Shipping Co. Vs. E.S.I. Corporation  INSC 198 (19 August 1992)
L.M. (J) Sharma, L.M. (J) Mohan, S. (J) Venkatachala N. (J)
1993 AIR 252 1992 SCR (3) 909 1992 SCC (4) 245 JT 1992 (4) 602 1992 SCALE
State Insurance Act, 1948: Sections 1(5) & 75:
extending operation of the Act to Hotels, Restaurants, Road Motor Transport
Establishments, Cinemas and `Shops'- `Shop'- Connotation of-Held establishment
carrying on stevedoring, clearing and forwarding operations at a Port is a
of statutes-Social security legislation- Construction of-Duty of Court-Should
be construed liberally so as to promote the object of the Act.
Government of Kerala issued a Notification dated 18.9.1974 under Section 1 (5)
of the Employees' State Insurance Act, 1948 extending the provisions of the Act
to six kinds of establishments viz. Hotels, Restaurants, Shops, Road Transport
Motor Establishments, Cinemas and Newspaper Establishments. The appellant
Company, carrying on the business of clearing and forwarding at the port of
Cochin, received notice for payment of its contribution under the Act. Denying
its liability to pay, it filed an application before the Employees' Insurance Court under Section 75 of the Act,
contending that the Notification was not applicable to it because its
establishment was not a shop, but the same was dismissed. On appeal a Division
Bench of the High Court held that the establishment of the appellant falls
within the purview of the term `shop'.
appeals to this Court it was contended on behalf of the appellant that (1)
though `shop' would take within it other establishments like hotels or
restaurants yet they have come to be specifically mentioned. In view of that
enumeration of other establishment in contradistinction to shops the 910 word
`shop' must be held to relate to a place where commercial activity of buying
and selling merchandise takes place otherwise the enumeration of other
establishment becomes meaningless; (2) in view of the fact that the
notification specifically enumerates the other establishments, the intention
has been clearly brought out not to give a wider meaning of the term `shop' as
otherwise the term `shop' itself would be enough to cover other establishments
like hotels, restaurants, cinema etc. From this point of view, the activity
carried on by the appellant merely processing the document at the customs
clearing house without rendering any service to the customers at the
appellant's office of establishment cannot be said to fall within the meaning
the appeals, this Court HELD: Per Sharma, J.
view of the consistent interpretation of the notification which has been followed
in the country, the question should not be reopened for fresh consideration.
Per Mohan, J. (For Himself and Venkatachala, J.) Concurring:
Employee's State Insurance Act is an Act to provide certain benefits to
employees in case of sickness, maternity and employment injury and makes
provision for certain other matters in relation thereto. Under Section 1(4), in
the first instance, it is made applicable to all factories. But the Act
envisages the extension of benefit to the employees in other establishments or
class of establishments, industrial commercial, agricultural or otherwise. The
extension of benefit is to be done by means of a notification by the
Appropriate Government. Thus the benefits conferred by the Act cover a large
area of employees than what the Factories Act and the akin legislations
intended. The conclusion is inescapable that it is a welfare legislation. The endeavour
of Court should be to place a liberal construction so as to promote its object.
The object is to envelop as many establishments as possible without leaving any
room for doubt. That is precisely what the Notification intends to do. [915D, E,F,920-A]
Notification catalogues six establishments one of which is `shop'. Merely
because other establishments which are akin to shop are enumerated, it does
not, in any manner, oblige the Court to give a narrow 911 meaning to the word
`shop' nor does it any way dilute the meaning of `shop'. The appellant is
carrying on stevedoring, clearing and forwarding operations. Clearing the
documents, even it be in the custom house, is necessary for the export or
import of goods. These services form part of the carriers job. It cannot be
gainsaid that the appellant is rendering service to cater the needs of
exporters and importers and others who want to carry the goods further.
