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PETITIONER: M/S. KIRLOSKAR CONSULTANTS LTD.

       Vs.

RESPONDENT: EMPLOYEES  STATE INSURANCE CORPN.

DATE OF JUDGMENT:       14/11/2000

BENCH: S. Rajendra Babu, & S.N. Variava.

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.   vs. R.K.   Swamy and Ors., (1994) 1 SCC 445, held that the  word

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‘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

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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. 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.