Regional Director, Employees State Insurance Corporation vs Tulsiani Chambers Premises Co-operative society

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2007 Supreme(Bom) 1581

BOMBAY HIGH COURT
Before : ANOOP V. MOHTA, J.
Regional Director, Employees State Insurance
Corporation …..Appellant
v.
Tulsiani Chambers Premises Co-operative society …Respondent
First Appeal No.844 of 2004 along with First Appeal Nos.510,309,823,2019,724 and 742 of 2004,
decided on 2nd November,2007.

Advocates appeared
Mr. H.V. Mehta for the appellant.
Mr. S.C. Naidu with Mr. M.M. Gujar, Mr. Siddharth Ingale and
Mr. Mikhail Behl i/b. M/s.C.R. Naidu & Co. for the respondents.

Headnote:Employee’s State Insurance Act, 1948 - Sections 45-A and 1(5)-Maharashtra Co-operative Societies Act, 1960, Section 2(16)-Whether "shop" under ESI Act-Co-operative society provided many services for consideration-Hence, claimed to be covered under Shops and Establishment Act and liable for payment of their contribution under Section 45-A of ESI Act-Latter application that not shop under ESI Act before ESI can allowed-Challenged-Appeals are dismissed.-The societies or the companies like the respondents/societies are not mentioned in the said item. Therefore, such societies cannot be treated as establishments even though twenty or more employees employed or were employed for wages on any day of the preceding twelve months, as contemplated under the ESI Act. Therefore unless extended and made applicable specifically by notification and/or by any other mode, the society and/or such companies cannot be treated as an establishment as defined under the ESI Act. Therefore, on the face of record, the respondent/societies/companies does not fall within the purview of the said notification and, therefore, the case that respondents/societies are amenable to the provisions of the ESI Act is unacceptable.
There is no question of giving wider meaning and scope to the clear word "shop" as mentioned in the notification referred above. The State, if wanted to include such societies or companies within the ambit of ESI Act it would have provided specifically accordingly. There is no question of extending the provisions of ESI Act by implication specifically when there is a clear notification dealing with the various establishment as referred in the said notification which has been in existence since 18th September, 1978.
The respondents-societies render services to the members are domestic in nature like operating lifts, water supply, electricity, cleaning, Sweeping and security. These services are essential for the very existence and security of its members and society building. These services therefore are in the nature of personal services and cannot be said to be economic activity. Therefore such services as contended by itself would not make the respondents-societies a "shop".

JUDGMENT:

In First Appeal No.844/2004, the Appellant is a Corporation incorporated under Employees State Insurance Act, 1948 (for short, ‘ESI Act’). The respondent is a co-operative society incorporated and registered under the Maharashtra Cooperative Societies Act, 1960 having its registered office at Tulsiani Chambers, 212, Nariman Point, Bombay 400 021.

2. On 2.4.1986 an Officer from the Appellant visited the respondent’s premises for inspection. On 8.9.1988, the appellant sent a letter to furnish complete and correct information in respect of the respondent society. On 4.1.1989, the appellant issued a letter to the respondents reminding them of the unpaid dues. On 5.1.1989, the appellant’s officer visits the respondent’s premises to verify the records.

3. On 10.1.1989, the appellant issues a letter to the respondents informing them that they are covered by the ESI Act and requesting immediate compliance. On 17.1.1989 a show cause Notice by the appellants issued to the respondents in form C-18 and provided for a personal hearing on 30.1.1989. On 14.2.1989 a Recovery Order under Section 45-A passed by the appellants against the respondents. On 20.2.1989 the respondents replied to show cause notice.

4. On 28.3.1989 an application to the ESI Court Bombay made by the respondents. On 19.12.2003 the application was allowed and the respondent society held to be not coverable under the ESI Act. Therefore the appeal.

5. In First Appeal No.510/2006, in or about 1980, the respondent society was covered under the provisions of Section 1(5) of the ESI Act with effect from 1.10.1980 (Prov.) on the basis of O-1 form submitted by the respondent society and the preliminary survey report dated 29.10.1980 submitted by the appellant’s Inspector.

6. In 1986, the respondents society disputed the coverage by filling an application (ESI) No.81 of 1986 before the ESI Court, Mumbai. This application was dismissed for default.

7. In 1994, thereafter, the respondents society filed an application for restoration. On hearing the application, the Employees’ Insurance Court directed the respondent society to deposit the amount of contribution claimed by the appellant Corporation in the Court.

8. On 20.9.1995, the respondent society complied with the order of the ESI Court and paid the contribution amount and further informed that they do not want to proceed in the matter in the EI Court.

9. On 26.7.1996, the appellant Corporation thereafter issued a notice to the respondents society for damages amounting to Rs.44,893/- for late payment of contribution for the period 4/86 to 5/90.

10. On 18.11.1999, the appellant Corporation passed an order under section 85-B for recovery of damages. On 26.4.2000, the appellant Corporation thereafter issued a demand letter claiming interest of Rs.1,33,051.69 for late payment of contribution for the period 1.10.1980 to 31.3.1986. On 26.4.2000, the appellant Corporation thereafter issued a notice under section 85-B proposing to levy damages of Rs.1,38,710/- for late payment of

contribution for the period from 1.10.1980 to 31.3.1986. On 15.5.2000/7.6.2000, the respondent society disputed the claim for levy of damages.

11. On 20.6.2000 the appellant Corporation passed an order under Section 85-B levying damages of Rs.1,38,710/-. On 12.9.2000, since the respondent society did not pay the amount, the corporation issued two Revenue Recovery certificates for recovery of a sum of Rs.44,893/- and Rs.1,38,710/- from the Respondent society. On 4.11.2000, the respondent society thereafter filed an Application (ESI) No.33 of 2000 challenging the coverage of the society and the subsequent claims of the corporation towards damages and interest on late payment of contribution and prayed for refund of the entire amount paid by the society for the period from 1.10.1980 till date along with interest at the rate of 18% on the ground that their establishment is not covered under the provisions of the ESI Act.

12. The respondent society deposited 50% of the

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