# THE BANGALORE TURF CLUB LTD v. REGIONAL DIRECTOR, EMPLOYEES STATE - **Citation:** [2014] 8 S.C.R. 1021 - **Court:** Supreme Court of India - **Decided:** 2014-07-31 - **Case number:** Civil Appeal No. 2416 of 2003 - **Bench:** H.L. Dattu, R.K. Agrawal, Arun Mishra - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-bangalore-turf-club-ltd-v-regional-director-employees-state-29918 - **Pages:** 54 ## Headnote EMPLOYEES' STATE INSURANCE ACT, 1948: A B c s. 1 (5) - 'Establishment' - 'shop' - Turf Club - Held: A 'shop' is a business establishment where a systematic or organised commercial activity takes place with regard to the sale or purchase of goods or services, and includes an establishment that facilitates these transactions as well - An D establishment being a place of business and a shop being a business establishment, it can be said that a 'shop' is indeed covered under, and may be called a sub-set of the term 'establishment' -- The activities of appellant-Turf Clubs are in the nature of organised and systematic transactions -- E Appellants-Turf Clubs, in essence, take money from viewers, members as well as the general public, as admission fee and in return provide them with certain services, those being the actual viewing of the race and facilitating placing of bets -- Thus, a race-club, of the nature of appellants, would fall under F the scope of the term 'shop' and thereby the provisions of ES/ Act would extend upon them by virtue of the respective impugned notifications issued under sub-s. (5) of s. 1 - Therefore, it is held (i) a 'race-club' is an 'establishment' as rightly held in the case of Employees State Insurance Corporation v. Hyderabad Race Club; and (ii) Appellant-Turf G Clubs are duly covered under the term 'shop' for the purposes of ES/ Act and notifications issued thereunder -- Government of Tamil Nadu Notification No. l/(2)/LE/1859176 dated 1021 H 1022 SUPREME COURT REPORTS (2014] 8 S.C.R. A 03.04.1976 - Government of Maharashtra Notification No. ES/. 167713910/PH-15 dated 18.09.1978. s. 1 - 'Entertainment' - Horse racing - Held: Is a form of · entertainment -- Such an entertainment is provided not only 8 to the members of the appellant-Clubs, but also to the general public on payment of a certain admission fee. s. 1 (5) - 'Establishment' - 'shop' - Chit Fund - Held: In light of the fact that appellant-Chit Fund provides for seNices and in return the foreman receives a commission, there C existing a systematic commercial activity and a rendering of seNices taking place, activities of Chit Fund would be those as would fall um:Jer the definition of a shop as evolved by the Court -- Therefore, in accordance with the reasoning if] Civil Appeal No.2416 of 2003 and other connected appeals, D appellant chit fund would fall within the meaning of the word 'shop' as mentioned in the notification issued under ES/ Act -- Therefore, provisions of ES/ Act would extend to appellant also - Government of Tamil Nadu Notification No. 11(2)/LEI 1859176 dated 03.04.1976. E INTERPRETATION OF STATUTES: Statutes pari materia -- Maharashtra Shops and Establishments Act, 1948, Kamataka Shops and Commercial Establishments Act, 1961 and ES/ Act--Held: Statutes are F said to be in pari materia with each other when they deal with the same subject-matter -- The rationale behind this rule is based on the interpretative assumption that words employed in legislations are used in an identical sense --However, this assumption is rebuttable by the context of the statutes -- ES/ G Act, the Act, 1948 and the Act, 1961 deal with labour and workmen, in essence and spirit they have a different scope and application -- The Acts do not appear to have any overlap· in their fields of operation and have mutually exclusive schemes -- Therefore, it cannot be said that the said Acts are H pari materia with each other. THE BANGALORE TURF CLUB LTD. v. REGIONAL 1023 DIRECTOR, ESI CORPORATION Liberal and beneficial interpretation -- Beneficial A legislation for welfare of workmen and employees -- Held: In the case of beneficial legislations and legislations enacted for welfare of employees and workmen, Court has on numerous occasions adopted liberal rule of interpretation to ensure that the benefits extend to those workers who need to be covered based on the intention of the Legislature -- Since ES/ Act is passed for conferring certain benefits to employees in ## Text _Characters 0–39,858 of 99,272. This is a partial read: ask again with offset=39858 for what follows._ [2014] 8 S.C.R. 1021 THE BANGALORE TURF CLUB LTD. v. REGIONAL DIRECTOR, EMPLOYEES STATE INSURANCE CORPORATION (Civil Appeal No. 2416 of 2003) JULY 31, 2014 [H.L. DATTU, R.K. AGRAWAL AND ARUN MISHRA, JJ.] EMPLOYEES' STATE INSURANCE ACT, 1948: A B c s. 1 (5) - 'Establishment' - 'shop' - Turf Club - Held: A 'shop' is a business establishment where a systematic or organised commercial activity takes place with regard to the sale or purchase of goods or services, and includes an establishment that facilitates these transactions as well - An D establishment being a place of business and a shop being a business establishment, it