TMI Blog2014 (7) TMI 1336X X X X Extracts X X X X X X X X Extracts X X X X ..... ent as a consequence of the urgent need for a scheme of health insurance for workers - A 'shop' is a place of business or an establishment where goods are sold for retail. However, it may be noted that the definitions as given in the dictionaries are very old and may not reflect, with complete accuracy, what a shop may be referred as in the present day. The word 'shop' is not defined either in the ESI Act or in the notification. The ESI 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 welfare legislation. The definition of a shop which meant a house or building where goods are sold or purchased has now undergone a great change. The word 'shop' occurring in the notification is used in the larger sense than its ordinary meaning. What is now required is a systematic economic or commercial activity and that is sufficient to bring that place within the sphere of a 'shop' - In view of the fact that an 'establishment' has been found to be a place of business and further that a 'shop' is a business establishment, it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VIL APPEAL NO. 3422 OF 2012 - - - Dated:- 31-7-2014 - H.L. Dattu, R.K. Agrawal And Arun Mishra, JJ. For the Appellant : K.K. Venugopal, Chander Uday Singh, J.P. Cama, V. Giri, Advs., M.N. Krishnamani, Sr. Adv., Ruchika, Neha Malik, Rajan Narain, V.J. Francis, Gobindram D. Talreja, R.N. Karanjawala, Manik Karanjawala, Ruby Singh Ahuja, Chahat Chawla, Neha Gupta, Advs. for Karanjawala and Company, M.A. Chinnaswamy, Mahesh Srivastava, Vaibhav Manu Srivastava, P.N. Puri, Yakesh Anand, Sonam Anand, Sanjeev Anand, P.V. Yogeswaran, S. Thananjayan, Rakesh K. Sharma, Sangita Chauhan and Shubha, Advs. JUDGMENT H.L. Dattu, J. CIVIL APPEAL NO. 2416 OF 2003, CIVIL APPEAL NO. 49 OF 2006, CIVIL APPEAL NO. 1575 OF 2006, CIVIL APPEAL NO. 3421 OF 2012 AND CIVIL APPEAL NO. 3422 OF 2012 1. The issue that arises for our consideration and decision is, whether a 'race-club' would fall under the scope of the definition of the word 'shop', for the purposes of notification issued under Sub-section (5) of Section 1 of the Employees' State Insurance Act, 1948 (for short, the ESI Act ). 2. The matter is referred to three-Judge Bench of this Court as two-Judge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed judgment has placed reliance on the judgment of this Court in the case of Bangalore Water Supply and Sewerage Board v. A. Rajappa and 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 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. 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-clubs. Let the papers of these cases be placed before Hon'ble The Chief Justice of India for constituting an appropriate Bench. 3. By the said referral order dated 28.04 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforementioned provision, to extend the provisions of the ESI Act, by issuing a notification in the official gazette, to any establishment or class of establishments as specified therein. This Sub-section is an enabling conditional legislation. 7. The meaning of the words 'or otherwise' after the words industrial, commercial or agricultural establishments in Sub-section (5) of Section 1 indicate that the Government can extend the ESI Act or any portion thereof to any other establishment or class of establishments. The genus lies in the words 'any other establishment or class of establishment'. The three words industrial, commercial and agricultural represents a specie. Since the legislature did not want to restrict the operation of the ESI Act to these three species has used the catch words 'or otherwise'. 8. The Notification that prompted the Appellant-Bangalore Turf Club Limited to initiate proceedings before various forums read as under: NOTIFICATION In exercise of the powers conferred by Sub-section (5) of Section 1 of the Employee's State Insurance Act, 1948 (34 of 1948) the Government of Karnataka having already given six months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lude a race-club within its definition. For this, he relies upon the definition clause under the Karnataka Shops and Commercial Establishments Act, 1961 (for short 'the Act, 1961'). He would submit that in the absence of a definition of the word 'shop' under the ESI Act, this Court should refer to definitions under the Act, 1961 as the two statutes are in pari materia with each other. It is further submitted that the meaning of 'shop' must be understood in common parlance, that is as per its traditional meaning. It is submitted that the Court should not prefer a liberal or expansive interpretation to ascertain the meaning of a 'shop', and that the literal rule of construction would be best suited to the given case. The learned Counsel would, in aid of his submissions rely on the view point expressed in the case of M/s. Hindu Jea Band v. ESIC (1987) 2 SCC 101; M/s. Cochin Shipping Co. v. ESIC (1992) 4 SCC 245; and Transport Corporation of India v. ESIC (2000) 1 SCC 332. It is further submitted that the case of ESIC v. R.K. Swamy and Ors. (1994) 1 SCC 445 and ESIC v. Hyderabad Race Club (2004) 6 SCC 191 requires reconsideration. He further submits that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... literal interpretation should be preferred, unless it does violence to the scheme of the statute; and fourthly, an exact meaning should be preferred over loose meanings. He would refer to Principles of Statutory Interpretation, Justice G.P. Singh, 13th Edition to support the above contentions. 