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PETITIONER: INTERNATIONAL ORE & FERTILIZERS(INDIA) PVT. LTD.

       Vs.

RESPONDENT: EMPLOYEES’ STATE INSURANCE CORPORATION

DATE OF JUDGMENT18/08/1987

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) SINGH, K.N. (J)

CITATION:  1988 AIR   79            1987 SCR  (3) 981  1987 SCC  (4) 203        JT 1987 (3)   354  1987 SCALE  (2)360  CITATOR INFO :  RF         1991 SC1289  (12)

ACT:     Employees’ State Insurance Act, 1948: Sections 1(5)  and 75  and Andhra Pradesh State Government  Notification  dated March 25, 1975--’Shop ’--What is.     Interpretation of Statutes: Welfare legislation--Liberal construction-Necessity for. Words & Phrases: ’Shop’--Meaning of.

HEADNOTE:     The petitioner, a limited company, having central office at Secunderabad was carrying on business of importing ferti- lizers and represented some foreign principals for the  sale of their products in India.     The Government of Andhra Pradesh after giving six months notice,  vide its gazette notification No. 788 Health  dated 25-9-74  as  required under section 1(5) of  the  Employees’ State Insurance Act, 1948 extended the provisions of the Act with  effect  from 30-3-75 to the  establishments  mentioned therein in which 20 or more persons were employed for  wages on  any  day  of the preceding  12  months  by  Notification G.O.M.S.  No.  297,  Health, dated 25th  March,  1975.  Item 3(iii) in the list of establishments in that notification to which  the Act was so extended by the State  Government  was "shops".     On inspection of the premises of the  petitioner-company at  Secunderabad on 28-4-75, the Employees’ State  Insurance Inspector  found  that the petitioner had  employed  persons ranging  from  27 to 29 for wages and was  carrying  on  the business  of import of fertilizers, and the  petitioner  was asked to comply with the provisions of the Employees’  State Insurance Act. The petitioner agreed and submitted contribu- tion  forms of its employees to the office of  the  Corpora- tion.     After  complying  with the provisions of the Act  for  a period of four years the petitioner instituted a case  under Section 75 of the Act before the Employees’ Insurance  Court for a declaration that the establish- 982 ment  in which the petitioner was carrying on  its  business

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was not a "shop", and, therefore, it was not covered by  the aforesaid  notification  and  that the  petitioner  was  not liable  to comply with the provisions of the Act. On  behalf of  the Corporation it was submitted that the  establishment being  run  by the petitioner was a "shop"  and,  therefore, liable to comply with the provisions of the Act. The Employ- ees’  Insurance Court upheld the plea of the petitioner  and declared that the establishment was not covered by the Act.     The High Court allowed the appeal of the Corporation and held  that the establishment was a "shop" to which  the  Act was applicable by virtue of the State Government’s notifica- tion.     In  the Special Leave Petition, on behalf of  the  peti- tioner it was urged that since no goods were actually  being delivered in the premises in which the petitioner was having its  establishment,  the  said establishment  could  not  be treated as a ’shop’ which was referred to in item 3(iii)  of the Government’s notification. Dismissing the Special Leave Petition, this Court,     HELD: 1. The petitioner-company is bound to comply  with the  provisions  of the Act as, at all relevant  times,  the company  had engaged more than 20 persons for wages  at  its place of business. [986E]     2.1 The word "shop" is not defined in the Act or in  the notification issued by the Government. [985D]     2.2  In ordinary parlance a "shop" is a place where  the activities  connected with the buying and selling  of  goods are carried on. [985E]     2.3  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  trad- ing  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. [985H, A]     In  the  instant case, the premises  where  business  is carried on by the petitioner is undoubtedly a "shop" as  the activities that are carried on there relate only to the sale of goods which are imported into India. 983 The  petitioner acts as the agent of its foreign  principals who are the sellers. The petitioner directs and controls all its activities from the premises in question. If orders  are received at a place which ultimately fructify into sales and the resulting trading activity is directed from there,  that place comes to be known as a "shop". [986B-C]       3.  The  High Court was right in  holding  that  while construing a welfare legislation like the Act and the  noti- fication issued thereunder a liberal construction should  be placed on their provisions so that the purpose of the legis- lation may be allowed to be achieved rather than  frustrated or stultified. [986D]

JUDGMENT:        CIVIL APPELLATE JURISDICTION: Special LeaVe  Petition (Civil) No. 6765 of 1985.        From the Judgment and Order dated 11.12. 1984 of  the Andhra Pradesh High Court in C.M.A. No. 244 of 1981. D .N. Gupta and Vijay Kumar Verma for the Petitioner. The Order of the Court was delivered by        VENKATARAMIAH, J. This petition is filed under  Arti-

