Madras High Court
Madras Government Servants ... vs Employees' State Insurance ... on 25 June, 1996
Equivalent citations: (1997)ILLJ606MAD, (1996)IIMLJ447
JUDGMENT S.S. Subramani, J.
1. Petitioner in E.I.O.P. No. 2 of 1984, on the file of the City Civil Court, Madras is the appellant in this Letters Patent Appeal.
2. The respondent herein, on July 15, 1976, issued a notification whereby certain establishments were also brought into its coverage and one of the establishments was 'shops'. Thereafter, respondent issued notice to the appellant herein why it is not implementing the Notification. A reply was sent and since the same did not satisfy the respondent, it issued a notice on June 9, 1983 that in case the Act is not implemented and the contributions thereunder are not paid, coercive steps will be initiated against it. The appellant/petitioner being aggrieved by the said notice, filed the above original petition before City Civil Court, Madras, for declaration that the provisions of the Employees' State Insurance Act, 1948 are not applicable to the petitioner/Society and that the Notification is not binding on it and for a further declaration that it is not liable to pay any amount mentioned in the notice issued by the respondent or for any future contribution, and for other consequential reliefs.
3. A written statement was filed by the respondent E.S.I Corporation contending that the petitioner is an establishment to which the Act is applicable, and that the petitioner/Society acts as an agent for purchasing domestic and other requirements for its members and that it is also transacting surety loans, and that it is also rendering service for consideration. Therefore, it was contended that it is a 'shop' coming within the definition of See. 1(5) of the Act and therefore liable for contribution.
4. After taking evidence, their Employees' State Insurance Court as per order dated March 13, 1985, came to the conclusion that the petitioner/Society is neither a shop nor an establishment and, therefore, the Notification has no application. It also declared that the petitioner/Society is not liable to contribute any amount as demanded.
5. Against the order of the Insurance Court an appeal was taken by the respondent under See. 82 of the Act as Appeal Against Order No. 51 of 1986 before this Court. The learned Judge, after bearing, came to the conclusion that the appellant/petitioner is an establishment and, therefore, bound by the Notification. The appeal was allowed and the E.I.O.P was dismissed.
6. It is against the judgment of the learned Judge, this Letters Patent Appeal is field.
7. The only point that requires consideration in this L.P.A. is, whether the petitioner/Society is a "shop" and, therefore, bound by the Notification.
8. Learned counsel for the petitioner submitted that even though the By-Laws of the Society provide for the Society to act as agent for purchasing domestic requirements of its members such business is not being done by it. The main contention that is put forward by the learned counsel for the appellant is that it is only financing the members for their use and recovering the same with the interest. In paragraphs 3 and 4 of the petition field before the City Civil Court, it is averred thus :
"... The object of the society shall be to borrow funds from members of others to be utilised for loans to member for useful purposes, and to generally encourage thrift, self help and co-operation among the members by providing the necessary facilities therefor ......"
Further down it is said :
"...... The petitioner/Society is purely a credit institution catering to the needs in the from of financial assistance to the members of the society ..."
On the basis of this contention, it is urged that the Act or Notification will have no application.
9. Before the City Civil Court, P.W. 1 was examined and he gave evidence in accordance with the allegations in the petition. From his evidence, it is clear that the petitioner/Society is running a financial institution though the assistance is given only to its members and not to the public at large.
10. While interpreting a Statue, the court will have to look into the intention of the legislature. But it is unreasonable to think or confine the intention to a meaning attributed to the word used at the time when the law was made. The court has to presume that the Legislature is presumed to be aware of the enlarged meaning and also the revolution of the changes brought about in special, economic, political and scientific fields of human activity. It was held Senior Electric Inspector and others v. Laxminarayan Chopra and another, as follows :
"The legal position may be summarized thus : The maxim contemporaneous exposition as laid down by Coke was applied to construing ancient statutes, but not to interpreting Acts which are comparatively modern. There is a good reason for this change in the mode of interpretation. The fundamental rule of construction is the same whether the court is asked to construe a provision of an ancient statute or that of a modern one, namely what is the expressed intention of the Legislature. It is perhaps difficult to attribute to a legislative body functioning in a static society that its intention was couched in terms of considerable breadth so as to take within its sweep the future developments comprehended by the phraseology used. It is more reasonable to confine its intention only to the circumstances obtaining at the time the law was made. But in a modem progressive society it would be unreasonable to confine the intention of a Legislature to the meaning attributable to the word used at the time the law was made, for a modern Legislature making laws to govern a society which is fast moving must be presumed to be aware of an enlarged meaning the same concept might attract with to the march of time and with the revolutionary changes brought about in social, economic, political and scientific and other fields of human activity. Indeed, unless a contrary intention appears, an interpretation should be as given to the words used to take in new facts and situations, if the words are capable of comprehending them ...."