can be said that a 'shop' is indeed covered under, and may be called a sub-set of the term 'establishment' -- The activities of appellant-Turf Clubs are in the nature of organised and systematic transactions -- E Appellants-Turf Clubs, in essence, take money from viewers, members as well as the general public, as admission fee and in return provide them with certain services, those being the actual viewing of the race and facilitating placing of bets -- Thus, a race-club, of the nature of appellants, would fall under F the scope of the term 'shop' and thereby the provisions of ES/ Act would extend upon them by virtue of the respective impugned notifications issued under sub-s. (5) of s. 1 - Therefore, it is held (i) a 'race-club' is an 'establishment' as rightly held in the case of Employees State Insurance Corporation v. Hyderabad Race Club; and (ii) Appellant-Turf G Clubs are duly covered under the term 'shop' for the purposes of ES/ Act and notifications issued thereunder -- Government of Tamil Nadu Notification No. l/(2)/LE/1859176 dated 1021 H 1022 SUPREME COURT REPORTS (2014] 8 S.C.R. A 03.04.1976 - Government of Maharashtra Notification No. ES/. 167713910/PH-15 dated 18.09.1978. s. 1 - 'Entertainment' - Horse racing - Held: Is a form of · entertainment -- Such an entertainment is provided not only 8 to the members of the appellant-Clubs, but also to the general public on payment of a certain admission fee. s. 1 (5) - 'Establishment' - 'shop' - Chit Fund - Held: In light of the fact that appellant-Chit Fund provides for seNices and in return the foreman receives a commission, there C existing a systematic commercial activity and a rendering of seNices taking place, activities of Chit Fund would be those as would fall um:Jer the definition of a shop as evolved by the Court -- Therefore, in accordance with the reasoning if] Civil Appeal No.2416 of 2003 and other connected appeals, D appellant chit fund would fall within the meaning of the word 'shop' as mentioned in the notification issued under ES/ Act -- Therefore, provisions of ES/ Act would extend to appellant also - Government of Tamil Nadu Notification No. 11(2)/LEI 1859176 dated 03.04.1976. E INTERPRETATION OF STATUTES: Statutes pari materia -- Maharashtra Shops and Establishments Act, 1948, Kamataka Shops and Commercial Establishments Act, 1961 and ES/ Act--Held: Statutes are F said to be in pari materia with each other when they deal with the same subject-matter -- The rationale behind this rule is based on the interpretative assumption that words employed in legislations are used in an identical sense --However, this assumption is rebuttable by the context of the statutes -- ES/ G Act, the Act, 1948 and the Act, 1961 deal with labour and workmen, in essence and spirit they have a different scope and application -- The Acts do not appear to have any overlap· in their fields of operation and have mutually exclusive schemes -- Therefore, it cannot be said that the said Acts are H pari materia with each other. THE BANGALORE TURF CLUB LTD. v. REGIONAL 1023 DIRECTOR, ESI CORPORATION Liberal and beneficial interpretation -- Beneficial A legislation for welfare of workmen and employees -- Held: In the case of beneficial legislations and legislations enacted for welfare of employees and workmen, Court has on numerous occasions adopted liberal rule of interpretation to ensure that the benefits extend to those workers who need to be covered based on the intention of the Legislature -- Since ES/ Act is passed for conferring certain benefits to employees in case B of sickness, maternity and employment injury, it is necessary that ES/ Act should receive a liberal and beneficial construction so as to achieve legislative purpose without c doing violence to the language of the enactment -- In light of the judgments of the Court and in particular Cochin Shipping Case and the Bombay.Anand Bhavan Case, an expansive meaning may be assigned to the word 'shop' for the purposes of the ES/ Act. Beneficial legislation - ES/ Act - Certain terms not defined in the Act - Resort to dictionary meaning and judicial pronouncements - Explained. The two Judge Bench before which the instant appeals were listed, was of the view that the appellant turf clubs would not be 'shop' for the purpose of the Employees' State Insurance Act, 1948 (ESI Act) or notifications issued thereunder and the decision of two Judge Bench in the case of Hyderabad Race Club would require reconsideration and, as such, the matter came to be considered by the three Judge Bench. The issues for consideration before the Court were: firstly, whether the judgment in the Hyderabad Race Club was correct in holding that a 'race-club' is an "establishment" for the purposes of the Employees' State Insurance Act, 1948, and secondly, whether the appellants-Turf Clubs fall within the scope of the definition of the word 'shop' as categorised in the notifications. D E F G H • 1024 SUPREME COURT REPORTS [2014] 8 S.C.R. A Disposing of the appeals (except C.A. Nos. 49 and 1575 of 2006, 3421 and 3422 of 2012), the Court HELD: 1.1. In the case of beneficial legislations