Point 1:Whether the appellant's establishment is a 'factory'

as defined under S. 2(12) of the act ?

• According to the court the hotel came under definition of the

word 'factory' as defined in the ESI Act, as
a) there were 82 persons working in the kitchen
b) power is used for manufacturing articles of food in the
kitchen.
 Point 2: Whether the preparation of articles of food in the kitchen, attached to the respondent hotel, involves 'manufacturing process,’?

• The definition of manufacturing process is not given in the ESI Act ,1948
and hence the definition of Manufacturing Process under Factories Act is
taken.
• In the case Poona Industrial Hotel Limited v. I. C. Sarin the Bombay high
court held that the preparation of the food necessarily implies making of
the food which is an article or substance as mentioned in the definition of
the phrase 'manufacturing process'. Several other articles which go into
the preparation of the food are altered or cleaned or otherwise treated or
adopted before the ultimate items of food emerged in the kitchen.
 Point 3:Whether a Notification under S. 1(5) of the Act by the State
Government is necessary in order to extend the provisions of the Act to a
hotel ?

• Since it was taken the view that the appellant's establishment, viz., Hotel
East-West is a 'factory' for purposes of ESI Act the court did feel the need
to keep the matter in abeyance till the Supreme Court decides the appeal.

Final Judgment: -
1. The appeal was dismissed and;

2. According to the order dated 4th February, 1976 issued by the Regional
Director, ESI Corporation Bangalore the appellant was asked to pay
contributions.
 Previous Judgments referred
• Human blood can be said to be drug and whether pathologists tapping
blood from human beings are manufacturing 'drug' so as to incur liability
to obtain licence under Section 18(c) of Drugs and Cosmetics Act, 1940.

• Pumping oil in petrol pump or peeling potatoes in hotel

• According to the decision of the Supreme Court in the case of Christian

Medical College v. ESI Corporation, wherein the Supreme Court
specifically held that repairing of the equipments with a view to use the
same amounts to manufacturing process and, therefore, Equipment
Maintenance Department of the Christian Medical College which
maintains and repairs the equipments for the efficient use in the hospital
comes within the definition of "Factory" under the ESI Act.