Therefore, it is a shop carrying on a systematic economic or a commercial
activity. This would be enough to bring the appellant without specifically
enumerating the specific activities carried on by the appellant. [913H, 919H,
920A-B] Hindu Jea Band, Jaipur. v. Regional Director Employees' State Insurance
Corporation, Jaipur,  2 S.C.R. 377 and M/s International Ore & Fertilizers (India) Pvt. Ltd. v. Employees' State Insurance Corporation,
 4 S.C.C. 203, relied on.
Law Lexicon, 14th Edn. 929 and Words and Phrases Legally defined, 2nd Edn. 73,
APPELLATE JURISDICTION: Civil Appeal Nos. 2593- 2599 of 1980.
the Judgements and Orders dated 23.5.79, 30.5.79, 25.6.79, 26.6.79 and 9.7.1979
of the Kerala High Court in M.F.A. Nos. 69, 76, 80, 81, 83, 89 and 75 of 1977.
Sampath for the Appellant in C.A. No.
O.C. Mathur, Ms. Meera and D.N. Mishra for the Appellant in C.A. No. 2594-99/80.
O.C. Mathur, Ms. Meera and D.N> Mishra for the Respondent in C.A. No. 2593/80.
V.C. Mahajan, Hemant Sharma and Mrs. Anil Katiyar for the Respondent.
of the Court were delivered by SHARMA, J. The learned counsel for the
respondent has, in support of his stand, placed reliance on several decisions
of this Court and the High 912 courts in which the notification in identical
terms has been construed in the way as is suggested on behalf of the
Corporation. Although Mr. Bobde, learned counsel for the appellant has advanced
an argument, which on the face of it, appears to be attractive, I think that in
view of the consistent interpretation of the notification which has been
followed in the country, the question should not be reopened for fresh
consideration. Accordingly, I agree that all these appeals should be dismissed
but without costs.
J. These appeals can be dealt with by a common judgement since the question of
law to be decided is one and the same. It is enough if we note the facts in
Civil Appeal No. 2599 of 1980.
appellant is a company incorporated under the Companies Act. It has its
registered office at Jew Town in Mattancherry. It is engaged in the business of clearing
and forwarding at the Port of Cochin situated in Willingdon Island. It is authorised to transact its
business at the Cochin Custom House under the terms of Section 202 of the Sea
Customs Act read with the Rules made thereunder and a licence was issued under
the said provisions.
appellant received a notice dated 3.1.75 enclosing certain notification whereby
the Employees State Insurance Act (hereinafter referred to as the Act) was
extended to certain classes of establishments specified in the Schedule wherein
20 or more persons are employees or were employed during that period. The
appellant replied that it did not fall under the purview of the said
notification. Therefore, the appellant was not liable to comply with any of the
provisions of the Act. Another letter dated 8.9.75 was received by the
appellant calling it upon to furnish certain details. This was replied to by a
letter dated 20.9.75 where under the details were furnished. Thereafter a
notice dated 7.11.75 with which were enclosed certain printed forms, was
received by the appellant. The appellant replied on 18.11.75 denying liability
to pay any contribution under the Act. The stand of the appellant was that the
company does not come within the notification dated 18.9.74 as the appellant
was not a shop and was carrying on business of clearing and forwarding at the Cochin Port. In reply to the said letter the appellant received a letter
dated 9.12.75 stating that the Insurance Inspector who visited the appellant
found 20 persons employed in the shop. It was functioning as shipping, clearing
and forwarding agents.
appellant served the customers. Therefore, it was a shop within the 913
dictionary meaning of the term and called upon the appellant to submit the
that the appellant does not render any service to customers at its office, it
was merely carrying on clearing and forwarding business by processing the
documents at Custom House, no service being rendered at the appellant's office
establishment, it was urged that it could not be called a shop within the dictionary
meaning. An application was moved under Section 75 of the Act before the
Court, Calicut to decide the dispute and to hold
that the appellant was not a shop within the purview of the Act and, therefore,
the Act itself was inapplicable.
were preferred on behalf of the Regional Director, Employees State Corporation
that in view of the notification dated 18.9.74 supplemented by the other
notifications dated 2.12.74 and 22.3.75, the appellant's business would fall
within the ambit of the said notifications. The Government of Kerala issued
those notifications with a view to extend benefits to the employees working in
other sections of organized labour such as shops and establishments.
