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2003 (9) TMI 808

..... g the given period. Toddy shops were run on the basis of yearly auction conducted by the Excise Department of the Government of Kerala. Various guidelines were issued by the Board of Revenue and the State Government from time to time for running toddy shops. The employees working in the toddy shops during the period in question were not brought under the coverage of the ESI Scheme mainly on the ground that the provisions of ESI Scheme were not applicable to the toddy shops according to the appellants; assuming that the Employees' State Insurance Act, 1948 (for short 'the Act') was applicable to the toddy shops in the previous years, that did not create any continuing liability of the appellants. On the basis of the inspection conducted by the officers of the respondent Corporation, respondents took up the position that the toddy shops were covered under the Act and assessed to the contribution; recovery proceedings also were initiated for collection of contribution amount. At that stage the appellants approached the Employees' Insurance Court (El Court) seeking declaration that the toddy shops run by the appellants during the period 1991-1994 could not have been bro .....

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..... ent being the principal employer. The El Court after considering facts, respective contentions and referring to the provisions of the Act and the Abkari Act and Rules concluded that toddy shops were the establishments belonged to or were under the control of the Department of the Government and the employees working in those shops were enjoying the benefits substantially similar to the benefits provided in the cases covered by the ESI Scheme. In this view the El Court held that the provisions of ESI Scheme were not applicable to the employees working in toddy shops of the appellants during the relevant period. The Court also made it clear that since the proviso to Section 1(4) of the Act was added to the statute book only with effect from 20.10.1989, any demand for contribution for the prior period had to be viewed differently. In this view the El Court allowed the applications filed by the appellants and granted relief to them. The respondents challenged the validity and correctness of the orders passed by the El Court by filing miscellaneous first appeals before the High Court. The High Court, after hearing the learned counsel for the parties and considering the respective conten .....

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..... ed on with the aid or power." State of Kerala issued a notification dated 18.9.1974 in exercise of power conferred under sub-Section (5) of Section 1 of the Act extending the provisions of the Act to classes of establishments specified in the schedule to the notification. The learned senior counsel for the appellants urged that (1) the toddy shops established under the Kerala Abkari Act are not covered by the Act since in a notification issued under Section 1(5) of the Act they are not specifically included; though Government specifically included hotels and restaurants, intentionally excluded toddy shops while issuing notification in 1974; this exclusion was because the employees attached to a toddy shop are enjoying substantially similar or even superior benefits under the Abkari Welfare Fund Act; hence the High Court was wrong in holding that toddy shops are covered by the Act. (2) Toddy shops were owned and controlled by the State Government and employees of these shops were otherwise receiving benefits substantially similar or superior to the benefits provided under the Act; because of the same the toddy shops were exempted from the purview of the Act by virtue of proviso .....

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..... yee's State Insurance Corporation, [1987] 4 SCC 203, M/s. Cochin Shipping Co. \. E.S.I. Corporation, [1992] 4 SCC 245 and Employees State Insurance Corporation v. R.K. Swamy and Ors., [1994] 1 SCC 445. Keeping in view the position, as made clear in aforementioned decisions of this Court, the High Court was right in holding, "Toddy Shop is a premises where the business of buying and selling is going on. Therefore, according to us, a toddy shop would come under the entry 'shop' in the schedule." We may add here that the appellants were not in a position to seriously dispute this finding of the High Court. In order to take shelter under the proviso to sub-Section (4) of Section 1 of the Act the appellants have to satisfy that (1) their establishments belonged to or were under the control of the Government; and (2) the employees in their estabishments were otherwise receiving benefits substantially similar or superior to the benefits provided under the Act. The High Court rightly took the view that the toddy shops of the appellants neither belonged to the government nor they were under the control of the Government. If the first requirement of the proviso itself i .....

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..... e toddy shops in question were covered by the Act long prior to the appellants became licensees to trade in liquor for the period in question. The appellants only contended that the toddy shops functioning in the State were not covered by the Act. As already noticed above, this plea was rejected by the High Court with which we are in agreement. Neither there was a plea nor material placed before El Court or High Court as to how many employees were working in the toddy shops in question from the beginning or whether the same employees continued/required to work in those shops even though the licensees changed or whether the new licensees could change or reduce the number of employees in existing toddy shops. In the absence of necessary pleas the High Court was right in rejecting the contention urged on behalf of the appellants based on Section 1(6) of the Act. The question of law based on Section 1(6) of the Act is left open to be decided in an appropriate case. Thus, we do not find any merit in any one of the contentions urged on behalf of the appellants. In our view, the impugned judgment does not call for any interference. Hence the appeals are dismissed with no order as to costs .....

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