Case Note & Summary
The appellant, Vidarbha Premier Co-operative Housing Society, filed an appeal against the order of the Employees' State Insurance Court, Nagpur, which dismissed its application under Section 77(1) read with Section 75(g) of the Employees' State Insurance Act, 1948, and Rule 13 of the Bombay Employees' Insurance Rules, 1959. The society's main activities were extending loans to members for acquiring, constructing, or repairing residential houses on a no-profit-no-loss basis, and constructing flats through contractors for allotment to members. The ESI Corporation sought to cover the society under the Act, contending that it was a 'shop' under Clause 3(iii) of the Schedule to the notification dated 19/11/1976 issued under Section 1(5) of the Act. The High Court framed two substantial questions of law: whether the society could be considered a 'shop' under the notification, and whether principles of natural justice could be invoked regarding the applicability of the notification. The Court held that the society's activities were not commercial in nature and did not involve the sale of goods or services to its members, and therefore it did not fall within the definition of a 'shop' under the notification. The Court also held that the notification under Section 1(5) is a legislative act, and principles of natural justice are not applicable. Consequently, the appeal was allowed, and the order of the ESI Court was set aside.
Headnote
A) Employees' State Insurance Act, 1948 - Definition of 'Shop' - Section 1(5) - Notification dated 19/11/1976 - Whether a housing society extending loans to members for construction of houses and constructing flats through contractors can be considered a 'shop' - Held that the society's activities are not commercial and do not involve sale of goods or services to members, thus not a 'shop' under the notification (Paras 03-05). B) Employees' State Insurance Act, 1948 - Section 1(5) - Notification - Principles of Natural Justice - Whether principles of natural justice can be invoked in applicability of notification issued under Section 1(5) - Held that the notification is a legislative act and principles of natural justice are not attracted (Para 03).
Issue of Consideration
Whether the appellant society can be said to be a 'shop' covered under Clause 3(iii) of the Schedule to the notification dated 19/11/1976 and in terms of Section 1(5) of the Employees' State Insurance Act, 1948; and whether principles of natural justice can be invoked in a case of applicability of notification issued under Section 1(5) of the Act.
Final Decision
Appeal allowed. The order dated 19/08/2005 passed by the ESI Court, Nagpur in E.S.I. Case No.5/1992 is set aside. The appellant society is not covered under the ESI Act as a 'shop' under the notification dated 19/11/1976.
Law Points
- Definition of 'shop' under ESI Act
- Applicability of notification under Section 1(5)
- Principles of natural justice in statutory notifications
