Kirloskar Consultants Ltd. Vs. Employees State
Insurance Corpn  INSC 558 (14 November 2000)
Rajendra Babu, & S.N. Variava.
BABU, J. :
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.
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.
1956 LLN 346.
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. vs.
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
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.
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.
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.
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.
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
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 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.
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.
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.
this appeal stands dismissed. However, in the circumstances, the parties shall
bear their respective costs.