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PETITIONER: REGIONAL DIRECTOR, EMPLOYEES STATE INSURANCECORPORATION A

       Vs.

RESPONDENT: RAM CHANDER

DATE OF JUDGMENT27/10/1987

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) OZA, G.L. (J)

CITATION:  1988 AIR  113            1988 SCR  (1) 835  1988 SCC  Supl.   90     JT 1987 (4)   313  1987 SCALE  (2)941

ACT:      Employees  State   Insurance  Act,   1948  Whether  the respondent’s L  tailoring  establishment  falls  within  the purview thereof  by  virtue  of  notification  issued  under section 1(5).

HEADNOTE: %      The  respondent  Ram  Chander  ran  a  tailoring  shop, employing  about  10  to  12  tailors.  The  number  of  his employees never  exceeded 20.  At  the  shop,  clothes  were stitched and  electric iron  was  used  in  the  process  of stitching and also for ironing the finished goods.      The dispute  that arose  for decision  in the  case was whether by  virtue of Notification dated September 20, 1975, issued under  Section 1(5) of the Employees’ State Insurance Act, 1943,  the respondent’s  establishment came  within the purview of the Act.      Allowing  the  Appeal  by  special  leave  against  the judgment and  order of  the High  Court, and  restoring  the decision of the Employees’ State Insurance Court the Court, ^      HELD:  Stitching   process  is   carried  on   in   the respondent’s  establishment.   By  stitching   commercially, different goods  with distinctive names, characters and uses are brought  into existence.  If by  a process,  a different entity comes  into existence,  the process is a manufacture, as held  by this  Court in  Empire Industries Limited & Ors. etc. v.  Union of  India &  Ors. etc., [1985] (Suppl. 1) SCR 292. In the stitching process, ironing is an essential part, and for  that electric  power is used. Also the respondent’s shop employed  more than  ten but  less than 20 persons. The respondent’s establishment  clearly falls within the purview of the Employees’ State Insurance Act. [837G-H;838C]      Deputy Commissioner,  Sales Tax  (Law) Board of Revenue (Taxes), Ernakulam  v. Pio  Food Packers, [1980] 3 SCR 1271; Chowgule & Co. Pvt. Ltd & Anr. v. Union of India and others, [1981] 2  SCR 271;  Ardeshir H. Bhiwandiwala v. The State of Bombay, [1961] 3 H 836 SCR 592;  M/s. Hindu  Jea Band, Jaipur v. Regional Director,

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Employees’ State  Insurance Corpn. Jaipur, AIR 1987 SC 1166; Metro Readywear  Company v.  Collector of  Customs, [1978] 2 Excise  Law   Times  520   and  Employees’  State  Insurance Corporation  v.   M/s.  New   Empire  Tailores  and  others, (unreported) referred to.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 2904 of 1987.      From the  Judgment and  order  dated  2.9.1986  of  the Rajasthan High  Court in  D.B. (Civil) Special Appeal No. 43 of 1986.      M. Chandrasekhran,  V.J. Francis and N.M. Popli for the Appellant.      B.D. Sharma for the Respondent.      The Judgment of the Court was delivered by      SABYASACHI MUKHARJI, J. Special leave granted.      This appeal arises out of the judgment and order of the Division  Bench  of  the  Rajasthan  High  Court  dated  2nd September, 1986.  The judgment  under appeal was rendered in an appeal  under  section  82(2)  of  the  Employees’  State Insurance Act,  1948 (hereinafter  called  ’the  Act’).  The respondent,  Ram   Chander,  was   the  proprietor  of  M/s. Commercial Tailors,  Sojati Gate,  Jodhpur. At  all material times, he  used to  run a tailoring shop, where clothes were stitched. The shop employed at the relevant time about 10 or 12 persons  as tailors.  The number  of employees,  however, never exceeded  20. The  clothes  were  .  supplied  by  the customers and these were stitched according to the different sizes of  the customers.  Such stitchings  were done  at the shop of  the respondent  herein manually  by  electric  iron which was  also used in the process of stitching. There were ironing  of  finished  clothes  also.  The  Employers  State Insurance  Court,   Rajasthan  came  to  the  conclusion  as follows:           "The applicant  is  a  tailoring  shop  which  has           employed more  than 20 persons on one occasion and           less on  other days  and makes use of power in the           shape of  electric press which is used for ironing           of stitched  clothes for  customers. The  electric           iron is  also used during the process of stitching           in addition to the ironing of finished clothes." 837      The question  before  the  Rajasthan  High  Court.  was whether such A establishment was covered by the Notification dated 20th  September, 1975  and came within the mischief of the Act.  The answer  to that  question would  depend on the relevant notification  being  the  Notification  dated  20th September, 1975  issued under  section 1(5)  of the Act. The schedule   which    extends   the    scheme   to   different establishments, inter  alia, provided  by clause  (1)(b)  as follows: B DESCRIPTlON OF ESTABLISHMENTS                                           AREAS IN WHICH THE                                               ESTABLISHMENTS                                                ARE SITUATED. 1. Any premises including the precincts thereof  1.Alwar    whereon ten or more persons but in any case   2.Ajmer    less than twenty persons are employed or were 3.Bikaner    employed for wages on any day of the preced-  4.Jaipur    ing twelve months, and in any part of which a 5.Jodhpur    manufacturing process is being carried on with 6.Kota    the aid of power or is ordinarily so carried  7.Udaipur

