Bangalore Turf Club Ltd. vs Regional Director, Employees State Insurance Corporation

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2014 Supreme(SC) 1301

SUPREME COURT OF INDIA
H.L. Dattu, R.K. Agrawal, Arun Mishra, JJ.
Bangalore Turf Club Ltd. - Appellant
Versus
Regional Director, Employees State Insurance Corporation - Respondent
Civil Appeal No. 2416 of 2003
Royal Western India Turf Club Ltd. - Appellant
Versus
Employees State Insurance Corporation and others - Respondents
With Civil Appeal No. 49 of 2006
Employees State Insurance Corporation and others - Appellants
Versus
Royal Western India Turf Club Ltd. and another - Respondents
With Civil Appeal No. 1575 of 2006
Royal Western India Turf Club Ltd. - Appellant
Versus
Employees State Insurance Corporation and others - Respondents
With Civil Appeal No. 3421 of 2012
Royal Western India Turf Club Ltd. - Appellant
Versus
Employees State Insurance Corporation and another - Respondents
With Civil Appeal No. 3422 of 2012.
Sri Visalam Chit Funds Limited - Appellant
Versus
Deputy Director, Sub Regional Office, Madurai - Respondent
With Civil Appeal No. 6212 of 2012
Decided On : 31-07-2014

Advocate Appeared:
For the Appellant in CA 2416 of 2003 :Mr. K.K. Venugopal, Senior Advocate, Ms. Ruchika, Ms. Neha Malik, Mr. Rajan Narain, Mr. V.J. Francis, Advocates.
For the Appellant in C.A. Nos. 49 of 2006, 3422 of 2012 and 1575 of 2006 :Mr. Chander Uday Singh and Mr. J.P. Cama, Senior Advocates, Mr. Gobindram D. Talreja, Mr. R.N. Karanjawala, Ms. Manik Karanjawala, Ms. Ruby Singh Ahuja, Mr. Chahat Chawla, Ms. Neha Gupta, for M/s. Karanjawala & Co., Advocates.
For the Appellant in C.A. No. 6212 of 2012 :Mr. V. Giri, Senior Advocate, Mr. M.A. Chinnasamy, Advocate.
For the Respondent in CA 2416 of 2003:Mr. M.N. Krishnamani, Senior Advocate, Mr. Mahesh Srivastava, Mr. V.M. Srivastava, Mr. Kanak Tyagi, Mr. Rahul Bandari and Mr. P.N. Puri, Advocates.
For the Respondent in C.A. Nos. 49 of 2006:Mr. M.N. Krishnamani, Senior Advocate, Mr. Mahesh Srivastava, Mr. V.M. Srivastava and Mr. P.N. Puri, Advocates.
For the Respondent in CA 2413 of 2003:Mr. M.N. Krishnamani, Senior Advocate, Mr. Mahesh Srivastava, Mr. V.M. Srivastava, Mr. P.N Puri, Mr. Yakesh Anand, Ms. Sonam Anand, Mr. Sanjeev Anand, Mr. P.V. Yogeswaran, Mr. S. Thananjayan, Mr. Rakesh K. Sharma, Ms. Sangita Chauhan and Ms. Shubha, Advocates.

Headnote:
Constitution of India,1950 - Articles 38,39, 21, 39(e) , 41 , 43 , 25(2) and 7(b) - Urban Land (Ceiling and Regulation) Act, 1976 - Section 10 - ESI Act - Section 1(5) - Minimum Wages Act, 1948 - Payment of Wages Act, 1936 - Workmens Compensation Act, 1923 - Chit Funds Act - Section 6 - Employees State Insurance Corporation - Demand against the appellant-clubs - Matter is referred to three-Judge Bench of this Court as two-Judge Bench of this Court is decision of two-Judge Bench of Court in case of Employees State Insurance Corporation Race Club, SCC may require reconsideration - Judgment, it was observed by Court that ‘race-club is an establishment within the meaning of the said expression as used under Section 1(5) of the ESI Act – Held, Appellant-Chit Fund provides for services and in return the foreman receives a commission, this Court is of the considered opinion that the activities of Chit Fund would be those as would fall under the definition of a shop as evolved by this Court - accordance with the reasoning of Court in Civil Appeal No. and other connected appeals – Court hold that the Appellant-herein would fall within the meaning of word shop as mentioned in notification issued under the ESI Act - Provisions of the ESI Act would extend to the appellant also - Civil Appeal is disposed of accordingly

Judgement Key Points

Certainly. Based on the provided legal document, the key points are as follows:

