Supreme Court Of India

Employees State Insurance Corporation V. Hyderabad Race Club

Criminal Appeal No. 4686 Of 1999 (With C.A. No. 4687 Of 1999). 28-07-2004


Santosh Hegde, J.

1. These two appeals arise out of a common judgment of the High Court of Judicature, Andhra Pradesh at Hyderabad made in a statutory appeal filed under Section 83(2) of the Employees State Insurance Act (the Act). The appellant-Hyderabad Race Club (the Club) in C.A. No. 4687/99 is aggrieved by the finding of the High Court whereby the appellant was held to be an establishment for the purpose of the Act whereas its contention before the authorities below including the High Court was that it was not in establishment covered by the Act.

 2. The grievance of the appellant-Employees State Insurance Corporation (the Corporation) in C.A. No. 4686/99 is that the High Court having come to the conclusion that the Hyderabad Race Club is an establishment under the Act erred in reducing its liability and holding that the demand made on the said club for contribution for the period between 1975 to 1986 was unreasonable because the law at that time on this point was uncertain.In this appeal, the appellant contends that the same cannot be a ground for exempting an establishment of its statutory liability once it is held that establishment comes under the purview of the Act.

3. We will first consider the case of the club whether it comes within the definition of 'establishment' under the provisions of the Act. It was the contention of the Club that the Club is not an establishment nor a shop within the meaning of Andhra Pradesh Shops and Establishment Act, 1988, hence the notification by which the Act was made applicable to the club was beyond the scope of the Act.

4. Having heard the learned counsel for the parties and perused the various judgments on this question that the contention of the appellant Club cannot be accepted. It is suffice to say that in view of the judgment of this Court in the case of M/s. Cochin Shipping Company vs. E.S.I. Corporation (1992 (4) SCC 245) and Employees' State Insurance Corporation vs. R.K. Swamy & others (1994 (1) SCC 445), it is quite clear that the institution like the appellant Club comes within the purview of the Act, hence, we find no difficulty in accepting the finding of the High Court in this regard, therefore, this contention of the appellant-Club in C.A. No. 4687/99 has to be rejected. However, learned counsel for the appellant contended that assuming for argument sake that the club is an establishment for the purpose of the Act even then it was obligatory on the part of the authorities below to have factually examined the liability of the Club which as contended by the learned counsel for the Club was not done by the authorities below. We find no merit in this argument also. Since it is found on record that inspite of the opportunity being granted to the appellant club, no material was produced or evidence led to prove what exactly was the number of workmen in the club who are entitled to the benefit of the Act. Per contra, the authorities below including the High Court has relied on the report of the Inspector who made a spot inspection and submitted a report to the authorities which has gone unchallenged. Therefore this factual finding also cannot be disturbed in this appeal.

5. So far as the contention of the Corporation in their appeal C.A. No. 4686/99 is concerned, the same is confined to the question of limiting the liability of the Club for the period after 1985. It is argued that once the applicability of a statute is declared by a court of law, the same applies from the date of the said law being brought into force, hence, in the instant case by the notification of 1975 the Club was brought within the purview of the Act, therefore, the liability of the Club started from the said date. Therefore, in this background, the High Court erred in exonerating the Club from its liability between the period 1975 to 1985.

6. It is true as contended by the learned counsel on behalf of the Corporation that once a court of law declared the applicability of a statute the said declaration in the ordinary course should apply from the date the law in question was brought into force, but there could be exception to this principle depending upon the facts of the case. It is undisputed that till the judgment of this Court in the case of M/s. Hindu Jea Band, Jaipur vs. Regional Director, Employees' State Insurance Corporation, Jaipur (AIR 1987 SC 1166) the law in regard to the institutions like a Club coming within the purview of the definition of establishment for the purpose of the Act was nebulous. It was so understood even by the Corporation itself which is evident from the fact that the action against the appellant for non-compliance of its liability was not taken for nearly 15 years until the visit of the Inspector of the Corporation on 17.6.1990. In that background even the Corporation was not very certain whether the word establishment used in the concerned notification of 26.3.1975 included a Club. Therefore, in our opinion, the High Court was justified in coming to the conclusion to call upon the Club to make contribution for a period between 1975 to 1986 would be somewhat unreasonable. Thus in the peculiar facts of this case, we are in agreement with the finding of the High Court that the demand under the Act as against this Club can be enforced only from the year 1987 onwards.

7. For the reasons stated above, these appeals fail and the same are dismissed.

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