R.R. Jain, J.
1. Both these Writ Appeals are directed against the judgment of a learned Single Judge in Writ Petition No. 3133 of 1993 decided on May 16, 1995. Writ Appeal No. 806/1995 is filed by original respondents whose claims were rejected by the Single Judge. Though the Judgment in Writ Appeal went in favour of the original petitioner, still, feeling aggrieved by some of the observations, the original petitioner has also preferred W.A. No. 117/1997. Thus since both these writ a peals arise from the same judgment, and are Between the same parties involving identical questions of law and facts, they are decided by this common order.
2. In order to appreciate rival contentions, it would be worthwhile to briefly state the facts giving rise to these appeals. For the sake of convenience the status of parties as impleaded in W. A. No. 806/1995 is referred to herein under :
The appellants, about 15 employees were in service of the second respondent TIAM House Service Limited, Madras-1. However, as alleged, the appellants, along with others (totally about 120 workmen) were transferred from the establishment of the second respondent to the third respondent, namely Cholamandalam Software Limited. To the great shock and surprise of the appellants, the management of the third (respondent resorted to illegal lockout on and t about April 4, 1989. Thus, there being a cessation employment, the appellants agitated c their rights before the Labour Court at Madras a by raising Industrial Disputes No. 813/89 to 827/89. The Labour Court, vide its order dated September 25, 1992, allowed the petitions and ordered for reinstatement with backwages and all perquisites including continuity of service, holding that the act of closure on the part of the third respondent management is illegal and dehors the provisions of law. Aggrieved by this order, the management of the third respondent preferred W.P. No. 3133/93. The learned Single Judge, vide his order dated May 16, 1995, allowed the writ petition, setting aside the order passed by the Labour Court. In other words, the order of reinstatement with backwages passed by the Labour Court was set aside. Since the claims of the workmen have been dismissed, the workmen have preferred Writ Appeal No. 806/1995. Though the third respondent, the original petitioner succeeded in the matter, yet feeling aggrieved that some of the legal contentions have not been considered, has filed Writ Appeal No. 117/1997.
3. From the record, it transpires that as alleged by the appellants, in all, there were 122 workmen working with the second respondent and were transferred to the third respondent company. These facts have been disputed by the management of the second and third respondents contending that the services of the workmen attached with the second respondent were not transferred, but the workmen, on their own resigned from the establishment of the second., respondent and voluntar jointed the management of the third respondent with effect from July 1, 1994. At the outset, we may say that this is purely a question of facts and we would not like to go into the question of facts while exercising writ jurisdiction.
Apart from this, this disputed question of facts is not at all relevant and material for deciding the questions of law arising for our consideration in these appeals.
4. The main question arising for our consideration is that whether the third respondent, Cholamandalam Software Limited is an industrial establishment as defined in Section 25L of the Industrial Disputes Act, as being a factory as defined in Section 2(m) of the Factories Act, and that the alleged dispute is an industrial dispute defined in Section 2A of the Industrial Disputes Act. An industrial establishment is defined under Section 25L of the Industrial Disputes Act as under :
"(a) "industrial establishment" means -
(i) a factory as defined in clause (m) of Section 2 of the Factories Act, 1948 (63 of 1948);
(ii) a mine as defined in clause (j) of sub-section (i) of Section 2 of the Mines Act, 1952 (35 of 1952); or
(iii) a plantation as defined in clause (f) of Section 2 of the Plantations Labour Act, 1951 (69 of 1951);
(b) Notwithstanding anything contained in sub-clause (ii) of clause (a) of Section 2, -
(i) in relation to any company in which not less than fifty-one per cent of the paid-up share capital is held by the Central Government, or
(ii) in relation to any corporation (not being a corporation referred to in sub-clause (1) of clause (a) of Section 2) established by or under any law made by Parliament, the Central Government shall be the appropriate Government.
Similarly, the word 'factory' is defined in Section 2(m) of the Factories Act as under :
"(m) "factory" means any premises including the precincts thereof -
(i) whereon ten or more workers are working, or were working on any day of the so preceding twelve months and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or
(ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, in any part of which a manufacturing process is being carried on without aid of power, or is ordinarily so carried on, or
but does not include a mine subject to the operation of (the Mines Act, 1952 (35 of 1952)), or (a mobile unit belonging to the armed forces of the Union, a railway running shed or a hotel, restaurant or eating place);
(Explanation I - For computing the number of workers for the purposes of this clause all the workers in (different groups and reways in a day shall be taken into account).
