M/s Southern Agencies, Rajamundry Vs. Andhra Pradesh Employees State Insurance Corporation
EmailAppeal: Civil Appeal No. 514 of 1999
(From the Judgment and Order dated 17.3.98 of the Andhra Pradesh High Court in A.A. Order No. 719 of 1992)
(From the Judgment and Order dated 17.3.98 of the Andhra Pradesh High Court in A.A. Order No. 719 of 1992)
Petitioner: M/s Southern Agencies, Rajamundry
Respondent: Andhra Pradesh Employees State Insurance Corporation
Apeal: Civil Appeal No. 514 of 1999
(From the Judgment and Order dated 17.3.98 of the Andhra Pradesh High Court in A.A. Order No. 719 of 1992)
(From the Judgment and Order dated 17.3.98 of the Andhra Pradesh High Court in A.A. Order No. 719 of 1992)
Judges: S. RAJENDRA BABU & S.N. VARIAVA, JJ.
Date of Judgment: Nov 29, 2000
Appearances:
Mr. K.V. Viswanathan, Mr. K.V. Venkataraman and Mr. Atul Kumar Sinha, Advocates for the Appellant.
Mr. V.J. Francis, Advocate for the Respondent.
Head Note:
INSURANCE LAWS
Employees’ State Insurance Act, 1948
Employees’ State Insurance Act, 1948 (As extended to State of Andhra Pradesh)
“Shop” – Connotation – Administrative office at one place – Having control over various outlets of sale or having sales offices. Held that administrative office is a “shop” for purposes of the Act. Case law discussed.
Held:
The word ‘shop’ has acquired an expanded meaning. Where in a premises, any economic activity is carried on, leading to sale or purchase that premises will have to be held a ‘shop’ for the purpose of the Act, even though there is no actual giving or taking of goods in such premises. If the business carried on in a premises results in having some nexus with the purchase or sale of goods, is sufficient to be ‘shop’ for the purpose of the Act. The nature of the activities carried on by the appellant is commercial or economical and would amount to parting with such services for a price through its different outlets. Further, the administrative office and different branches constitute a single entity. (Paras 4, 5)
Cases Reffered:
1. M/s Kirloskar Consultants Ltd. v. Employees’ State Insurance Corporation, (JT 2000 (Suppl.2) SC 585) (Para 4)
2. ESI Corporation v. R.K. Swamy & Ors, (JT 1993 (6) SC 176) (Para 4)
2. ESI Corporation v. R.K. Swamy & Ors, (JT 1993 (6) SC 176) (Para 4)
3. International Ore and Fertilizers (India) Pvt. Ltd. v. ESI Corporation, (JT 1987 (3) SC 354) (Para 4)
4. Hindu Jea Band v. Regional Director, ESIC, (JT 1987 (1) SC 518) (Para 4)
JUDGEMENT:
RAJENDRA BABU, J.
1. The appellant is a partnership firm engaged in the retail sale of Godrej Steel Furniture, Usha Fans and similar items, having its administrative office at Rajamundry. There is also a sales office at Rajamundry. The appellant has separate units at Kaki-nada, Visakha-patnam, Vizianagaram, Srikakulam, Khammam and War-rangal.
2. The Government of Andhra Pradesh extended the application of the provisions of the Employees’ State Insurance Act, 1948 (hereinafter referred to as ‘the Act’) to different classes of establishments, including ‘shop’. By a communication sent on 19.11.1982, the Corporation asked the appellant to furnish the details of its branch offices, together with the number of em-ployees working therein as the appellant is covered by the Act, pursuant to the notification dated 2.3.1978 issued by the Government of Andhra Pradesh. The appellant contended that in none of these outlets, there are employees exceeding ten and each of these outlets is a separate unit and they cannot be clubbed together. Further, the sales offices situated in differ-ent districts are not covered under the Act and the administra-tive office is not a ‘shop’ for the purpose of the Act as no sale takes place there and it is purely an administrative office. The appellant filed an original petition before the E.S.I. Court, Rajamundry, contesting the stand taken by the respondent which was, however, negatived by it by an order made on 4.11.1991. The matter was carried as Civil Miscellaneous Appeal before the High Court. A Division Bench of the High Court observed that if the head office is not covered by the said notification, then all the establishments run by the appellant firm cannot be aggregat-ed for the purpose of bringing them within the ambit of the Act and referred the matter to the Full Bench. The Full Bench took the view that for the purpose of the Act, the office of the ap-pellant at Rajamundry can be treated as a ‘shop’ and dismissed the appeal. Hence this appeal by special leave.
3. The contentions put forward before the High Court and the Employees’ State Insurance Court are reiterated before us on behalf of the appellant, while the learned Counsel for the respondent supported the view taken by the High Court.
4. In M/s Kirloskar Consultants Ltd. v. Employees’ State In-surance Corporation, (JT 2000 (Suppl.2) SC 585) after referring to the decisions in International Ore and Fertilizers (India) Pvt. Ltd. v. ESI Corporation, (JT 1987 (3) SC 354 = 1987 (4) SCC 203), Hindu Jea Band v. Regional Director, ESIC, (JT 1987 (1) SC 518 = 1987 (2) SCC 101), and ESI Corporation v. R.K. Swamy & Ors, (JT 1993 (6) SC 176 = 1994 (1) SCC 445), we have examined the scope of the expression ‘shop’ used in the notification issued under the Act and held that the word ‘shop’ has acquired an expanded meaning. Where in a premises, any economic activity is carried on, leading to sale or purchase, that premises will have to be held a ‘shop’ for the purpose of the Act, even though there is no actual giving or taking of goods in such premises. If the business carried on in a premises results in having some nexus with the purchase or sale of goods, is sufficient to be ‘shop’ for the purpose of the Act.
