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PETITIONER: COCHIN SHIPPING CO. ETC. ETC.

       Vs.

RESPONDENT: E.S.I. CORPORATION

DATE OF JUDGMENT19/08/1992

BENCH: SHARMA, L.M. (J) BENCH: SHARMA, L.M. (J) MOHAN, S. (J) VENKATACHALA N. (J)

CITATION:  1993 AIR  252            1992 SCR  (3) 909  1992 SCC  (4) 245        JT 1992 (4)   602  1992 SCALE  (2)221

ACT:      Employees’ State Insurance Act, 1948: Sections 1(5)  & 75:     Notification 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 ‘shop’.     Interpretation of statutes-Social security  legislation- Construction of-Duty of Court-Should be construed  liberally so as to promote the object of the Act.      Words and Phrases:      ‘Shop’- Meaning of.

HEADNOTE:      The  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’.     In 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

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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 of ‘shop’.      Dismissing the appeals, this Court      HELD: Per Sharma, J.      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. [912-B]      Per  Mohan,  J.  (For  Himself  and  Venkatachala,  J.) Concurring:      1.   The  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]      2.  The 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, [1987] 2 S.C.R. 377 and M/s  International  Ore & Fertilizers (India) Pvt.  Ltd.  v. Employees’ State Insurance Corporation, [1987] 4 S.C.C. 203, relied on.      Wharton’s  Law  Lexicon, 14th Edn. 929  and  Words  and Phrases Legally defined, 2nd Edn. 73, referred to.

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JUDGMENT:      CIVIL  APPELLATE JURISDICTION: Civil Appeal Nos.  2593- 2599 of 1980.      From 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.      A.T.M. Sampath for the Appellant in C.A. No. 2593/80.      V.A. Bobde, O.C. Mathur, Ms. Meera and D.N. Mishra  for the Appellant in C.A. No. 2594-99/80.      V.A. Bobde, O.C. Mathur, Ms. Meera and D.N> Mishra  for the Respondent in C.A. No. 2593/80.      N.N. Goswamy, V.C. Mahajan, Hemant Sharma and Mrs. Anil Katiyar for the Respondent.      The Judgements 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.      MOHAN, 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.      The  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.      The 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 whereunder  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. The  appellant  served the customers.  Therefore, it  was  a shop within the

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                                                     913 dictionary meaning of the term and called upon the appellant to submit the returns.      Contending  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  Employees,  Insurance  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.      Objections  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  notification. Against  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 dated 3.11.80.      Mr.  Bobde,  learned counsel for the  appellants  would raise the following submissions.      The 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.      As  to 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.      The  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. 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

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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.      In  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. It caters to the needs of exporters and importers.  It is  a systematic  commercial  activity or  an  economic  activity. Hence,  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  "shop". The   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. This  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., [1987] 2 SCR  377  and M/s.  International Ore & Fertilizers (India) Pvt.  Ltd.  v. Employees’ State Insurance Corporation, [1987] 4 SCC 203 are cited.   Thus  it is submitted that no  exception  could  be taken to the impugned judgement.      Mr.  A.T.M. Sampath, learned counsel appearing for  the appellant  adopts  the  arguments of  Mr.  Bobde  while  the respondent opposes in the same vein.      The 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.      Under 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.      In the instant case, the impugned notification runs  as follows:                    "GOVERNMENT OF KERALA No. 22877/E2/73/LBR                LABOUR (E) DEPARTMENT                                    TRIVANDRUM, DT. 18.9.74

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                                                      916                         NOTIFICATION S.R.O.      In 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. ____________________________________________________________ Description 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. namely.                                  2. Quilon, Kundara, Chatha-                                     nnur, Kottaraka, Punalur                                     an   Sast  hamcotta   in                                     Quilon District. (i) Hotels;                      3. Alleppey,  Kayamkulam                                     and     Shertailai     in                                     Alleppey District. (ii) Restaurants;                4. Kottayam   town   in                                     kottayam District. (iii) Shops                      5. Ernakulam and Cochin in                                     Ernakulam District. (iv)Road Motor Transport         6. Trichur town in  Trichur     establishment; (v) Cinema including preview     7. Palghat  town in Palghat     theatres;                       District. (iv)Newspaper   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.                                 By 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".      Wharton’s Law lexicon 14th Ed. Page 929:          "Shop  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."

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        Words  and Phrases Legally Defines 2nd Ed. 73:          "Shop" includes dwelling-house  and  warehouse,  or          other place of business, or place where business is          transacted.          "Shop"  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:          "The  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.          its 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.          The  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 [1987] 4 SCC 203 at 206 the following useful observations are found:          "The  word "shop" is not defined in the Act  or  in          the  notification issued by the  State  Government.          According to the Shorter Oxford English  Dictionary          the  expression "shop" means "a house  or  building          where goods are made or prepared for sale and sold".          It 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.          At  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

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        on  the  goods  being  delivered  to  the   Central          Government  it  collects the price payable  by  the          government and remits it to its foreign principals.          All  these activities are directed  and  controlled          from its.                                                        919          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.      The 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

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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  appellant. Thus  we  reject  the contentions raised on  behalf  of  the appellant.      The appeals stand dismissed. There shall be no order as to costs. T.N.A.                                  Appeals dismissed.                                                        921