Holding

The amendment widens the definition of "seasonal factory" and does not withdraw the exemption, so the respondents' factories continue to be excluded from the Act.

Summary

The Regional Director of the Employees' State Insurance Corporation sought contributions from the factories of High Land Coffee Works and Sons under the Employees' State Insurance Act, 1948. Section 1(4) of the Act excludes "seasonal factories," defined in Section 2(12). The factories were originally classified as seasonal and thus exempt. An amendment by Act 44 of 1966 added that a factory engaged for up to seven months a year in blending, packing or repacking of tea or coffee, or other processes specified by the Central Government, would also be a seasonal factory. The corporation argued that this amendment removed the exemption, while the respondents contended the amendment merely broadened the definition without altering their status. The Employees' Insurance Court and the Karnataka High Court upheld the exemption, and the Supreme Court affirmed that the amendment was expansive, not restrictive, so the factories remained seasonal and excluded from the Act. Consequently, the appeals and special leave petition were dismissed.

Issues considered

Whether the amendment to the definition of "seasonal factory" by Act 44 of 1966 removes the exemption of the respondents' factories under Section 1(4) of the Employees' State Insurance Act, 1948.

Legislation cited

Subjects

Employees' State Insurance Actseasonal factorystatutory interpretationamendmentexemptionfactory definitioninclude clause

Judgment

REGIONAL DIRECTOR, EMPLOYEE'S STATE INSURANCE A
CORPORATION
v.
HIGH LAND COFFEE WORKS OF P.F.X. SALDANHA
AND SONS AND ANR

JULY 26, 1991 B

[K. JAGANNATHA SHETTY, V. RAMASWAMI AND
YOGESHWAR DAYAL, JJ.]

Employees State Insurance Act, 1948-Sections 1(4) and 2( 12)-
Seasonal factory' exemption from Statute-Whether arises. C

The Regional Director, State Employees Corporation the appel-
lant in the instant case claimed for covering the factories of the respon-
dents M/s. High Land Coffee Works of P.F.X. Saldanha & Sons under
the provisions of the Employees State Insurance Act 1948.
D
Section 1(4) of the Act excludes "seasonal factory" from the scope
of the Act. The seasonal factory is defined under section 2(12) of the
Act.

The factories of the respondents were excluded from the operation
of the Act since they were declared to be seasonal factories within the E
meaning of the definition of section 2(12) of the Act.

By amending Act 44 of 1966 which came into force from 28th
January, 1966,the definition of 'seasonal factory' has been amended
and accordingly the seasonal factory means a factory which exclusively
engaged in one or more of the manufacturing processes detailed in t':te F
definition and includes a factory which is engaged for a period not
exceeding seven months in a year. The expressions manufacturing pro-
cess & power shall hav' the meaning respectively assigned to them in.
the Factories Act 1948.

So after the amendment the Corporation called upon the respon- G
dents to pay the contributions payable under the Act and threatened to
take coercive steps to recover the arrears under the Revenue Recovery
Act and prosecute them.

The respondents challenged the demand made by the appellants
in the Employees Insurance Court contending that even the amending H

307
308 SUPREME COURT REPORTS [1991] 3 S.C.R.

Act 44 of 1966 has not altered the definition of seasonal factory, would
A
still excludes such factory from the operation of the Act. The Employees
Insurance Court accepted the plea of the respondents and even the
Karnataka High Court agreed to the view of aforesaid Court. So the •
Corporation appealed to this Court.

B The sole question before the Court for consideration is whether
the respondents' factories in view of the amendment to the definition of
seasonal factory have lost the benefit of exclusion from the Act.

Dismissing t!te appeals and the ·special leave petition the Court, ,...
QELD: That in the instant case the High Court observation that
· C the purpose of the definition by the amending act was to enlarge and not
to restrict the Statutory concept of seasonal factory so the position of the
respondents establishments as seasonal factories remain unaltered. This
view seems to be justified because the objects reasons of the Bill of the
amending Act clearly indicates that the proposed amendment was to
D ·bring within the scope of the definition of seasonal factory' a factory
which works for a period of not exceeding seven months in a year a) in
·any process of blending, packing orJepacking of tea or coffee b) in
such other manufacturing processes as the Central Government may,
by notification in the official Gazettee specify. Thus amendment is
. clearly jn favour of widening the definition of seasonal factory' because
E the word 'include' in the Statutory definition is generally used to
enlarge the meaning of the preceeding words. This is well accepted
statutory construction that in interpretation clauses in order to enlarge
the words or phrases occuring in the body of the statute the word
include is very generally used. [3JOF-311C)

F Stroud's Dictionary, 5th Edn. Vol. 3 page 1263.

C./. T. Andhra Pradesh v. M/s. Taj Mahal Hotel, Secunderabad,
[1971] 3 SCC 550 and State of Bombay v. The Hospital Mazdoor Sabha
& Ors., [1960] 2 SCR p. 666 at 875, referred to.

G CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
1837-1841of1977.

From the Judgment and Order dated 28.10.1976 of the Karna-
taka High Court in Misc. First Appeal Nos. 557 to 561 of 1975.