15. Per contra, Shri Krishnamani, learned Counsel for the Respondent-ESIC, would submit, that, in the absence of a definition under the ESI Act, dictionaries may be used as an external aid of construction. He further contends that it is inappropriate to refer to the definition of shop found in the Act, 1961 or the Act, 1948 as neither would be pari materia with the ESI Act. He further contends that the ESI Act is a beneficial legislation aimed at ensuring social security of employees and in view of the same the Court must adopt an expansive and liberal interpretation to achieve the objects and purpose of the ESI Act. Reference is made to the observations made in Cochin Shipping case (supra) and the R.K. Swamy's case (supra) and in Bombay Anand Bhavan Restaurant v. ESI Corporation (2009) 9 SCC 61. It is submitted that the nature of the activities of the race-clubs would be the same a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is settled law that to prevent injustice or to promote justice and to effectuate the object and purpose of the welfare legislation, broad interpretation should be given, even if it requires a departure from literal construction. The court must seek light from loadstar Articles 38 and 39 and the economic and social justice envisaged in the Preamble of the Constitution which would enliven meaningful right to life of the worker Under Article 21. The State is enjoined Under Article 39(e) to protect the health of the workers, Under Article 41 to secure sickness and disablement benefits and Article 43 accords decent standard of life. Right to medical and disability benefits are fundamental human rights Under Article 25(2) of Universal Declaration of Human Rights and Article 7 (b) of International Convention on Economic, Social and Cultural Rights. Right to health, a fundamental human right stands enshrined in socioeconomic justice of our Constitution and the Universal Declaration of Human Rights. Concomitantly right to medical benefit to a workman is his/her fundamental right. The Act seeks to succour the maintenance of health of an insured workman. The interpretative endeavour should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss, maternity, employment injury and for certain other matters in relation thereto. It is enacted with a view to ensuring social welfare and for providing safe insurance cover to employees who were likely to suffer from various physical illnesses during the course of their employment. Such a beneficial piece of legislation has to be construed in its correct perspective so as to fructify the legislative intention underlying its enactment. When two views are possible on its applicability to a given set of employees, that view which furthers the legislative intention should be preferred to the one which would frustrate it.... 28. Dealing with this very Act, a three-Judge Bench of this Court in the case of Buckingham and Carnatic Co. Ltd. v. Venkatiah AIR 1964 SC 1272 speaking through Gajendragadkar, J., (as he then was) held, accepting the contention of the learned Counsel, Mr. Dolia that: It is a piece of social legislation intended to confer specified benefits on workmen to whom it applies, and so, it would be inappropriate to attempt to construe the relevant provisions in a technical or a narrow sense. This position cannot be disputed. But in dealing with the plea raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative purpose without doing violence to the language of the enactment. 23. As regards the principles to be followed in the event a particular word or phrase has not been defined by the Statute, whether the Courts would be justified in placing reliance upon the meanings as provided for by dictionaries, and if so whether such reliance would be guided by any principles. The position as regards to using dictionaries as an external aid of construction is reflected in the following decisions of this Court. 