Delhi District Court
M/S Computal System & Services vs Employees State Insurance Corporation on 22 November, 2008
1
IN THE COURT OF SH. AJAY GOEL: SENIOR CIVIL JUDGE CUM
RENT CONTROLLER (CENTRAL) : DELHI
ESIC -66/08/91
In the matter of :
M/s Computal System & Services
10 Community Centre, Mayapuri,
Phase-I, New Delhi-64.
...Petitioner
Versus
Employees State Insurance Corporation,
through its Regional Director,
Rajindra Place, New Delhi .... Respondent
Date of Institution: 2.1.92
Date of assignment to this court: 1.11.08
Date of Decision: 22.11.08
PETITION U/S 75 OF THE ESI ACT
JUDGMENT
1. Instant case was decided by my Ld. Predecessor vide judgment dated 6.3.97, however the said order was set aside and matter was remanded back by Hon'ble High Court for fresh decision. This is a petition u/s 75 of Employees State Insurance Corporation act, 1948 (hereinafter referred to as an Act). Case of the petitioner is that the petitioner is an 2 Organisation/commercial establishment imparting computer education in various recognised schools and its study centre at Mayapuri, New Delhi. Sh. S.P. Gupta is the General Manager of the establishment. Petitioner is a commercial establishment under the Delhi Shops and Establishments Act, 1954 as distinct from 'SHOP'. It was stated that respondent corporation issued notice on 28.8.89 covering the petitioner company illegally and malafidely as 'SHOP' and demanded contribution from January 1989 on the basis of notification no. F.28(2)/88/IMP/LC/Lab/2625-32 dated 30.9.88 extending the provisions of the Act . petitioner establishment was covered under the ESI and was allotted code no. 11-15170-101(Shop) ESIC notice dated 28.8.89. In reply to the said notice Regional Director, ESI was requested that the establishment is not covered under ESI as the same is an Educational Organisation and is not a shop as is allweged by the ESIC vide letter dated 9.9.89 but the respondent malafidely refused to accept the legal contentions and submission made on this behalf by petitioner. It was specifically contented that the petitioner is not a 'SHOP as covered by the notification but an educational institution. Despite the abovesaid the Deputy Regional Director ESI replied vide letter dated 3 6.10.89 that the petitioner establishment has been rightly covered under the ESI and required the petitioner company to fill up the forms etc. and deposit the ESI contribution w.e.f January 1989. Petitioner as stated is not engaged in purchase or sale of any commodity or services and as such is not a 'SHO' and the notification referred above is not applicable to the petitioner establishment. The petition was filed with the prayer that the dispute regarding the coverage of the commercial establishment of the petitioner establishment be decided; that petitioner is not covered under the ESI Act and is not liable to pay any contribution to the respondent; tha the respondent be directed not to recover any amount of contribution from the petitioner and the amount already recovered be refunded alongwith interest and such other relief be granted that petitioner is entitled under the circumstances.
2. WS and amended WS were filed on behalf of respondent wherein it was stated that petitioner organisation hires out the services of teachers to public schools for teaching computer science for consideration in Delhi and outside Delhi. It was denied for want of knowledge that petitioner was registered under Shops and Establishment Act. Respondent informed the 4 petitioner that the petitioner was covered under ESI Act as a 'Shop' and that they should comply with the provisions w.e.f January, 1989. As stated the petitioner is legally liable to pay contribution of Rs.61,453/- on the wages of Rs.709693.85/ to its employees during the period from January 1989 to November, 1990 as demanded by the respondent vide its letters dated 20.3.91 and 24.12.91.
3. In replication contents of the WS were denied and those of the petition were reiterated. It was stated that the whole computer education system installed by the petitioner for imparting education to children can't be construed as 'shop' within the meaning of ESI Act. The system includes software, books for reading to children free of charge, computer equipments and its maintenance and the trained staff to impart technical education.
4. Vide order dated 10.10.95 from the pleadings of the parties following issues were framed:-
1) Whether the petitioner establishment is covered under the 'shops' and therefore provisions of ESIC Act are applicable to it? OPP.
2) Relief.5
Vide order dated 7.5.96 issue no. 1 was amended that the onus of proof of the issue was rested on respondent and not on the petitioner.