(Explanation II - For the purposes of this clause the mere fact that an Electronic Data Processing Unit or a Computer Unit is installed in any premises or part thereof shall not be construed to make it a factory if no manufacturing process is being carried on in such premises or part thereof.)"
5. Mr. Fenn Waiter, the learned Advocate for the appellants workmen has vehemently argued that the activities of the 'Mird respondent involve manufacturing process and it is a factory within the meaning of Section 2(m). According to him, Computer Data Processing Unit involves manufacture of software floppy, cartridges, chips, diskette, etc. as well as process of feeding through manpower and these recorded mediums are goods and are sold in the market as goods after being fed. The duly prepared floppy or cassettes are sold in the market as valuable commodity. The intrinsic value thereof includes the cost of blank medium as well as instructions or knowledge record thercon through the intellectual process of manpower. Thus, the manpower deployed for data processing is required to use its expertise knowledge to convert a blank medium into a valuable commodity. Thus, the entire value of blank medium is changed by manufacturing process. In support or his contentions, the learned Advocate relies upon a decision reported in 1988 (33) E.L.T. 787 (Tribunal) in Collector of Central Excise, Bangalore v. Sunray Computers (P) Ltd. (relevant portion at page 793). An endeavor is also made to show that preparation of software is a manufacturing process by referring to another judgment reported in 1994 (74) E.L.T. 636 (Tribunal) in International Computers Indian MFR. LTD. v. C. C. E., Pune. Similarly, preparation and designing of systems software amounts to manufacture under Section 2(f) of the Central Excises and Salt Act, 1944 as held in 1994 (73) E.L.T. 450 (Tribunal) in O. R. G. Systems v. Collector of Central Excise, Vadodara.
6. Thus, relying upon the aforesaid judgments, Mr. Fenn Waiter has argued that preparation of accounts, balance sheets, keeping record of customers, etc. is a manufacture process as defined under Section 2(k) of the Factories Act. Consequently, the premises used by the third respondent would squarely be covered under Section 2(m) as factory, and the dispute between the parties would again he covered as an industrial dispute. As regards the scope of manufacturing activities, Mr. Fenn Waiter has invited our attention to a judgment of the Bombay High reported in 1982 L.I.C. 1644 in M/s. Bharti Udyog v. The Regional Director, Employees' State Insurance Corporation. Reliance is also placed on a judgment of the Supreme Court reported in (19WI-LLJ-490) in S. G. Chemicals and Dyes Trading Employees Union v. S. G. Chemicals And Dyes Trading Limited And Another for the meaning of "Industrial Establishment" "undertaking' Industrial Establishment" or "undertaking" etc. Relying upon the judgment in K. V.
V. Sarma, Manager, Gemini S&os, Madras, wherein production of films or exhibition material was considered as a manufacturing process. Mr. Fenn Waiter has argued that even in preparation of software also, identical process being involved, the activities of the third respondent should he taken a,; manufacturing process and the establishment a should be treated as a factory.
7. Repelling these contentions, learned counsel for the third respondent, Mr. Somayaji has argued that irrespective of the fact whether the third respondent is carrying on manufacturing activities and that the third respondent is an industrial establishment as being a factory defined under Section 2(m) of the Factories Act, by virtue of Explanation 11 added with effect from December 1, 1987, the electronic data processing unit or a computer unit installed in any premises or part thereof is taken out from the purview of the definition 'factory' under Section 2(m) of the Act. Thus, in the light of rival contentions, now, the question cropping up for consideration is further being narrowed is down to the interpretation of the scope of Explanation II only. Since the interpretation of the scope of Explanation 11 to Section 2(m) of the Factories Act would resolve the controversy, we would not to dwell upon the other question raised by Mr. Fenn Waiter. The question whether the activities carried out by the third respondent are manufacturing process as defined under Section 2(k) of the Factories Act, so as to bring the premises used by the third respondent within the meaning of the word 'factory' is kept open and we are not giving any finding.
