Supreme Court: In a civil appeal filed by E.S.I. Corporation (‘appellant’) against the order of Kerala High Court, whereby, Endocrinology and Immunology Lab’s (‘respondent Laboratory’) appeal was allowed and it was held that the provisions of the Employees’ State Insurance Act, 1948 (‘the Act’) will be applicable to the respondent establishment w.e.f. 06-09-2007 and not from 22-11-2004, the Division Bench of Hima Kohli and Rajesh Bindal*, JJ. dismissed the appeal and held that the pathological laboratories would be covered within the ambit of the Act from the date of notification issued by the Government of Kerala dated 06-09-2007.
In the matter at hand, the respondent is pathological laboratory. The inspector conducted an inspection of the respondent Laboratory on 01-04-1999. A show cause notice was issued to the respondent Laboratory after finding that 19 employees were working there. The respondent Laboratory filed an application before the Employees’ Insurance Court under Section 75 and 77 of the Act, challenging the coverage of the Laboratory. It was ordered that the respondent Laboratory is a ‘shop’ as per Section 1(5) of the Act and the provisions of the Act would extend to the respondent w.e.f. 22-11-2002. A review application was filed by the respondent before the E.S.I. Court, which was dismissed. An appeal was preferred against the E.S.I. Court’s order by the respondent before the High Court which was allowed vide impugned order. The appellant’s case was that the respondent Laboratory will be covered in view of the notification dated 27-05-1976 issued by the Government of Kerala and Circular dated 22-11-2002 and thus, the respondent Laboratory would fall within the term ‘shop’.
Regarding the question from which date the respondent Laboratory will be covered under the Act, the Court perused Sections 1(4), 1(5), 2(12) and 14(AA) of the Act. The Court said that the respondent Laboratory will not be covered by the provisions of Section 1(4) of the Act as it will not fall within the definition of a ‘factory’, since no manufacturing process was carried on therein, therefore, the respondent Laboratory is merely a pathological laboratory. The Court noted that another notification dated 06-09-2007 was issued by the State, which brought certain establishments under the ambit of the Act. The Court also noted that in terms of the said notification medical institutions including diagnostic and pathological laboratories, where 20 or more persons were employed, were covered. The Court said that the High Court’s impugned order was in terms of the said notification.
Further, the Court said that the in the matter at hand, the respondent Laboratory is a pathological laboratory and would be covered under the Act in terms of the Notification dated 06-09-2007, as 20 or more employees were found to be employed in the premises in question. The Court also noted that the aforesaid Notification was issued in consultation with the appellant and with the approval of the Central Government. Therefore, the Court said that if the pathological laboratories were already covered under the Act, as is sought to be urged by the appellant, then there was no occasion to issue such a notification. Thus, the Court said that it was clearly established that pathological laboratories were not covered under the Act prior to the date of notification i.e., 06-09-2007.
Thus, the appeal was dismissed.
[ESI Corpn. v. Endocrinology & Immunology Lab, 2023 SCC OnLine SC 908, Decided on 02-08-2023]
*Judgment authored by: Justice Rajesh Bindal