5. Petitioner in support of its case examined three witnesses i.e. PW-1 Sh. S.P. Gupta, PW-2 Raj Kumar and PW-3 Hitesh Kumar Tyagi who deposed as under:-
PW-1 deposed that their organisation is providing package of computer services to the educational institutions. They impart computer education to students at their complex i.e community centre, Mayapuri. By the words computer package he means that they provide all the amenities to impart computer education. They provide them teachers, computers, books etc. They earn all their revenue from their main job of providing computer education directly to the students in their institute and indirectly in other schools. Their institute is recognised by Department of Electronics, Govt. of India in respect of computer courses. Mark-A is the acquisition letter issued by the department to their institution. They are not indulging in any job work and sale and purchase of anything in the open market and hence their organisation is 6 not a shop. They have entered into an agreement to conduct computer courses in B.M. Gange Girls Sr. Secondary school. Similarly there is an agreement with T.R. Maheshwari Public School, Moti Nagar. Organisations like ICS, NIT,MCS MTEC etc. have not been covered under ESIC, though they are providing same services. In cross examination witness admitted that there were 31 employees in January, 1989, March 1989 and 24 in July 1989 who were working as computer teachers. It is also admitted that the petitioner firm is rendering services of computer education in schools. The witness had no knowlede about 01 form at the time of evidence. In the beginning he paid contribution to the respondent for a few months. It was denied that petitioner firm is liable to pay contribution.
PW-2 Sh. Raj Kumar deposed that he was working as teacher under the management of M/s Computal Systems and was imparting computer education in the complex of the petitioner firm. He further deposed that sometimes he also go to other educational institutions to impart education. He stated that they do not involve themselves in job work of sale and purchase of any item. In cross examination of PW-2 it was admitted that 7 petitioner firm rendered services against consideration in terms of money. PW- 3 Sh. Hitesh Kumar Tyagi deposed that he was working as teacher under the management of M/s Computal Systems. He at that time was teaching in K.D. Field Public School, Navin Shahdara. He was paid in the petitioner firm and not by the school and he impart education on behalf of the company.
6. Respondent in support of its case examined three witnesses i.e. RW- 1V.M. Bhasin, RW-2 Ghanshyam Singh and RW-3 P.L. Gupta who deposed as under:-
RW-1 deposed that he conducted the inspection of petitioner firm on 20.3.91 and prepared inspection report ex. RW-1/1. An observation letter was prepared by him which is also called the discrepancy letter . The said letter was ex. RW-1/2. It was agreed by witness that he conducted the inspection and dues mentioned in letter ex. RW-1/3 are correct. In cross examination the witness stated that he had not seen any educational activities like computer training by the petitioner firm. He could not tell whether ESIC Act applied on educational institutions or not. It was denied that ESI Act was made applicable on the petitioner firm arbitrarily. 8
RW-2 Ghanshyam Singh deposed that he conducted survey of the petitioner firm on 11.7.89 and prepared a survey report vide ex. RW-21. In cross examination the witness deposed that when he conducted the survey he made certain inquiries from the official Mr. S.P. Gupta. The queries were replied and he was informed that the company engages teachers for the purpose of computer training and these teachers are sent to various establishments for computer training. The witness recorded the nature of the work carried in the premises as providing teachers to public schools for teaching computers. This is so recorded in answer to para 2-A of part- B of survey report. It was admitted that ESI Act is not applicable to the educational establishment and it was denied that petitioner firm is an educational establishment.
RW-3 deposed that petitioner was carrying on the work of imparting training of computer whose who used to come to lean the course of computer. As per the record, they used to charge consideration from the trainees. Letter dated 28.8.89 was sent by their office for the purpose of coverage and it bears the signatures of Sh. Daya Ram. The witness identified the signatures of Sh. Daya Ram at apoint A and B vide 9 ex. RW-3/1(it was observed that date apparently was wrong as 5.10.97 was to fall on future date). A letter dated 5.10.97 was also sent by the office of the respondent which also bear the signatures of Sh. Daya Ram which he identified at point C vide ex. RW-3/2. Letter dated 24.12.91 i.e. Demand letter was sent by the respondent. In cross examination it was admitted that establishment in question is imparting computer training for the purpose of gain. It was also admitted that ESI Act is not applicable on educational institutions.