H Cr. Anand Prakash, Ms. Kitty Kumaramangalam and C. V.
Subba Rao for the Appellant.
E.S.l. v. HIGH LAND COFFEE WORKS ISHETTY. J.] 309

G.B. Pai, Dr. Shankar Ghosh, D.N. Mishra and Ms. Mridula A
Ray for the Respondents.

The Judgment of the Court was delivered by

K. JAGANNATHA SHETTY, J. These appeals by special leave
are directed against the judgment of the Karnataka High Court reject- B
ing the claim of the appellant-Corporation for covering the factories of
the respondents under the provisions of the Employees' State Insu-
rance Act, 1948 (the Act).

Section 1(4) excluses "seasonal factory" from the scope of the
Act. The "seasonal factory" is defined under Section 2( 12) of the Act
which is extracted hereunder:
c

"Seasonal factory means a factory which is exclusively
engaged in one or more of the following manufacturing
processes, namely, cotton, ginning, cotton or jute pressing,
decortication of groundnuts. the manufacture of coffee, D
indigo, lac, rubber, sugar (including gur) or tea or any
manufacturing process which is incidental to or connected
with any of the aforesaid processes."

The factories of the respondents were excluded from the opera-
tion of the Act since they were declared to be the seasonal factories E
within the meaning of the above stated definition. There is no dispute
on this aspect.

By Amending Act 44 of 1966 which came into force with effect
from 28th January 1968, the definition of "seasonal factory" has been
amended. The definition as amended reads: F

"Seasonal factory means a factory which is exclusively
engaged in one or more of the following manufacturing
processes, namely, cotton ginning, cotton or jute pressing,
decortication of groundnuts, the manufacture of coffee,
indigo, lac, rubber, sugar (including gur) or tea or any G
manufacturing process which is incidental to or connected
with any of the aforesaid processes and includes a factory
which is engaged for a period not exceeding seven months
in a year-

(a) in any process of blending, packing or re-packing of tea H
or coffee; or
310 SUPREME COURT REPORTS [1991] 3 S.C.R.

(b) in such other manufacturing process as the Central
A
Government may, by notification in the Official Gazette,
specify;

The expressions "manufacturing process" and
"power" shall have the meaning respectively assigned to
B them in the Factories Act, 1948".

After the said amendment, the Employees' State Insurance
Corporation called upon the respondents to pay the contributions pay-
able under the Act and threatened to take coercive steps to recover the
arrears under the Revenue Recovery Act and prosecute them. Chal-
lenging the validity of the demand made, the respondents approached
c the Employees' Insurance Court, inter alia contending that the amend-
ment to the definition of the expression "seasonal factory" brought
out by the Amending Act 44 of 1966 has not altered the position of the
seasonal factory as obtained prior to the amendment and Section 1(4) of
the Act would still continue to exclude .such factory from the operation
D of the Act. The Employees' Insurance Court accepted the respon-
dent's plea. The Karnataka High Court has also agreed with the view
taken by the Employees' Insurance Court. The Corporation has now I
appealed to this Court. ..... J
',
'
The sole question for consideration is whether the respondents'
E factories in view of the amendment to the definition of 'seasonal
factory' have lost the benefit of exclusion from the Act. The High
Court on this aspect has observed that the purpose of the amendment
was to enlarge and not to restrict the statutory concept of 'seasonal
factory' and the position of respondents establishments as seasonal
factories under and for the purpose of the Act remained unaltered
F even after the amendment.

The view .taken by the High Court seems to be justified. The
statement of Objects and Reasons of the Bill which later became the
Act 44 of 1966 indicates that the. proposed amendment was to bring
within the scope of the definition of 'seasonal factory', a factory which
G works for a period of not exceeding seven months in a year- (a) in any
process of blending, packing or repacking of tea or coffee; or (b) in
such other manufacturing process as the Cenrtral Government may, by
notification in the Official Gazette, specify. The amendment there-
fore, was clearly in favour of the widening the definition of 'seasonal
factory'. The amendment is in the nature of expansion of the original
H definition as it is clear from the use of the words 'include a factory'.

'
il.S.I. v. HIGH LAND COFFEE WORKS ISHETTY, J.] 311

The amendment docs not restrict the original definition of "seasonal A
factory" but makes addition thereto 'by inclw·icm. The word "include"
in the statutory definition is generally used to enlarge the meaning of
the preceding words and it is by way of extension, and not with restric-
tion, The word 'include' is very generally used in interpretation clauses
in order to enlarge the meaning of words or phrases occurring in the
B
body of the statute; and when it is so used, these words or phrases must
be construed as comprehending, not only such things as they signify
according to their natural import but also those things which the in-
terpretation clause declares that they shall include. (See: (i) Stroud's
Judicial Dictionary, 5th ed. Vol. 3, p. 1263 and (ii) C./. T. Andhra
Pradesh v. M/s Taj Mahal Hotel, Secunderabad, [1971] 3 SCC 550 (iii)
State of Bombay v. The Hospital Mazdoor Sabha & Ors., [1960] 2 SCR c
866 at 875.

In view of these well accepted statutory construction, the deci-
sion of the High Court does not call for interference.

In the result the appeals ,:nd the special leave petition fail and D
are dismissed with costs.

S.B. Appeais and petition
dismissed.

'