In that case their Lordships were considering the meaning for the words "Telegraph line".
11. In so far as the statutory construction of welfare Legislations is concerned, it was held in State Bank v. N. S. Money (1976-I-LLJ-478) (SC) thus :
"Statutory construction" when courts consider welfare legislation with an economic justice bias, cannot turn on cold print glorified as grammatical construction but on teleological purpose and protective intendment.
While canons of traditional sanctity cannot wholly govern, courts cannot go haywire in interpreting provisions, ignoring the text and context.
The dictionaries are not dictators of statutory so construction where the benignant mood of a law and, more emphatically, the definition clause furnish a different denotation."
12. It was observed in The Chairman Board of Mining Examination and Chief Inspector of Mines and another v. Ramjee thus :
"..... Law is meant to serve the living and does not beat its abstract wings in the jural void. Its functional fulfillment as social engineering depends on its sensitized response to situation, subject matter and the complex of realities which require ordered control. A holistic understanding is simple justice to the meaning of all legislations. Fragmentary grasp of rules can misfire or even backfire as in this case ..."
13. In Royal Talkies, Hyderabad and others v. Employees' State Insurance Corporation through its Regional Director, Hill Fort Road, Hyderabad., (1978-II-LLJ-390), the Supreme Court was considering the very Statute in question and how it has to be interpreted. In para 20 (at page 396), it was held thus :
"Shri Chitale tried to convince us that on a minute dissection of the various clauses of the provision it was possible to exclude canteen employees and cycle stand attendants. May be, punctilious sense of grammar and minute precision of language may sometimes lend unwitting support to narrow interpretation. But language is handmaid not mistress. Maxwell and Fowler move along different streets, sometimes. When, as in Sec 2(9), the definition has been cast deliberately in the widest terms and the draftsman has endeavored to cover every possibility so as not to exclude even distant categories of men employed in the primary work or cognate activities, it will defeat the object of the statute to truncate its semantic sweep and throw out of its ambit those who obviously are within the benign contemplation of the Act. Salvationary effort, when the welfare of the weaker sections of society is the statutory object and is faced with stultifying effect, is permissible judicial exercise."
14. In Regional Director, E. S. I. Corporation, Madras v. S. L. Flour Mills (P) Limited (1986-II-LLJ-304) (SC) also the question as to how the Act in question has to be interpreted came for consideration and in paragraph 10 at pages 308-309 it was held thus :
"The Act is a piece of social security legislation enacted to provide for certain benefits to employees in case of sickness, maternity and employment injury. To hold that the workers employed for the work of construction of buildings for the expansion of the factory are not employees within the meaning of Sec. 2(9) of the Act on the ground that such construction is not incidental or preliminary to or connected with the work of the factory will be against the object of the Act. In an enactment of this nature, the endeavour of the court should be to interpret the provisions liberally to in favour of the persons for whose benefit the enactment has been made."
15. In a recent decision of the Supreme Court, again under the same Act, reported in is C. E. S. C. Limited v. Subhash Chandra Bose (1992-I-LLJ-475) in paragraph 33 at page 487 it was held thus :
"The Act aims at relieving the employees from health and occupational hazards. The interpretation calls for in this case is of the meanings 'supervision' and 'agent' in Sec 2(9)(ii) of the Act. The legal interpretation is not an activity sui generis. The purpose of the enactment is the touch stone of interpretation and every effort would be to give effect to it. The judge acts as a vechile of communication between the authors and the recipients. The end result is to promote rule of law to and to enliven social order and humane relations."
16. The Employees' State Insurance Act, 1948 (Act 34 of 1948) is a piece of legislation intended for social security. The Act was originally made applicable only to factories. By virtue for a provision, namely, Sec 1(5), the appropriate Government may in consultation with the Corporation and where the appropriate Government, is a State Government with the approval of the Central Government, after giving six months' notice of its intention of so doing by notification in the Official Gazette, extend the provisions of this Act or any of them, to any other establishment or class of establishments, industrial, commercial, agricultural or others wise. It is in pursuance of Sec 1(5), the Notification was issued by the respondent in this case. The Act has not defined 'shop' or 'establishment'. But the Preamble of the said Act says :
"An Act to provide for certain benefits to employees in case of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto."
17. The main argument of the learned counsel for the petitioner/appellant was that there is no commercial activity in so far as the financial transactions are concerned, and therefore, the petitioner/Society is not a 'shop' and if it is not a shop, it cannot be an establishment under the Act.