The Employees Insurance Court by a judgement dated 29.1.77 in
E.I.C. No. 1/76 held that the appellant would be covered with effect from six
months after 21.12.74. In the result, the appellant was brought within the
this order, M.F.A. No. 75 of 1977 was preferred to the High Court of Kerala. A
Division Bench by its judgement dated 25.6.79, following its earlier judgement
held that the term "shop" as understood in the scheme of the Act is
not merely a place where the business of purchase and sale takes place but it
is a place where there is commercial activity arising from customer service. In
that sense, the establishment of the appellant has to be understood to fall
within the purview of the term "shop". Accordingly the appeal was
dismissed. Hence, the civil appeals, leave having been granted by an order
learned counsel for the appellants would raise the following submissions.
Act primarily applies to factories. Of course, the Act could be extended to
other establishments by means of a notification. In the instant case, a
notification dated 16.9.74 catalogues six establishments one of which 914 is
shop. Though "shop" would take within it other establishments like
hotels or restaurants yet they have come to be specifically mentioned. In view
of that enumeration of other establishment in contradiction to shops the word
"shop" must be held to relate to a place where commercial activity of
buying and selling merchandise takes place otherwise the enumeration of other
establishment becomes meaningless.
what is the meaning of "shop" could be gathered from Wharton's Law
Lexicon 14th Ed. 929 and Words and Phrases Legally Defined 2nd Ed. 73.
next submission of the learned counsel is in view of the fact that the
notification specifically enumerates the other establishments, the intention
has been clearly brought out not to give a wider meaning of the term
"shop" as otherwise the term "shop" itself would be enough
to cover other establishments like hotels, restaurants, cinema etc.
this point of view, the activity carried on by the appellant merely processing
the document at the customs clearing house without rendering any service to the
customers at the appellant's office or establishment cannot be said to fall
within the meaning of "shop". Therefore, the approach of the High
Court and the authorities would require to be set aside. It must be held that
the notification has no application to the appellant's business.
opposition to this, Mr. Goswamy, learned counsel appearing on behalf of
Employees, State Insurance Corporation would submit that the word
"shop" is wide in its amplitude. It means a place where any kind of
commercial activity is pursued and where services are rendered to the
customers. In so far as the appellant is carrying on the business of clearing
and forwarding and rendering service which are part of carrier's job certainly
it will be a shop.
caters to the needs of exporters and importers. It is a systematic commercial
activity or an economic activity.
it would be a shop within the meaning of the notification. Merely because every
establishment may fall within the scope of the term "shop" as
enumerated, it does not, in any way, restrict the meaning of the word
object of enumeration is to envelop as many establishments as possible without
leaving room for any doubt, where, therefore, the word "shop" alone
would be enough to cover the activities of the appellant, it is not necessary
to further enumerate and specifically bring within the scope of the notification
the activities of the appellant. Regard must be had in 915 this connection that
this is a social welfare legislation.
Court had always taken the view that as far as permissible the endeavour of the
Court must to be cover those employees than to deny the benefit of these
provisions. In support of these submissions the cases in Hindu Jea Band Jaipur
v. Regional Director, Employees' State Insurance Corporation, Jaipur etc.,
 2 SCR 377 and M/s. International Ore & Fertilizers (India) Pvt. Ltd.
v. Employees' State Insurance Corporation,  4 SCC 203 are cited. Thus it
is submitted that no exception could be taken to the impugned judgement.
A.T.M. Sampath, learned counsel appearing for the appellant adopts the
arguments of Mr. Bobde while the respondent opposes in the same vein.
Employees State Insurance Act is an Act to provide certain benefits to
employees in case of sickness, maternity and employment injury and make
provision for certain other matters in relation thereto. The Act is an outcome
of a policy to provide remedy for the widespread evils arising from the
consequences of national poverty. Indeed, it is a piece of social security.
Section 1 (4), in the first instance, it is made applicable to all factories.
