THE MANAGEMENT OF THE TATA IRON & STEEL CO. LTD. versus CHIEF INSPECTING OFFICER AND ORS.

Citation: [2004] SUPP. 6 S.C.R. 1088 · Decided: 17-12-2004 · Supreme Court of India · Bench: ASHOK BHAN · Disposal: Dismissed

Judgment (excerpt)

A 
B 
THE MANAGEMENT OF THE TAT A IRON & STEEL CO. LTD. 
v. 
CHIEF INSPECTING OFFICER AND ORS., 
DECEMBER 17, 2004 
[ASHOK BHAN AND A.K. MATHUR, JJ.] 
Bihar Shops and Establishments Act, 1953-Sections 2(6) and 4(2) 
read with Schedule I, Item No. 2-Estab!ishment of hospital by management 
of a Company-If an establishment within section 2(6)-Held : Hospital 
C is part of establishment of management and caters for employees of 
management and its associated companies as statutory obligation but also 
for Government servants and private parties on payment of fees, profit or 
loss being irrelevant-Therefore, hospital is doing business and is not doing 
charity, as such an establishment as defined in section 2(6) and covered 
D by the Act-Exemption under section 4(2) read with Schedule I, Item No. 
2-Entitlement of-Held : Since the hospital is not being run for charitable 
pwpose, it is not entitled to exemption under section 4(2) read with Schedule 
I, Item No. 2-f!ihar Shops and Establishment Rules, 1956-Employees State 
Insurance Act, 1948. 
E 
Words and Phrases 
'Establishment' and 'business '-Meaning of 
Appellant-management of a company established a hospital for 
F providing medical facilities to the employees, their families and 
dependents of its associated companies. Medical facilities were also 
provided to Government employees and private patients on payment of 
charges. Notice was issued to the appellant for registration of the Hospital 
as an establishment under the Bihar Shops and Establishments Act, 
1953. Appellant contended that since it is providing medical service to 
G its employees and its associated industries, it is not involved in commer-
cial activities and as such is not an establishment under the Act. Authori-
ties rejected the contention. Appellan( then filed writ petition. High 
Court held that the hospital is an establishment within the meaning of 
section 2(6) of the Act and as such covered by the Act. Hence the present 
H appeals. 
1088 
THE MANGT. OF THE TATA IRON & STEEL CO. LTD. 1·. CHIEF INSPECTING OFFICER 1089 
Appellant-management contended that the Hospital does not fall A 
within the definition of 'establishment' as defined in Section 2(6) of the 
Act; that being a charitable hospital, it is entitled to exemption under 
section 4(2) read with Schedule 1 of item No. 2; and that normally 
business is for some profit or gain, but this Hospital is not working for 
any profit or gain and is running in loss, as such not covered by the B 
definition of 'establishment'. 
Dismissing the appeals, the Court 
HELD : 1.1. The Hospital is a part of the appellant-management 
and is one of its Divisions, as evident from the budgetary provisions. It C 
is clear from the facts that right from the beginning when the Hospital 
was established, it was catering to the needs of the employees and thei.r 
families, and its associated companies but at the same time it was open 
for the Government servants and private patients also on payment of 
fees. It is not primarily meant to cater to the employees of the appellant 
or their associated companies but also for the private individuals also. 
Therefore, it cannot be said that the Hospital was only meant to cater 
the need of the employees of the appellant. It had the business activities 
by charging fees from the Government servants as well as private 
patients for their treatment in the hospital. [1097-A-B] 
Black's Law Dictionary, referred to. 
1.2. The establishment of the present Hospital is an obligation on 
the part of tile appellant management because otherwise they had to 
contribute under the Employees State Insurance Act, 1948. Under the 
said Act the employees as well as the employer, both have an obligation 
to make contribution for the medical facilities provided by the E.s.f. 
Hospitals. AH the establishment have to get themselves registered under 
section 2A of the E.S.I. Act. At the same time, under section 87 of the 
Act, examination can also be granted from making contribution by the 
Government. It is admitted that the present establishment had obtained 
exemption up to the year 1996 but after that exemption was not granted 
and a petition was filed in the Court and stay order has been granted. 
Therefore, even if the establishment of the Hospital may be for the 
purpose of taking care of their employees, it is under statutory obliga-
tion of the appellant management, otherwise they would have to make 
registration under Section 2A of the

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