DELHI GYMKHANA CLUB LTD.versusEMPLOYEES STATE INSURANCE CORPN.

                         [2014] 14 S.C.R. 1082


A                  DELHI GYMKHANA CLUB LTD.
                                    v.
            EMPLOYEES STATE INSURANCE CORPN.
                   (Civil Appeal No. 2415 of 2003)
B                        OCTOBER 28, 2014
             [T. S. THAKUR AND R. BANUMATHI, JJ.]
       · Employees' State Insurance Act, 1948: s.2(12) as stood
   prior to Amendment Act 2911989- Expressions 'factory' and
C 'manufacturing process' - Explained - Extending of
 · provisions of the Act to persons working in kitchen-catering
   division of Delhi Gymkhana Club Ltd.- ES/ Act is a
   beneficial piece of social welfare legislation aimed at
   securing the well-being of employees and court will not adopt
D a narrow interpretation which will have the effect of defeating
   the objects of the Act - Kitchen is an integral part of the
   club which caters to the needs of its members and their
   guests, on payment of money thereby making the appellant-
   club fall within the definition of 'factory' u/s 2(12) of ES/ Act. -
E Order of ES/ Corporation u/s 45-A of ES/ Act, holding that
   appellant club is covered under provisions of ES! Act,
   upheld- Factories Act, 1948- s.2(k)(I).
          The instant appeal arose out of the order. dated
     4.8.1986 passed by ESI Corporation holding the
F    appellant-club as covered under the Employees' State .
     Insurance Act, 1948 and directing it to pay the required
     contribution in respect of its employees for the period
     1.2.1980 to 31.8.1985.
          Dismissing the appeal, the Court
G         HELD: 1.1 Even though the terms "kitchen" and
     "catering" of a club may not be called a factory in
     common parlance, having regard to the definition of
     "manufacturing process" and that ESI Act is a beneficial
     legislation, a liberal interpretation has to be adopted.
·H
                                  1082
  DELHI GYMKHANA CLUB LTD. v. EMPLOYEES STATE                 1083
              INSURANCE CORPN.

Therefore, so long as manufacturing process is carried        A
on with or without the aid of power by employing more
than twenty persons for wages, it would come within the
meaning of "factory" as defined u/s 2(12) of the ESI Act.
[Para 20][1093-F-H]
     The Bangalore Turf Club Ltd. v. Regional Director,       B
     Employees State Insurance Corporation (2014)
     Vol. 9 Scale 177; Employees State Insurance
     Corporation v. Hyderabad Race Club, (2004) LLR
     769 (SC)= (2004) 6 SCC 191- relied on.
      Cricket Club of India, Bombayv. Employees' State
                                                              c
      Insurance Corporation (1998) LLR 729 (Bombay
      HC), Employee~' State Insurance Corporation v.
      Jalandhar Gymkhana Club, (1992) LLR 733
      (P & H HC) - approved.
                                                              D
       1.2 Admittedly more than 20 persons are employed
  in preparation of foodstuffs and ·serving in the kitch~n­
  catering division of the appellant club and those
. employees are paid salary, wages, gratuity etc.
  Admittedly, the club maintains a kitchen, refrigerator,     E
  geyser and other equipments are used in making
  and preparation of foodstuffs wherein power is used.
  [Para 12][1090-B-C]
     1.3 The appellant-club is catering to the elite people
of Delhi. Appellant-club provides various services to its F
members and organizes several sports activities. Wide
range of activities of the club are associated With the
large number of staff. Kitchen is an integral part of the
club which caters to the needs of its members and their
guests, on payment of money either in cash or by card, G
where the food items are put for sale, thereby making
the appellant-club fall within the definition of 'factory'
u/s 2(12) of the ESI Act. There is no reason to keep the
employees of the appellant-club out of the welfare
                                                               H
1084        . SUPREME COURT REPORTS               (2014] 14 S.C.R.