5. Admittedly, in the present case, the appellant supervises and controls the sales in all its branch offices and takes share of their income and, therefore, we think, there is absolutely no jurisdiction to take any contrary view. The nature of the activi-ties carried on by the appellant is commercial or economical and would amount to parting with such services for a price through its different outlets. Further, the administrative office and different branches constitute a single entity as held by the courts below which on examination of the facts reaches such conclusion. The evidence tendered by the General Manager indicat-ed that the branches responsible and answerable to the appell-ant; that the head office keeps track of the efficiency of each branch and its profitability; that the head office has control over the branch offices and gets information periodically, as to stocks received and goods sold from each branch from time to time; that the business, in respect of all branches, is carried on with the same funds and there are transfers of employees as well from one branch to another branch; that a single audit is made by preparing a single statement of accounts, including sales in all the branches which are put together. These factors clearly indicate that the administrative office at Rajamundry is nothing but a controlling office to supervise the sales taking place in different branches and thus, falls within the defini-tion of expression ‘shop’.
6. We find no merit in this appeal and the same shall stand dismissed. No costs.
1. The appellant is a partnership firm engaged in the retail sale of Godrej Steel Furniture, Usha Fans and similar items, having its administrative office at Rajamundry. There is also a sales office at Rajamundry. The appellant has separate units at Kaki-nada, Visakha-patnam, Vizianagaram, Srikakulam, Khammam and War-rangal.
2. The Government of Andhra Pradesh extended the application of the provisions of the Employees’ State Insurance Act, 1948 (hereinafter referred to as ‘the Act’) to different classes of establishments, including ‘shop’. By a communication sent on 19.11.1982, the Corporation asked the appellant to furnish the details of its branch offices, together with the number of em-ployees working therein as the appellant is covered by the Act, pursuant to the notification dated 2.3.1978 issued by the Government of Andhra Pradesh. The appellant contended that in none of these outlets, there are employees exceeding ten and each of these outlets is a separate unit and they cannot be clubbed together. Further, the sales offices situated in differ-ent districts are not covered under the Act and the administra-tive office is not a ‘shop’ for the purpose of the Act as no sale takes place there and it is purely an administrative office. The appellant filed an original petition before the E.S.I. Court, Rajamundry, contesting the stand taken by the respondent which was, however, negatived by it by an order made on 4.11.1991. The matter was carried as Civil Miscellaneous Appeal before the High Court. A Division Bench of the High Court observed that if the head office is not covered by the said notification, then all the establishments run by the appellant firm cannot be aggregat-ed for the purpose of bringing them within the ambit of the Act and referred the matter to the Full Bench. The Full Bench took the view that for the purpose of the Act, the office of the ap-pellant at Rajamundry can be treated as a ‘shop’ and dismissed the appeal. Hence this appeal by special leave.
3. The contentions put forward before the High Court and the Employees’ State Insurance Court are reiterated before us on behalf of the appellant, while the learned Counsel for the respondent supported the view taken by the High Court.
4. In M/s Kirloskar Consultants Ltd. v. Employees’ State In-surance Corporation, (JT 2000 (Suppl.2) SC 585) after referring to the decisions in International Ore and Fertilizers (India) Pvt. Ltd. v. ESI Corporation, (JT 1987 (3) SC 354 = 1987 (4) SCC 203), Hindu Jea Band v. Regional Director, ESIC, (JT 1987 (1) SC 518 = 1987 (2) SCC 101), and ESI Corporation v. R.K. Swamy & Ors, (JT 1993 (6) SC 176 = 1994 (1) SCC 445), we have examined the scope of the expression ‘shop’ used in the notification issued under the Act and held that the word ‘shop’ has acquired an expanded meaning. Where in a premises, any economic activity is carried on, leading to sale or purchase, that premises will have to be held a ‘shop’ for the purpose of the Act, even though there is no actual giving or taking of goods in such premises. If the business carried on in a premises results in having some nexus with the purchase or sale of goods, is sufficient to be ‘shop’ for the purpose of the Act.
5. Admittedly, in the present case, the appellant supervises and controls the sales in all its branch offices and takes share of their income and, therefore, we think, there is absolutely no jurisdiction to take any contrary view. The nature of the activi-ties carried on by the appellant is commercial or economical and would amount to parting with such services for a price through its different outlets. Further, the administrative office and different branches constitute a single entity as held by the courts below which on examination of the facts reaches such conclusion. The evidence tendered by the General Manager indicat-ed that the branches responsible and answerable to the appell-ant; that the head office keeps track of the efficiency of each branch and its profitability; that the head office has control over the branch offices and gets information periodically, as to stocks received and goods sold from each branch from time to time; that the business, in respect of all branches, is carried on with the same funds and there are transfers of employees as well from one branch to another branch; that a single audit is made by preparing a single statement of accounts, including sales in all the branches which are put together. These factors clearly indicate that the administrative office at Rajamundry is nothing but a controlling office to supervise the sales taking place in different branches and thus, falls within the defini-tion of expression ‘shop’.
6. We find no merit in this appeal and the same shall stand dismissed. No costs.
