INTERNATIONAL ORE & FERTILIZERS (INDIA) PVT. LTD. versus EMPLOYEES STATE INSURANCE CORPORATION

Citation: [1987] 3 S.C.R. 981 · Decided: 18-08-1987 · Supreme Court of India · Bench: E.S. VENKATARAMIAH · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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INTERNATIONAL ORE & FERTILIZERS 
(INDIA) PVT. LTD. 
v. 
EMPLOYEES' STATE INSURANCE CORPORATION 
AUGUST 18, 1987 
[E.S. VENKATARAMIAH AND K.N. SINGH, JJ.} 
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Employees' State Insurance Act, 1948: Sections 1(5) and 75 and 
Andhra Pradesh State Government Notification dated March 25, 
1975-'Shop'-What is. 
Interpretation of Statutes: Welfare legislation-Liberal construc-
tion-Necessity for. 
Words & Phrases: 'Shop'-Meaningof. 
The petitioner, a limited company, having central office at Secun-
derabad was carrying on business of importing fertilizers and represen-
ted some foreign principals for the sale of their products in India. 
The Government of Andhra Pradesh after giving six months 
notice, vide its gazette notification No. 788 Health dated 25-9-74 as 
required under section 1(5) of the Employees' State Insurance Act, 1948 
lo'-- extended the provisions of the Act with effect from 30-3-75 to the 
establishments mentioned therein in which 20 or more persons were 
employed for wages on any day of the preceding 12 months by Notifica-
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tion G.O.M.S. No. 297, Health, dated 25th March, 1975. Item 3(iii) in the 
list of establishments in that notification to which the Act was so ex-
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tended by the State Government was "shops". 
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On inspection of the premises of the petitioner-company at Secun-
derabad on 28-4-75, the Employees' State Insurance Inspector found 
that the petitioner had employed persons ranging from 27 to 29 for 
wages and was carrying on the business of import of fertilizers, and the 
Y petitioner was asked to comply with the provisions of the Employees' 
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State Insurance Act. The petitioner agreed and submitted contribution 
forms of its employees to th• office of the Corporation. 
After complying with the provisions of the Act for a period of four 
years the petitioner instituted a case under Section 75 of the Act before 
the Employees' Insurance Court for a declaration that the establish-
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981 
982 
SUPREME COURT REPORTS 
[1987] 3 S.C.R. 
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ment in which the petitioner was carrying on its business was not a 
"shop", and, therefore, it was not covered by the aforesaid notification 
and that the petitioner was not liable to comply with the provisions of 
the Act. On behalf of the Corporation it was submitted that the estab-
lishment being run by the petitioller was a "shop" and, therefore, 
liable to comply with the provisions of the Act. The Employees" Insu- i 
B ranee Court upheld the plea of the petitioner and declared that the 
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estab~shment was not covered by the Act. 
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The High Court allowed the appeal of the Corporation and held 
that the establishment was a "shop" to which the Act was applicable by 
virtue of the State Government's notification. 
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In the Special Leave Petition, on behalf of the petitioner i1t was 
urged that since no goods were actually being delivered in the premises 
in which the petitioner was having its establishment, the said establish-
ment could not be treated as a 'shop' which was referred to in item 3(iii) 
of the Government's notification. 
Dismissing the Special Leave Petition, this Court, 
HELD: l. The petitioner-company is bound to comply with the 
provisions of the Act as, at all relevant times, the company had engaged 
more than 20 persons for wages at.its place of business. [986E] 
2.1 The word "shop" is not defined in the Act or in the notifica-
tion issued by the Government. [9850] 
2.2 In ordinary parlance a "shop" is a place where the actMties 
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connected with the buying and selling of goods are carried on. [985E] 
2.3 It is not actually necessary that the delivery of the goods to the 
purchaser should take place at the premises 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 Y 
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 all trading 
activities. [985H, A] 
In the instant case, the premises where business is carried on by 
the petitioner is undoubtedly a "shop" as the activities that are carried 
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on there relate only to the sale of goods which are imported into India. 
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INTERNATIONAL ORE v. E.S.l. CORPN. [VENKATARAMIAH. J.] 
983 
The petitioner acts as the agent of its foreign principals who are the

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