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Supreme Court of India

BANGALORE TURF CLUB LTD.versusREGIONAL DIRECTOR, ESI CORPORATION

Citation
2009 INSC 628
Decided
28 April 2009
Disposal
Matter referred to larger bench

Holding

A club is not a "shop" within the meaning of Section 1(5) of the Employees' State Insurance Act, 1948.

Summary

Bangalore Turf Club Ltd. challenged the Regional Director of the Employees' State Insurance Corporation's demand for ESI contributions, contending that as a club it does not qualify as a "shop" under Section 1(5) of the Employees' State Insurance Act, 1948. The central issue was whether turf clubs fall within the definition of "shop" and are therefore covered by the Act, especially in light of the earlier decision in Employees State Insurance Corp. v. Hyderabad Race Club which held they were. The Supreme Court observed that Section 1(5) only covers establishments specifically notified and that the term "shop" is not defined in the Act, so it must be given its ordinary meaning, which does not include clubs. It distinguished the Hyderabad Race Club case, stating that the earlier judgment incorrectly presumed all establishments were covered. The Court also held that the definition of "industry" in the Industrial Disputes Act cannot be imported into the ESI Act. Consequently, the Court concluded that turf clubs are not shops under the Act and ordered that the matter be referred to a larger Bench for reconsideration of the Hyderabad Race Club decision. The respondents were directed not to raise any demand against the clubs pending the larger Bench.

Issues considered

  • Whether a turf club qualifies as a "shop" under Section 1(5) of the Employees' State Insurance Act, 1948 and is therefore covered by the Act
  • Whether the decision in Employees State Insurance Corp. v. Hyderabad Race Club should be reconsidered

Legislation cited

Subjects

Employees' State Insurance Actshop definitionturf clubstatutory interpretationreferral to larger benchlabour lawnotification

Judgment

                           [2009] 7 S.C.R. 106


A                  BANGALORE TURF CLUB LTD.
                                     V.
              REGIONAL DIRECTOR, ESI CORPORATION
                   Civil Appeal No. 2416 of 2003
                            APRIL 28, 2009
B
           (MARKANDEY KATJU AND H.L. DATTU, JJ.)

         EMPLOYEES' STATE INSURANCE ACT, 1948:

           s. 1(5) - 'Shop' - Turf Club - Held: Is not 'shop' - Besides,
c   uls 1(5) only such establishments are covered as are notified
    in official gazette - Decision in Hvderabad Race Club requires
    reconsideration - Matter referred to larger Bench.
        Employees State Insurance Corpn. Vs. Hyderabad
    Race Club 2004 (6) SCC 191 - referred to.
D
         Bangalore Water Supply & Sewerage Board Vs.
    A. Rajappa & Ors. 1978 (2) SCC 213 - held inapplicable.
                         Case Law Reference
         2004 (6) sec 191          referred to           para 3
E
         191s (2) sec 213           held inapplicable para 3

         CIVILAPPELLATE JURISDICTION: Civil Appeal No. 2416
    of 2003
                                                                           •
F        From th~ Judgement and Order dated 04.09.2002 of the
    Hon'ble High Court of Karnataka at Bangalore in MFA No. 3699
    of 1998
                                   WITH
G        Civil Appeal Nos. 49 of 2006
         Civil Appeal Nos. 1575 of 2006
        K.K. Venugopal, J.P. Cama (NP), C.S. Rajan, B.C.
    Prabhakar, Kanika Gamber, Rajeshwari Shukla, Gopal
H                                   106
                                        BANGALORE TURF CLUB LTD. V.                      107
                                    REGIONAL DIRECTOR, ES! CORPORATION
                ...
                           Sankaranarayanan, R. K. Dubey, Rajan Narain, Ruby Singh                A
                           Ahuja, Gobindram D. Talreja, Simran Brar,Abeer Kumar, Manik
 '                         Karajawala, Anupam Mishra, V. J. Francis, with them for the
"""\


-                          appearing parties.

                                The following order of the Court was delivered :

                                Heard learned counsel for the parties.
                                                                                                  8

                      •         The short question involved in these cases is whether the
                           appellant Turf Clubs are covered by the Employees' State
                           Insurance Act, 1948 {for short the 'ESI Act').
                                                                                                  c
                                 Under Section 1 sub-section (5) of the ESI Act all
                           establishments are not automatically covered by the said Act
                           but only such establishments as are mentioned in the notification
                           issued by the appropriate Government under Section 1(5). This
                      -\
                           provision is not like sub~section (4) of Section 1 by which all D
                           factories are automatically covered by the ESI Act. The
                           notifications issued under Section 1(5) in these cases use the
       '                   word 'shop' and it has been held by the impugned judgments in
                           these cases that the turf clubs are shops. Reliance in this behalf
                           has been placed on the judgment of this Court in the case of. E
                           Employees State Insurance Corpn. Vs. Hyderabad Race Club
                           2004 (6)SCC, 191.
                      j,

                                With great respect to the aforesaid decision in the case of
                           Hyderabad Race Club (supra), we think that the s9id decision
                                                                                                  F
                           requires reconsideration. In common parlance a club is not a
                           shop.
       ~~

                                 The wo!d 'shop' has not been defined either in the ESI Act
            '              nor in the notification issued by the appropriate government
                           under Section 1(5). Hence, in our opinion, the meaning of 'shop'· G
                      t    will be that used in common parlance. In common parlance
                           when we go for shopping to a market, we do not mean going to
                           a racing club.
                                Hence, prima facie, we are of the opinion that the appellant~ ·
                                                                                                  H
    108       SUPREME COURT REPORTS                     [2009) 7 S.C.R.


A   club is not a shop within the meaning of the Act or the notification   />


    issued by the appropriate government.
        In our opinion, the error in the judgment in the case of
  Hyderabad Race Club (supra) is that it has been presumed                            f
  therein that all establishments are covered by the Act. That is
B not correct. Only such establishments are covered as are
  notified under Section 1(5) in the official gazette.

         The High Court in the impugned judgment has placed
  reliance on the judgment of this Court in the case of Bangalore
c Water Supply & Sewerage Board Vs. A. Rajappa & Ors.1978(2)
  SCC, 213. In our opinion,reliance on the aforesaid decision is
  wholly misplaced. The definition of 'industry' in the Industrial
  Disputes Act is very wide as interpreted in the aforesaid
  decision. We cannot apply the judgment given under a different
  Act to a case which is covered by the ESI Act. Under various
D
  labour laws different definitions have been given to the words
  'industry' or 'factory' etc. and we cannot apply the definition in
  one Act to that in another Act (unless the statute specifically says
  so). It is only where the language used in the definition is in pari          '
  materia that this may be possible.
E
         Hence, we are of the opinion that the decision of this Court
  in the case of Hyderabad Race Club (supra) should be
  reconsidered by a larger Bench. In the meantime, the
  respondents shall not raise any demand against the appellant-
                                                                           •
F clubs.
         Let the papers of these cases be placed before Hon'ble
    the Chief Justice of India for constituting an appropriate Bench.
                                                                                I•,

    R.P.                                    Referred to larger Bench


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