and legislations enacted for the welfare of employees and 8 workmen, this Court has on numerous occasions adopted the liberal rule of interpretation to ensure that the benefits extend to those workers who need to be covered based on the intention of the Legislature. [para 17] [1046-E] C Regional Director, ES/ Corpn. v. Francis De Costa, 1992 (3) SCR 23 = 1993 Supp (4) SCC 100; Transport Corpn. of India v. ES/ Corpn. (2000) 1 SCC 332; Buckingham and Carnatic Co. Ltd. v. Venkatiah 1964 SCR 265 =AIR 1964 SC 1272; and Bombay Anand Bhavan Restaurant v. ES/ Corpn. D (2009) 9 SCC 61 - relied on. E Bangalore Water Supply & Sewerage Board vs. A. Rajappa & Ors. 1978 (3) SCR 207 = 1978 (2) SCC, 213 - held inapplicable. Principles of Statutory Interpretation, Justice G.P. Singh, 13th Edition - referred to. 1.2. The ESI Act is a welfare legislation enacted by the Central Government as a consequence of the urgent F need for a scheme of health insurance for workers. The legislature enacted the ESI Act to provide certain benefits to employees'in case of sickness, maternity, employment injury and to make provision in certain other matters in relation thereto. The provision of the ESI Act apply to all G the factories other than seasonal factories. The State Government with the approval of the Central Government is authorised to make the provisions of the ESI Act applicable to any other establishment(s). The provisions of the ESI Act provide that all employees in factories or establishments to which the ESI Act applies shall be H THE BANGALORE TURF CLUB LTD. v. REGIONAL 1025 DIRECTOR, ESI CORPORATION insured in the manner provided under the ESI Act. Since A the .ESI Act is passed for conferring certain benefits to employees in case of sickness, maternity and employment injury, it is necessary that the ESI Act should receive a liberal and beneficial construction so as to achieve legislative purpose without doing violence to the B language of the enactment. [para 18 and 22] [1046-F; 1050-0-F] 1.3. The literal rule of construction may be the primary approach to be utilized for interpretation of a statute and that words in the statute should in the first instance be C given their meaning as understood in common parlance. However, the ESI Act is a beneficial legislation. It seeks to provide social security to those workers as it encompasses. In light of the judicial pronouncements, it may be seen that the traditional approach can be D substituted. A dictionary meaning may be attached to words in a statute in preference over the traditional meaning. However, for this purpose as well, the scheme, context and objects of the legislature must be taken into consideration. Taking into due consideration the nature E and purpose of the ESI Act, the dictionary meaning as understood in the context of the said Act, would be preferable to achieve the objects of the legislature. [para 31] [1054-A-C] Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 F (SC); State of Orissa v. Titaghur Paper Mills Co. Ltd., 1985 SCR 26 = 1985 Supp SCC 280; State of U.P. v. Hari Ram, 2013 (2) SCR 301 = (2013) 4 SCC 280; S. Gopal Reddy v. State of A.P. 1996 (3) Suppl. SCR 439 = (1996) 4 SCC 596; Sheikh Gu/fan v. Sanat Kumar Ganguli, (1965) 3 SCR 364 - G referred to. Queen's Bench in Lyons v. Tucker, (1880) 6 QBD 664; Caledonian Railway v. North British Railway, (1881) 6 AC 114; Spielman v. Industrial Commission, 295 N.W. 1, 4, 236 Wis. 240; Lorenzetti v. American Trust Co., D.C.Cal., 45 H 1026 SUPREME COURT REPORTS [2014] 8 S.C.R. A F.Supp. 128, 139 - referred to. 1.4. In the absence of any definition as provided in the ESI Act, this Court may look into its dictionary meaning for guidance or as an aid of construction of the term 'establishment'. Therefore, it can be simply stated B that, an 'establishment' is a term which can have a wide meaning. It would be any place where business is conducted, or it would be any place of business. The term 'establishment' would mean the place for transacting any business, trade or profession or work connected with or C incidental or ancillary thereto. It is true that the definition in dictionaries is the conventional definition attributed to trade or commerce, but it cannot be wholly valid for the purpose of constructing social welfare. !egislation in a modern welfare State. The test of finding out whether o professional activity falls within the meaning of the expression 'establishment' is whether the activity . .Js systematically and habitually undertaken for productibn or distribution of the goods or services to the community with the help of employees in the manner of a trade or E business in such an undertaking. If a systematic economic or commercial activity is carried on in the premises, it would follow that the establishment at which such an activity is carried on is a 'shop'. This Court, in Hyderabad Race Club, keeping in view the systematic F commercial activity carried on by the Club, has held that the Race-Club is an establishment within the meaning of the said expression as used in the notification issued ul s 1 (5) of the ESI Act. Therefore, in the considered