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Can Educational Institutions be covered under Shops and Establishments Law?

Every State has formulated its own laws regulating the shops and establishments. This article aims to understand the definition and scope of the terms shops and commercial establishments under various State Legislations. It determined the inclusion of educational institutions under the act which in therein would help the educational institutions to know the applicability of this act. It also attempts to compare several judicial pronouncements delivered by different courts to derive a concrete conclusion regarding the applicability of educational institutions under the act.

Introduction
In India, economy is dominated by the labour class. Tracing back to the history, labour class was often discriminated and exploited from a very long time. Due to their poor and weak bargaining power, they were often subjected to humiliation. It was the need to form a tripartite agreement for a better relation between the government, employer and workmen.[1]

The concept of trade unions have also started to take a shape in the society. Trade unions were formed to provide strengths to the workmen for collective bargaining. With time, India had also adopted labour law for the protection and welfare of the workmen.[2]

Shops and Establishments Law is one of the State labour law legislation enacted by the State government. Every shops and establishments must follow the rules provided under their state and also get themselves registered under the act before 30 days of their establishment. It is a mandatory compliance that cannot be avoided under any circumstances.

Once the application is submitted before the State Labour Department, the officer must be satisfied that all the rules were duly followed before granting the recognition to open their shops and establishments.[3] This act was adopted in order to regulate the working of shops and commercial establishments that includes the rules for the payment of wages to the employees, total hours of work per day, number of leaves permissible, mandatory holidays, and even terms and conditions of the services.[4]

Every business or establishments working for profits must attain license under this act therein making the rules binding to them. Majorly all the shops, restaurants, any place of public entertainment or public place, amusement places, movie halls are all covered under this act. In the case of Parry and Company Ltd v. Commercial Employees Association[5], the court explained the objective of the act and emphasized the importance of the Labour Commissioner in case of any dispute under the act. This commissioner is set up to ensure that the rights of the employers and employees granted in the act are not compromised.

Discussion
Shops & Establishments Act is not a central legislation applicable to the entire country. But every State government has formulated their own act that are little different from state to state. The major intention and the crux of the statue remains the same for every state. In this research, few major states like Kerala, Delhi, Maharashtra, Tamil Nadu & Andhra Pradesh has been taken into consideration in order the address the research questions.

The meaning of commercial establishment has been analysed with the help of case laws in order to understand the applicability of the act to educational institutions. Different courts of different states have understood the definition of commercial establishments in a different way and given a different explanation and meaning to it.

  1. Kerala Shops And Commercial Establishments Act 1960

    In Kerala, the Kerala Shops and Commercial Establishments Act 1960 was adopted in order to regulate the working conditions of employees. The term commercial establishment is defined under section 2(4) of the statute. According to the definition provided under the act, any establishment that has a characteristic of being commercial in nature is an industry or trading business, banking sector or an insurance company.

    It must be administrative in nature and involves establishments like working spaces, hotel, cafe, restaurants, movie theatre, or any kind of public entertainment that is controlled by government. However, if any particular establishment is specifically mentioned in the Gazette through a government notification, then it will also come under the definition of commercial establishment.

    The term shops is also defined under section 2(15) that states that any premise that is associated with the trade or business or a place where services is provided to customers are a part of shop. Even the co-spaces like godowns or warehouses will also come under the meaning of shops.

    In the case of Sarangadharan v Asst. Labour Officer[6], the court faced with a crucial question that helped to understand the intention of the legislation while defining the term commercial establishments.

    Contention: Whether an educational institution that is affiliated to CBSE Board comes under the purview of Kerala Shops & Establishment Act 1960 or not?
    In this case, it was submitted that an educational institution is neither a shop where any goods are being sold to the consumers, nor a commercial establishment where any commercial transaction takes place.

    The sole object of an educational institution is to impart education to the children and there is no involvement of commercial activity that takes place. Certain arguments were presented that taking high school fee, donations, additional expenses are also another form of commercial activities as it was not an educational institutions running for the purpose of charity. Some element of commercial transaction is surely involved in case of educational institutions.

    With the plain reading and understanding of the terms shops and commercial establishments it can be said that no trade or commercial business is carried out by educational institutions that creates a nexus with the customers. Reliance is placed on Ramanathan v State of Kerala[7], where the court held that though a statutory power is given to the government to declare anything as a part of this act, but still it must be come under the definition of commercial establishments before extending the applicability of the act.

    Decision: The court held that the educational institution was under the control of CBSE Board. Employing teachers and taking fees from the students will not be a sufficient ground to call it as a shops or establishments under the act. In no way there is a trade or business that is taking place that is commercial in nature. Thus, educational institutions will not be governed under the Kerala Shops and Commercial Establishments Act 1960.
     