24. In the case of Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC), this Court pointed out that meanings of words used in Acts of Parliament are not necessarily to be gathered from dictionaries which are not authorities on what Parliament must have meant. It was also indicated that, where there is nothing better to rely upon, dictionaries may be used as an aid to resolve an ambiguity. The ordinary dictionary meaning cannot be discarded simply because it is given in a dictionary. To do that would be to destroy the literal rule of interpretation. It was observed in the given case that it would be a basic rule to rely upon the ordinary dictionary meaning of a word which, in the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 96) 4 SCC 596, wherein it was held that: 12. It is a well-known rule of interpretation of statutes that the text and the context of the entire Act must be looked into while interpreting any of the expressions used in a statute. The courts must look to the object which the statute seeks to achieve while interpreting any of the provisions of the Act. A purposive approach for interpreting the Act is necessary. 28. As regards the question as to whether the Court should rely upon the meaning of the word 'shop' in common parlance or in its traditional sense, or should the Court refer to the dictionary meaning, it would be appropriate to consider the following cases. 29. In the decision rendered by the Queen's Bench in Lyons v. Tucker (1880) 6 QBD 664, it was observed that a statute consists of two parts, the letter and the sense. In this regard it was noticed that it was the internal sense of the law that would make the law, and not the mere letter of the law. In the case of Caledonian Railway v. North British Railway (1881) 6 AC 114, it was held as under: The mere literal construction of statute ought not to prevail if it is opposed to the intentions of the Leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation of statutes, let us revert back to the factual matrix as present in the given set of appeals. 33. The first point for consideration in this reference is, whether there is any flaw in the judgment and order passed by this Court in the case of Hyderabad Race Club (supra). In the said decision this Court has concluded that race-club is an establishment. Therefore, what then is an 'establishment' for the purpose of the ESI Act. 34. In the absence of any definition as provided in the ESI Act, this Court may look into its dictionary meaning for guidance or as an aid of construction of the term 'establishment'. Dictionaries do define the meaning of a word as understood in common parlance. 35. According to Black's Law Dictionary, 7th Edition (1999), the term 'establishment' means, inter alia: Establishment, n. 2. An institution or place of business. 36. According to the Words and Phrases, Permanent Edition, Volume 15, the term 'establishment' has been held to mean, Inter alia, the following: An establishment means a permanent commercial organisation or a manufacturing establishment. Spielman v. Industrial Commission 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the races, may be made either at the Club's totalizators (the totes) by purchasing tickets of ₹ 5 denomination or with the bookmakers (bookies) who are licensed by the Club and operate within the first enclosure. The totalizator is an electronically operated device which pools all the bets and after deducting betting tax and the Club charges, works out a dividend to be paid out as winnings to those who have backed the successful horses in the race. Bookmakers, on the other hand, operate on their own account by directly entering into contracts with the individual punters who come to them and place bets on horses on the odds specified by the bookmakers. The bookmakers issue to the punters printed betting cards on which are entered the bookmaker's name, the name of the horse backed, the amount of bet and the amount of prize money payable if the horse wins. The winning punters collect their money directly from the bookmaker concerned. The net result is that 75% of the tote collections of each race are distributed as prize money for winning tickets, 20% is paid as betting tax to the State and 5% payable to the Club as its commission. It is thus obvious that the Club is ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in dictionaries may be noticed. 41. As per the Concise Oxford English Dictionary, Eleventh Edition (Revised), the term shop has been given the following meaning: shop n. 1. a building or part of a building where goods or services are sold. According to Wharton's Law Lexicon, 14th Edition (2003), a shop has been said to mean: Shop, a place where things are kept for sale, usually in small quantities, to the actual consumer. According to Black's Law Dictionary, 7th Edition (1999), the term 'shop' has been stated to mean: Shop, n. A business establishment or place of employment; a factory, office, or other place of business. According to the Words and Phrases, Permanent Edition, Volume 39, the term 'shop' has been stated to mean, inter alia, the following: The word shop means a room or building in which the making, preparing, or repairing of any article is carried on, or in which any industry is pursued; the place where anything is made; the producing place or source. State v. Sabo 140 N.E. 499, 500 : 108 Ohio St. 200.; Worcester defines a shop as a place, building, or room in which things are sold; a store. Salomon v. Pioneer Co- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of services. 