Employees State Insurance Corporation, Pune vs Kirloskar Consultants Ltd.

D.R. Dhanuka, J.—The Employees'' State Insurance Corporation has preferred this appeal against order dated 30th January 1987, passed by the Employees'' Insurance Court, Pune in Application (ESI) No. 6 of 1982.

By the impugned order under appeal, the trial Court has declared that the provisions of Employees'' State Insurance Act are not applicable to the establishment of Respondent in this appeal i.e. M/s. Kirloskar Consultant Ltd.

The establishment of Respondent herein is registered as "a commercial establishment." The Respondent company provides consultancy services to its clients is respect of Industrial, technical, marketing and management and prepares project report for its clients. The respondent is engaged in Industrial Consultancy and carrying on "economic activity" as part of its business. The only question which is required to be decided in this appeal is as to whether the establishment of the respondent is liable to be considered as "shop" under the notification issued by the appropriate Government u/s 1(5) of the Employees'' State Insurance Act, 1948. The respondent employs more than 100 employees. The Hon''ble Supreme Court has already held that the establishment of the ''advertising consultancy'' is liable to be considered as a ''shop''. The judgment of High Court of Bombay in case of Dattatray Advertising Co. Pvt. Ltd. is already overruled by the Apex Court.

While deciding the above referred application, the trial Court followed the ratio of old decisions which are all overruled by the Hon''ble Supreme Court by its judgment in the case of Employees State Insurance Corporation v. R. K. Swami and Ors. 1993 2 CLR 1068 . By this judgment, the Hon''ble Supreme Court overruled the decisions of Bombay, Madras and Kerala High Court referred to therein. Even prior to the delivery of this judgment, the Hon''ble Supreme court has already interpreted the expression "shop" used in the relevant notification in its wide sense as obvious from the observations of the Hon''ble Supreme Court in the case of International Ore and Fertilizers (India) Pvt. Ltd. and in the case of M/s. International Ore and Fertilizers (India) Pvt. Ltd. Vs. Employees'' State Insurance Corporation, and 1992 2 CLR 623. According to the view of the Hon''ble Supreme Court" if a systematic economic or commercial activity is carried on in the premises, it would follow that the establishment at which such an activity is carried on is a "shop". The expression "shop" is not restricted to mean house or building where goods are purchased or sold. The office of a clearing and forwarding agent was held by the Apex Court to be a shop in the case of Cochin Shipping Company

In para 5 of the judgment of the trial Court, it was observed by the Court that Mr. Atre the witness examined on behalf of M/s Kirloskar Consultants Ltd. had admitted that the Respondents carried on business of providing consultancy services to its clients in respect of industrial, technical, marketing and management and the establishment was registered as a commercial establishment. According to the version of the said witness the Respondents prepare ''project reports'' for their customers and provide guidance inter alia to business housing. The respondents engage various technical persons including Architects and Engineers for carrying out their consultancy business.

The learned counsel for the Respondents submits that in substance the Respondents were pursuing the profession like that of an architect and an Engineer and the activity of the respondent could not be described as an economical or commercial activity. The learned counsel for the respondents submits that the main work of the respondent was done by experts like Engineers and Architects and the establishment of the respondents could not be therefore, treated as a "shop" under the relevant notification issued u/s 1(5) of the Act. It is not possible to accept this submission of the learned counsel for the respondents in view of the ratio of the various judgments of the Hon''ble Supreme Court referred to in para 11 and para 12 of the judgment in Swami''s case and in view of the ration of judgment of the Hon''ble Supreme Court in Swami''s case itself. In this appeal the Court is concerned with the nature of the business of M/s. Kirloskar Consultants Ltd. and not of individuals employed by the respondents.

The learned counsel for the appellant rightly relies on the judgment of the Hon''ble Supreme Court in Swami''s case referred to hereinabove. The learned counsel for the Respondent has made an unsuccessful effort to distinguish the said judgment. In view of the above, I hold that the establishment of the respondent was and is a ''shop'' within meaning of the said expression as used in the relevant notification issued u/s 1(5) of the Act.

In the result, the appeal is allowed. The impugned order of the trial Court being order dated 30th January 1987 is set aside. Application (ESI) No. 6 of 1982 is dismissed. There shall be no order as to costs.

It is hereby directed that before issuing any notice of demand and before adopting any recovery proceedings, the appellant shall calculate the amounts payable by the respondents and shall give a reasonable opportunity to the respondents to make their submissions restricted to the calculations so as to obviate future litigation. After the calculations are checked up in the manner aforesaid, the appellant shall issue the necessary notice of demand on the respondents. The Respondents shall pay the amount payable by the Respondents to the appellant within four weeks of service of notice demand. The Respondent must comply with the provisions of the Act as required by law in view of the finding of the trial court and this Court that the respondents are governed by the Employees'' State Insurance Act, 1948.

Issue of certified copy is expedited.

Appeal allowed.