Holding

The term "shop" includes establishments engaged in systematic commercial activities such as stevedoring, clearing and forwarding, and therefore the appellant falls within the ambit of the Employees' State Insurance Act.

Summary

Cochin Shipping Co., a company engaged in stevedoring, clearing and forwarding at Cochin Port, received a notice under the Employees' State Insurance Act, 1948 to pay contributions. The company contended that the Kerala Government's notification extending the Act to "shops" did not apply to it, arguing that a "shop" is a place where buying and selling of merchandise occurs. The High Court held that the company's activities constituted a "shop" and the Supreme Court affirmed this view, emphasizing a liberal construction of welfare legislation. The Court observed that the term "shop" in the notification is intended to encompass any establishment carrying on systematic commercial activity, not limited to retail sales. Consequently, the company was held liable to contribute under the Act and the appeals were dismissed.

Issues considered

The meaning of the term "shop" in the Kerala Government notification under Section 1(5) of the Employees' State Insurance Act, 1948.
Whether the activities of stevedoring, clearing and forwarding constitute a "shop" within the meaning of the notification.
Whether the enumeration of other establishments in the notification limits the scope of the term "shop".

Legislation cited

Employees' State Insurance Act, 1948s. 1(4), s. 1(5), s. 75
Sea Customs Acts. 202

Subjects

Employees' State Insurance Actshop definitionstatutory interpretationwelfare legislationnotificationclearing and forwardingstevedoringliberal construction

Judgment

-{ COCHIN SHIPPING CO. ETC. ETC. A
v.
E.S.I. CORPORATION

AUGUST 19, 1992

[LAUT MOHAN SHARMA, S. MOHAN AND B
N. VENKATACHALA, JJ.]

>-- Employees' State Insurance Act, 1948: Sections 1(5) & 75:

Notification extending operation of the Act to Hotels, Restaurants,
'C
Road Motor Transport Establishments, Cinemas and 'Shops"-'Shop'-Con-
notation of- Held establishment carrying on stevedoring, clearing and for-
warding operations at a Port is a 'shop'.

Interpretation of statutes-Social security legislation-construction of-
+ Duty of Courr-Should be construed liberally so as to promote the object of ,D
the Act.

Words and Phrases:

'Shop'-Meaning of.
E
-{ The Gonrnment of Kerala issued a Notification dated 18.9.1974
under Section 1(5) of the Employees' State Insurance Act, 1948 extending
the provisions of the Act to six kinds of establishments viz. Hotels, Res-
-.:: taurants, Shops, Road Transport Motor Establishments, Cinemas and
~
Newspaper Establishments. The appellant Company, carrying on the busi-
ness of clearing and forwarding at the port of Cochin, received notice for F
,.__ payment of its contribution under the Act. Denying its liability to pay, it
filed an application before the Employees' Insurance Court under Section
75 of the Act, contending that the Notification was not applicable to it
because its establishment was not a shop, but
I
the same was dismissed. On
appeal a DMsion Bench of the High Court held that the establishment of
G
the appellant falls within the purview of the term 'shop'.

In appeals to this Court it was contended on behalf of the appellant
~
that (1) though 'shop' would take within it other establishments like hotels
or restaurants yet they have come to be specifically mentioned. In view of
that enumeration af other establishment in contradistinction to shops the H
909
;

910 SUPREME COURT REPORTS (1992] 3 S.C.R.

A word 'shop' must be held to relate to a place where commercial activity of }-
buying and selling merchandise takes place otherwise the enumeration of
other establishment becomes meaningless; (2) in view of the fact that the
notification specifically enumerates the other establishments, ~he inten-
tion has been clearly brought out not to give a wider meaning of the term
'shop' as otherwise the term 'shop' itself would be enough to covet other
B establishments like hotels, restaurants, cinema etc. From this point of
view, the activity carried on by the appellant merely processing the docu-
ment at the customs clearing house without rendering any service to the
customers at the appellant's office of establishment cannot be said to fall
within the meaning of 'shop'.
c
Dismissing the appeals, this Court

HELD: Per Sharma, I.

