DARASK LTD Vs. E S I CORPORATION

JUDGEMENT

(1.) The appellant company has been found by the Employees State Insurance Court to be a shop falling within the scope of Notification under S.1(5) of the Employees State Insurance Act, 1948. The Kerala Government issued notification dated 22-3-1975 specifying certain establishments wherein 20 or more persons are employed or were employed for wages on any day of the preceding 12 months to be covered under the Act with effect from 29-3-1975. These establishments were:

(2.) 'Shop' is not a term defined either in the Notification or in the Act. So it must have the meaning as understood in common parlance. That I the popular meaning is to be given to the term is indicated by the decision in I. T. Commr A. P. v. Taj Mahal Hotel (AIR 1972 SC 168). The dictionary meaning of the term 'Shop' is mentioned in the order of the Insurance Court as 'Shop' is a place where any kind of industry is persued; a place of employment or activity industry means systematic economic activity or any branch thereof". Generally a shop is a place where commercial activities such as buying and selling take place. But there need not necessarily be such activity to make a place a shop. It may be a servicing centre where servicing is done for price. Radio repairing shop, shoe repairing shop, cycle repairing shop are examples. Where there is no commercial activity at all the fact that employees are engaged may not be sufficient to make it a shop. Normally one associates the term shop with customer. Where there is no commercial activity at all and the place is not intended for commercial activity there will be no occasion for a customer to deal with that office. It may not be necessary for the purpose of this case to go further into the term shop, for, it appears to us that on the facts evidenced in this case the Canon Shed Office of the appellant company is nothing but a shop. It is not a case where there may be any difficulty in finding so. Ext. P1 is the agreement entered into between the appellant company and its principal Alembic Chemical Works Limited. The case of the appellant as stated in the application filed under S.77 read with S.75 of the Act before the Insurance Court is that the applicant is a marketing organisation acting as dealers or agents of certain manufacturing companies situated outside the State working for a commission on the sales turnover and effecting sales promotion. The applicant has no manufacturing unit and the staff of the applicant at Ernakulam are directly controlled and supervised by the Executive Director at Bangalore. That the relationship between the applicant company and its principal is governed by Ext. P1 (seen marked as Ext. P2) is not disputed by the parties. There is no case that subsequent to Ext. P1 agreement the terms of the agreement have been changed. What is stated therein is that the principal Alembic Chemical Works Company " Limited wishes to appoint the Agents as its regional selling agents for the purpose of distribution and sale of the goods manufactured by the principal, such goods to be sold by the agents for and on behalf of the principal. Clause (1) of the agreement provides that the principal appoints the agents as its selling agents and clause (2) provides that the principal will entrust the agents with the products of the principal for managing the promotion, distribution and / or sale, on behalf of the principal on terms and conditions and prices fixed by the principal from time to time. Clause (4) of the agreement provides that the agents shall have authority to sell and deliver the goods to third parties. Clause (13) provides that the agents shall be paid commission at the rate of 10 percent on all sales effected by them in their area. Pursuant to this the Ernakulam Office of the appellant company has appointed medical representatives who canvass orders and promote sales. Delivery of goods to third parties is effected by the Ernakulam Office. No doubt they are doing this on behalf of their principal and for commission. That does not render it any activity different from that of selling goods. They are selling goods on behalf of their principal, but all the same it is a normal commercial activity that is run in the shop by the appellant company.