Eateries using LPG under ESI law

Eateries using LPG under ESI law


While upholding the ruling of the Karnataka High Court, a Bench of justices Markandey Katju and H L Dattu said such establishments would be termed as factories as they involve a manufacturing process using LPG, even though they employ less than 10 people.

“In our view, the use of LPG satisfies the definition of power as it is mechanically transmitted and is not something generated by human or animal agency,’’ said the judgement dismissing the arguments of Bangalore’s M/S Cow and Cane and Bombay Anand Bhavan Restaurant.

Both the units were engaged in preparing sweets, savories and other beverages in their establishments, but refused to subscribe to Employees’ State Insurance scheme under the ESI Act, 1948 for the benefit of the employees.

The two establishments had contended that they were not using any mechanical power like electricity as specified under the law, but using liquefied petroleum gas (LPG) to prepare the food items.

“LPG cannot be equated with the use of power and as per the provisions of the ESI Act, it is only when electric power is used in manufacturing process with 10 or more employees, then alone ESI Act could be made applicable,’’ said the eateries during their arguments.

However, the ESI Corporation had directed Cow and Cane to subscribe to ESI scheme on April 9, 1999.  The establishment had challenged the order before the appellate authority and Karnataka High Court.

Cow and Cane had argued that after the purchase of bottle cooler and coffee roaster, the establishment had not employed more than 10 employees and therefore, they are not covered under the provisions of law and also not obliged to pay any contribution for employees’ benefits.

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