In view of the consistent interpretation of the notification which has
D been followed in the country, the question should not be reopened for fresh
consideration. (912-B]

Per Mohan, J. (For Himself and Venkatachala, I.) Concumng:

1. The Employee's State Insurance Act is an Act to provide certain
E benefits to employees in case of sickness, maternity and employment
injury and makes provision for certain other matters in relation thereto.
>--
Under Section 1(4), in the first instance, it is made applicable to all
factories. But the Act envisages the extension of benefit to the employees
in other establishments· or class of establishments, industrial commercial,
=---
F agricultural or otherwise. The extension of benefit is to be done by means "
of a notification by the Appropriate Government. Thus the benefits con-
ferred by the Act cover a large area of employees than what the Factories
Act and the akin legislations intended. The conclusion is inescapable that
it is a welfare legislation. The endeavour of Court should be to place a
liberal construction so as to promote its object. The object is to envelop
G as many establishments as possible without leaving any room for doubt.
That is precisely what the Notification intends to do. [915D,E,F, 920-A]
~
2. The Notification catalogues six establishments one of which is
'shop'. Merely because other establishments which are akin to shop are
H enumerated, it does not, in any manner, oblige the Court to give a naITow
COCHIN SHIPPING CO. v. E.S.I. CORPN. [SHARMA, J.) 911

meaning to the word 'shop' nor does it any way dilute the meaning of A
'shop'. The appellant is carrying on stevedoring, clearing and forwarding
operations. Clearing the documents, even it be in the cu~tom house, is
necessary for the export or import of goods. These services form part, of
the carriers job. It cannot be gainsaid that the appellant is rendering
service to cater the needs of exporters and importers and others who want B
to carry the goods further. Therefore, it is a shop carrying on a systematic
economic or a commercial activity. This would be enough to bring the
appellant without specifically enumerating the specific activities carried
on by the appellant. [913H, 919H, 920A-B]

Hindu lea Band, Jaipur. v. Regional Director Employees' State In- C

- surance Corporation, Jaipur, [1987) 2 S.C.R. 377 and Mis International Ore
& Fertilizers (India) Pvt. ltd. v. Employees' State Insurance Corporation,.
[1987] 4 S.C.C. 203, relied on.
•
Wharton's Law Lexicon, 14th Edn. 929 and Words and Phrases Legal-
fy ~~~~~~~~ D
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2593-
2599 of 1980.

From the Judgments and Orders dated 23.5.79, 30.5.79, 25.6.79,
26.6.79 and 9.7.1979 of the Kerala High Court in M.F.A. Nos. 69, 76, 80, E
81, 83, 89 and 75 of 1977.

A.T.M. Sampath for the Appellant in CA. No. 2593/80.

V.A. Bobde, O.C. Mathur, Ms. Meera and D.N. Mishra for the
Appellant in CA. No. 2594-99/80.
F

V.A. Bobde, O.C. Mathur, Ms. Meera and D.N. Mishra for the
Respondent in C.A. No. 2593/80.

N.N. Goswamy, V.C. Mahajan, Hemant Sharma and Mrs. Anil G
Katiyar for the Respondent.

The Judgments of the Court were delivered by

SHARMA, J. The learned counsel for the respondent has, in support
of his stand, placed reliance Qn several decisions of this Court and the Hig~ H
J

912 SUPREME COURT REPORTS [1992] 3 S.C.R.

A Courts in which the notification in identical terms has been construed in )-
the way as is suggested on behalf of the Corporation. Although Mr. Bobde,
learned counsel for the appellant has advanced an argument, which on the
face of it, appears to be attractive, I think that in view of the consistent
interpretation of the notification which has been followed in the country,
the question should not be reopened for fresh consideration. Accordingly,
B I agree that all these appeals should be dismissed but without costs.

