K.R. ANITHA AND ORS. versus REGIONAL DIRECTOR, E.S.L. CORPORATION AND ANR.

Citation: [2003] SUPP. 3 S.C.R. 881 · Decided: 17-09-2003 · Supreme Court of India · Bench: SHIVARAJ V. PATIL · Disposal: Dismissed

Judgment (excerpt)

j 
K.R. ANITHA AND ORS. 
A 
v. 
REGIONAL DIRECTOR, E.S.l. CORPORATION AND ANR. 
SEPTEMBER 17, 2003 
[SHIVARAJ V. PATIL AND D.M. DHARMADHIKARI, JJ.] 
B 
Employees' State Insurance Act, 1948-Section 1(4), (5) and (6)-
Toddy shops run by licensee contractors on the basis of yearly auction 
conducted by State Government-Applicability of the Act-Held, toddy 
shop come under the entry 'shop' in the Schedule to the Act-ls not exempt C 
under proviso to sub-section (4) of Section I since it neither belongs to 
nor is under the control of State Government-Hence, the Act is applicable-
Kerala Abkari Act and Rules. 
Appellants are licensee-contractors in respect of toddy shops run 
on the basis of yearly auction conducted by the Excise Department of D 
the State Government. The appellants did not make contribution 
during the period of their license as required under the Employees' 
State Insurance Act, 1948 on the ground that the provisions of the Act 
are not applicable to the employees working in toddy shops. Respondent-
Corporation conducted inspection and initiated recovery proceedings E 
for collection of contribution am(lunt against the appellants under the 
Act taking the stand that the toddy shops are covered under the Act. 
The appellants filed applications before the Employees Insurance 
Court (EI Court) under the Act for a declaration that the toddy shops 
run by the appellants during the period 1991-94 could not be brought F 
under the purview of the Act since the toddy shops are not included 
specifically in the notification dated 18.9.1974 issued by the State 
Government under section 1(5) of the Act. The appellants further 
contended before the EI Court that the appellants are not liable under 
the Act even though the previous contractors were complying with the G 
ESI Scheme. The EI Court allowed the applications of the appellants 
by holding that the provisions of the Act are not applicable to the toddy 
shops of the appellants. The respondents challenged the validity and 
correctness of the orders passed by the EI Court before High Court. 
The High Court allowed the appeals of the respondents. 
H 
881 
882 
SUPREME COURT REPORTS [2003] SUPP. 3 S.C.R. 
A 
In appeal to this Court the appellants contended that the toddy 
shops established under the State Abkari Act are not covered by the 
ESI Act since they are not included specifically under the notification 
dated 18.9.1974 issued by the State Government under section 1(5) of 
the ESI Act; that the toddy shops are exempted under the proviso to 
B subsection ( 4) of Section I of the Act since they are owned and 
controlled by the State Government and its employees are enjoying 
similar or even superior benefits provided under the Act; and that the 
appellants, being Abkari contractors, are only immediate employers 
under the State Government, who is the principal employer. 
C 
The respondents contended that the appellants did not raise the 
plea before the EI Court that the toddy shops were not covered by the 
Act even previously even though the previous contractors were 
complying with the ESI Scheme and that the strength of the employees 
in toddy shops was less and not covered by the Act; that the toddy 
D shops in question were covered by the Act long prior to the appellants 
became licensees to trade in liquor for the period in question. 
Dismissing the appeals, the Court 
HELD : 1. The High Court was right in holding that toddy shop 
E is a premises where the business of buying and selling is going on and 
that a toddy shop would come under the entry 'shop' in the Schedule. 
the appellants did not seriously dispute this finding of the High Court. 
[888-G-H] 
F 
Mis International Ore and Fertilisers (India) Pvt. Ltd. v. Employees' 
G 
State Insurance Corporation, [1987] 4 SCC 203; Mis Cochin Shipping 
Co. v. E.S.l. Corporation, [1992] 4 SCC 245 and Employees' State 
Insurance Corporation v. R.K. Swamy & Ors., (1994] I SCC 445, relied 
on. 
2. In order to take shelter under the proviso to sub-section (4) of 
Section I of the Employees' State Insurance Act, 1948, the appellants 
have to satisfy that their establishments belonged to or were under the 
control of the Government; and that the employees in their 
establishments were otherwise receiving benefits substantially similar 
H or superior to the benefits under the Act. The State has the monopoly 
K.R. ANITHA v. REGIONAL DIRECTOR 
883 
in liquor trade but it is open to the State to part with that right f

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