view of this Court, the view expressed in Hyderabad Race Club is in consonance with the provisions of the ESI Act and G also settled legal principles. Therefore, the said decision does not require re-consideration. [para 34, 38 and 39] [1054-F; 1055-F-G; 1057-D-H] Employees State Insurance Corporation v. Hyderabad H Race Club (2004) 6 SCC 191-- affirmed. THE BANGALORE TURF CLUB LTD. v. REGIONAL 1027 DIRECTOR, ESI CORPORATION Dr. K.R. Lakshmanan v. State of Tamil Nadu (1996) 2 A sec 224' - relied on. 1.5. A 'shop' is a place of business or an establishment where goods are sold for retail. However, it may be noted that the definitions as given in the B dictionaries are very old and may not.reflect, with complete accuracy, what a shop may be referred as in the present day. Therefore, it may be pertinent to consider the manner in which this Court has dealt with the word 'shop' in its judicial decisions. [para 42) [1059-F-G] c International Iron Ore and Fertilizers (India) Pvt. Ltd. v. ESIC 1987 (3) SCR 981 = (1987) 4 SCC 203; M~. Hindu Jea Band V. ESIC 1987 (2) SCR 377 = (1987) 2 sec 101; Mis. Cochin Shipping Co. v. ESIC 1992 (3) SCR 909 = (1992) 4 SCC 245; and Transport Corporation of India v. ESIC 1999 D (4) Suppl. SCR 393 = (2000) 1 sec 332; ESJC vs. R.K. Swamy & Ors 1993 (3) Suppl. SCR 461 = (1994) 1 SCC 445 - referred to. State v. Sabo, 140 N.E. 499, 500, 108 Ohio St. 200; E Salomon v. _Pioneer Co-operative Co., 21 Fla. 374, 384, 58 Am.Rep .. 667; State v. O'Connell, 26 Ind. 266, 267; Salomon v. Pioneer Co-operative Co., 21 Fla. 374, 384, 58 Am.Rep. 667 - referred to. Corpus Juris Secundum, Volume LXXX; Halsbury's F Laws of England, Vol. 36, p.396, para. 593).; Black's. Law Dictionary, 7th Edition (1999); Concise Oxford English Dictionary, Eleventh Edition (Revised); Wharton's Law Lexicon, 14th Edition (2003); Words and Phrases, Permanent Edition, Volume 39, referred to. G 1.6. Therefore, culling out certain basic features of a 'stiop', it can be said that a 'shop' is a business establishment where a systematic or organised commercial activity takes place with regard to the sale or H 1028 SUPREME COURT REPORTS [2014) 8 S.C.R. A purchase of goods or services, and includes an establishment that facilitates the above transaction as well. [para 44] (1060-C-D] 1.7. The word 'shop' is not defined either in the ESI 8 Act or in the i1otification. The ESI Act being a Social Welfare Legislation intended to benefit, as far as possible workers belonging to all categories, one has to be liberal in interpreting the words in such welfare legislation. The definition of a shop which meant a house or building C where goods are sold or purchased has undergone a great change. The word 'shop' occurring in the notification is used in the larger sense than its ordinary meaning. What is now required is a systematic economic or commercial activity and that is sufficient to bring that place within the sphere of a 'shop'. [para 45] (1060-D-F] D 1.8. In view of the fact that an 'establishment' has been found to be a place of business and further that a 'shop' is a business establishment, it can be said that a 'shop' is indeed covered under, and may be called a sub-· E set of the term 'establishment'. [para 46] (1060-G] Whether the activities of a race-club are 'entertainment': 1.9. In the absence of any definition ·of F 'entertainment' in the ESI Act, the activities of a race club to fall within the term 'entertainment' have to be seen in the light of its dictionary meaning. Therefore, it can be safely concluded that 'entertainment' is an activity that provides with amusement or gratification. Further, it would G include public performances, including games and sports. [para 47 and 49] (1061-A; 1062-B] Concise Oxford English Dictionary, Eleventh Edition (Revised); Black's Law Dictionary, 7th Edition (1999); H Words and Phrases, Permanent Edition; Volume 14A; THE BANGALORE TURF CLUB LTD. v. REGIONAL 1029 DIRECTOR, ESI" CORPORATION Corpus Juris Secundum, Volume LXXX - referred to. A 1.10. As has been observed in the c~se of Dr. K.R. Lakshmanan horse racing is an organised institution. Apart from a sport, it has become a huge public entertainment business. Further, the said race-clubs also 8 provide the viewers with the facilities to indulge in betting activities, which may even be said to be an integral part of the sport. The race-clubs further even charge a fixed commission on the said betting. "Commission" in common parlance has duly been understood to mean a C fixed charg~ payable to an agent or a broker for providing services for facilitating a transaction. Therefore, it can be said that horse racing is indeed a form of entertainment. Such an entertainment is provided not only to the members of the appellant-Clubs, but also to the general public on the payment of a certain admission fee.