SC says turf clubs are shops

The Supreme Court has held that horse racing and turf clubs could be described as a shop in order to be covered under the Employees State Insurance Act for those were involved in systematic commercial activities.

A three-judge bench presided by Justice H L Dattu passed the ruling while answering the reference made by a two-judge bench if a race club would fall under scope and definition of the word ‘shop’.

“The activities of the appellant-turf clubs is in the nature of organised and systematic transactions, and further that the said turf clubs provide services to members as well as public in lieu of consideration. Therefore, the appellant-turf clubs are a ‘shop’ for the purpose of extending the benefits under the ESI Act,” the bench also comprising Justices R K Agrawal and Arun Mishra said.

The matter involved the Bangalore Turf Club and the Royal Western India Turf Club Ltd, which were brought under the beneficial ESI Act by the state government of Karnataka and Maharashtra respectively through notifications for being ‘shop’.

They were told to make contribution towards all their employees under the ESI Act.

Both the clubs questioned the move claiming they cannot be termed as shops since theirs are large open area consisting of track and stables for conducting the actual race, while shops are normally enclosed premises wherein goods and servicies are sold.

Giving a liberal interpretation, the court discarded their plea and said the definition of a shop which meant a house or building where goods are sold or purchased has now undergone a great change.

“The word ‘shop’ occurring in the notification (issued by government) 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’,” the bench said.

“Since 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 language of the enactment,” the bench said.

It also pointed out that horse-racing clubs conducted racing, essentially an activity of entertainment, and provided various services to the members and spectators such as racing and betting, for a consideration, making themselves, accountable under the ESI Act.