 A coverage of the beneficial legislation like ESI Act.
       [Para 13 and 17][1090-F-G; 1092-D-E]
            G L. Hotels Limited and Ors. v. TC. Sarin and Anr.
            1993 (1) Suppl. SCR 808: (1993) 4 sec 363;
            Bombay Anand Bhavan Restaurant v. Deputy
 B          Director, Employees State Insurance Corporation
            And Anr. (2009) 9 SCC 61 ; Transport Corporation
            of India v. Employees' State Insurance Corporation
            &Anr. 1999 (4) Suppl. SCR 393: (2000) 1 sec
            332 and Cochin Shipping Co. v. ES/ Corporation
 c          1992 (3) SCR 909: (1992) 4 SCC 245 - relied
            on.
                       CASE LAW REFERENCE
       1993 (1) Suppl. SCR 808 .         relied on     para 14
 D. (2009) 9 sec 61                      relied on      para 15
       1999 (4) Suppl. SCR 393           relied on     para 19
       1992 (3) SCR 909                  relied on     para 19
       (2014) Vol.9 Scale 177            relied on      para 21
 E (2004) LLR 769 (SC)      =(2004)
   6 sec 191                             relied on      para 22
       (1998) LLR 729 (Bo!llbay HC)      approved      para 22
       (1992) LLR 733 (P & H HC).        approved      para 22
 F          CIVIL APPELLATE JURISDICTION : Civil Appeal No.
       2415 of 2003.
            From the judgment and order dated 15.07.2002 in FAQ
       No. 30 of 1987 of the High Court of Delhi at N. Delhi.
        Rakesh K. Sharma, Sanjay Kunur, R.N. Keshwani and
 G S.N. Bhat,Advs. for the Appellant.
            Mahesh Srivastava, Vaibhav M. Srivastava, P.N. Puri,
       Murari Kumar, YakeshAnand, Vijay Pratap Singh a·nd Sanjeev
       Anand, Ad vs. for the Respondent.
 H
 DELHI GYMKHANA CLUB LTD. v. EMPLOYEES STATE                      1085
             INSURANCE CORPN.

     The Judgment of the Court was delivered by                   ·A
     R. BANUMATHI, J.
     1. Short point falling for consideration in this appeal is
whether kitchen of the appellant-club and catering section
thereon come within the meaning of "factory" and                  B
"manufacturing process" as defined in Employees' State
Insurance Act, 1948 (for short 'ESI Act').
       2. The appellant-Delhi Gymkhana Club is a member club,
duly registered under the Companies Act. Appellant-club has
a kitchen to cook food items to provide food and refreshment      c
to its members. On 20.03.1975, a notification was issued by
the Delhi Administration, in exercise of the powers conferred
under Section 1(5) of the ESI Act, stating that the provisions
contemplated under the Act .shall be extended to the
establishments specified in the Schedule thereon. In D
furtherance of the said notification, the respondent-ES!
Corporation sought to apply the provisions of the Act on the
appellant-club, on the ground thatthe preparation of food items
amounts to "manufacturing process" and that the appellant-
club is a factory/establishment covered under the provisions E
of the ESI Act. After issuing the show cause notice, ESI
Corporation passed the order on 4.8.1986 under Section 45-
Aof the ES I Act, holding that M/s. Delhi Gymkhana Club Limited
is covered under the provisions of Employees State Insurance
Act, directing the appellant to pay Rs.6,82,655.40 as a F
contribution of insurance in respect of employees for the period
from 1.02.1980 to 31.08.1985, along with interest@6% per
annum.
       3.Aggrieved, the appellant filed-a petition in the ESI Court
which, by a judgment dated 25.11.1986, while allowing the G
petition of the appellant-club, held that preparation of eatables
does not fall under "manufacturing process" and hence, ESI
Act is not applicable to the appellant-club and the appellant
was not liable to pay contribution. Aggrieved by the same,
respondent-corporation preferred appeal before the High H
     1086         SUPREME COURT REPORTS                  [2014] 14 S.C.R.