  2. Delhi Shops And Establishments Act 1954

    The Delhi Shops and Establishments Act 1954 is enacted in Delhi for regulating the working conditions of employees. According to section 2(5), the term commercial establishments is defined as any kind of trade or business activity that is carried out by an establishment. It also includes the establishments that are registered as a society or under a charitable institution.

    In the case of Institute of Economic Growth v The Controlling Office under the Payment of Gratuity Act[8], the court held that the educational institutions that are operating for the private motive will not be excluded from the definition of commercial establishments. Only the institutions that are working for the purpose of charity will not be covered under this definition. However, this stance was later changed in Mr. Tanmaya Mehta v. CBSE,[9] where the court tried to interpret the applicability of educational institutions under the act.

    Contention: Whether a private institution under CBSE is a commercial establishment under the act in Delhi?
    In this case, there was an argument that private institutions sell certain things to school students that includes NCERT books, school uniform and other necessary stationary items. This activity was regarded as a commercial activity that was going on inside the school premises. School was forcing the parents to buy these necessary items from a specified vendor only. This can be enough to make the educational institutions under the purview of commercial establishments.

    However, the court emphasised on the Circular No. CBSE/AFF/CIRCULAR/10/2017 dated 19.04.2017 that was issued by the CBSE board to all affiliated schools. In this circular it was specifically advised to all CBSE affiliated to not force parents to buy belongings from a particular vendor. Also, it was specifically stated that educational institutions are established for imparting education and not to start a commercialization business with the students. In no way the sole purpose of the educational institutions is defeated by any organisation. It was expected by all the schools to strictly comply with the orders of CBSE board passed through circulars.

    Decision: The court explicitly held that main objective of the educational institutions is to ensure quality education and it does not comes under the definition of commercial establishments under the Delhi Shops and Establishments Act 1954.
     
  3. Maharashtra- Bombay Shops And Establishments Act 1948

    The Bombay Shops and Establishments Act 1948 is a state act applicable to all parts of Maharashtra. As per the definition of commercial establishments provided under the act, it means that any establishment as a business of trade or commerce will come under this act. Even the establishments that are registered under societies act or work for no profit gain i.e. the charitable institutions will also be covered under this act.

    However, the act specifically excludes public places and entertainment from the purview of the act.
    The court interpreted the definition of commercial establishments to understand its scope.

    In Principal, Bhartiya Mahavidyalaya, Amravati and another v Ramkrishna Wasudeo LahudkaR[10], the petitioner was operating an educational institution that was registered under the societies act. As per the definition provided under the statute, all the establishments that are registered under the Indian Societies Act are covered under the act.

    However, section 4 of the act gives a special power to the State Government to make certain exemptions of the act by passing a notification through the gazette. Schedule II of the act provides the list of exemption. Entry No. 6F specifically exempts educational institutions from the definition of commercial establishments by focusing on its main purpose of establishment.

    Thus, if any establishment is specifically exempted by the government, then it will not come under the purview of this act. However, later on the court interpreted and strictly relied on the definition of commercial establishments provided under the in the case of Shri Gurudeo Ayurved Mahavidyalaya v. Madhav Narayan Makahode[11] where it held that the college registered under the Societies Act will be applicable under the Maharashtra shops and establishments act.
     
  4. Tamil Nadu Shops And Establishments Act 1947

    According to section 2(3) of the Tamil Nadu Shops and Establishments Act 1947, commercial establishment means an establishment that is engaged in any kind of business and run for profit. It also states that the government may include certain establishment under the purview of the act by issuing a notification through gazette. The court in the case of Mr. Balan Haridas v. Mr. V. Subbiah[12] had faced a challenge to decide whether educational institutions will come under the applicability of commercial establishments.

    The petitioner focused on the case of Manuelmony Matriculation School v. Principal Labour Court[13] where it was held that every educational institutions is taking money from the students and work for profit motive, so it will come under the commercial establishments. But court has given a different interpretation that the main objective of educational institutions is to provide a community service of education and it does not form an industry involving the activities of trade, business or profession making it non-applicable under the act. Also, the court emphasised on the definition of commercial establishment and stated that is not as wide as the definition of industry as interpreted in the Bangalore Supply case.[14]
     
  5. Andhra Pradesh Shops And Establishments Act 1988

    The Andhra Pradesh Shops and Establishments Act 1988 have been enacted in the state for regulating the working conditions of employees working in shops and establishments. Section 2(5) of the act defined the term commercial establishments.

    According to the statute, it means that any establishment that is engaged in the activities related to trade, commerce and performing some kind of business or profession will be covered in the act. However, no further explanation is given to this definition. It was important to understand and interpret the wide applicability of this act.

