E.S.I. CORPORATION,
REP. BY THE REGIONAL DIRECTOR … Appellant(s)
VERSUS
M/s. ENDOCRINOLOGY AND
IMMUNOLOGY LAB … Respondent(s)
CIVIL APPEAL NO.3368 OF 2012
The Respondent establishment, a Pathological Laboratory, came under scrutiny following an inspection that revealed the presence of 19 employees. In response, a show cause notice was issued to the establishment, questioning its coverage under the Employees' State Insurance Act. Subsequently, the respondent filed an application before the Employees' Insurance Court to challenge this coverage.
The Employees' Insurance Court initially ruled that the establishment was indeed a 'shop' as defined by The Employees’ State Insurance Act, 1948 and, therefore, should be covered under the Act from 22.11.2002. However, the High Court overturned this decision and held that the establishment should be covered from 06.09.2007.
The primary legal issue before the court was to determine the correct interpretation of the Act and various notifications issued by the Government of Kerala and the Employees State Insurance Corporation. Specifically, the question was whether the establishment, a pathological laboratory, should be considered a 'shop' and be covered under The Employees’ State Insurance Act, 1948.
The appellant, the Employees State Insurance Corporation, argued that the establishment should be categorized as a 'shop' and, therefore, should be covered under the Act from 22.11.2002. They relied on a circular issued by the Corporation in 2002 that modified an earlier memo from 1989.
On the other hand, the respondent establishment contended that it was a pathological laboratory and not a 'shop.' They also highlighted a subsequent notification issued in 2007 by the Government of Kerala, which explicitly covered medical institutions, including pathological laboratories, under the Act. They argued that this notification should prevail and that they should be covered from 06.09.2007.
The court carefully examined the provisions of the Act, particularly Sections 1(4) and 1(5), which define the scope of the Act's application to various establishments. It noted that the term 'factory' was defined under Section 2(12) of the Act and included premises where a manufacturing process was carried out. However, the respondent establishment, being a pathological laboratory, did not engage in any manufacturing process and therefore did not fall under the definition of a 'factory.'
Regarding the term 'shop,' the court noted that the Act did not provide a specific definition. The appellant's argument relied on the circular issued by the Corporation in 2002, which claimed that pathological laboratories should be covered under the term 'shop.' However, the court found that this interpretation was not supported by the Act itself and that the circular was not legally binding.
The court then considered the 2007 notification issued by the Government of Kerala, which explicitly extended the Act's provisions to medical institutions, including pathological laboratories, employing 20 or more persons. The court emphasized that this notification was issued after consulting with the Corporation and obtaining the approval of the Central Government, making it a valid and authoritative interpretation.
Based on the analysis of the relevant provisions of the Act and the notifications, the court concluded that the respondent establishment, a pathological laboratory, should be covered under the Employees' State Insurance Act from 06.09.2007. The court upheld the High Court's decision and dismissed the appeal filed by the Employees State Insurance Corporation.
August 02, 2023.