REGIONAL DIRECTOR, EMPLOYEES STATE INSURANCE CORPORATION versus RAM CHANDER

Citation: [1988] 1 S.C.R. 835 · Decided: 27-10-1987 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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REGIONAL DIRECTOR, EMPLOYEES STATE 
INSURANCE CORPORATION 
v. 
RAM CHANDER 
OCTOBER 27, 1987 
[SABYASACHI MUKHARJI AND G.L. OZA, JJ.] 
Employees State Insurance Act, 1948-Whether the respondent's 
tailoring establishment falls within the purview thereof by virtue of 
notification issued under section 1(5). 
"\-
The respondent Ram Chander ran a tailoring shop, employing 
about 10 to 12 tailors. The number of his employees never exceeded 20. At 
the shop, clothes were stitched and electric iron was used In the process 
of stitching and also for ironing the finished goods. 
A 
B 
c 
The dispute that arose for decision in the case was whether by D 
virtue of Notification dated September 20, 1975, issued under Section 
1(5) of the Employees' St&te Insurance Act, 1943, the respondent's 
establishment came within the purview of the Act. 
1 
Allowing the Appeal by special leave against the judgment and 
order 9f the High Court, and restoring the decision of the Employees' E 
State Insurance Court the Court, 
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HELD: Stitching process is carried on in the respondent's 
~ 
• 
A 
-.,,, 
, 
establishment. By stitching commercially, different goods with distinc-
tive names, characters and uses are brought Into existence. If by a 
process, a different entity comes into existence, the process is a F 
manufacture, as held by this Court in Empire Industries Limited 
& Ors, etc. v. Union of India & Ors. etc., (1985] (Suppl. 1) 
SCR 292. In the stitching process, ironing is an essential part, and 
for that electric power is used. Also the respondent's shop employed 
more than ten but less than 20 persons. The respondent's establish-
ment clearly falls withln the purview of the Employees' State G 
Insurance Act. [837G-H; 838C] 
Deputy Commission~r, Sales Tax (Law) Board of Revenue 
(Taxes), Ernakulam v. Pio Food Packers, (1980] 3 SCR 1271; 
Chowgule & Co. Pvt. Ltd & Anr. v. Union of India and others, (1981] 2 
SCR 271; Ardeshir H. Bhiwandiwala v. The State of Bombay, (1961] 3 H 
835 
836 
SUPREME COURT REPORTS 
[1988] I S.C.R. 
A SCR 592; M/s. Hindu lea Band, Jaipur v. Regional Director, 
Employees' State Insurance Corpn. Jaipur, AIR 1987 SC 1166; Metro 
Readywear Company v. Collector of <;ustoms, [1978] 2 Excise Law 
Times 520 and Employees' State Insurance Corporation v. Mis. New 
Empire Tai/ores and others, (unreported) referred to. 
B 
CIVIL APPELLAIB JURISDICTION: Civil Appeal No. 2904 
of 1987, 
From the Judgment and Order dated 2.9.1986 of the Rajasthan 
High Court in D.B. (Civil) Special Appeal No. 43 of 1986. 
._
C 
M. Chandrasekhran, V.J. Francis and N.M. Popli for the 
Appellant. 
-f 
B .D. Sharma for the Respondent. 
The Judgment of the Court was delivered by 
l) 
SABYASACHI MUKHARJI, J. Special leave granted. 
This appeal arises out of the judgment and order of the Division 
Bench of the Rajasthan Higb Court dated 2nd September, 1986. The 
judgment under appeal was rendered in an appeal under section 82(2) ''f 
i;: of the Employees' State Insurance Act, 1948 (hereinafter called 'the 
Act'). The respondent, Ram Chander, was the proprietor of M/s. 
Commercial Tailors, Sojati Gate, Jodhpur. At all material times, he 
used to run a tailoring shop, where clothes were stitched. The shop 
employed at the relevant time about 10 or 12 persons as tailors. The 
number of employees, however, never exceeded 20. The clotpes were 
f 
supplied by the customers and these were stitched according to the 
1 
different sizes of the customers. Such stitchings were done at the shop ·-f 
of the respondent herein manually by electric iron which was also used 
c 
H 
in the process of stitching. There were ironing of finished clothes also. 
The Employers State Insurance Court, Rajasthan came to the conclu-
sion as follows: 
"The applicant is a tailoring shop which has employed 
more than 20 persons on one occasion and less on other 
days and makes use of power in the shape of electric press 
1r' 
which is used for ironing of stitched clothes for customers. 
The electric iron is also used during the process of stitching 
in addition to the ironing of finished clothes." 
· 
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REGIONAL DIRECTOR E.S.I.C. v. RAM CHANDER [MUKHARJI, J.] 837 
The question before the Rajasthan High Court was whether such 
A 
establishment was covered by the Notification dated 20th September, 
1975 and came within the mischief of the Act. The answer to that 
question would depend on the relevant notification being the Notifica-
tion dated 20th September, 1975 issued under se
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