18. So, the only point that has to be considered is whether because of the lending of money, the petitioner-Society can be considered as a shop' for the purpose of this Act.
19. In M/s. Hindu Jea Band Jaipur v. Regional Director Employees' State Insurance Corporation, Jaipur (1987-I-LLJ-502), the Supreme Court said that a shop is a place where services are sold on retail business. That is a case where the petitioner therein was carrying on the business of playing music on occasions, such as marriage and other social functions. Accepting the meaning of the word 'shop' in Collins English Dictionary which has given thus :
"(i) a place especially a small building for the retail sale of goods and services and (ii) a place for the performance of a specified type of work, workshop, the Supreme Court said that the playing of music was available on payment of stipulated amount and there fore, it was a 'shop',.
20. In M/s. International Ore and Fertilizers (India) Limited v. Employees' State Insurance Corporation (1988-I-LLJ-235) (SC), the question raised was when there is no transaction in the nature of goods in the premises, whether that could be a 'shop'. In paragraph 4 of the judgment (at p. 237), their Lordships accepted the meaning of the word 'shop' provided in Shorter Oxford English Dictionary, namely, "a house or building where goods are made or prepared for sale and sold." Their Lordship further said that it also means a place of business or place where one's ordinary occupation is carried on [italics ours]. Dealing with the subject, their Lordships further held that it is not actually necessary that the delivery of the goods to the purchaser should take place at the premises in which the business of buying or selling is carried on to constitute the said premises into a 'shop'. Their Lordships further went on to hold that 'while construing a welfare legislation like the Act and the notification issued thereunder a liberal construction should be placed on their provisions so that the purpose of the legislation may be allowed to be achieved rather than frustrated or stultified'.
21. In M/s. Cochin Shipping Company v. E. S. I. Corporation (1993-II-LLJ-795) (SC) the petitioner therein was only processing the document at the Customs Clearing House and there was no other activity. When notice was issued under the Act, the same was challenged that there is no commercial activity and, therefore, it was not o bound by the provisions of the Act. While considering the same their lordships said thus : at p. 800 "Clearing the documents, even if it be in the Custom House, is necessary for the export or import of goods. These services form part of the carrier's job. The appellant is rendering service to cater to the needs of exporters and importers and others who want to carry the goods further. Therefore it is a shop carrying on a systematic economic or a commercial activity. This would be enough to bring in the appellant without specifically enumerating the specific activities carried on by the appellant. Merely because other establishments which are akin to shop are enumerated, it does not, in any manner, oblige the court to give a narrow meaning to the word 'shop' nor does it in any way dilute the meaning of 'shop' at pp. 797-798 :
The Act is an outcome of a policy to provide remedy for the widespread evils arising from the consequences of national poverty. Indeed, it is a piece of social security. The benefits conferred by the Act cover a large area of employees than what the Factories Act and the akin legislations intended. It is thus a welfare legislation. The endeavour of the court should be to place a liberal construction so as to promote its objects to which a reference has been made."
In that case also, the Supreme Court reiterated that a liberal interpretation has to be given since the Act is an outcome of a policy to provide remedy for the widespread evils arising from the consequences of national poverty. In paragraph 19 of the said judgment, their Lordships also accepted the meaning for the word 'shop' as given in Words and Phrases Legally Defined, 2nd Edition at Page 73 which reads thus : at p 799 "'Shop' includes dwelling house and warehouse or other place of business, or place where business is transacted."
The contention in that case was that though the word 'shop' would take within its ambit the other establishments like hotels or restaurants yet in view of enumeration of other establishments viz hotels, restaurants, etc. in contradistinction to shops, the word 'shop' must be held to relate to a place where commercial activity of buying and selling merchandise takes place; otherwise the enumeration of other establishments would become meaningless. The contention of the Department was that the word 'shop' has a wider meaning and it means a place where any kind of commercial activity is pursued and where services are rendered to customers. The contention of the Department was that accepted by the Supreme Court in that case. In paragraph 22 of the Judgment, their Lordships held thus at p, 800 :
"..... merely because other establishments which are also akin to shop are enumerated it does not, in any manner oblige us to give a narrow meaning to the word 'shop' nor does it in any way dilute the meaning of 'shop'. As rightly contended by the learned counsel for the respondent, the object is to envelopes as many establishments as possible without leaving any room for doubt. That is precisely what the notification intends to do."
