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IN THE HIGH COURT OF DELHI
SIDDHARTH MRIDUL, J.
Employees' State Insurance Corp. – Appellant
Versus
Sea Hawk Cargo Carriers Pvt. Ltd. – Respondent
F.A.O. No. 483 of 1999
Decided On : 21-09-2010
Advocate Appeared:
For the Appellants : K.P. Mavi and Saurabh.
For the Respondent: P.R. Sikka.
The main legal point established in the judgment is that the term 'shop' under the Employees' State Insurance Act is to be interpreted broadly to include premises where systematic economic or commercial activities are carried on, even if services are provided to a single principal.
Headnote:
Employees' State Insurance Act - Applicability of Act to loading and unloading services - Section 2(27), 82 - The court discussed the applicability of the Employees' State Insurance Act to a company providing loading and unloading services at an airport under a long-term contract. The court interpreted the term 'shop' and considered the nature of the services provided to reach a decision. Key legal provisions discussed include the definition of 'shop' under Section 2(27) and the broad construction principle for furthering the object of the Act.
Fact of the Case:
The appellant appealed the decision of the Employees' State Insurance Court, which held that the provisions of the Act were not applicable to the respondent-company as it exclusively provided services to one customer under a contract basis.
Finding of the Court:
The court analyzed the nature of the services provided by the respondent-company and the interpretation of the term 'shop' under the Act. It found that the loading and unloading services provided by the respondent-company, even to a single principal, fell within the meaning of the term 'shop' and were covered under the provisions of the Act.
Issues: The issues included the applicability of the Act to the respondent-company, the nature of the services provided, and the interpretation of the term 'shop' under the Act.
Ratio Decidendi: The court held that the services of loading and unloading of cargo, even when provided to a single principal, are covered under the meaning of the term 'shop' under the Act. It also emphasized that the term 'shop' is not restricted to retail sales alone and includes premises where employees are employed in connection with the business of the employer.
Final Decision: The court allowed the appeal and held that the respondent-company is covered under the provisions of the Act, making it liable to pay the contribution demanded by the appellant-Corporation.
SIDDHARTH MRIDUL, J.
1. The present appeal u/s 82 of the Employees' State Insurance Act, 1948 (hereinafter referred to as the Act) assails the decision/order of the Employees' State Insurance Court (in short ESI Court) dated 17th July, 1999 passed in ESI Case No. 27/1992 u/s 75 of the Act.
2. The respondent is a company incorporated under the provisions of the Companies Act, 1956. The respondent-company in terms of an agreement with the International Airport Authority of India (IAAI) was engaged in the loading and unloading of cargo at the Indira Gandhi International Airport on a long term contract basis. The appellant-Corporation issued notice dated 18th April, 1991 informing the respondent-company that it is a shop and as such the provisions of the Act were applicable to it by virtue of Notification No. F.28(2)/88-IL LAB dated 30th September, 1988 by which all shops were brought under the purview of the Act w.e.f. 2nd October, 1988. A code number was also allotted and a direction was issued for compliance with the provisions of the Act.
3. On receipt of the aforesaid notice the respondent-company vide its letter dated 2nd May, 1991 brought to the notice of the appellant-Corporation that the company is only acting as contractor for loading and unloading of cargo for IAAI and that the services are neither rendered nor available to any party other than IAAI.
4. The appellant-Corporation thereafter sent another notice dated 15th September, 1991 wherein the respondent was asked to pay the contribution for the period from 2nd October, 1988 to 30th September 1991. The respondent-company once again reiterated its submissions and specifically submitted that provisions of the Act were not applicable to the company. However, the appellant-Corporation vide letters dated 13th February, 1992 and 20th March, 1992 informed the respondent-company that the contents of its letters dated 9th May, 1991, 23rd September, 1991 and 27th January, 1992 are not legally valid and sustainable and as such coverage of the establishment under the Act as shop is in order.
5. Aggrieved by the said order the respondent-company filed a petition u/s 75 of the Act for quashing and setting aside of the order No. D/11-17867 dated 15th January, 1992 issued by the appellant-Corporation. After completion of the pleadings and on the basis thereof the following issues were framed by the ESI Court:
(1) Whether the plaintiff business is not covered under the ESI Act?
(2) Whether the plaintiff is entitled to the relief claimed?
(3) Relief.
6. Vide the impugned order dated 17th July, 1999 the ESI Court, Delhi held that the services being rendered by the respondent-company to the IAAI is exclusively services to one customer under contract basis and as such they are not providing or supplying any services in retail or goods sold in retail to customers. The impugned order, therefore, further held that the provisions of the Act are not applicable to the respondent-company.
7. Aggrieved by the order dated 17th July, 1999 the appellant-Corporation preferred the present appeal on the following substantial questions of law, namely:
1. Whether the services of loading and unloading of cargo are covered under the meaning of the term shop?
2. Whether the firm/company, which is providing services only to one principal/customer, is not liable to be covered under the provisions of the Act?
3. Whether the term shop is restricted only to mean a place where goods are sold and purchased on retail basis only?
4. Whether the services provided to one customer i.e. IAAI for consideration by respondent falls within the meaning of the term shop or not?
8. On behalf of the appellant it was urged by Mr. K.P. Mavi, counsel, that the impugned order misconstrued the judgment of the Supreme Court in M/s. Hindu Jea Band, Jaipur vs. Regional Director, Employees' State Insurance Corporation, Jaipur, AIR 1987 SC 1166. Counsel urged that the word shop has to be given a liberal interpretation since the object of th