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  on but excluding a mine subject to the    operation of the Mines Act, 1952 (35 of 1952)    or a rail way running shed or an establishment    which is exclusively engaged in any of the    manufacturing processes specified in clause    (12) of section 2 of the Employees’ State    Insurance Act, 1948 (34 of 1948)                             (emphasis supplied)      In  order   to  answer   the   question   whether   the establishment of the respondent comes within the mischief of the Act,  it is  necessary therefore,  in view  of the facts found  as   noted   before   to   determine   only   whether manufacturing process  was carried on with the aid of power. It is  manifest that  there is  use of electric power in the process of  stitching. This  is a  finding of  fact that the establishment of  the shop  employed more  than 10  but less than  20  persons.  It  cannot  also  be  disputed  that  by stitching commercially  different  goods  are  brought  into existence. These  are known  differently, stitched  shirt is indubitably a  different commodity than unstitched cloth. It is so  commercially known  and treated.  If by  a process  a different entity  comes into  existence then  it can be said that this  was manufactured.  See  in  this  connection  the observations of this Court in Empire lndustries Limited & H 838 others etc.  v. Union of India & others etc., [ 1985] Suppl. 1 S.C.R.  292. It  was observed  therein that manufacture is complete as  soon as  by the  application  of  one  or  more process, the  raw material  undergoes some  change. If a new substance is brought into existence or if a new or different article having  a distinctive  name, character or use result from particular  processes, such  process or processes would amount  to   manufacture.  Whether   in  a  particular  case manufacture has resulted by a process or not would depend on the-facts and circumstances of the particular case. There is no doubt  that the  process must  bring into existence a new item or  a new  commodity known differently in the market as such by  people who  use or  deal with  that good.  In  that process the  ironing of  clothes as  has been found to be an essential part  and for  that power is used. These are facts found and are not disputed. If that is the position, then in our opinion,  it comes clearly within the purview of the Act in view  of the  other facts  noted before and the employees are covered by the Act.      Our attention was drawn by learned counsel appearing on behalf of  the respondent  to the observations of this Court in Deputy  Commissioner, Sales  Tax (Law)  Board of  Revenue (Taxes) Ernakulam  v. Pio Food Packers, [1980] 3 S.C.R. 1271 and the decision of this Court in Chowgule & Co. Pvt. Ltd. & Anr. v.  Union of India & others, [ 1981] 2 S.C.R. .271. The effect of  both these  decisions have been considered in the aforesaid Empire  Industries’s case (supra). Learned counsel drew our attention to the decision of this Court in Ardeshir H. Bhiwandiwala v. The State of Bombay, [1961] 3 S.C.R. 592, where the  question arose under the Factory Act. It was held therein that  the  salt  works  was  a  factory  within  the definition given  in the  Act and  the appellant therein was rightly convicted  for working  it without  a  licence.  The decision is  of no assistance to the respondent in resolving the contentions involved in this appeal.      Our attention  was also  drawn to  the decision of this Court in  M/s. Hindu  Jea Band, Jaipur v. Regional Director, Employers’ State  Insurance Corporation, Jaipur, A.I.R. 1987 S.C. 1166,  where it  was held  that it was not that a place where goods  were sold  was  only  a  shop.  A  place  where

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services were  sold on  retail basis  was also  a shop.  The facts of  that case  were entirely  different from  these in this case. But the ratio of that decision is apposite to the issue in  dispute here.  There this Court reiterated that it was not  that a place where goods were sold was only a shop. But a  place where  services were  sold on  retail basis was also a shop. The place of business of a firm carrying on the business of playing music on occasion such as, marriages and 839 Other social  functions which  made available  on payment of the stipulated  price the  services of  the members  of  the group of  musicians employed  by it  on wages  was a shop to which the  Act was applicable by virtue of the notification. The fact  that the  services were  rendered by the employees engaged by  the firm  intermittently or during marriages did not entitle  the  firm  to  claim  any  exemption  from  the operation  of   the  Act.  In  Metro  Readywear  Company  v. Collector of  Customs, [ 1978] 2 Excise Law Times 520 of the High Court  of Kerala  at Ernakulam  it was  held  that  the brassieres were undoubtedly undergarments falling within the description  "articles   of  ready-to-wear   apparel  (known commercially as  ready  made  garments)  and  therefore  was classified under  Item 22D of Central Excise Tariff. Ironing with electric iron amounted to a process of manufacture with the aid  of power.  It was  held that  ironing  of  stitched brassieres is  incidental or  ancillary to their manufacture since the  said process  was intended  to give  a finishing, touch in order to render them marketable. In our opinion the ratio or the reasoning of the said decision is applicable to the facts of this case.      Our attention  was drawn  to the unreported decision of the Andhra  Pradesh High  Court in Employees State Insurance Corporation v.  M s.  New Empire  Tailors and  others, where the aforesaid reasoning was accepted by the High Court.      In the  light of  the aforesaid,  we are of the opinion that the High Court in the instant case was in error and the decision of  the E.S.I.  Court must be upheld. The appeal is accordingly allowed  and the  judgment and order of the High Court are  set aside  and the  order  of  the  E.S.I.  Court restored. In  the facts  and circumstances  of the  case the parties will  pay and  bear their  own costs.  This judgment will apply  to the  facts as  pertinent to  the facts in the relevant year in question. S.L.                                         Appeal allowed. 840