The Act envisages the extension of benefit to the employees in other
establishments or class of establishments , industrial, commercial,
agricultural or otherwise. The extension of benefit is to be done by means of a
notification by the appropriate Government. Thus the benefits conferred by the
Act cover a large area of employees than what the Factories Act and the akin
legislations intended. The conclusion is inescapable that it is a welfare
legislation. The endeavour of the Court should be to place a liberal
construction so as to promote its objects to which a reference has been made.
instant case, the impugned notification runs as follows:
OF KERALA No. 22877/E2/73/LBR LABOUR (E) DEPARTMENT TRIVANDRUM, DT. 18.9.74 916
exercise of the powers conferred by sub-section (5) of Section 1 of the
Employees' State Insurance Act, 1948 (Central Act 84 of 1948), the Government
of Kerala, in consultation with the Employees' State Insurance Corporation and
with the approval of the Central Govt. hereby given notice of its intention to
extend the provisions of the said Act to the clauses of the Establishments
specified in the Schedule annexed hereto, on or after 29.3.1975.
of establishments Areas in which the establis- hment are situated
____________________________________________________________ The following
establishments 1. Trivandrum, Navaikulam where on twenty or more persons and Pazhayakunnumel
(Kil- are employed for wages on any day imanoor) in Trivandrum of the preceding
twelve months, District.
Kundara, Chatha- nnur, Kottaraka, Punalur an Sast hamcotta in Quilon District.
Hotels; 3. Alleppey, Kayamkulam and Shertailai in Alleppey District.
Restaurants; 4. Kottayam town in kottayam District.
Shops 5. Ernakulam and Cochin in Ernakulam District.
Motor Transport 6. Trichur town in Trichur establishment;
Cinema including preview 7. Palghat town in Palghat theatres; District.
establishments 8. Kozhikode town in as defined in Section 2 Kozhikode District
and (d) of the Working Journalists (Conditions of Service) 9. Cannanore town, Tellich-
and Miscellaneous Provisions erry and Baliapatam in Act, 1955 (5 of 1955). Cannanore
District in the State of Kerala.
order of the Governor, Sd/ U. Mahabala Rao, Secretary to Government" 917
As it could be seen, six kinds of establishments wherein 20 or more employees
are or were employed for wages on any day of the preceding 12 would months fall
within the scope of the notification. Item 3 says "shops". Therefore,
the argument is while "shop" could cover the other establishments
like hotels or restaurants in view of the specific enumeration the activities
of clearing and forwarding carried on by the appellant unless specifically
enumerated cannot be brought within the word "shop". This argument
takes us to the meaning of "shop".
Law lexicon 14th Ed. Page 929:
a place where things are kept for sale, usually in small quantities, to the
actual consumers. By Shops Act, 1912, s.19, "shop" includes any
premises where any retail trade or business is carried on: retail trade or
business' includes the business of a barber or hairdresser, but not the sale of
programmes, etc., at places of amusement." Words and Phrases Legally
Defines 2nd Ed. 73:
includes dwelling-house and warehouse, or other place of business, or place
where business is transacted.
includes any premises, and any vehicle, stall or place other than premises. on
or in which any retail trade or business is carried on " It has also come
up for consideration in the rulings of this Court while interpreting a similar
notification. In Hindu Jea Band, Jaipur (supra) it was held thus:
first contention urged in support of the petition is that since the petitioner
was not selling any goods in the place of its business but was only engaged in
arranging for musical performances on occasions such as marriages etc.
business premises cannot be called a "shop". We do not agree with the
narrow construction placed by the petitioner on the expression "shop"
which appears in the notification issued under section 1(5) of the Act which is
a beneficent legislation.
