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PETITIONER: M/S.  KIRLOSKAR CONSULTANTS LTD.

       Vs.

RESPONDENT: EMPLOYEES STATE INSURANCE CORPN.

DATE OF JUDGMENT:       14/11/2000

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

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.

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vs.   R.K.  Swamy 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  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 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

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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.