Full Judgment Text
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PETITIONER:
M/S. KIRLOSKAR CONSULTANTS LTD.
Vs.
RESPONDENT:
EMPLOYEES STATE INSURANCE CORPN.
DATE OF JUDGMENT: 14/11/2000
BENCH:
S.N.Variava, S.Rajendra Babu
JUDGMENT:
RAJENDRA BABU, J. :
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The appellant before us provides under a roof, the
services of several different professionals like Engineers,
Architects, Financial Consultants and Management
Consultants, guidance and advice to other companies,
corporations, boards and even local authorities on how best
to manage their business for optimum utilization of plant,
machinery and other infrastructure. The appellant is
registered as a commercial establishment under the
provisions of the Bombay Shops and Commercial Establishments
Act. An application was filed by the applicant under
Section 75 of the Employees State Insurance Act, 1948
[hereinafter referred to as the Act] before the ESI Court,
Pune for a declaration that the provisions of the said Act
would not be applicable to the appellant, pursuant to a
letter sent by the respondent stating that it was covered
under the provisions of the Act w.e.f. 31.7.76. From that
letter it was assumed that it was a shop for purposes of the
applicability of the Act. The appellant started remitting
contribution in respect of its employees as per the
provisions of the Act. It was contended before the E.S.I
Court that the appellant has not carried on any process of
manufacture and hence is not a factory much less work
carried on by it on the premises could make it a shop.
The respondent pleaded that the appellant is engaged
in the consultancy services in technical and marketing
fields for a price and it is a shop. The E.S.I Court after
noticing that the appellants establishment is a commercial
establishment doing consultancy service in respect of
marketing, management, technical and industrial
establishment, observed that a shop does not include a
premises where intellectual advice is tendered and,
therefore, the appellant is not covered by the Act. To
reach this conclusion, it relied upon the decision of the
High Court in Dattatraya Advertising Co. Ltd. vs.
E.S.I.Corpn., 1956 LLN 346.
Against the order of the ESI Court the respondent
filed an appeal under the Act in the High Court. The High
Court, on the basis of ratio of the decision in E.S.I.Corpn.
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vs. R.K. Swamy and Ors., (1994) 1 SCC 445, held that the
word ‘shop has acquired an expanded meaning to cover a
premises where the advertising agency sells its expert
services to a client to enable the client to launch an
effective advertising campaign for his product, and in the
same manner premises where consultancy service is provided
is also a shop and appeal of respondents was allowed.
Hence this appeal. Shri Raju Ramchandran, learned senior
Advocate for the appellant, relying upon a decision of this
court in V.Sasidharan vs. M/s. Peter And Karunakar & Ors.
(1984) 4 SCC 230, contended that the appellants business
premises cannot be a shop on the analogy that a lawyers
office where advice is given by lawyers is not a ‘shop as
held by this Court for purposes of Kerala Shops and
Commercial Establishments Act, 1960. He emphasized that a
place of work can not be regarded as a shop unless the
activity is conducted is in a ‘shop. He submitted that the
expression ‘shop means a premises which is used in
connection with the trade or business, but not when
professional service is rendered. He emphasised that the
appellant does not carry on any trade or business and
contended that the appellants establishment can not be a
‘shop. He also submitted that the decision of this Court
in R.K.Swamys case is in conflict with the decision in
Sasidharans case and therefore, the matter has to be
considered by a larger bench.
Shri Vijay Kumar Mehta, learned counsel for the
respondents, submitted that in the light of the several
decisions of this Court where the expression shop having
been given expanded meaning for purposes of the ESI Act,
whereunder the expression shop is not defined the matter
is no longer res integra. Nor is shop defined as has been
done in the Kerala Shops and Commercial Establishment Act.
He, therefore, submitted that it is unnecessary to refer the
matter to a larger bench as there is no conflict between the
views expressed in the decision in Sasidharans case and the
decision in R.K.Swamys case. He also submitted that
whenever an establishment carries on activities in the
nature of a trade or commerce, it must be held that such
premises is a ‘shop in the light of the judgments rendered
by this court giving an expanded meaning to the word ‘shop.
He also submitted that on the facts of this case, it is
clear that the appellant is engaged in several activities
including advice to its clients in respect of industrial,
technical, marketing and management activities. It is
submitted that the nature of the activities carried on by
the appellant cannot fall outside the scope of the
expression ‘shop as understood by this court in several
decisions.
This court in Sasidharans case was concerned with the
interpretation of Kerala Shops & Commercial Establishments
Act, 1960, wherein Section 2(4) defines ‘commercial
establishment and Section 2(15) defines ‘shop. In that
case, therefore, this court had to find out whether the
activities carried on in a lawyers office fall within the
definitions in Sections 2(4) and 2(15) of the said Act.
Thus, this court was not concerned with the meaning
attributed to a shop arising in ESI Act. It was held that
lawyers do not carry on trade or business nor render service
to customers but carry on a profession and therefore cannot
fall within the scope of that Act. Reference may be made to
a decision of this court in Hindu Jea Band vs. Regional
Director, ESIC, (1987) 2 SCC 101, and in that case the
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premises in which services for rendering music is given is
held to be a ‘shop; so was the decision in Cochin Shipping
Co. vs. ESI Corpn., (1992 ) 4 SCC 245, wherein it was held
that regardless of the fact that the steamship company is
not carrying on stevedoring operations, it is a shop.
Further, in the case of International Ore and Fertilizers
(India) Pvt. Ltd. vs. ESI Corporation, (1987) 4 SCC 203,
the premises was held to be a shop even where activities
relating to sale of goods do not take place but negotiations
for the terms of sale, carrying on of the survey of the
goods imported, is done. What we are concerned in the
present case is what this court was concerned in R.K.Swamys
case. An advertising agency organises campaigns by
conducting the same in different media and would give advice
in this behalf and also in regard to possible expenses. It
is also engaged in preparing and presenting alternate
campaigns and for such a purpose it prepares artwork and
appropriate slogans to go with it. By engaging the service
of experts in different fields the advertising agency would
prepare the campaign for customers and sells the campaign by
receiving the price thereof. As the advertising agency
sells its expert services to a client to enable him to
launch an advertising campaign to advertise his product, the
same being offered for at a price, the premises of an
advertising agency could reasonably be said to be a shop.
Adopting the same logic, we may say that the business
carried on by the appellant is of consultancy services to
its customers in respect of industrial, technical, marketing
and management activities and preparation of project reports
by engaging the services of architects, engineers and other
experts. In substance, the nature of activities carried on
by the appellant is commercial or economical and would
amount to parting with the same at a price. Hence reliance
on Sasidharans case is misplaced. Thus, we do not find any
good reason to differ from the view expressed by the High
Court.
Hence, this appeal stands dismissed. However, in the
circumstances, the parties shall bear their respective
costs.