22. In Employees' State Insurance Corporation v. R. K. Swamy (1994-I-LLJ-636) (SC) which is also a case under the same Act, their Lordships said that the word 'shop' has acquired extended meaning. That was a case where an advertising agency was sought to be covered under the provisions of the Act. The above decision was rendered. Against an order of our High Court in W.P. Nos. 1891 of 1982 and 3123 of 1983, wherein this court had said that an advertising agency will not come within the ambit of the Act. But this finding was set aside by the Supreme Court. The earlier decisions cited supra were also followed, and their Lordships reiterated that a place where a systematic economic or commercial activity is carried on, will be a 'shop'. In paragraph 13 of the Judgment, their Lordships further reiterated as to how the Act should be interpreted. The relevant portion of is the said paragraph reads thus at p. 640 :
"... The object which the Act purported to achieve was to require that appropriate provision should be made for employees employed in establishments to which the Act applied. That meant that in construing the material provisions of such an Act it two views were reasonably possible, and the courts should prefer the view which helped is the achievement of the objects. When the words used in an entry were capable of a narrow or a broad construction each construction being reasonably possible, and it appeared that the broad construction would help the furtherance of the object, then it was necessary to prefer that construction. This rule postulated that there was a competition between two constructions, each one of which was reasonably possible. The rule did is not justify straining words or putting an unnatural or unreasonable meaning on them just for the purpose of introducing a broader construction."
23. A Division Bench of the Kerala High Court had occasion to consider a similar question and the decision rendered there on is reported in Brooke Bond India Limited v. E. S. I. Corporation (1980-I-LLJ-352) wherein it was held thus : at p 354 "Employees' State Insurance Act is undoubtedly a labour welfare legislation enacted with the intention to benefit the workers of all categories as far as feasible. It was at first extended to all the workers in the factories and the definition of employee under Sec. 2(9) of the Act was subsequently amended to give as wide a meaning as feasible to that term. This was to include and bring under the Act as far as possible workers belonging to all categories. The word 'shop' has not been defined either in the Act or in the Notification. The Employees' State Insurance Act being a social welfare legislation, intended to benefit as far as possible workers belonging to all categories, one has to be liberal in interpreting the words in such a social welfare legislation. It is not expedient or desirable to lay down any hard and fast rule in the interpretation of a statute whether it is a social document or not. The relevant word or the phrase has to be interpreted consistent with the modern trend in the field of labour jurisprudence and the object of the Act. There should not be much emphasis on the words; what is important is that the interpretation must be consistent with the object, the general purpose and policy of the statute. In construing a beneficial legislation, the court has a duty to make such construction as to suppress the mischief and advance the remedy. The word 'shop' occurring in the Notification is used in a larger sense than its ordinary meaning. It is not always necessary that there should be a building or land for conducting a shop. Where the usual meaning of the language falls short of the whole object of the legislature, a more extended meaning may be attributed to the words, if that is fairly susceptible ...."
24. On the above principles of law, we have to consider whether the petitioner/Society is a 'shop' and whether the notice issued by the respondent is in any way invalid. In view of the decision in Senior Electric Inspector's case (supra) the court has to interpret a Statute taking into consideration the new factual situation and also taking into consideration the social, economic, political and scientific advancement in society. Probably that may be the reason why in this Statute, there is no definition for the word 'shop' or 'establishment', since the Legislature did not want to restrict the scope of its applicability to changed situations. The definition of 'shop' which is meant as a house or building where s goods are made or prepared for sale and sold has now undergone a great change. In the present legal sense, it is not necessary that there should be building or land for conducting a shop, nor is it is necessary that in the premises there should be buying or selling. Once an ordinary occupation is carried on, if there is a systematic economic or commercial activity, that will be sufficient to bring that place within its sphere.
25. Even services which are sold for a price will amount to a 'shop'. The learned Judge has taken into consideration the above facts and has correctly interpreted the scope of the Notification. Giving loan to the members of the Society is a 'service' and the word 'price' has also been given a wider connotation. The learned Judge has held :
"... The word 'price' should not be taken as a price paid for a product or a particular article ......"
The charging of interest and sharing the profits among the various members will be sufficient to bring the impugned notification within the ambit of the Act, the interest charged by the petitioner/Society is the price for rendering services. We are in agreement with the finding of the learned Judge that the petitioner cannot impeach the Notification. It is in evidence of P.W. 1 and can also be seen from the averments in the petition that the petitioner is doing money-lending business and interest is also charged from the debtors. By self imposed restrictions, the facility is extended only to its members and not to the public at large. But it cannot be disputed that what the petitioner is doing is systematic commercial or economic activity, and it is one of its 'ordinary occupations'.
26. Taking into consideration the principles laid down in the decisions cited above, and also the social purpose behind the enactment, we have no hesitation to hold that the finding of the learned Judge is correct and that the same does not call for any interference. The Letters Patent Appeal is without any merits and the same is, therefore, dismissed, however, without any order as to costs.