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CASE NO.: Appeal (civil) 514 1999

PETITIONER: M/S SOUTHERN AGENCIES, RAJAMUNDRY

       Vs.

RESPONDENT: ANDHRA PRADESH EMPLOYEES STATE INSURANCE CORPORATION

DATE OF JUDGMENT:       29/11/2000

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

JUDGMENT:

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     J U D G M E N T

     RAJENDRA BABU,, J.  :

     The  appellant  is a partnership firm engaged  in  the retail sale of Godrej Steel Furniture, Usha Fans and similar items  having its administrate office at Rajamundry.   There is  also  a sales office at Rajamundry.  The  appellant  has separate  units  at Kakinada,  Visakhapatnam,  Vizianagaram, Srikakulam, Khammam and Warrangal.  The Government of Andhra Pradesh  extended  the application of the provisions of  the Employees  State Insurance Act, 1948 [hereinafter  referred to  as  the Act] to different classes  of  establishments, including shop.  By a communication sent on 19.11.1982 the Corporation  asked  the appellant to furnish the details  of its  branch  offices together with the number  of  employees working  therein  as  the appellant is covered  by  the  Act pursuant  to  the notification dated 2.3.1978 issued by  the Government  of Andhra Pradesh.  The appellant contended that in  none  of these outlets there are employees exceeding  10 and each of these outlets is a separate unit and they cannot be  clubbed together.  Further the sales offices situated in different  districts  are not covered under the Act and  the administrative office is not a shop for the purpose of the Act  as  no  sale  takes place there and  it  is  purely  an administrative  office.   The  appellant filed  an  original petition  before  the E.S.I.  Court, Rajamundry,  contesting the  stand  taken  by  the respondent  which  was,  however, negatived  by it by an order made on 4.11.1991.  The  matter was  carried  as Civil Miscellaneous Appeal before the  High Court.   A Division Bench of the High Court observed that if the head office is not covered by the said notification then all  the establishments run by the appellant firm cannot  be aggregated for the purpose of bringing them within the ambit of  the Act and referred the matter to the Full Bench.   The Full Bench took the view that for the purpose of the Act the office  of  the appellant at Rajamundry can be treated as  a shop  and  dismissed  the appeal.  Hence  this  appeal  by special  leave.  The contentions put forward before the High Court   and  the  Employees   States  Insurance  Court  are

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reiterated  before us on behalf of the appellant, while  the learned  counsel for the respondent supported the view taken by  the  High Court.  In M/s Kirloskar Consultants Ltd.   v. Employees  State Insurance Corporation, JT 2000 (Suppl.  2) SC  585,  after referring to the decisions in  International Ore and Fertilizers (India) Pvt.  Ltd.  v.  ESI Corporation, 1987 (4)SCC 203, Hindu Jea Band v.  Regional Director, ESIC, 1987  (2)  SCC  101, and ESI Corporation v.  R.K.   Swamy  & Ors,;   1994 (1) SCC 445, we have examined the scope of  the expression  shop used in the notification issued under the Act  and held that the word shop has acquired an  expanded meaning.   Where  in  a premises any  economic  activity  is carried  on  leading to sale or purchase that premises  will have  to  be held a shop for the purpose of the  Act  even though  there is no actual giving or taking of goods in such p     remises.   If  the business carried on in  a  premises results in having some nexus with the purchase or sale A ct. of  goods is sufficient to be shop for the purpose of  the Admittedly,  in  the present case, the appellant  supervises and  controls the sales in all its branch offices and  takes share  of  their income and, therefore, we think,  there  is absolutely  no justification to take any contrary view.  The nature  of  the  activities carried on by the  appellant  is commercial  or  economical and would amount to parting  with such  services  for a price through its  different  outlets. Further  the  administrative office and  different  branches constitute a single entity as held by the courts below which on  examination  of  the  facts  such  conclusion  has  been reached.   The  evidence  tendered by  the  General  Manager indicated  that the branches are responsible and  answerable to  the appellant;  that the head office keeps track of  the efficiency  of each branch and its profitability;  that  the head  office  has control over the branch offices  and  gets information  periodically  as to stocks received  and  goods sold  from each branch from time to time;  that the business in respect of all branches is carried on with the same funds and there are transfers of employees as well from one branch to another branch;  that a single audit is made by preparing a  single  statement of accounts including sales in all  the branches  which  are  put together.  These  factors  clearly indicate  that  the administrative office at  Rajamundry  is nothing  but  a  controlling office to supervise  the  sales taking place in different branches and thus falls within the definition  of expression shop.  We find no merit in  this appeal and the same shall stand dismissed.  No costs.