MOHAN, J. These appeals can be dealt with by a common judgment _..,
since the question of law to be decided is one and the same. It is enough
if we note the facts in Civil Appeal No. 2599 of 1980.
c
The appellant is a company incorporated under the Companies Act.
It has its registered office at Jew Town in Mattancherry. It is engaged in
the business of clearning and forwarding at the Port of Cochin situated in
·-
D
Willingdon Island. It is authorised to transact its business at the Cochin
Custom House under the terms of Section 202 of the Sea Customs Act read +
with the Rules made thereunder and a licence was issued under the said
provisions.

The appellant received a notice dated 3.1.75 enclosing certain
notification whereby the Employees State Insurance Act (hereinafter
E referred to as the Act) was extended to certain classes of establishments
specified in the Schedule wherein 20 or more persons are employees or
were employed during that period. The appellant replied that it did not
fall under the purview of the said notification. Therefore, the appellant was :i-im
not liable to comply with any of the provisions of the Act. Another letter ":::.

F dated 8.9.75 was received by the appellant calling it upon to furnish certain
details. This was replied to by a letter dated 20.9.75 whereunder the details
were furnished. Thereafter a notice dated 7.11.75 with which were enclosed ~
certain printed forms, was received by the appellant. The appellant replied
on 18.11.75 denying liability to pay any contribution under the Act. The
stand of the appellant was that the company does not come within the
G notification dated 18.9.74 as the appellant was not a shop and was carrying
on business of clearing and forwarding at the Cochin Port. In reply to the
said letter the appellant received a letter dated 9.12.75 stating that the
Insurance Inspector who visited the appellant found 20 persons employed
in the shop. It was functioning as shipping, clearing and forwarding agents.
H The appellant served the clistomers. Therefore, it was a shop within the
COCHIN SHIPPING CO. v. E.S.I. COR}>N. [MOHAN, J.] 913

dictionary meaning of the term and called upon the appellant to submjt A
the returns.

Contending that the appellant does not render any service to cu~
tomers at its office, it was merely carrying on clearing and forwarding
business by processing the documents at Custom House, no service bein~
rendered at the appellant's office establishment, it was urged that it coul~ B
not be called a shop within the dictionary meaning. An application w~
moved under Section 75 of the Act before the Employees, Insurance Court,
Calicut to decide the dispute and to hold that the appellant was not a sho11
within the purview of the Act and,· therefore, the Act itself was inap~
P.licable. C

Objections were preferred on behalf of the Regional· Director,,
Employees State Corporation that in view of the notification dated 18.9.74
supplemented by the other notifications dated 2.12.74 and 22.3.75, the'I
+ appellant's business would fall within the ambit of the said notifications.
The Government of Kerala issued those notifications with.a view to extend' D
benefits to the employees working in other sections of organised labour'
such as shops and establishments. '

The Employees Insurance Court by ·a judgment dated 29.1.77 in'
E.1.C. No. 1/76 held that the applellant would be covered with effect from ' E
six months after 21.12.74. In the result, the appellant was brought within '
the notification. Against this order, M.FA.No. 75of1977 was preferred to '
the Hign Court of Kerala. A Division Bench by its judgment dated 25.6.79, '
following its earlier judgment held that the term "shop"as understood in the '
scheme of the Act is not merely a place where the business of purchase
and sale takes place but it is a place where there is commercial activity ' F
arising from customer service. In that sense, the establishment of the '
appellant has to be understood to fall within the purview of the term "shop".
Accordingly the appeal was dismissed. Hence, the civil . appeals, leave
having been granted by an order dated 3.11..80.

Mr. Bobde, learned counsel for the appellants would raise the fol- ,G
lowing submissions.

The Act primarily applies to factories. Of course, the Act could be
extended to other establishments by means of a notification. In the instant
case, a notification dated 16.9.74 catalogues six establishments one of which H
914 SUPREME COURT REPORTS (1992] 3 S.C.R.

A is shop. Though "shop" would take within it other establishments like hotels
or restaurants yet they have come to be specifically mentioned. In view of
that enumeration of other establishment in contradiction to shops the word
"shop" must be held to relate to a place where coll'linercial activity of buying
and selling merchandise takes place otherwise the enumeration of other
establishment becomes meaningless.
B
As to what is the meaning of "shop" could be gathered from
Wharton's Law Lexicon 14th Ed. 929 and Words and Phrasas Legally
Defined 2nd Ed. 73.