word shop has not been defined in the Act. A shop is no doubt an 918 establishment
(other than a factory) to which the Act can be extended under section 1(5) of
the Act provided other requirement are satisfied. In Collins English Dictionary
the meaning of the word shop is given thus: "(i) a place esp. a small
building for the retail sale of goods and service and (ii) a place for the
performance of a specified type of work; workshop." It is obvious from the
above meaning that a place where services are sold on retail basis is also a
shop. It is not disputed that the petitioner has been making available on
payment of the stipulated price the services of the members of the group of
musicians employed by it on wages. We, therefore, hold that the place where the
petitioner has been carrying business is a shop to which the Act is applicable
by virtue of the notification referred to above. The first contention,
therefore, fails" Again, in M/s. International Ore & Fertilizers
(India) Pvt. Ltd. v. Employees' State Insurance Corporation  4 SCC 203 at
206 the following useful observations are found:
word "shop" is not defined in the Act or in the notification issued
by the State Government.
to the Shorter Oxford English Dictionary the expression "shop" means
"a house or building where goods are made or prepared for sale and
also means a "place of business" or place where one's ordinary
occupation is carried on". In ordinary parlance a "shop" is a
place where the activities connected with the buying and selling of goods are
carried on. The evidence produced in the case shows that the petitioner is
carrying on its business at its business premises in Secunderabad.
that place the petitioner carries on the commercial activity facilitating the
emergence of contracts of sale of goods between its foreign principals and the
State Trading Corporation/Minerals and Metals Trading Corporation of India. It arranges for the unloading of
the goods under its supervision and for the survey of the goods despatched by
its foreign principals at the ports on behalf of its foreign principals and on
the goods being delivered to the Central Government it collects the price
payable by the government and remits it to its foreign principals.
these activities are directed and controlled from its.
premises at Secunderabad. It is thus clear that the activities carried on by
the petitioner constitute trading activities although the goods imported from
abroad are not actually brought to the said premises and delivered to the
purchaser there. In our opinion it is not actually necessary that the delivery
of the goods to the purchaser should take place at the premises in which the
business of buying or selling is carried on to constitute the said premises
into a "shop". The delivery of the goods sold to the purchaser is only
one aspect of trading activities. Negotiation of the terms of sale, carrying on
of the survey of the goods imported, arranging for the delivery of the goods,
sold, collection of the price of the goods sold etc. are all trading
activities. The premises where the business is carried out by the petitioner is
undoubtly a shop as the activities that are carried on there relate only to the
sale of goods which are imported to India. The petitioner acts as the agent of its foreign principals who are the
sellers. The petitioner directs and controls all the activities from the
premises in question. If orders are received at a place which ultimately
fructify into sale and the resulting trading activity is directed from there
that place comes to be known as a "shop". In our view the Employees' Insurance Court placed a very narrow interpretation
on the expression "shop" while upholding the contention of the
petitioner by confining "shop" to a place where goods are actually
stored and delivered pursuant to a sale. We agree with the decision of the High
court that while construing a welfare legislation like the Act and the
notification issued thereunder a liberal construction should be placed on their
provisions so that the purpose of the legislation may be allowed to be achieved
rather than frustrated or stultified." In this case, the argument advanced
on behalf of the appellant is slightly different, namely, other kinds of
establishments which can easily fall within the definition of "shop"
have been enumerated. Hence, a specific enumeration, so as to include the
appellant's business activity, is to be insisted upon. In our considered view,
this argument cannot be accepted. First of all, merely because other
establishments which are akin to shop are enumerated, it does not, in any manner,
oblige us to give a narrow meaning to the word "shop" nor does it any
way dilute the meaning of 920 "shop". As rightly contended by the
learned counsel for the respondent, the object is to envelope as many
establishments as possible without leaving any room for doubt. That is
precisely what the notification intends to do.
appellant is carrying on stevedoring, clearing and forwarding operations.
Clearing the documents, even it be in the custom house, is the carrier's job.
It cannot be gainsaid that the appellant is rendering service to cater the
needs of exporters and importers and others who want to carry the goods
further. Therefore, it is a shop carrying on a systematic economic or a
commercial activity. This would be enough to bring the appellant without
specifically enumerating the specific activities carried on by the appellant.
Merely because shop has been enumerated along with other similar establishment
we do not think any further specific enumeration is necessary to cover the
we reject the contentions raised on behalf of the appellant.
appeals stand dismissed. There shall be no order as to costs.