Professional services, such as those provided by architects, are distinct from trade or business activities and do not qualify as a 'shop' under the ESI Act.

1. Thepetitioner is a partnership firm consisting of professional Architects. Challenge in this Writ Petition is to an order made under section 45 (A) of the ESI Act, 1948 passed by the respondent by his proceedings No.TN/Ins-V/51-75324-101/737/02 dated 18. 2003.

2. Earlier, similar order under section 45(A) of the ESI Act passed against the petitioner firm was challenged by the petitioner in W.P.No.34050 of 2002. The same was dismissed by a learned Single Judge of this court. Challenging the same, an Appeal was preferred in W.A.No.3664 of 2002. In the said Writ Petition as well as in the Writ Appeal, a legal question arose with regard to the applicability of the ACT on the ground that the appellant is a firm of architects and not involved in any construction activities. The learned Single Judge did not agree with the said contention of the petitioner that the petitioner firm cannot be brought within the purview of the Act. However, the Division Bench set aside the order of the learned Single Judge holding that sufficient opportunity had not been given to the petitioner to prove that the petitioner is not indulging in construction activities and that ESI Act is not applicable to them. The matter was therefore remanded to the respondent.

3. Thereafter, the respondent held enquiry into the matter as directed by the Division Bench and has passed the impugned order dated 18. 2003. In the said order, the respondent has categorically held that the petitioner is not carrying on construction activities. The relevant portion of the said finding of the respondent is extracted below:

"It is also clear from the analysis of the written submission made by the employer and also from the various documents as stated above that the employer firm is not carrying on any construction activities."

Having given such a finding, the respondent went on to analyse whether the petitioner firm would fall within the ambit of the definition of a shop’. At last, the respondent held that the premises wherein economic activity is carried on leading to the sale or purchase of goods or services will have to be held as a "shop" for the purpose of ESI Act. Accordingly, the respondent held that the petitioner firm is a firm of architects in whose premises the economic activity of rendering professional/consultancy service is rendered through various clients as described in the aforesaid paragraphs for consideration and the fees are paid to the firm by the respective clients which amounts to sale of professional/consultancy services rendered in the premises as stated above and hence the employer firm squarely fits in well within the definition of shop’. On the above finding, the respondent directed the petitioner to pay a sum of Rs.2,77,974/- towards ESI Contribution. The petitioner is aggrieved by the same.

4. According to the petitioner, the firm of architects will not fall within the ambit of the term "shop" as contemplated under the Act. But the learned counsel appearing for the respondent would submit that the Act is squarely applicable to the petitioner firm, since professional/consultancy service is rendered by the petitioner firm for consideration.

5. Thecore question is whether the petitioner firm is a "shop" or not so as to bring the same within the ambit of the Act.

6. In this regard, we may refer to Section 40 of the Act, which states that the principal employer shall pay in respect of every employee, whether directly employed by him or by or through an immediate employer, both the employers contribution and the employees contribution. The term principal employer has been defined in Section 2(17) of the Act as follows:

principal employer means

.(i) in a factory, the owner or occupier of the factory and includes the managing agent of such owner of occupier, the legal representative of a deceased owner or occupier and where a person has been named as the manager of the factory under the Factories Act, 1948 (63 of 1948), the person so named