C The next submission of the learned counsel is in view of the fact that
the notification specifically enumerates the other establishments, the inten-
tion has been clearly brought out not to give a wider meaning of the term
"shop" as otherwise the term "shop" itself would be enough to cover other
establishments like hotels, restaurants, cinema etc. From this point of view,
the activity <:arried on by the appellant merely processing the document at
D the customs clearing house without rendering any service to the customers
·at the appellant's office or establisnment cannot be said to fall within the
meaning,of "shop". Therefore, the approach of the High Court and the
authorities would require to be set aside. It must be held that the notifica-
tion has no application to the appellant's business.
E
In opposition to this, Mr. Goswamy, learned counsel appearing on
behalf of Employees, State Insurance Corporation would submit that the
word "shop" is wide in its amplitude. It means a place where any kind of
commercial activity is pursued and where services are rendered to the
customers. In so far as the appellant is carrying on the business of clearing
F and forwarding and rendering service which are part of carrier's job
certainly it will be a shop.· It caters to the needs of exporters and importers.
It is a systematic commercial activity or ~ economic activity. Hence, it
would be a shop within the meaning of the notification. Merely because
every establishment may fall within the scope of the term "shop" as
G enumerated, it does not, in any way, restrict the meaning of the word
"shop". The object of enumeration is to envelop as many establishments as
possible without leaving room for any doubt, where, therefore, the word
"shop" alone would be enough t? cover the activities of the appellant, it is
not necessary to further enumerate and specifically bring within the scope
H of the notification the activities of the appellan;t .. Regru.;g;m~t.!>C£ ~'Mbin
i..,

COCHIN SHIPPING CO. v. E.S.I. CORPN .. (MOHAN, J.] 915

this connection that this is a social welfare legislation. This Court had A
--( always taken the view that as far as permissible the endeavour of the Court
must be to cover those employees than to deny the benefit of these
provisions. In support of these submissions the cases in Hindu lea Band
Jaipur v. Regional Director, Employees' State Insurance Corporation, Jaipur
etc., [1987) 2 SCR 377 and Mis. International Ore & Fertilizers (India) Pvt. B
Ltd. v. Employees' State Insurance Corporation, [1987) 4 SCC 203 are cited.
Thus it is submitted that no exception could be taken to the impugneq
judgment.
>-
Mr. A.T.M. Sampath, learned counsel appearing for the appellant
adopts the arguments of Mr. Bobde while the respondent opposes in the c
~ same vein.

The Employees State Insurance Act is an Act to provide certain
benefits to employees in case of sickness, maternity .and employment injury
+ and make provision for certain other matters in relation thereto. The Act D
is an outcome of a policy to provide remedy for the widespread evils arising
from the consequences of national poverty. Indeed, it is a piece of social
security.

Under Section 1 (4), in the first instance, it is made applicable to all E
--{ factories. The Act envisages the extension of benefit to the employees in
other establishments or class of establishments, industrial, commercial,
agricultural or otherwise. The extension of benefit is to be done by means
of a notification by the appropriate Government. Thus the benefits con-
ferred by the Act cover a large area of employees than what the Factories
Act and the akin legislations intended. The conclusion is inescapable that
I
F
it is a welfare legislation. The endeavour of the Court should be to place
~ a liberal construction so as to promote its objects to which a reference has
been made.

In the instant case, the impugned notification runs as follows: G

"GOVERNMENT OF KERALA

No. 22877/E2/73/LBR LABOUR(E)DEPARTMENT
I
TRIV ANDRUM, dt. 18.9.74 · H
916 SUPREME COURT REPORTS (1992) 3 S.C.R.

