As pumping oil is a manufacturing process, ESI Act is also applicable to petrol pumps

M/S Qazi Noorul H.H.H Petrol Pump and Another - Appellant


Deputy Director, E.S.I. Corporation - Respondent

Facts of the Case:
Appellant runs a petrol pump for dispensing petrol/diesel. He was issued an order by the respondents directing to pay contribution under the Act (Employee’s State Insurance Act, 1948) for past period along with interest. Failing the same respondents may issue recovery under Section 45C and 45G of the Act.

Appellant challenged this order before the Allahabad High Court challenging the applicability of the Act to petrol pumps. The petition was dismissed. Hence, an appeal was filed before Supreme Court.

Supreme Court considered that Sec. 1(4) of the Act states that the Act shall apply to all factories. ‘Factory’ means any premises including the precincts thereof, wherein in preceding 12 months manufacturing process is carried on by employing,

-10 or more persons with aid of power; or

-20 or more persons without aid of power.

Also, it clarified that expressions “manufacturing process” and “power” used in the Act, have the same meaning as in the Factories Act, 1948. In connection with the same, Sec. 2(k)(ii) of the Factories Act states that pumping oil is a manufacturing process. As when petrol/diesel is to be filled in a vehicle, petrol/diesel is in a tank and it does not on its own flow from the tank to the pipe and thereafter into the vehicle, but only by means of a pump using power.

Hon’ble Supreme Court held that the ESI Act applies to the petrol pumps. Hence, the appellants were ordered to make ESI contributions with interest but the rate of interest was reduced to 10% on principal amount. No order as to costs.


Source: Labour law Reporter, pg. no. 1066, Supreme Court of India, October 2009.


Also Check: Other Legal Aspects


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