      A     Court. The High Court allowed the appeal and held that the
            kitchen is an integral part of the club and that cooking of
            foodstuffs amounts to 'manufacturing process' falling within the
            meaning of sub-section ( 14AA) of Section 2 of tlie ESI Act,
            thereby falling within the meaning of 'factory' as defined under
      B     Section 2(12) of ESIAct. Being aggrieved, the appellant-club
            is in appeal before us.

·1
              4. Contention of the appellant is that the Club is a non-
        profit organization, exclusively rendering facilities. to its
        (Tlembers and that the ESI Act is not applicable to them. It is
      C contended that social security perks, better than the ones
        contemplated under the ESI Act, are already put in place for
        the benefit of employees. Contending that preparation of food
        iterns does not amount to"manufacturing process' and that
        provisions of ESI Act are not applicable to the club, the
      D appellant placed reliance on the decision of this Court in· Indian
        Hotels Co. Ltd. Vs. I. T.O. (2000) 7 SCC 39, wherein it was
        held that preparation of foodstuffs in hotel kitchen is merely
        processing of food to make it .edible and that there is no
        manufacturing process.
      E       5. Per contra, learned counsel for the respondent
          submitted that the purpose is to extend the benefit of the
          scheme to the employees working in the appellant-club and
          while doing so, the object of welfare legislations, like the ESI
          Act, ought to be kept in mind. Refuting the appellant's contention
      F that preparation of foodstuffs in the kitchen does not amount
          to 'manufacturing process', the respondent placed reliance on
          the decision of this Court in GL. Hotels vs. T.C. Sarin (1993)
          4 sec 363, wherein it was held that cooking forms part of
         manufacturing process, as it alters and treats or otherwise
      G adapts an article of food or substance with a view to its use,
          sale, delivery or disposal in the club. It was submitted that the
          High Court rightly held that the kitchen of the appellant falls
        . within the meaning of'factory' as defined under Section 2(12)
          of the ESIAct.
      H
 DELHI GYMKHANA CLUB LTD. v. EMPLOYEES STATE                     1087
      INSURANCE CORPN. [R. BANUMATHI, J.)

     6. We have carefully considered the submissions and         A
perused the materials on record.
      7. ESI Act is made applicable under Section 1(4) to all
factories including factories belonging to the Government, other
than seasonal factori~s. Proviso appended to Section 1(4) of
the ESI Act carves out an exception. Sub-section (4) of Section B
1 of the ESI Act shall not apply to a factory or establishment·
belonging to or under the control of the Government whose
employees are otherwise in receipt of benefits substantially
similar or superior to the benefits provided under this Act.
     8. The provisions of Section 1(5) of the ESIAct enable C
the appropriate government to issue notification in respect of
any other establishment or class of establishments, industrial,
commercial, agricultural or otherwise. In exercise of its powers
under Section 1(5) of the Act, the Delhi Administration issued
the notification dated 20.03.1975 extending the provisions of D
the Act to certain establishments.          -
     Relevant portion of the said notification reads as under:
     "1. Any premises including the precincts       In the
     thereof whereon ten or more persons            Union        E
     but in any case less than twenty persons,      Territory
     are employed or were employed for              of Delhi.
     wages on any day of the preceding
     twelve months and in any part of which
     a manufacturing process is being                             F
     carried on with the aid of power or is
     ordinarily so carried on; but excluding a
     mine subject to the operation of the
     Mines Act 1952 (35of1952) or railway
     running shed or an establishment which                      G
     is exclusively engaged in any of the
     manufacturing process specified in
     clause (12) of Section 2 of the.
     Employees State Insurance Act, 1948
     (34of1948).                                                  H
1088         SUPREME COURT REPORTS                  [2014] 14 S.C.R.
                                    I