[para D 13 and 50-51] [1062-D•F] Dr. K.R. Lakshmanan v. State of Tamil Nadu (1996) 2 sec 224 - relied on. Whether appellants -Turf Clubs fall under the definition of the term ·~hop' for the purposes of the ESI Act: 1.11. It is not the case of the appellants that the Club does not provide services. It may be gainsaid that the said services, apart from providing the viewers with a form of entertainment, is available to all members of the public at a mere payment of an admission or entrance fee. [para 53] [1062-G, HJ 1.12. A 'shop' is a business establishment where a systematic or organised commercial activity takes place with regard to the sale or purchase of goods or services, and includes an establishment that facilitates these transactions as well. The appellant- Turf Club, in essence, E F G H 1030 SUPREME COURT REPORTS [2014] 8 S.C.R. A takes money from viewers, members as well as the general public, as admission fee and in return provides them with certain services, those being the actual viewing of the race and facilitating placing of bets. [para 54-55] [1063-B-D] B 1.13. It can be safely concluded that, the appellantTurf Clubs conduct the· activity of horse racing,. which is an entertainment. The·appellant-Turf Clubs provide various services to the viewers, ranging from. providing C facilities to enjoy viewership of the said entertainment, to the facilitating of betting activities, and that too for a consideration -- either in the form of admission fee or as commission. What is relevant is that the establishment must only offer the clients or customers with goods or services. In this light, it is found that a race-club, of the D nature of the appellants, would fall under the scope of the term 'shop' and thereby the provisions of the ESI Act would extend upon them by virtue of the respective impugned notifications issued under sub-s. (5) of s. 1 of the ESI Act. [para 57] [1065-B-E] E 2.1. Two statutes are said to be in pari materia with each other when they deal with the same subject-matter. The rationale behind this rule is based on the interpretative assumption that words employed in F legislations are used in an identical sense. However, this assumption is rebuttable by the context of the statutes. [para 59] [1065-H; 1066-A] G Sutherland in Statutes and Statutory Construction, Vol. 2, Third Edition - referred to. 2.2. The Maharashtra Shops and Establishments Act, 1948 and Karnataka Shops and Commercial Establishments Act, 1961, though they may relate to labour and workmen, are in essence intended to be H regulatory. The Acts require mandatory registration of the THE BANGALORE TURF CLUB LTD. v. REGIONAL 1031 DIRECTOR, ESI CORPORATION establishments covered by the- respective statutes, set A out p~ovisions relating to working hours, wages, annual . leave, etc. and further prescribe penalties for noncompliance with the said provisions. TIJe Acts further enable the local authorities to appoint local inspectors who are given certain powers to ensure the compliance of the provisions of the Acts. Under sub-s. (4) of s. 48 of the Act, 19.48 such inspector$ would also be deemed to B 'be inspectors under the Mklimum Wages Act, 1948. Further, the Act, 1961 under Chapter V makes an express reference to the applicability of the Payment of Wages c Act, 1936 and the Workmen's Compensation Act, 1923. There is a clear absence of reference to any other legislation in the aforesaid provisions, thereby indicating that the legislature intended to exclude the applicability of the ESI Act. [para 61) [1066-F-H; 1067-A-B] 2.3. The ESI Act, on the other hand, as has been noticed in the preamble is an Act that provides for certain benefits to employees in case of sickness, maternity and employment injuries. It establishes the Employees' State Insurance Corporation for the administration of the scheme of Employees' State Insurance and sets up an Employees' State Insurance Fund in which all contributions paid under the ESI Act are held and accordingly administered. The ESI Act also establishes a Special Court for adjudication of disputes and claims under the same. [para 62) [1067-C-D] 2.4. It can be concluded that though the ESI Act, the Act, 1948 and the Act, 1961 deal with labour and workmen, D E F in essence and spirit they have a different scope and application. The Acts do not appear to have any overlap G in their fields of operation and have mutually exclusive schemes. Therefore, it cannot be said that the Acts are pari materia with each other. [para 63) [1067-E, F] Directorate of Enforcement v. Deepak Mahajan 1994 (1) SCR 445 = (1994) 3 SCC 440 - referred to. H 1032 SUPREME COURT REPORTS [2014] 8 S.C.R. ' A Krishena Kumar v. Union of India, 1990 (3) SCR 352 = (1990) 4 SCC 207; Waman Rao v. Union of India 1981 (2) SCR 1 = (1981) 2 SCC 362; Raju v. Union of/ndia 2011 (2) scR 1 = (2011) 2 sec 132- cited. 