44. Therefore, certain basic features of a ' shop' may be culled out from the above. 11 can be said that a 'shop' is a business establishment where a systematic or organised commercial activity takes place with regard to the sale or purchase of goods or services, and includes an establishment that facilitates the above transaction as well. 45. The word 'shop' is not defined either in the ESI Act or in the notification. The ESI 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 welfare legislation. The definition of a shop which meant a house or building where goods are sold or purchased has now undergone a great change. The word 'shop' occurring in the notification is used in the larger sense than its ordinary meaning. What is now required is a systematic economic or commercial activity and that is sufficient to bring that place within the sphere of a 'shop'. 46. In view of the fact that an 'establishment' has been found to be a place of business and further that a 'shop' is a busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed institution. Apart from a sport, it has become a huge public entertainment business... . Therefore, it can be said that horse racing is indeed a form of entertainment. Such an entertainment is provided not only to the members of the Appellant-Clubs, but also to the general public on the payment of a certain admission fee. 51. Further, the said race-clubs also provide the viewers with the facilities to indulge in betting activities, which may even be said to be an integral part of the sport. The race-clubs further even charge a fixed commission on the said betting. Commission in common parlance has duly been understood to mean a fixed charge payable to an agent or a broker for providing services for facilitating a transaction. 52. The next question is whether the Appellant-Turf Clubs fall under the definition of the term 'shop' for the purposes of the ESI Act. 53. It is not the case of the Appellants that the Club does not provide services. It may be gainsaid that the said services, apart from providing the viewers with a form of entertainment, is available to all members of the public at a mere payment of an admission or entrance fee. The only question, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to buy, maintain and sell horses and ponies for racing, breeding and training either directly or through riding clubs, studs or other agencies; ... (j) to establish institutions, schools, funds and other conveniences for training jockeys and riders, both professional and amateur; ... The above objects are reproduced, solely with the intention to establish that the Appellant cannot claim that the Turf Club is established for the limited purpose of conducting races. This does not imply that this Court is of the opinion that if the Turf Club were to merely conduct horse races, it would surely fall out of the purview of a shop. Further, it would not be relevant as to whether the said activities as enlisted above are being conducted as on date. One cannot argue that a given premises may not be a shop based on the grounds that certain contentious activities have been discontinued for the time being. These activities are provided for in the Memorandum of Association and therefore, the Turf Clubs may, legally and as a matter of right, resume them on a future date. 57. It can be safely concluded that, the Appellant-Turf Clubs conduct the activity of horse racing, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 (for short, the Act, 1948 ) reads as follows: An Act to consolidate and amend the law relating to the Regulation of conditions of work and employment of shops, commercial establishments, residential hotels, restaurants, eating houses, theatres, other places of public amusement or entertainment and other establishments. The preamble of the Karnataka Shops and Commercial Establishments Act, 1961 (for short, the Act, 1961 ) reads as follows: An Act to provide for the Regulation of conditions of work and employment in shops and commercial establishments. 