 A          2. Any premises including the precincts        In the
            thereof whereon twenty or more                 Union
             persons are employed or were                  Territory
            employed for wages on any day of the           of Delhi.
            preceding twelve months, and in any
 B           part of which a manufacturing process
             is being carried on without the aid of
            power, or is ordinarily so carried on; but
            excluding a mine subject to the
            operation of the Mine Act, 1952 (35 of
 c         . 1952) to a railway running shed or an
            establishment which is exclusively
            engaged in any of the manufacturing
            process specified in clause (12) of
            Section 2 of the Employees' State
 D           Insurance Act, 1948 · (34 of
             1948).3."." '.-. " ... "
            In furtherance of the above notification, the ESI
       Corporation sought to apply the provisions of the Act to the
       appellant-club.
 E          9. The word "factOry" has been defined in Section 2(12)
       of ESI Act as under:-
            "2(12) "factory" mea.ns any premises including the
            precincts thereof whereon twenty or more persons are
            employed or were employed for wages on any day of
 F
            the preceding twelve months, and in any part of which a
            manufacturing process if 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   Mines
            Act, 1952 (35of1952), or a railway running shed."
 G
             The above definition is prior to the amendment Act 29/
       1989. In this appeal, we are concerned with the definition of
       "factory" as it ex~sted prior to October 20, 1989.
         10. Prior to Act 29/1989, in Section 2(12) of the ESIAct,
 H the expressions "manufacturing process", "power" shall have
  DELHI GYMKHANA CLUB LTD. v. EMPLOYEES STATE                        1089
       INSURANCE CORPN. [R. BANUMATHI, J.]

the meaning respectively assigned to them in the Factories A
Act, 1948. After Act 29 of 1989, a separate definition for
"manufacturing process" has been incorporated in sub-section ·
(14AA) of Section 2 which practically has the same effect. It is
seen from the definition of "factory" that the following conditions
are to be satisfied in order to make any premises including B
the precincts thereof a factory:
      (1)   in the premises including the precincts thereof
            twenty or more persons are employed or were
            employed for wages on any day of the preceding
            twelve months;                                  C
      (2)   in any part of these premises or precincts, a
            manufacturing process is being carried on, and
      (3)   such manufacturing process must be carried on
            with the aid of power, or is ordinarily so carried on.   D
      11. "Manufacturing process" has been defined in Section
2(k) of the Factories Act, 1948 as under:-
      "2. (l<) 'manufacturing process' means process for -
        (i) making, altering, repairing, ornamenting, finishing,     E
            packing, oiling, washing, cleaning, breaking up,
            demolishing, or otherwise treating or adapting
            any article or substance wlth a view to its use,
            sale, transport, delivery or disposal; or
        (ii) pumping oil, water, sewage or any other substance;       F
             or
        (iii) generating, transforming or transmitting power;
              or
        (iv) composing types for printing, printing by letter
             press, lithography, photogravure or other similar G
             process or book binding; or
        (v) constructing, reconstructing, repairir)g, refitting,
            finishing or breaking up ships or vessels; or
        (vi) preserving or storing any article in cold storage."      H
1090         SUPREME COURT REPORTS               (2014] 14 S.C.R.


 A          For the purpose of this appeal, we are concerned only
       with Section 2(k) (i) of the FactoriesAct.
         12. We need not go into the details of the number of
   employees working in the kitchen of the appellant-club, as
   admittedly more than 20 persons are employed in preparation
 B of foodstuffs and serving in the kitchen-catering division and
   those employees are paid salary, wages, gratuity etc.
   Admittedly, the club maintains a kitchen, refrigerator, geyser
   and other equipments are used in making and preparation of
   foodstuffs wherein power is used. That food items are being
 C prepared in the kitchen and being served in the kitchen of the
   appellant-club to appellant-club's members and their guests
   for payment is not disputed.
          13. The object of the appellant-club is to promote polo,
   hunting, racing, tennis and other games, athletic sports and
 0 recreations amongst its members. Huge contribution is
   collected for becoming members of the club and only the
   privileged can become the members of the appe!fant-club.
   There are wide range of sports activities, recreations and big
   budget is involved. The kitchen of the club has a direct
 E connection with the activities carried on in the rest of the club
   precincts. The members and the guests of the members share
   the services of the kitchen. The ESI Act is enacted to provide
   certain benefits to employees in case of sickness, maternity
   in case offemale employees, employment injury and to make
 F provision in certain other matters in relation thereto. We find
   no reason as to why the employees of the appellant-club should
   be kept out of the welfare coverage of the beneficial legislation
   like ESIAct.
         14. Let us now examine whether preparation of food
 G items in the kitchen of the appellant-club amounts to
   "manufacturing process" bringing the club within the purview
   of the definition of 'factory'. it has been consistently held by
   this Court that preparation of foodstuffs in hotels and
 H restaurants amounts to manufacturing process, thereby
  DELHI GYMKHANA CLUB LTD. v. EMPLOYEES STATE                            1091
       INSURANCE CORPN. [R. BANUMATHI, J.]

