A single judge of Bombay High Court recently ruled that the Employees’ State Insurance (ESI) Act, 1948, applies to the computer industry as the creation or development of software is a manufacturing process for the purpose of the act.
In addition, the court, which was ruling jointly on appeals in Assistant Director, Employees’ State Insurance Corporation v M/s Western Outdoor Interactive Pvt Ltd and M/s Reliable Software Pvt Ltd v Assistant Director Employees’ State Insurance Corporation, held that the premises where computers for manufacturing process are used in manufacturing is a factory.
Both Western Outdoor Interactive and Reliable Software were involved in software development and ancillary activities using computers and had challenged notices for contributions towards ESI before the Employees’ Insurance Court. The court produced contradictory rulings in the two cases: it ruled that Western Outdoor was not a factory as defined under the ESI Act and that Reliable Software was a factory as software development is a manufacturing process.
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The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