8 "The Loom of Language", Maxwell on Interpretation of Statutes, Tenth Edn. at page 229 - referred to. 2.5. It is to be noticed that every word of a language. is flexible to connote different meanings when used in different contexts. That is why it is said that words are C not static, but dynamic and the Court should adopt the dynamic meaning which upholds the validity or scheme of any legislation. It is settled law that the words used in a particular statute cannot be used to interpret the same word in a different statute especially in light of the fact D that the two statutes are not pari materia with each other and have a wholly different scheme from one another. [para 66] (1068-F-G] 2.6. This Court is of the view that, in the instant case, E the use of the word 'namely' and a consequent enumeration would simply imply that the notification seeks to enlist the classes of establishment or establishments that fall within the purview of the ESI Act. Mis. Cochin Shipping Co. v. ESIC 1992 (3) SCR 909 = F (1992) 4 sec 245 - relied on 3.1. The term 'shop' if interpreted in its traditional sense it would not serve the purpose of the ESI Act. As has been observed by this Court in the case of Bombay Anand Bhavan Restaurant, the language of the ESI Act G may also be strained by this Court, if necessary. The scheme and context of the ESI Act must be given due consideration by this Court. A narrow meaning should not be attached to the words used in the ESI Act. This Court should bear in mind that the ESI Act seeks to H THE BANGALORE TURF CLUB LTD. v. REGIONAL 1033 DIRECTOR, ESI CORPORATION insure the employees of covered establishments against A various risks to their life, health and well-being and places the said charge upon the employer. Further, in light of the judgments of this Court and in particular the Cochin Shipping Case and the Bombay Anand Bhavan Case, this Court is of the opinion that an expansive meaning may B be assigned to the word 'shop' for the purposes of the ESI Act. The activities of the appellants-Turf Clubs are in the nature of organised and systematic transactions, and further the said Turf Clubs provide services to members as well as public in lieu of consideration. Therefore, the c appellants-Turf Clubs are a 'shop' for the purpose of extending the benefits under the ESI Act. [para 71-72] [1070-D-H; 1071-A] Bombay Anand Bhavan Restaurant v. ES/ Corpn. (2009) 9 SCC 61 Mis. Cochin Shipping Co. v. ESIC 1992 (3) SCR D 909 = (1992) 4 sec 245- relied on. 3.2. Therefore, the reference is answered in the following terms: i. A 'race-club' is an 'establishment' as rightly held in the case of Employees State Insurance Corporation v. Hyderabad Race Club (2004) 6 SCC 191; ii. The appellant-Turf Clubs are duly covered under the term 'shop' for the purposes of the ESI Act and notifications issued thereunder. [para 73] [1071-B-C] Civil Appeal No. 6212 of 2012 Whether the business of a Chit Fund can be said to be a 'shop' for the purposes of the ESI Act: 4.1. Government of Tamil Nadu issued Notification E F No. 11(2)/LE/1859/76 dated 03.04.1976 as published on G 21.04.1976, pursuant to which the appellant-Chit Funds Ltd. was required to comply with the provisions of the ESI Act. Features of a Chit Fund are as follows: (i) Chit Funds are a special form of contract H 1034 SUPREME COURT REPORTS [2014] 8 S.C.R. A contemplated by Entry 7, List Ill of Schedule VII to the Constitution of India; (ii) The foreman acts as person to bring together the subscribers; B (iii) The amounts are paid to the subscribers as per the chit and in accordance with the provisions of the Chit Funds Act; (iv) The agreement between the parties that is entered c as per s.6 of the Chit Funds Act, only provides for distribution of the chit amount. This agreement is treated as contract between the subscribers and the foreman, and it is the foreman who brings the subscribers together; D (v) The foreman is paid commission, in accordance with the Chit Funds Act, for the services rendered by the foreman as he does not lend money belonging to him; E (iv)There is no debtor-creditor relationship, per se. "There is no promise to repay an existing debt, but to pay in discharge of a contractual obligation. The prize amount is not received as a loan, but as of right by virtue of tpe terms of the contract between the F parties. (para 3 and 6] [1072-E; 1073-D-H; 1074-A] Sriram Chits and Investments (P) Ltd. v. Union of India 1993 (1) Suppl. SCR 54 = 1993 Suppl (4) sec 226 - referred to. G 4.2. In light of the fact that the appellant-Chit Fund provides for services and in return the foreman receives a commission, there existing a systematic commercial activity and a rendering of services taking place, this Court is of the considered opinion that the activities of H the Chit Fund would be those as would fall under the THE BANGALORE TURF CLUB LTD. v. REGIONAL 1035 DIRECTOR, ESI CORPORATION definition of a shop as evolved by this Court. [para 8-9] A [1074-D, F] ES/C v. R.K. Swamy 1993 (3) Suppl. SCR 461 = (1994) · 1 sec 445, relied on. 4.3. Therefore, in accordance with the reasoning of B this Court in Civil Appeal No.2416 of 2003 and other connected appeals, this Court holds that the appellant c~it fund would fall within the meaning of the word 'shop' as mentioned in the notification issued under the ESI Act. Therefore, the provisions of the ESI Act would extend to c the appellant also. [para 10] [1074-G] Case Law Reference : 1978 (3) SCR 207 held inapplicable para 2 D 1987 (2) SCR 377 cited para 11 1992 (3) SCR 909 cited para 11 1999 (4) Suppl. SCR 393 relied on para 11 1993 (3) Suppl. SCR 461 cited para 11 E (2004) 6 sec 191 cited para 11 1990 (3) SCR 352 cited para 16 