Benefits under ESI Act to be extended to persons employed in the kitchen of the Delhi Gymkhana Club

Supreme Court: Deciding the question that whether the kitchen and catering section of the Delhi Gymkhana Club come within the meaning of “factory” and “manufacturing process” as defined in Employees’ State Insurance Act, 1948 (ESI Act) thereby granting the employees of the club the benefits of the Act, the bench of T.S. Thakur and R. Banumathi, JJ held that the ESI Act was enacted to provide certain benefits to employees in case of sickness, maternity in case of female employees, employment injury and to make provision in certain other matters in relation thereto and the employees of the appellant-club should not be kept out of the welfare coverage of the beneficial legislation like ESI Act.

Interpreting the term “factory” under the ESI Act, the Court held that a 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, 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. Holding that preparation of food items in the kitchen amounts to “Manufacturing process”, the Court said that 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 meaning of “factory” as defined under Section 2(12) of the ESI Act and the contention that the appellant-club is a non-profit organization, would not take away the same from the purview of the Act.

The present case where the parties were represented by R.N. Keshwani and P.N. Puri, the Court explained the importance of the said legislation and held that 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 and deprived section of the society, who are in the constant need of protection, security and assistance and that the social security system needs to be effective and constructive and should have more coverage areas. Delhi Gymkhana Club Ltd. v. Employees State Insurance Corpn., 2014 SCC OnLine SC 853 decided on 28-10-2014

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