Case: Employees State Insurance Corporation Vs. Shri R.K. Swamy

ultimately fructify into sales and the resulting trading activity is directed from there that place comes to be known as a "Shop". In our view the Employees Insurance Court placed a very narrow interpretation on the expression "shop" while upholding the contention 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 provisions so that the purpose of the legislation may be allowed to be achieved rather than frustrated or stultified." 12. In the case of M/s Cochin Shipping Company (ibid) this Court took note of the decisions in the case of Hindu Jea Band and International Ore & Fertilizers (India) Pvt. Ltd., and it noted that the appellant was carrying on stevedoring, clearing and forwarding operations. Clearing documents, even it be in the Custom house, was necessary for the export or import of goods. These services formed part of the carriers job. It could not be gainsaid that the appellant was rendering a service to cater to the needs of exporters and importers and others who wanted to carry goods. Therefore, the appellants premises were held to be a shop carrying on a systematic economic or commercial activity. 13. In the case of Regional Provident Fund Commissioner v. Shibu Metal Works (ibid) this court noted that the Employees Provident Fund Act was intended to serve a beneficient purpose. The object which the Act purported to achieve was to require that appropriate provision should be made for employees employed in establishments to which the Act applied. That meant that in construing the material provisions of such an Act in two views were reasonably possible, the courts should prefer the view which helped the achievement of the object. When the words used in an entry were capable of a narrow or a broad construction, each construction being reasonably possible, and it appeared that the broad construction would help the furtherance of the object, then it was necessary to prefer that construction. This rule postulated that there was a competition between the constructions, each one of which was reasonably possible. The rule did not justify straining words or putting an unnatural or unreasonable meaning on them just for the purpose of introducing a broader construction. 14. There is no doubt at all that the said Act is beneficient legislation. If, therefore, it is reasonably possible so to construce the word "shop" as to include the activity of an advertising agency within it, that construction must be preferred. 15. The decision in the case of Hindu Jea Band held a shop to be "a place where services are sold on retail basis. It was, therefore, held that making available on payment of a stipulated price the service of musicians employed by the petitioner on wages made the petitioners establishment a shop. In the case of International Ore & Fertilizers (India) Pvt. Ltd., the petitioner carried on commercial activities facilitating the sale of goods by its foreign principals to the State Trading Corporation or the Minerals and Metals Corporation. It arranged for the unloading of such goods and, their survey. Upon delivery it collected the price payable and remitted it to its foreign principals. These were trading activities and although the goods imported were not actually and although the goods imported were not actually brought to the petitioners premises and delivered to the purchasers there, the premises were held to be a shop because the trading activities aforementioned related to the sale of goods. These judgments were followed in the case of Cochin Shipping Company, which catered to the needs of exporters and importers and others who wanted to carry goods. The appellants premises were, therefore, held to be a shop where systematic economic or commercial activity was carried on. 16. In the light of these judgments, and the expanded meaning now given to the word "shop", the evidence which we have reproduced above setting out the different activities of an advertising agency needs to be considered. Clients call on an advertising agency to initiate campaigns for promotion of their products. Advertising campaigns can be conducted in the different media and otherwise. The advertising agency gives advice in this behalf and as to possible expenses. The advertising agency prepares and presents alternative campaigns for the client to choose from. For such purpose it must prepare the necessary art work and the appropriate words to go with it. It employs specialists in these fields. The advertising agency is paid for the service it renders as aforesaid by the client. It also receives commission from the media though whom advertising is done. 17. Anyone who has products to sell may approach an advertising agency. The advertising agency will prepare an adverting campaign for him utilising the services of the experts it employs in this behalf. It sells the campaign to the client and receives the price thereof. Indubitably, the price will depend upon the nature of the campaign, but that does not, in our view, make any great difference. Essentially, the advertising agency sells its expert services to a client to enable the client to launch an effective campaign of his products. Without straining language, the premises of an advertising agency can, therefore, reasonably be said to be a `shop as now understood. 18. The correspondence between the Government of Tamil Nadu and the appellants in the course of consultation under section 1(5) of the said Act does not assist, in our view, even the advertising agencies in the cases from Madras for, whatever the view of the appellants was before the notification was issued, it is for the courts to interpret the notification once it is issued. The doctrine of contemporaneous exposition does not apply here. The appellants have not, in implementing the notification, proceeded on the basis that advertising agencies are not shops.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]14. There is no doubt at all that the said Act is beneficient legislation. If, therefore, it is reasonably possible so to construce the word "shop" as to include the activity of an advertising agency within it, that construction must be preferred. 15. The decision in the case of Hindu Jea Band held a shop to be "a place where services are sold on retail basis. It was, therefore, held that making available on payment of a stipulated price the service of musicians employed by the petitioner on wages made the petitioners establishment a shop. In the case of International OreFertilizers (India) Pvt. Ltd., the petitioner carried on commercial activities facilitating the sale of goods by its foreign principals to the State Trading Corporation or the Minerals and Metals Corporation. It arranged for the unloading of such goods and, their survey. Upon delivery it collected the price payable and remitted it to its foreign principals. These were trading activities and although the goods imported were not actually and although the goods imported were not actually brought to the petitioners premises and delivered to the purchasers there, the premises were held to be a shop because the trading activities aforementioned related to the sale of goods. These judgments were followed in the case of Cochin Shipping Company, which catered to the needs of exporters and importers and others who wanted to carry goods. The appellants premises were, therefore, held to be a shop where systematic economic or commercial activity was carried on. 16. In the light of these judgments, and the expanded meaning now given to the word "shop", the evidence which we have reproduced above setting out the different activities of an advertising agency needs to be considered. Clients call on an advertising agency to initiate campaigns for promotion of their products. Advertising campaigns can be conducted in the different media and otherwise. The advertising agency gives advice in this behalf and as to possible expenses. The advertising agency prepares and presents alternative campaigns for the client to choose from. For such purpose it must prepare the necessary art work and the appropriate words to go with it. It employs specialists in these fields. The advertising agency is paid for the service it renders as aforesaid by the client. It also receives commission from the media though whom advertising is done. 17. Anyone who has products to sell may approach an advertising agency. The advertising agency will prepare an adverting campaign for him utilising the services of the experts it employs in this behalf. It sells the campaign to the client and receives the price thereof. Indubitably, the price will depend upon the nature of the campaign, but that does not, in our view, make any great difference. Essentially, the advertising agency sells its expert services to a client to enable the client to launch an effective campaign of his products. Without straining language, the premises of an advertising agency can, therefore, reasonably be said to be a `shop as now understood.The correspondence between the Government of Tamil Nadu and the appellants in the course of consultation under section 1(5) of the said Act does not assist, in our view, even the advertising agencies in the cases from Madras for, whatever the view of the appellants was before the notification was issued, it is for the courts to interpret the notification once it is issued. The doctrine of contemporaneous exposition does not apply here. The appellants have not, in implementing the notification, proceeded on the basis that advertising agencies are not shops.