1981 (2) SCR 1 cited para 16 F 2011 (2) SCR 1 cited para 16 1992 (3) SCR 23 relied on para 19 1964 SCR 265 relied on para 28 G (2009) 9 sec 61 relied on para 21 [1957] 32 ITR 466 (SC) referred to para 24 1985 SCR 26 raferred to para 25 H 1036 SUPREME COURT REPORTS (2014] 8 S.C.R. A 2013 (2) SCR 301 referred to para 26 1996 (3) Suppl. SCR 439 referred to para 27 (1880) 6 QBD 664 referred to para 29 B (1881) 6 AC 114 referred to para 29 (1965) 3 SCR 364 referred to para 30 295 N.W. 1, 4, 236 referred to Para 36 Wis. 240." c (1996) 2 sec 224 relied on para 38 21 Fla. 37 4, 384, 58 referred to para 41 Am.Rep. 667 1987 (3) SCR 981 referred to para 43 D 1994 (1) SCR 445 referred to para 64 Civil Aeeeal No. 6212 of 2012 1993 (1) Suppl. SCR 54 referred to para 5 E 1993 (3) Suppl. SCR 461 relied on para 8 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2416 of 2003. F From the Judgment and Order dated 04.09.2002 of the Division Bench of the Karnataka High Court at Bangalore in MFA No. 3699/1998. WITH G C.A. Nos. 49/2006, 1575/2006, 3421/2012, 3422/2012 and 6212/2012. K.K. Venugopal, Chander Uday Singh, J.P. Cama, V. Giri, M.N. Krishnamani, Ruchika, Neha Malik, Rajan Narain, V.J. Francies, Gobindram D. Talreja, R.N. Karanjawala, Manik H THE BANGALORE TURF CLUB LTD. v. REGIONAL 1037 DIRECTOR, ESI CORPORATION Karanjawala, Ruby Singh Ahuja, Chahat Chawla, Neha Gupta A (For Karanjawala & Co.), M.A. Chinnasamy, Mahesh Shrivastava, V.M. Srivastava, P.N. Puri, Yakesh Anand, Sonam Anand, Sanjeev Anand, P.V. Yogeswaran, S. Thananjayan, Rakesh K. Sharma, Sangita Chauhan, Shubha for the appearing parties. B The Judgment of the Court was delivered by H.L. DATTU, J. Civil Appeal No. 2416 of 2003, Civil Appeal No. 49 of 2006, Civil Appeal No. 1575 of 2006, Civil Appeal No. 3421 of 2012 and Civil Appeal No. 3422 of . C 2012. 1. The issue that arises for our consideration and decision is, whether a 'race-club' would fall under the scope of the definition of the word 'shop', for the purposes of notification D issued under sub-section (5) of section 1 of the Employees' State Insurance Act, 1948 (for short, "the ESI Act"). 2. The matter is referred.to three-Judge Bench of this Court as two-Judge Bench of this Court is of the view that the decision of two-Judge Bench of this Court in the case of E Employees State Insurance Corporation v. Hyderabad Race Club (2004) 6 SCC 191 may require .reconsideration. By the aforesaid judgment, it was observed by this Court that 'raceclub' is an 'establishment' within the meaning of the said expression as used under Section 1 (5) of the ESI Act. The order F of reference reads as under: " ORDER Heard learned counsel for the parties. The short question involved in these cases is whether the appellant Turf Clubs are covered by the Employees' State Insurance Act, 1948 (for short 'ESI Act'). G H A B ·C D E F G H 1038 SUPREME COURT REPORTS [2014) 8 S.C.R. Under Section 1 sub-section (5) of the ESI Act all establishments are not automatically covered by the said. Act but only such establishments as are mentioned in the notification issued by the appropriate Government under Section 1 (5). This provision is not like sub-section (4) of Section 1 by which all factories are automatically covered by the ESI Act. The notifications issued under Section 1 (5) in these cases use the word 'shop' and it has been held by the impugned judgments in these cases that the turf clubs are shops. Reliance in this behalf has been placed on the judgment of this Court in the case of Employees State Insurance Corpri. vs. Hyderabad Rsce Club 2004 (6) sec. 191. With great respect to the aforesaid decision in the case of Hyderabad Race Club (supra), we think that the said decisions requires reconsideration. In common parlance a club is not a· shop. The word 'shop' has not been defined either in the ESI Act nor in the notification issued by the appropriate government under Section 1 (5). Hence, in our opinion, the meaning of 'shop' will be that used in common parlance. In common parlance when we go for shopping to a market, we do not mean going to a racing club. Hence, prima facie, we are of the opinion that the appellant-club is not a shop within the meaning of the Act or the notification issued by the appropriate government. In our opinion, the error in the judgment in the case of Hyderabad Race Club (supra) is that it has been presumed therein that all establishments are covered by the Act. That is not correct. Only such establishments are covered as are notified under Section 1 (5) in the official gazette. The High Court in the impugned judgment has placed THE BANGALORE TURF CLUB LTD. v. REGIONAL 1039 DIRECTOR, ESI CORPORATION [H.L. DATTU, J.] reliance on the judgment of this Court in t.he case of A Bangalore Water Supply & Sewerage Board vs. A. Rajappa & Ors. 1978 (2) SCC, 213. In our opinion, reliance on the aforesaid decision is wholly misplaced. The definition of 'industry' in the Industrial Disputes Act is very wide as interpreted in the aforesaid decision. We cannot B apply the judgment given under a difterent Act to a case which is covered by the ESI Act. Under various labour laws different definitions have been given to the words 'industry' or 'factory' etc. and we cannot apply the definition in one Act to that in another Act (unless the statute specifically c says so). It is only where the language used in the definition is in pari material that this may be possible. Hence, we are of the opinion that the decision of this 'Court in the case of Hyderabad Race Club (supra) should be reconsidered by a larger Bench. In the meantime, the D respondents shall not raise any demand against the appellant-clubs. Let the papers of these cases be placed before Hon'ble The Chief Justice of India for constituting an appropriate E Bench." 