invoking the applicability of the provisions of the ESI Act. This        A
Court in G.L. Hotels Limited and Ors. vs. T. C. Sarin and Anr.,
(1993) 4 SCC 363 has affirmed the views of the High Court
that "since the manufacturing process in the form of cooking
and preparing food is carried on in the kitchen and the kitchen
is a part of the hotel or a part of the precinct of the hotel, the       B
entire hotel falls within the purview of the definition of "Factory"."
      15. In Bombay Anand Bhavan Restaurant vs. Deputy
Director, Employees· State Insurance Corporation And Anr.,
(2009) 9 sec 61, the question for consideration was whether
the appellant-restaurant, which was using LPG gas for C
preparation of coffee, tea and other beverages, is covered
under the ESIAct. Observing that it is a settled position of law
that cooking, preparing of food items qualifies as
manufacturing process and that the use of LPG satisfies the
definition of power, this Court in paragraphs (27) and (39) D
held as under:-
       27. Both the appellants prepare sweets, savouries and
       other beverages in their establishments. It is a settled
       position of law that cooking and preparing food items
      qualifies as manufacturing process. In ES/ v. Spencer & E ·
       Co. Ltd. (1978 Lab IC 1759 Mad) the Madras High Court
       held, while dealing with the case of a hotel run by Spencer
       and Co., that preparation of coffee, peeling of potatoes,
       making bread toast, etc. in a hotel, involve "manufacturing
       process". Similarly, the Bombay High Court in Poona F
       Industrial Hotel Ltd. v. /. C. Sarin (1980 Lab IC 100 Born),
       held that the kitchen attached to Hotel Blue Diamond run
       by the petitioners therein, should be considered as a
      "factory" forthe purpose of the ES I Act. Hence, it is beyond
     . doubt that there is manufacturing process involved in the G
       establishment of the appellants.


      39. In our view, the use of LPG satisfies the definition of
      power as it is mechanically transmitted and is not                  H
1092        SUPREME COURT REPORTS                   [2014] 14 S;C.R.


· A        something generated by human or animal agency. Since
           the esta_blishments of the appellants involve a
           manufacturing process with the aid of LPG, which can
           now be termed as power, the establishments of tlie
           appellants can be termed as factories, and therefore,
 B         the ESI Act will apply to these establishments."
           16. On behalf of the appellant, it is contended that the
     above decisions are in respect of hotels and the appellant is
     only a club which has been running a kitchen and catering
     division only for the benefit of its members and the same is
 C · not for the purpose of making any profit and it should be held
     that the appellant-club does not fall within the definition of
     "factory" under Section 2(12) of the ESIAct. We find no merit
    ·in the above submission.
          17. The appellant-club is catering to the elite people of
 D Delhi. Appellant-club provides various services to its members
   and organizes several sports activities. Wide range of activities
   of the club are associated with the large number of staff.
   Kitchen is an integral part of the club which caters to the
   needs of its members and their guests, on payment of money
 E either in cash or by card, where the food items are put for
   sale, thereby making the appellant-club fall within the definition
   of 'factory' under Section 2(12) of the ESI Act. All the persons
   employed for the purpose of supply and distribution of food·
   prepared in the kitchen and for doing other incidental duties in
 F connection with the kitchen and catering are to be regarded
   as employees of the factory. It hardly matters for the employee
   whether the appellant's kitchen is run with any profit making
   motive or not.
 G      18. The object of ESI Act is to provide certain benefits
   to the employees in case of sickness, maternity and
   employment injury and also to make provision for certain other
   matters in relation thereto. ES I Act is a beneficial piece of social
   welfare legislation aimed at securing the well-being of the
 H employees and the court will not adopt a narrow interpretation
   which will have the effect of defeating the objects of the Act.
  DELHI GYMKHANA CLUB LTD. v. EMPLOYEES STATE                 1093
       INSURANCE CORPN. [R. BANUMATHI, J.]