The primary issue is whether a 'race-club' falls under the scope of the word 'shop' as used in notifications issued under the Employees' State Insurance (ESI) Act (!) (!) .
The interpretation of the term 'shop' is crucial, and in the absence of a statutory definition, it is to be understood in its common parlance, which generally refers to a place where goods or services are sold (!) (!) (!) .
The courts have historically adopted an expansive interpretation of 'shop' for social welfare legislation, considering the scheme, purpose, and context of the legislation, rather than a narrow or traditional meaning (!) (!) .
The activities of a 'race-club' involve systematic and organized commercial transactions, including providing entertainment, facilitating betting, and charging admission fees and commissions, which align with the broader understanding of a 'business establishment' or 'place of business' (!) (!) (!) .
The activities undertaken by such clubs are systematic, involve organized services, and are conducted for the benefit of the public, which supports their classification as 'shops' under the relevant notifications (!) (!) (!) .
The term 'establishment' is broadly interpreted to include places where systematic business or commercial activities are conducted, which would encompass race-clubs engaged in organized entertainment and betting activities (!) (!) .
The interpretation of 'shop' should not be confined to its traditional or narrow sense but should be understood expansively to fulfill the legislative intent of social security and welfare for employees and workers (!) (!) .
The doctrine of 'pari materia'—that similar statutes dealing with related subjects should be interpreted in harmony—has been considered, but differences in the scope and purpose of relevant statutes suggest that each should be interpreted according to its own context (!) (!) .
The purpose of the ESI Act is social welfare, aiming to provide benefits related to health, sickness, and employment injuries, which warrants a broad and liberal interpretation of terms like 'shop' to include establishments engaged in organized commercial activities (!) (!) .
Overall, the activities of the race-clubs, including betting and entertainment services provided systematically and organized for the public, are sufficiently similar to commercial establishments to be classified as 'shops' under the relevant notifications, thereby extending the provisions of the ESI Act to such clubs (!) (!) (!) .

Please let me know if you need further analysis or clarification on any specific point.

JUDGMENT :

H.L. Dattu, J.

Civil Appeal No. 2416 of 2003, Civil Appeal No. 49 of 2006, Civil Appeal No. 1575 of 2006, Civil Appeal No. 3421 of 2012 and Civil Appeal No. 3422 of 2012.

1. The issue that arises for our consideration and decision is, whether a 'race-club' would fall under the scope of the definition of the word 'shop', for the purposes of notification issued under sub-section (5) of section 1 of the Employees' State Insurance Act, 1948 (for short, "the ESI Act").

2. The matter is referred to three-Judge Bench of this Court as two-Judge Bench of this Court is of the view that the decision of two-Judge Bench of this Court in the case of Employees State Insurance Corporation v. Hyderabad Race Club, (2004) 6 SCC 191 may require reconsideration. By the aforesaid judgment, it was observed by this Court that ‘race-club' is an 'establishment' within the meaning of the said expression as used under Section 1(5) of the ESI Act. The order of reference reads as under :

Heard learned counsel for the parties.

The short question involved in these cases is whether the appellant Turf Clubs are covered by the Employees' State Insurance Act, 1948 (for short ‘ESI Act').

Under Section 1 sub-section (5) of the ESI Act all establishments are not automatically covered by the said Act but only such establishments as are mentioned in the notification issued by the appropriate Government under Section 1(5). This provision is not like sub-section (4) of Section 1 by which all factories are automatically covered by the ESI Act. The notifications issued under Section 1(5) in these cases use the word ‘shop’ and it has been held by the impugned judgments in these cases that the turf clubs are shops. Reliance in this behalf has been placed on the judgment of this Court in the case of Employees State Insurance Corpn. v. Hyderabad Race Club, 2004 (6) SCC, 191.

With great respect to the aforesaid decision in the case of Hyderabad Race Club (supra), we think that the said decisions requires reconsideration. In common parlance a club is not a shop.

The word ‘shop’ has not been defined either in the ESI Act nor in the notification issued by the appropriate Government under Section 1(5). Hence, in our opinion, the meaning of ‘shop’ will be that used in common parlance. In common parlance when we go for shopping to a market, we do not mean going to a racing club. Hence, prima facie, we are of the opinion that the appellant-club is not a shop within the meaning of the Act or the notification issued by the appropriate Government.

In our opinion, the error in the judgment in the case of Hyderabad Race Club (supra) is that it has been presumed therein that all establishments are covered by the Act. That is not correct. Only such establishments are covered as are notified under Section 1(5) in the official gazette.

The High Court in the impugned judgment has placed reliance on the judgment of this Court in the case of Bangalore Water Supply & Sewerage Board v. A. Rajappa & Ors., 1978 (2) SCC, 213. In our opinion, reliance on the aforesaid decision is wholly misplaced. The definition of ‘industry’ in the Industrial Disputes Act is very wide as interpreted in the aforesaid decision. We cannot apply the judgment given under a different Act to a case which is covered by the ESI Act. Under various labour laws different definitions have been given to the words ‘industry’ or ‘factory' etc. and we cannot apply the definition in one Act to that in another Act (unless the statute specifically says so). It is only where the language used in the definition is in pari material that this may be possible.

Hence, we are of the opinion that the decision of this Court in the case of Hyderabad Race Club (supra) should be reconsidered by a larger Bench. In the meantime, the respondents shall not raise any demand against the appellant-clubs.

Let the papers of these cases be placed before Hon'ble The Chief Justice of India for constituting an appropriate Bench."

3. By the said referral orde

Click Here to Read the rest of this document

2014 Supreme(SC) 1301

Cases Referred (16)