A NOTIFICATION
S.R.O.
In exercise 'of the powers conferred by sub-section (5) of Section 1
of the Employees' State Insurance Act, 1948 (Central Act 84 of 1948), the
Government of Kerala, in consultation with the Employees' State Insurance
B Corporation and with the approval of the Central Govt. hereby given notice
of its intention to extend the provisions of the said Act to the clauses of
the Establishments specified in the Schedule annexed hereto, on or after
29.3.1975.

Description of establishments Areas in which the establishment
c are situated
The following establishments whereon 1. Trivandrum, Navaikulam and Paz-
twenty or more persons are employed hayakunnumel (Kilimanoor) in
for wages on any day of the preceding Trivandrum District.
twelve months, namely:
2. Quilon, Kundara, Chathannur,
D Kottaraka, Punalur an Sast
hamcotta in Quilon District.
(i) Hotels; 3. Alleppey, Kayamkulam and
Shertailai in Alleppey District.
(ii) Restaurants: 4. Kottayam town in Kottayam
E District.
(iii) Shops; 5. Ernakulam and Cochin in
Ernakulam District.
(iv) Road Motor Transport 6. Trichur town in Trichur District.
establishments;
F (v) Cinema including preview 7. Palghat town in Palghat District.
theatres;
(vi) Newspaper establishments as 8. Kozhikode town in Kozhikode
defined in Section 2 ( d) of the District and
Working Journalists (Conditions
of Service) and Miscellaneous 9. Cannanore town, Tellicherry and
G Provisions Act, 1955 (5ofl955). ~aliapatam in Cannanore District
m the State of Kerala.

By order of the Governor,
Sd/
H U .Mahabala Rao, Secretary to Government"
COCHIN SHIPPING CO. v. E.S.I. CORPN. [MOHAN, J.] 917

As it could be seen, six kinds of establishments wherein 20 or more A
-( employees are or were employed for wages on any day of the preceding 12
months would fall within the scope of the notification. Item 3 says "shops".
Therefore, the argument is while "shop" could cover the other estab-
lishments like hotels or restaurants in view of the specific enumeration the
activities of clearing and forwarding carried on by the appellant unless B
specifically enumerated cannot be brought within the word "shop". This
argument takes us to the meaning of "shop".

)t.-- Wharton's Law Lexicon 14th Ed. Page 929:

"Shop a place where things are kept for sale, usually in small C
quantities, to the actual consumers. By Shops Act, 1912, s.19,
"shop" includes any premises where any retail trade or business
is carried on: 'retail trade or business' includes the business of
a barber or hairdresser, but not the sale of programmes, etc.,
-+ at places of amusement." D I

Words and Phrases Legally Defines 2nd Ed. 73:

"Shop" includes dwelling-house and warehouse, or other place
of business, or place where business is transacted.
E
"Shop" includes any premises, and any vehicle, stall or place
other than premises, on or in which any retail trade or business
is carried on." -

It has also come up for consideration in the rulings of this Court
while interpreting a similar notification. In Hindu lea Band, Jaipur (supra) F
it was held thus:

_"The first contention urged in support of the petition is that
since the petitioner was not selling any goods in the place of
its business but was only engaged in arranging for musical
performances on occasions such as marriages etc. its business G
premises cannot be called a "shop." We do not agree with the
narrow construction placed by the petitioner on the expression
"shop" which appears in the notification issued under section
1(5) of the Act which is a beneficent legislation. The word shop
has not been defined -in the Act. A shop is no doubt an H
918 SUPREME COURT REPORTS (1992] 3 S.C.R.

A establishment (other than a factory) to which the Act can be
extended under section 1 (5) of the Act provided other require-
ments are satisfied. In Collins English Dictionary the meaning
of the word shop is given thus: "(i) a place esp. a small building
for the retail sale of goods and services and (ii) a place for the
performance of a specified type of work; workshop." It is
B obvious from the above meaning that a place where services
are sold on retail basis is also a shop. It is not disputed that
the petitioner has been making available on payment of the
stipulated price the services of the members of the group of
musicians employed by it on wages. We, therefore, hold that
c the place where the petitioner has been carrying business is a
shop to which the Act is applicable by virtue of the notification
referred to above. The first contention, therefore, fails."