8. Mr. Fenn Waiter, learned counsel has argued that the third respondent had also obtained licence under the Factories Act, and got renewed the same from time to time. Thus, by conduct, the third respondent shall be estopped from contending that its establishment is not a, factory. In our view, in the light of controversy narrowed down as above this contention has no significance and does not call for any adjudication.
9. The word 'factory' has been explained in 40 Section 2(m) and while deciding whether a particular establishment is a factory or not, the meaning attributed to the words "manufacturing process" and "industrial establishment" would, be relevant. But on a plain reading of Explanation II added on December 1, 1987, it becomes abundantly clear that an electronic data processing unit, or a computer unit installed in any premises or part thereof, and such activities may amount to manufacturing process, bringing within the ambit of the word 'factory' as defined under Section 2(m) of the Factories Act, yet Explanation II grants an exemption immunity to an electronic data processing or computer unit from being brought within the purview of the welfare legislators namely the labour laws. Thus, an establishment solely engaged as electronic data processing unit or , computer unit, though may be a factory, yet would be exempted from the application of labour laws by virtue of Explanation II and such establishment cannot be held as a factory. The only object of bringing Explanation II. is to march in step together with industrial modernies section and electronic innovation in industrial field. Computer is a recent innovation and has augmented industrial development to a great extent. By computerisation, efficiency has been increased adding to the national resources available for development. The legislature still thought more scope for the use of electronics and computer, and its contribution to the national development. 'Mus, in our view, taking prior the laudable object of national prosperity legislature thought it proper to grant immunity to such units from application of welfare legislation, namely labour laws, so that such developmental projects can strengthen national growth without any hurdle or impediment. Of course, the statement of objects and reasons for bringing out the amendment, does not expressly say so, but, if read in between the lines, we derive the aforesaid scope from para 2 of the statement of objects and reasons.
10. Mr. Fenn Waiter has expressed concern. that by giving the aforesaid meaning to the Explanation II, by installing electronic data processing unit or computer unit in a small part of a big industrial establishment, exemption would be claimed from the implementation of labour laws, frustrating the very object of welfare legislation. The apprehension of Mr. Fenn Waiter is misplaced, as the legislature has taken ample care while 'rafting Explanation II. Addition of is following words: "If no manufacturing process is be' carried out in such premises art In thereof@' provides an answer to the appresion. By incorporating these words, it is the intention of the legislature that if an establishment is solely engaged in electronic data processing or computer unit, then only the benefit of Explanation II can be claimed, but, if the electronic data processing activities or computer software processing activities are carried out along with other manufacturing process or activities, then, that establishment cannot claim the benefit and would squarely be covered by the welfare legislations, namely labour laws, and the establishment would be a factory as defined under Section 2(m) of the Factories Act.
11. Thus, in our view the activities carried out by the third respondent, though otherwise may be manufacturing process but, it is not a factory by virtue of Explanation II and therefore the establishment of the third respondent cannot be brought within the purview of industrial establishment as deemed under Section 25L of the Act. If the third respondent is not a factory, and or an industrial establishment, the dispute could not have been resolved by the Labour Court as an industrial dispute. Under the circumstances, it cannot be gain said that the order of reinstatement passed by the Labour Court would be without jurisdiction and dehors the provisions of law, and cannot be sustained, hence the order of the learned single Judge, setting aside the award passed by the Labour Court reaming unmpeachable and cannot be interfered.
12. For the reason stated above, it becomes abundantly clear that the third respondent is not a factory within the meaning of definition 2(m) by virtue of Explanation H. Consequently, the dispute be an industrial occasion of a Labour of the industrial applicable. Of course, support of his contention, Mr. Somayaji, learned counsel for the third respondent has also relied upon a decision reported in 1973 LIC 461 in Management of Hindustan Steel Ltd. v. Re Workmen And Others, and In J. K. Iron & Steel Co. Ltd v. Iron & Steel Mazdoor Unions & Ors. (1956-I-LLJ-227). But for the reason stated above we do not think that we require corroboration by any legal pronouncement, hence we are not discussing the ratio in detail.
13. In the result, Writ Appeal No. 806 of 1995 filed by the appellant workmen is hereby dismissed and Writ Appeal No. 117 of 1997 filed by the third respondent is allowed to the extent that the Labour Court should not have entertained and resolved the dispute as it was not on industrial dispute and thus, the Labour Court exceeded the jurisdiction in deciding the matter. However, there will be no order as to costs.