IMPORTANT POINT
Coverage of establishments under Employees’ State Insurance Act, 1948 can be expanded by State Notification.

JUDGMENT :

RAJESH BINDAL, J.

1. Order dated 21.08.2008 passed by the High Court of Kerala has been challenged by the Corporation¹ [The Employees State Insurance Corporation] by which the appeal² [Ins. App. No.4 of 2008(A)] filed by the respondent was allowed. It was held that the provisions of the Act³ [The Employees’ State Insurance Act, 1948 (hereinafter ‘the Act’)] will be applicable to the respondent establishment w.e.f. 06.09.2007 and not from 22.11.2002.⁴ [Wrongly typed in the impugned order as 24.11.2002]

2. Briefly stated, as per the facts available on record, the respondent establishment is a pathological laboratory. Inspection of the premises of the respondent was carried out by the Inspector on 01.04.1999. Having found that there were 19 employees working in the establishment, a show cause notice was issued to the respondent. The respondent establishment challenged coverage of the establishment by filing an application under Sections 75 and 77 of the Act before the Employees’ Insurance Court. The Court vide order dated 19.04.2007, passed in I.C. No. 13/2003 declared that the establishment of the respondent is a ‘shop’ as per Section 1(5) of the Act and the provisions of the Act would extend to the respondent w.e.f. 22.11.2002. A review application⁵ [M.P. No. 159/2007] filed by the respondent before the E.S.I. Court, was dismissed vide order dated 21.12.2007. The orders of the E.S.I. Court were challenged by the respondent by filing an appeal before the High Court which was allowed vide impugned order.

3. Learned counsel for the appellant submitted that the order passed by the High Court is not in conformity with the law as the respondent establishment will be covered under the provisions of the Act in terms of the notification dated 27.05.1976 issued by the Government of Kerala in exercise of the powers conferred under the Act. In terms of the aforesaid notification, if 10 or more persons are employed in an establishment on any day in the preceding 12 months which included a “shop” it will be covered under the provisions of the Act. The respondent establishment being a shop, was clearly covered. After inspection, a notice was issued to the respondent for coverage w.e.f. 01.04.1999. However, in view of the Circular dated 22.11.2002, issued by the Corporation for the coverage of pathological laboratories and diagnostic centres, the establishment was covered from 22.11.2002. It is stated that the findings of the High Court that the respondent establishment shall be covered under the Act w.e.f. 06.09.2007, is erroneous.

4. On the other hand, learned counsel for the respondent submitted that there is no error in the order passed by the High Court. Notification dated 27.05.1976, issued by the Government of Kerala, does not cover the establishment of the kind that the respondent has, which is pathological laboratory. By no stretch of imagination can it be termed as a shop, where merely buying and selling activities take place, and not the kind of work executed by experts engaged by the respondent. In fact, medical institutions which included nursing homes, diagnostic centres and pathological laboratories employing 20 or more persons were brought under the ambit of the Act vide notification⁶ [Dated 06.09.2007] issued by the Government of Kerala. The order passed by the High Court is in line with the said notification. Hence, the present appeal deserves to be dismissed.

5. We have heard learned counsel for the parties and perused the material placed on the record.

6. The short question which requires consideration by this Court is, the date from which the respondent establishment, which is undisputedly carrying on the business of a pathological laboratory, will be covered under the Act.

7. (i) Section 1(4) of the Act provides that the Act shall apply to all factories (including factories belonging to the Government) other than s