Again, in Mis. International Ore & Fertilizers (India) Pvt. Ltd. v.
D Employees' State Insurance Corporation (1987] 4 SCC 203 at 206 the follow- +
ing useful observations are found:

"The word "shop" is not defined in the Act or in the notification
issued by the State Government. According to the · Shorter
Oxford English Dictionary the expression "shop" means "a
E house or building where goods are made or prepared for sale
and sold". It also means a "place of business" or place where
one's ordinary occupation is carried on". In ordinary parlance
a "shop" is a place where the activities connected with the
buying and selling of goods are carried on. The evidence
F produced in the case shows that the petitioner is carrying on
its business at its business premises in Secunderiibad. At that
place the petitioner carries on the commercial. activity facilitat-
ing the emergence of contracts of sale of goods between its
foreign principals and the State Trading Corporation/Minerals
and Metals Trading Corporation of India. It arranges for the
G unloading of the goods under its supervision and for the survey
of the goods despatched by its foreign principals at the ports
on behalf of its foreign principals and on the goods being
delivered to the Central Government it collects the price pay-
able by the government and remits it to its foreign principals.
H All these activities are directed and controlled from its
..\_

COCHIN SHIPPING CO. v. E.S.I. CORPN. [MOHAN, J.] '919

premises at Secunderabad. .It is thus clear that the activities A
carried on by the petitioner constitute trading activities al-
though the goods imported from abroad are not actually
brought to the said premises and delivered to the purchaser
there. In our opinion it is not actually necessary that the delivery
of the goods to the purchaser should take place at the premises
B
in which the business of buying or selling is carried on to
constitute the said premises into a "shop". The delivery of the
goods sold to the purchaser is only one aspect of trading
activities. Negotiation of the terms of sale, carrying on of the
survey of the goods imported, arranging for the delivery of' the
goods, sold, collection of the price of the goods sold etc. ,are c
all trading activities. The premises where business is carried on
by the petitioner is undoubtedly a shop as the activities that ,are
carried on there relate only to the sale of goods which are
imported into India. The petitioner acts as the agent of, its
-+ foreign principals who are the sellers. The petitioner directs D
and controls all the activities from the premises in question,. If
orders are received at a place which ultimately fructify ip.to
sales and the resulting trading activity is directed from th~re
that place comes to be known as a "shop". In our view the
Employees' Insurance Court placed a very narrow interarpreta-
tion on the expression "shop" while upholding the contention E
~ of the petitioner by confining "shop" to a place where goods
are actually stored and delivered pursuant to a sale. We agree
with the decision of the High Court that while construing a
-:::_ welfare legislation like the Act and the notification issued
thereunder a liberal construction should be placed on their F
provisions so that the purpose of the legislation may be allowed
to be achieved rather than frustrated or stultified."
>--
In this case, the argument advanced on benalf of the appellant' is
slightly different, namely, other kinds of establishments which can easily
fall within the definition of "shop" have been enumerated. Hence, a specific G
1

enumeration, so as to incb1de the appellant's business activity, is to J>e
insisted upon. In our considered view, this argument cannot be accepted.
First of all, merely because other establishments which are akin to shop
are enumerattid, 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 H
J

920 SUPREME COURT REPORTS [1992] 3 S.C.R.

A "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.

The appellant is carrying on stevedoring, clearing and forwarding
operations. Clearing the documents, even it be in the custom house, is
B necessary for the export or import of goods. These services form part of
the carrier's job. It cannot be gainsaid that the appellant is .rendering
service to cater the needs of exporters and importers and others who want
to carry the goods further. Therefore, it is a shop carrying on a systematic
economic or a commercial activity. This would be enough to bring the
appellant without specifically enumerating the specific activities carried on
c by the appellant. Merely because shop has been enumerated along with
other similar establishment we do not think any further specific enumera-
tion is necessary to cover the appellant. Thus we reject the contentions
raised on behalf of the appellant.

D The appeals stand dismissed. There shall be no order as to costs. +
T.N.A. Appeals dismissed.