Facts: Madhu Malti Enterprises, a trader, stores medicines purchased from pharmaceutical companies in a refrigerator until they are sold to druggists and chemists. The Employees' State Insurance Corporation (ESIC) sought to apply the ESI Act, arguing that this storage constitutes a "manufacturing process". The ESI Court ruled in favor of the ESIC.
Procedural Posture: Madhu Malti Enterprises appealed the ESI Court's order to the High Court of Bombay under Section 82 of the Employees' State Insurance Act, 1948. The appeal was admitted on a substantial question of law: whether using a refrigerator to store medicines amounts to a continuation of the manufacturing process.
Issue: Does the mere act of storing medicines in a refrigerator by a trader, without any further processing, constitute a "manufacturing process" as defined under the ESI Act, read with the Factories Act, 1948, thereby making the trader liable under the ESI Act?
Holding: No, the mere act of storing medicines in a refrigerator by a trader does not constitute a "manufacturing process" under the ESI Act and the Factories Act, 1948. The appeal is allowed.
Reasoning: The Court reasoned that Section 2(k)(vi) of the Factories Act, 1948, defines "manufacturing process" to include "any process for preserving or storing any article in cold storage". The court emphasized the importance of the word "for," stating that it implies a process for the purpose of preserving or storing. The court distinguished between a "process for" and the mere "act of" preserving or storing. Since the appellant only stores medicines without any prior activity or process, it does not fall under the definition of "manufacturing process". The court also distinguished between cold storage and a refrigerator, noting that the Factories Act refers to cold storage, which is a large, insulated facility, unlike a domestic refrigerator. The court further stated that the main activity of the appellant is trading, and storing medicines is only an incidental activity. The court also cited Delhi Cold Storage Pvt. Ltd. Vs. Commissioner of Income Tax to support the view that mere storage does not constitute a process.