3. By the said referral order dated 28.04.2009, it is the view of the two-Judge Bench of this Court that in view of the meaning as used in common parlance, the term 'shop' may not include racing clubs as stated by this Court in the Hyderabad Race Club case (supra). Therefore, prima facie, the· view of this Court is that the Appellant-Turf Clubs would not be a shop for the purpose of the ESI Act or notifications issued thereunder. F It is further observed that the meaning of 'shop' will be that as would be used in common parlance. G ISSUES:- 4. T~e issues that arise for our consideration and decision H 1040 SUPREME COURT REPORTS [2014] 8 S.C.R. A are firstly, whether the judgment in the Hyderabad Race Club case (supra) was correct in holding that a 'race-club' is an "establishment" for the purposes of the ESI Act, and secondly, whether the Appellant-Turf Clubs fall within the scope of the definition of the word 'shop' as categorised in the notifications. B RELEVANT PROVISIONS:- 5. To appreciate the view points of the learned counsel, we require to notice cert2!n provisions of the ESI Act. The relevant sections are sub section (4) and sub section (5) of C Section 1 of the ESI Act, and further the respective impugned notifications in the present set of appeals. The relevant provisions are reproduced: D E "1. Short title, extent, commencement and application.- (4) It shall apply, in the first instance, to all factories (including factories belonging to the Government) other than seasonal factories. (5) The appropriate Government may, in consultation with the Corporation and where the appropriate Government ls a State Government, with the approval of the Central F Government, after giving one month's notice of its intention of so doing by notification in the Official Gazette, extend the provisions of this Act or any of them, to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise. G H 6. Sub-section (4) of Section 1 provides that the ESI Act shall apply to all factories including factories belonging to the THE BANGALORE TURF CLUB LTD. v. REGIONAL 1041 DIRECTOR, ESI CORPORATION [H.L. DATIU, J.] Government other than seasonal factories. Sub-section (5) of A Section 1 enables the appropriate Governrpent to extend the provisions of the ESI Act to any other establishment or class of establishments- industrial, c_omrtlercial, agricultural or otherwise. The State Government is empowered, subject to the conditions specified in the aforementioned provision, to extend B the provisions of the ESI Act, by issuing a notification in the official gazette, to any establishment or class of establishments as specified therein. This Sub Section is an enabling conditional legislation. c 7. The meaning of the words 'or otherwise' after the words · "industrial, 'commercial or agricultural~' establishments in Sub Section (5) of Section 1 indicate that the Government can extend the ESI Act or any portion thereof to any other establishment or class of establishments. The genus lies in the words 'any• other establishment or class of establishment'. The D three words industrial, commercial and agricultural represents a specie. Since the legislature did not want to restrict the operation of the ESI Act to these three species has used the catch words 'or otherwise'. 8. The Notification that prompted the appellant - Bangalore Turf Club Limited to initiate proceedings before various forums read as under: "NOTIFICATION In exercise of the powers conferred by Sub-Section (5) of Section 1 of the Employee's State Insurance Act, 1948 (34 E F of 1948) the Government of Karnataka having already given six months' notice as required there under, vide the Government of Karnataka Notification No. SWU134/LSI/ G 76 dated 19.12.1976 published in the State Gazette (Extraordinary) dated 19.12.1976 hereby appoints 27th January 1985 as the date on which all provisions of the said act shall extend to the classes of establishments and in the area specified in the schedule annexed hereto:- H A B c D E F 1042 SUPREME COURT REPORTS (2014] 8 S.C.R. Description of Establishment 1. 1 ... . 2 ... . 3. Shops, Road Motor Transport Establishments, Cinema including preview theatres and newspaper Establishments which are employing or were employing twenty or more persons for wages on any days of the preceding twelve months. " SCHEDULE Name of the Centre Area in which establishments are situated 9. In view of the aforesaid Notification issued by the Government of l