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cle  136  of the Constitution for special  leave  to  appeal against  the  judgment of the High Court of  Andhra  Pradesh dated 11.12.84 allowing an appeal filed against the judgment dated 31.12.80 in E.I. case No. 4 of 1980 on the file of the Employees’ Insurance Court at Hyderabad.       The petitioner is a limited company carrying on  busi- ness at  Secunderabad and at some other places in India. The petitioner is engaged in the business of importing fertiliz- ers.  It represents some foreign principals for the sale  of their products in India. The petitioner imports  fertilizers into  India  which  is  an item  purchased  by  the  Central Government  through the State  Trading  Corporation/Minerals and     Metals Trading ’Corporation of India. In the  course of its business the petitioner obtains the tenders from  the State  Trading  Corporation   Minerals  and  Metals  Trading Corporation  of India and passes them on to  its  principals abroad.  Thereafter  negotiations are  carried  on  directly between  the State Trading Corporation/Minerals  Metals  and Trading   Corporation of India and the  foreign  principals. After  the deal is completed and the fertilizers  arrive  at the  Indian ports the fertilizers are delivered to the  Cen- tral Government at the ports. Before delivering the goods to the Central Government the petitioner supervises the 984 unloading of the goods and conducts the survey of the  goods imported to ascertain the condition of the goods and to find out  whether there are any shortages in the consignments  so that there may be no disputes later on about the quality and quantity of the goods delivered. The petitioner-company  has its branch offices in Bombay, Calcutta and Madras for super- vising its work at the ports and to attend to other  matters relating to clearing of shipments and in Delhi for  securing payments of bills. Its central office is at Secunderabad.     The Government of Andhra Pradesh after giving six months notice  vide its gazette notification No. 788  Health  dated 25.9.74  as  required under section 1(5) of  the  Employees’ State  Insurance Act, 1948 (hereinafter referred to as  ’the Act’)  extended the provisions of the Act with  effect  from 30.3.75 among others to the establishments mentioned therein in  which 20 or more persons were employed for wages on  any day of the preceding 12 months by Notification G.O.M. S. No. 297,  Health dated 25th March, 1975 published in the  Andhra Pradesh  Gazette  dated March 26, 1975. Item 3(iii)  in  the list of establishments in that notification to which the Act was  so  extended by the State Government  was  "shops".  On inspection  by  the Insurance Inspector of the  premises  in which the petitioner was carrying on its business at  Secun- derabad  it  was found on 28.4.75 that  the  petitioner  had employed persons ranging from 27 to 29 for wages within  the relevant  period and was carrying on the business of  import of  fertilizers.  On  being asked by  the  Employees’  State Insurance  Corporation to comply with the provisions of  the Act  the petitioner agreed that its business was covered  by the  Act  in view of the notification issued  by  the  State Government  as  it  happened to be a  "shop"  and  submitted contribution  forms  of its employees to the office  of  the Employees’ State Insurance Corporation. After complying with the  provisions  of the Act for a period of four  years  the petitioner  raised a dispute about its liability to pay  the contributions  payable  under the Act and  instituted  under section  75 of the Act the case out of which  this  petition arises  before the Employees’ Insurance Court  at  Hyderabad for a declaration that the establishment in which the  peti- tioner  was  carrying on its business was not a  "shop"  and therefore  it was not covered by the notification issued  by

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the State Government and that the petitioner was not  liable to comply with the provisions of the Act. The above petition was  resisted  by the Regional  Director,  Employees’  State Insurance Corporation. It was pleaded on his behalf that the establishment  which was being run by the petitioner  was  a "shop" and therefore it was liable to comply with the provi- sions of the Act. The Employees’ Insurance Court upheld  the plea of the petitioner and 985 declared  that the establishment of the petitioner  was  not covered by the Act. Aggrieved by the decision of the Employ- ees’  Insurance Court, the Regional Director of the  Employ- ees’ State Insurance Corporation filed an appeal before  the High  Court  under  section 82 of the Act.  The  High  Court allowed the appeal, reversed the decision of the  Employees’ Insurance  Court  and dismissed the petition  filed  by  the petitioner  under section 75 of the Act. The High Court  was of  the  view that the establishment of  the  petitioner  at Secunderabad was a "shop" to which the Act was applicable by virtue  of the notification issued by the State  Government. Aggrieved  by the decision of the High Court the  petitioner has  filed this petition under Article 136 of the  Constitu- tion requesting this Court to grant special leave to  appeal against the decision of the High Court.     On  behalf of the petitioner it is urged before us  that since no goods were actually being delivered in the premises in  which  the petitioner was having its  establishment  the said  establishment could not be treated as a shop which  is referred to in item 3(iii) of the Government’s notification. The word "shop" is not defined in the Act or in the  notifi- cation  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  peti- tioner 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 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  prem- ises  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". 986 The delivery 0f 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 business is carried on by the  petitioner

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is undoubtedly a shop as the activities that are carried  on there  relate only to the sale of goods which  are  imported into India. The petitioner acts as the agent of its  foreign principals  who are the sellers. The petitioner directs  and controls  all its activities from the premises in  question. If orders are received at a place which ultimately  fructify into  sales 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" white 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  frus- trated or stultified. There is no doubt that the  establish- ment  of  the petitioner at Secunderabad is a  "shop"  where selling activity is carried on and by virtue of the  notifi- cation  issued  by the State Government the Act  became  ap- plicable  to it. The petitioner is bound to comply with  the provisions  of the Act as admittedly at all  relevant  times the petitioner had engaged more than 20 persons for wages at its place of business. There is no ground to interfere  with the judgment of the High Court. In the result this petition fails and is dismissed. N.P.V.                                        Petition  dis- missed. 987