BHARUCHA - (1.) LEAVE granted in the Special LEAVE Petitions.
(2.) THESE are appeals by special leave filed by the Employees State Insurance Corporation against the judgments and orders of the High Courts of Bombay, Madras and Kerala holding that advertising agencies are not shops for the purposes of the application thereto of the Employees' State Insurance Act, 1948 (hereinafter referred to as "the said Act"). All the appeals can, therefore, be disposed of by a common judgment. It is convenient to take note in the judgment, as illustrative, of the facts of the case arising in Bombay. A notification was issued under S. 1(5) of the said Act by the Government of Maharashtra. S. 1(5) entitles the appropriate Government, (in these appeals, admittedly, the Governments of Maharashtra, Tamil Nadu and Kerala) to extend the provisions of the said Act, in consultation with the appellants (the Employees' State Insurance Corporation) and with the approval of the Central Government, after giving 6 months notice of its intention so to do by a notification in the Official Gazette, to any establishment or classes of establishments, industrial, commercial, agricultural or otherwise. By the said notification the said Act was applied to, inter alia, shops. The relevant portion of the notification read thus: "3. The following establishments wherein a twenty or more employees are employed or were employed for wages on any day of the preceding twelve months, namely: JUDGEMENT_445_1_1994Html1.htm
(3.) THE appellants informed M/s. Dattaram Advertising (P) Ltd., the respondent in the appeal, that it was covered by the notification and required it to comply with the provisions of the said Act and make contributions thereunder. The respondent resisted and, ultimately, filed an application before the Employees' State Insurance Court contending that it was not a hotel, a restaurant, a shop, a cinema or a newspaper establishment and, therefore, the said Act had not been extended to it by the said notification. The appellants submitted that the respondent was a shop and, accordingly, covered by the said notification and, therefore, by the said Act. The Employees' State Insurance Court upheld the submission and dismissed the respondent's application. An appeal was filed by the respondent under the provisions of the said Act before the High Court at Bombay and the learned single Judge who heard it reversed the order of the Employees' State Insurance Court, holding that the respondent was not a shop. The appellants filed a Letters Patent Appeal, upon which the impugned judgment and order was made. The impugned judgment noted the evidence on behalf of the respondent as to the activities carried on in its advertising agency, thus : "The witness on behalf of the respondent has stated that sometimes the clients visit the .office of the respondent, while sometimes the officers of the respondent visit its clients. The proposals for the promotion of the products in different media are given by the officers of the respondent in its office. Advices are given by the respondent's officers as to the expenses that could be incurred if the products are advertised 'through the different media such as newspapers. All India Radio, television etc. Basically, says the witness, the respondent renders advice to its clients as to how their products are to be advertised. Though at one stage he made himself bold to say that the income of the respondent was only by way of commission which the respondent earns by giving advertisements to the media, he was naturally compelled to admit later that the clients also pay the respondent for the various services rendered by the respondent's organisation. 8. Proceeding further, it may be noted that the respondent's organisation has an art department, a media department and an accounts department. The different categories of the employees are office peons, assistants, accountants, artists, art directors, etc. The witness has described the manner in which a proposal for the advertisement takes shape and how it is ultimately executed. The description given by him, happily brought out in the cross-examination on behalf of the Corporation gives a fairly accurate picture of the work done by the respondent. The idea for advertising is suggested, in the first place, by the respondent to its clients. After the idea is accepted in one form or another, the execution of the same is taken up. The photograph work is given to outside agencies However, the drawing of the sketches and doing the painting work are done by the art department of the respondent. After the work is over, a bill is prepared in respect of a particular client and the payment is naturally made by the client in accordance with the bill." ;