61. On a perusal of the above, it may be said that the said Acts, though they may relate to labour and workmen, is in essence intended to be regulatory. The Acts require mandatory registration of the establishments covered by the respective statutes, sets out provisions relating to working hours, wages, annual leave, etc. and further prescribe penalties for non-compliance with the said provisions. The Acts further enable the local authorities to appoint local inspectors who are given certain powers to ensure the compliance of the provisions of the Acts. Under Sub-section (4) of Section 48 of the Act, 1948 such inspect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Furthermore, in the case of Deepak Mahajan (supra), at paragraph 24 quotes Maxwell on Interpretation of Statutes, Tenth Edn. at page 229, wherein the following passage is found: Where the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence.... Where the main object and intention of a statute are clear, it must not be reduced to a nullity by the draftsman's unskilfulness or ignorance of the law, except in a case of necessity, or the absolute intractability of the language used. 66. It is to be noticed that every word of a language is flexible to connote different meanings when used in different contexts. That is why it is said that words are not static, but dynamic and the Court should adopt the dynamic meaning which upholds the validity or scheme of any legislation. It is settled law that the words used in a particular statute cannot be used to interpret the same word in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to shop are enumerated, it does not, in any manner, oblige us to give a narrow meaning to the word shop nor does it any way dilute the meaning of 'shop'. As rightly contended by the learned Counsel for the Respondent, the object is to envelope as many establishments as possible without leaving any room for doubt. That is precisely what the notification intends to do. 69. We are in agreement with the view expressed in the aforesaid decision. 70. We are of the view that, in the present case, the use of the word 'namely' and a consequent enumeration would simply imply that the notification seeks to enlist the classes of establishment or establishments that fall within the purview of the ESI Act. 71. It has consistently been the stand of the Appellants-herein that the term 'shop' must be understood in its 'traditional sense'. However, as has been observed by this Court in the case of Bombay Anand Bhavan Restaurant (supra), the language of the ESI Act may also be strained by this Court, if necessary. The scheme and context of the ESI Act must be given due consideration by this Court. A narrow meaning should not be attached to the words used i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Civil Miscellaneous Appeal (MD) No. 1231 of 2011. The matter had reached before the High Court against the order of the Labour Court, Tirunelveli, whereby the Appellant was held to be a 'shop' under a Notification extending the provisions of the ESI Act to a certain class of establishments as mentioned under the said Notification. The High Court of Madras, by the said impugned judgment, upheld the order passed by the Labour Court. It was observed in the impugned judgment that the object of the ESI Act is beneficial in nature and the object of the legislature could not be defeated by adopting a narrow definition of the term 'shop'. 79. The given appeal is not a consequence of the aforementioned reference order. However, this appeal has been tagged with the above appeals since it involves the same question of law. The issue in this appeal is whether the business of a Chit Fund can be said to be a 'shop' for the purposes of the ESI Act. 80. The short facts leading to the dispute are that the Government of Tamil Nadu issued a Notification No. II(2)/LE/1859/76 dated 03.04.1976 as published on 21.04.1976. By the said impugned notification, the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the foreman who brings the subscribers together; v. The. foreman is paid commission, in accordance with the Chit Funds Act, for the services rendered by the foreman as he does not lend money belonging to him; iv. There is no debtor-creditor relationship, per se. There is no promise to repay an existing debt, but to pay in discharge of a contractual obligation. The prize amount is not received as a loan, but as of right by virtue of the terms of the contract between the parties. 84. Further, learned Counsel for the Appellant-Chit Fund would contend that the office of the Chit Fund is merely to facilitate such transactions. There may be a business, but the same would be governed by a contract. There is no buying or selling of goods, as contemplated by the dictionary or traditional meaning of a shop. Further, it is accepted that the foreman receives a commission for rendering of the service, however the same is as per the contract and the Chit Funds Act. 85. In fairness to the learned Senior Counsel, he conceded that the ratio of the case of ESIC v. R.K. Swamy (1994) 1 SCC 445, wherein an advertising agency was held to be a shop for the purposes of the ESI Act by virtu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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