      19. In the case of Bombay Anand Bhavan Restaurant A
vs. Dy. Director ES/ Corporation &Anr. (2009) 9 SCC 61 in
paragraph 20 it has been held as under:-
     "20. The Employees' State Insurance Act is a beneficial
     legislation. The main purpose of the enactment as the
     Preamble suggests, is to provide for certain benefits to B
     employees of a factory in case of sickness, maternity
     and employment injury and to make provision for certain
     other matters in relation thereto. The Employees' State
     Insurance Act is a social security legislation and the ..
     canons of interpreting a social legislation are different C
     from the canons of interpretation of taxation law. The
     courts must not countenance any subterfuge which would
     defeat the provisions of social legislation and the courts
     must even, if necessary, strain the language of the Act in
     order to achieve the purpose which the legislature had D
     in placing this legislation on the statute book. The Act,
     therefore, must receive a liberal construction so as to
     promote its objects."
     The same principle was reiterated in Transport
Corporation of India vs. Employees' State Insurance E
Corporation &Anr., (2000) 1 SCC 332 and Cochin Shipping
Co. vs. ES/ Corporation (1992) 4 SCC 245.
      20. Even though the term "kitchen", "catering" of a club
may not be called a factory in common parlance, having regard F
to the definition of "manufacturing process" and that ESI Act is·
a beneficial legislation, a liberal interpretation has to be
adopted. Therefore, so long as manufacturing process is
carried on with or without the aid of power by employing more
than twenty persons for wages, it would come within the G
meaning of"factory" as defined under Section 2(12) of the ESI
Act. The contention that the appellant-club is a non-profit
making organization would not take away the same from the
purview of the Act.

                                                               H
1094       SUPREME COURT REPORTS                  (2014] 14 S.C.R.


 A         21. In The Bangalore Turf Club Ltd. vs. Regional Director;
     E;mployees State Insurance Corporation reported in (2014)
     Vol.9 Scale 177, the question which was referred to a larger
     Bench was "whether the Bangalore Turf Club Ltd. being
     engaged in organizing sports activities which involves
 B providing of service to the members of the Club and outsiders
     can be construed as a "shop" for the purpose of extending
     the benefits under the ESIAct." Referring to Cochin Shipping
     Co. vs. ES! Corporation (supra) and Bombay Anand Bhavan
     Restaurant vs. Deputy Director ES/ Corporation & Anr.
 c,. (supra), in paragraphs (71) and (72), it was held as under:
           "71. It has consistently been the stand of the Appellants-
           herein that the term 'shop' must be understood in its
           'tradit:onal sense'. However, as has been observed by
           this Court. in the case of Bombay Anand Bhavan
 D         Restaurant(supra), the language of the ESIAct may also
           be strained by this Court, if necessary. The scheme
           and context of the ESI Act must be given due
          .consideration by this Court. A narrow meaning should
           not be attached to the words used in the ESI Act. This
 E         Court should bear in mind that the ESIAct seeks to insure
           the employees of covered establishments against various
           risks to their life, health and well-being a'ld places the
           said charge upon the empioyer.
          72. We find that the term 'shop' as urged to be understood
 F        and interpreted in its. traditional sensewould not serve
          the purpose of the. ESI Act. Fur~her in light of the
          judgments discussed above and in particular the Cochin
          Shipping Case (supra)' and the Bombay Anand Bhavan
          Case (supra), this Court is of the opinion that an
 G        expansive meaning may be assigned to the word 'shop'
          forthe purposes of the ESIAct. As has been found above,
          the activities of the Appellant-Turf Clubs is in the nature
          of organized and systematic transactions, and further that
          the said Turf Clubs provide services to members as well
 H        as public in lieu of consideration. Therefore, the
  DELHI GYMKHANA CLUB LTD. v. EMPLOYEES STATE                       1095
       INSURANCE CORPN. [R. BANUMATHI, J.]

