Electronics Shop Repairing and Servicing Electrical Goods is “Factory” under ESI Act : SC

The Supreme Court bench of Justices Hima Kohli and Rajesh Bindal was hearing an appeal against the Karnataka High Court's decision, which confirmed the ESI Court's determination that the ESI Act would apply to the firm.

Electronics Shop Repairing and Servicing Electrical Goods is “Factory” under ESI Act 1948 held by Supreme Court in case of M/S JP Lights India v. Regional Director, ESI Corporation, Bangalore.

According to the Supreme Court judgement, an electronic goods shop that sells items and repairs/services such goods is engaging in a “manufacturing process” employing “power” as defined under the ESI Act and the Factories Act, 1948.

The Supreme Court bench of Justices Hima Kohli and Rajesh Bindal was hearing an appeal against the Karnataka High Court’s judgement, which confirmed the ESI Court’s determination that the ESI Act would apply to the firm.

According to the Court, the firm’s use of electrical energy for fixing electronic items would place it under the definition of “power” utilized in the “manufacturing process” under both the ESI Act and the Factories Act of 1948.

The court pointed out that section 2(144) of the ESI Act uses the word manufacturing process and depends on its definition in section 2(k) of the Factories Act of 1948. Surprisingly, the term “manufacturing process” also includes “repairing” any item for usage.

“The appellant firm is in the business of selling electrical goods in a shop,” the Court found. To be sure, the business is employed not only for selling things, but also for servicing electrical goods. That being the case, it is evident that the appellant firm meets the description of a “Factory” and is engaged in a “manufacturing process,” as intended by both statutes.”

The appellant claimed that it was not manufacturing items with the assistance of “power” as defined by the ESI Act. The court pointed to the phrase “power” as defined in section 2(g) of the Factories Act of 1948, which is specified in section 2 (15)(C) of the ESI Act.

The Court stated that “power” refers to “the location of any electric energy transmission.” As a result, it was convinced that when electric energy is used to repair items, it can be regarded to be employing “power” as defined by the aforementioned Acts.

The Court went on to say, “The appellant-firm is an establishment that has been using electrical energy for the sale and repair of electrical goods at its premises by using “power” as has been defined under Section 2(15) (C) of the ESI Act, which again takes us back to the Factories Act, 1948, where the definition of “power” has been spelled out in Section 2(g) and the meaning ascribed to the said word is ‘electrical energy, or any other form of energy which is mechanically transmitted and is not generated by human or animal agency’.”

In view of the foregoing observations, the Supreme Court dismissed the appeal and upheld the lower courts’ conclusions that the appellant firm was indeed covered by the ESI Act.

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