The Supreme Court has said the Board of Control for Cricket in India (BCCI) sells tickets for matches, provides entertainment, receives income from Indian Premier League (IPL), which are commercial in nature, and hence, can be termed as a “shop” for the purposes of attracting the provisions of the Employees State Insurance (ESI) Act.
A bench of Justices M.R. Shah and P.S. Narasimha said: “Considering the systematic activities being carried out by the BCCI namely, selling of tickets of cricket matches; providing entertainment; rendering the services for a price; receiving the income from international tours and the income from the Indian Premier League, the ESI court as well as the high court have rightly concluded that the BCCI is carrying out systematic economic commercial activities and, therefore, the BCCI can be said to be ‘shop’ for the purposes of attracting the provisions of ESI Act.”
It said that the BCCI is engaged in systematic commercial activities, a profit earning institution, and is engaged in entertainment industry as it provides entertainment to the customers at a price, by selling tickets, and therefore, it must pass on benefits to its employees by extending the coverage of ESI contribution on the wages payable to the coverable employees.
In the case of Bangalore Turf Club Ltd (supra), the top court observed and held that the ESI Act is a welfare legislation enacted by the Centre as a consequence of the urgent need for a scheme of health insurance for workers and, therefore, liberal rule of interpretation should be adopted to ensure that the benefits extend to those workers, who need to be covered based on the intention of the legislature.
“A narrow meaning should not be attached to the words used in the ESI Act as the ESI Act seeks to insure the employees of covered establishments against various risks to their life, health and well-being and places the said charge upon the employer,” the top court said.
It observed that the term “shop” should not be understood and interpreted in its traditional sense as the same would not serve the purpose of the ESI Act. And, an expansive meaning may be assigned to the word “shop” for the purposes of the ESI Act.
“It is further observed that the activities of the Turf Clubs are in the nature of organised and systematic transactions, and that the Turf Clubs provide services to members as well as to the public in lieu of consideration, therefore, the Turf Clubs are a shop for the purpose of extending the benefits under the ESI Act,” said the top court.
The BCCI submitted that its predominant activity is to encourage cricket/sports and, therefore, the same shall not be brought within the definition of “shop” for the purposes of applying the ESI Act.
But, the top court said: “The aforesaid has no substance. What is required to be considered is the overall activities. If the test as observed by this court in the case of Bangalore Turf Club Limited (supra) is adopted, the activities carried out by the BCCI can be said to be commercial activities, providing entertainment by selling the tickets. Therefore, for the purposes of ESI Act, the BCCI can be said to be a shop.”
It said the Bombay High Court has also taken into consideration the relevant clauses of the Memorandum of Association of the BCCI to come to the conclusion that the activities of the BCCI can be said to be systematic commercial activities providing entertainment by selling tickets etc, and the Memorandum of Association as a whole is required to be considered.
The top court dismissed the BCCI’s plea noting that it sees no reason to interfere with the judgment and order passed by the high court as well as the ESI court.
The top court judgment on a plea by the BCCI against the high court judgment, which considered whether the BCCI can be said to be a “shop” as per the notification dated September 18, 1978, and if the provisions of the ESI Act shall be applicable to the BCCI or not.
The high court dismissed the first appeal, which was filed against the judgment and order passed by the Employees’ Insurance Court at Bombay on September 9, 2021, declaring that the BCCI is covered within the meaning of “shopa as per notification dated September 18, 1978 issued by the government of Maharashtra under the provisions of Section 1(5) of the ESI Act, 1948.