning of the Employees' State
Insurance Act." We cannot accept this line of reasoning. It seems to us a
startling proposition that every inch of the wide area over which the
transmission lines are spread is a factory within the meaning of s. 2(12).
"A factory must occupy a fixed site", see Halsbury's Laws of England,
3rd ed., Vol. 71 ,art. 15, p. 15. The company's factory has a fixed site.
It is located inside the Kamptee Road 97 and
its boundaries are fixed by the compound wall of the premises The next question
is whether the members of the staff of the categories mentioned in appendix
111, items 1-4 of appendix IV and items 2-6 and 9-11 of appendix V to the company's
petition am employees within the meaning of s. 2(9) of the Employees' State
Insurance Act. It is common case that these workers are employed on
remuneration which in the aggregate does not exceed four hundred rupees a
Section 2(9) is in these terms "
employee' means any person employed for wages in or in connection with the work
of a factory or establishment to which this Act applies and (i) who is directly
employed by the principal employer on any work of, or incidental or preliminary
to or connected with the work of, the factory or establishment, whether such
work is done by the employee in the factory or establishment or elsewhere; or
(ii) who is employed by or through an immediate employer on the premises of the
factory or establishment or under the supervision of the principal employer or
his agent on work which is ordinarily part of the work of the factory or
establishment or which is preliminary to the work carried on in or incidental
to the purpose of the factory or establishment; or (iii) whose services are
temporarily lent or let on hire to the principal employer by the person with
whom the person whose services am so lent or let on hire has entered into a
contract of service;
but does not include(a) any member of the
Indian naval, military or air forces or;
(b) any person employed on a remuneration
which in the aggregate exceeds four hundreds rupees a month; " The
definition of employee in s. 2(9) may be contrasted with that of a worker in s.
2 (1) of the Factories Act 1948, which is in these terms 98 worker' means a
person employed, directly or through any agency, whether for wages or not, in
any manufacturing process, or in cleaning any part of the machinery or premises
used for a manufacturing process, or in any other kind of work incidental to,
or connected with, the manufacturing process, or the subject of the
manufacturing process;" It is to be seen that the definition of an
employee in the Employees State Insurance Act is wider than that of a worker in
the Factories Act. The object of the Factories Act is to secure the health,
safety, welfare, proper working hours, leave and other benefits for workers
employed in factories.
The benefit of this Act does not extend to
field workers working outside the factory, see the State, of Uttar Pradesh v.
M. P. Singh(1). The object of the Employees' State Insurance Act is to secure
sickness, maternity, disablement and medical benefits to employees of factories
and establishments and dependents' benefits to their dependants.
The benefit of this Act extends inter alia to
the employees mentioned in s. 2 (9) (i) whether working inside the factory or
establishment or elsewhere.
The definition of "employee" in S.
2 (9) deals with three classes of employees. We are concerned with the class of
employees mentioned in S. 2 (9) (i). The courts below concurrently found and in
our opinion, rightly, that all the workers of the disputed categories are
persons employed for wages in or in connection with work of the company's
factory and are directly employed by the company on work of or incidental to or
connected with the work of the factory.
Some of them do the work in the factory and
some work elsewhere, but they are all employees within the meaning of S. 2 (9)
(i). Take the case of the workers mentioned in appendix 111. The assistant
engineers, supervisors, electricians, and overseers are engaged in the erection
and maintenance of the electricity supply lines connected with transmission of
power. The cable jointer, mistries, linemen, coolies and wiremen are employed
for inspection of the supply lines, digging pits, erecting poles for laying
distribution mains and service lines. The masons attend to the masonry work of
the buildings. The attendants in-charge of the sub-stations look after the
transformation and transmission of power. The motor drivers and cleaners are
employed for carrying materials and tower ladders in trucks for maintenance of
the supply lines. The clerks, draughtsmen and main office peons help the
assistant engineers. The store keepers and clerks with The assistance of
coolies issue stores to all the departments and keep accounts relating to
stock. The deputy meter superintendent, meter mechanics and meter testers
mentioned in items 1 to 4 of appendix IV attend to the testing calibration and
repairs of (1)  2 S.C.R. 605.
99 the meters. Let us now take the case of
the staff mentioned in items 2 to 6 and 9 to II of appendix V. The clerks in
the accounts, time-keeping and filing departments are employed to maintain
accounts, attendance registers, muster rolls, pay-sheets, typing, filing and
dispatching documents required in connection with all the departments including
the receiving station and the workshop. The telephone operators attend to the
telephone calls for all the departments. The menial staff is required to do miscellaneous
work including the cleaning of the office compound. The motor car staff is
employed to look after the cars employed in the administration section. All
these employees, clerical or otherwise, are employed in connection with the work
of the factory, that is to say, in connection with the work of transforming and
transmitting electrical power. Some of the employees are clerks; they are not
engaged in manual labour. But a person doing non-manual work can be an employee
within the meaning of s' 2 (9) (i) if he is employed in connection with work of
The duties of the administrative staff are
directly connected with the work of the factory. The case of the Employees'
State Insurance Corporation, Bombay v. Raman(1) is distinguishable. In that
case a company had a factory and an administrative office. The office was
situated in a building which was situated within the same compound in which the
factory was located. The entire compound was surrounded by one compound wall. It
was found that the work of the factory began with the collection of raw
materials and ended with the production of finished articles and the work of
selling the products was not connected with the work of the factory. The
administrative office handled sales of.
the products manufactured in the factory as
well as goods imported from abroad. The factory and the administrative office
maintained separate muster and wage rolls and separate accounts. In these
circumstances, it was held that the clerks employed in the administrative
office, whose work consisted mainly of taking down dictations from the manager
and other officers and typing out letters, were not employees within the
meaning of s. 2(9). The facts of the present case are entirely different. The
company maintains one establishment for its factory. The factory does the work
of transforming and transmitting electrical energy.
All the workers in question including the
clerks and the administrative staff are engaged in connection with this work.
None of them is employed in any separate establishment unconnected with the
work of the factory.
Some of the employees work outside the
factory, but their duties are connected with the work of the factory. They are
therefore employees within the meaning of s. 2 (9) (i).
Some are (2)  1 L.L.J. 267.
100 employed in the sub-stations. It is
common case that the stations are not independent factories. The sub-stations
attendants attend to work which is directly connected with the of the factory
at the main station. They are therefore employees within the meaning of s. 2
In the result the appeals are dismissed with
costs. One hear fee.
G.C Appeals dismissed.