     Appellant-Turf Clubs are a 'shop' for the purpose of           A
     extending the benefits under the ESI Act."
      22. In Employees State Insurance Corporation vs.
Hyderabad Race Club, (2004) LLR 769 (SC)=(2004) 6 SCC
191, this Court has clarified that a club will be coverable under
the ESIAct.                                                         B
      23. In Cricket Club of India, Bombay vs. Employees'
State Insurance Corporption (1998) LLR 729 (Bombay HG),
the Bombay High Court has held that ESI Act will apply to a
club since there was no distinction between a hotel and a club.
In Erryployees' State Insurance Corporation vs. Jalandhar C
Gymkhana Club, (1992) LLR 733 (P & H HG), the Punjab
and Haryana High Court considered the question whether
manufacturing process is being carried on in the kitchen of
the club, rendering catering services to its members. It was
held that a perusal of sub-clauses (i) to (vi) of Section 2(k) of D
the Factories Act would make it clear that preparation of the
items which are prepared in the kitchen and the preservation
 and storing of any articles in the cold storage would amount to
a manufacturing process.
                                                                  E
      24. The counsel for the appellant claimed exemption
under Section 1(4) of the ESIAct, contending that the club is
 already providing medical facilities and that they have staff
welfare fund out of which employees are paid in cases· of death,
funeral expenses and in case of illness and hence ESI Act is F
 not applicable to them. The provisions of ESI Act must be
 construed along the lines of the objects of the Act so that the
 benefits of welfare legislation are not curtailed. ESI Act
provides a kind of social security and employees are one of
 the most vulnerable ar.d deprived section of the society, who G
are in the constant need of protection, security and assistance.
The social security system needs to be effective and
ccnstructive and should have more coverage areas.
Government has the obligation to protect working class from
 uncertain contingencies so that they can happily contribute H
towards social security schemes. ESI Act and all the provisions
1096         SUPREME COURT REPORTS                 (2014] 14 S.C.R.


 A     of the Act are significant and are meant to realize state's
       obligation in safeguarding the rights provided under Part IV of
       the Constitution. The appellant's contention regarding
       adequate social security benefits being already in place is not
       tenable.
 B       25. In the light of the various decisions and the view taken
   by this Court in GL. Hotels case, the High Court has rightly
   held that the preparation of food items in the kitchen of the
   appellant-club amounts to "manufacturing process" and that
   the employees are covered under the purview of the ESI Act.
 C Considering the activities of the appellant-club and that the
   kitchen catering forms an integral part of the appellarit-club,
   the High Court rightly held that the appellant-club falls within
   the purview of the ESI Act and we do not find any infirmity in
   the order passed by the High Court.
 D       26. Learned counsel for the appellant-club then submitted
   that the order under Section 45-A was passed in 1986 and by
   this time the contribution amount payable would have
   accumulated and, therefore submitted that in case ifthe Court
   holds that the employees of the appellant-club are covered
 E under the ESI Act, the contribution should be made prospective
   from the date of the order passed by this Court. The Act being
   a beneficial legislation, the above contention cannot be
   countenanced. ESI contribution ought to have been paid when
   the demand was made in 1986. It is very unfortunate that the
 F appellant-club has not paid the ESI contribution of its
   employees for more than three decades and is not justified in
   seeking for prospective operation of the order.
        27. The impugned order of the High Court does not suffer
 G from any infirmity warranting interference. We find no merit in
   the appeal and the same is dismissed.

       Rajendra Prasad                                Appeal dismissed.