7. I have heard Ld. Cl. for both the parties as well as perused the record.
8. Issue no. 1: The onus of proving this issue was on the respondent. Vide judgment dated 6.3.97 my Ld. Predecessor has opined in favour of the petitioner on the strength of evidence produced on record and had discarded the plea of respondent but later on the matter was remanded back by the Hon'ble High Court for considering the agreements on record. After referring some of the agreements and the clause that " computers were to become the property of the school" was to be interpreted. Ld. Cl. For the petitioner has argued that after the decision of the case by Hon'ble High Court the computer firm is no more in existence and thus he is not 10 liable to pay anything and further argued that after the case has been remanded back no evidence has been led by the respondent thus the material already available has to be read. This argument itself replies to the effect of dissolution of firm of petitioner and I have to see the right of the parties on the date of filing of the petition and have to interpret the already existing agreements on record, hence the argument of petitioner is not tenable. The Ld. Cl. for respondent has argued on the strength of AIR1987-SC-1166 M/s Hindu Jea Bank, Jaipur and R.D.E.S.I vs. State of Rajasthan & Ors. Wherein it was observed that " The word 'Shop' has not been defined in the Act and the said word cannot be construed narrowly since the notification has been issued under Section 1(5) of the act which is a beneficent legislation. It is obvious from the meaning given in Collins English dictionary that " Shop is a place where services are sold onretail basis". In that case firm had been making available on payment of the stipulated price the services of the members of the group of musicians employed by it on wages." It was held that " place where firm has been carrying on business is a shop and the notification covered the petitioner's establishment." I have gone through the same. Respondent's witnesses in 11 one breath had admitted that Act is not applicable to the educational institutions and neither of these witnesses have brought on record that any of the computer was sold or any other material was sold. The modus operandi and the working of the petitioner is very much clear whereby firstly they impart education on computer and then only the remuneration were paid to the firm and thereafter it was agreed that the computer installed were to be remained with the school. In the agreement itself by both the parties nowhere it is stated that the consideration was to pass to the petitioner by the respective schools and it was out of charity or as a gift that computer was left with the school because the practice was done on these computers and data was already there and that is why it was useful for the school. The shop as admitted by both parties involves the quantum of sale whereby one thing is handed over to another against consideration. In agreement itself at page no. 173 of the record it is clear that two computers shall become the property of the school free of cost and in some of the agreement no such clause exist meaning thereby where ever the school personally demanded that computers will be left with the school after the training, the petitioner has admitted the same. Even 12 otherwise the meager amount has been taken from the schools and it is not made out from the agreement that computeres were sold. The infrastructure was to be provided by the school. No amount is mentioned regarding the purchase of any computers and the element of sale is totally missing. In the agreement at page no. 157 also words 'free of cost' is mentioned regarding providing of computers and it will be hardship for the petitioner as on the one hand he does not charge anything for delivering the computers and still he is burdened with the tag of shop. In agreement at page no. 41 it is clearly mentioned that computers and generators will not be given to the school free of cost but respondent has not produced any record or evidence whereby it can be established that some computers were sold off to school or if so at what rate. Thus in these circumstances when the evidence is lacking on behalf of respondent it cannot be stated that the petitioner was engaged in any of the activities of selling of computers. No such question was ever put to any of the witnesses of respondent and rather it has come in evidence that they were rendering services only. PW-1 has clearly stated that petitioner is not a shop and are not engaged in sale and purchase of anything but this part 13 was not cross examined by the respondent and the same is deemed to have been admitted. Even respondent's witnesses have not stated anything to the same effect in their statement. Thus the onus of this issue has been rather discharged by the petitioner in his favour and the respondent has failed to prove the same. Accordingly this issue is decided in favour of the petitioner and against the respondent.
9. In view of the above discussion, I am of the opinion that petitioner firm/organisation i.e. M/s Computal Systems and Services is not a 'Shop' but an educational institution and hence provisions of ESI Act 1948 are not applicable to this institution.
10. Issue no. 2 Relief: In view of the decision of issue no. 1 it is held that petitioner is not liable to pay any contribution to respondent under ESI Act 1948 and accordingly respondent is restrained from recovering any amount in this regard. Amount already paid by petitioner establishment/organisation will be refunded by respondent to the petitioner. However, in the facts and circumstances of the case, petitioner will not be entitled to any interest on the amounts so refunded. In the fact and circumstances of the case and particularly the fact that costs have not 14 specifically been claimed in the petition, there is no order as to costs. Decree sheet be prepared accordingly. File be consigned to record room.
Announced in open court (Ajay Goel) on 22.11.08 SCJ cum RC(Central)/Delhi