    The courts often faced the contention regarding the applicability of educational institutions under this act. In contrast to other states like Andhra Pradesh High Court in the case of Secretary, Siddhartha Academy of General and Technical Education, Vijayawada v. Appellate Authority[15] has held that any educational institutions will be covered under the shops and establishments act only if a central notification is issued by the government.

    The court in this case also relied on a Supreme Court decision laid down in Ruth Soren v Managing Committee[16], where it was held that the educational institutions are not covered under the shops and establishment act. So, it is the sole discretion of the Andhra Pradesh government, if they want to include the educational institutions under the scope of the shops and establishments act or not. Such government notification can also be revised with time to time.

Conclusion And Recommendation
As the shops and establishment act is a state legislation, every state have formulated their own rules and regulation that gives us different meaning and interpretation. After discussing few major state laws on the applicability to the educational institutions, it can be concluded that different states have inculcated different meaning of the term commercial establishments. Even the state courts have given a different interpretation on determining whether educational institutions will be covered under the act or not.

For instance, in states like Kerala, Tamil Nadu and Andhra Pradesh, a limited scope is given to the definition of commercial establishment. It does not include the establishments that are registered under the societies act or are established as charitable institutions. But in contrast, states like Delhi and Maharashtra have specifically included those establishments under the purview of their shops and establishment act.

After comparing the several judgements by different states, it can be stated that different states have given their own views and interpretation. High Courts in Kerala, Delhi and Tamil Nadu have taken a stance by looking into the main objective of the educational institutions and restricted its applicability under the shops and establishments act.

However in Maharashtra, the Bombay High Court has held that the educational institutions will be covered under the definition of commercial establishments as they take money from the students and are operated for the profit motive. In contrast, the Andhra Pradesh High Court has specified that it will be on the decision of the state government if they want to include a specific establishment under this act by issuing it in an official gazette.

Thus, it can be said that a general view and a straight answer with a yes or no cannot be given for the research questions. Being a state legislation, it is obvious that different interpretation and applicability will be deduced by the state government along with the judiciary. However, according to me, in practicality there are educational institutions that are focusing more on private gains. Even then it cannot be said that these educational institutions are carrying out activities related to trade, business or profession.

References
Primary Sources
Statutes:
  • Andhra Pradesh Shops and Establishments Act 1988
  • Bombay Shops and Establishments Act 1948
  • Delhi Shops and Establishments Act 1954
  • Kerala Shops and Commercial Establishments Act 1960
  • Tamil Nadu Shops and Establishments Act 1947
Secondary Sources
Articles and Websites:
  • Notification dated 09/08/2012 regarding to add in the schedule under Delhi Shops and Establishment Act, 1954. | Labour Commissioner |, https://labour.delhi.gov.in/content/notification-dated-09082012-regarding-add-schedule-under-delhi-shops-and-establishment-act (last visited Feb 26, 2021)
  • Overview of Labour Law Reforms PRSIndia, https://www.prsindia.org/billtrack/overview-labour-law-reforms (last visited Feb 26, 2021)
  • Prasannan Parthasarathi, Indian Labor History, International Labor and Working-Class History 127“135 (2012)
  • Shops and Establishments Act¯: All You Need to Know QuickBooks, https://quickbooks.intuit.com/in/resources/legal/shops-establishments-law-says/ (last visited Feb 26, 2021)
  • The Shops & Establishments Act in India - An Overview, https://www.professionalutilities.com/advice/licenses-shop-and-establishment-license.php (last visited Feb 25, 2021)
  • What Was The Intent Behind Enactment Of The Shops And Establishment Act? iPleaders, https://blog.ipleaders.in/intent-behind-enactment-shops-establishment-act/ (last visited Feb 25, 2021)
End-Notes:
  1. Labour Laws in India - An overview - Major Legislations iPleaders, https://blog.ipleaders.in/labour-laws-in-india/ (last visited Feb 25, 2021)
  2. Prasannan Parthasarathi, Indian Labor History, International Labor and Working-Class History 127“135 (2012)
  3. Shops and Establishment Act, V Skills, https://www.vskills.in/certification/tutorial/shop-and-establishment-act/ (last visited April 25, 2021)
  4. Shop and Establishment Act India - IndiaFilings - Learning Centre, https://www.indiafilings.com/learn/shop-and-establishment-act-india/ (last visited Feb 26, 2021)
  5. AIR 1952 SC 179
  6. 2001 SCC OnLine Ker 425
  7. 1991 (1) KLT 89
  8. 2010 SCC OnLine Del 1161
  9. 2018 SCC OnLine Del 73452018 SCC OnLine Del 73452018 SCC OnLine Del 73452018 SCC OnLine Del 7345
  10. 1993 SCC OnLine Bom 192
  11. 1994 SCC OnLine Bom 32
  12. 2011 SCC OnLine Mad 1622
  13. 2008 (1) LLN 387
  14. Bangalore Water Supply & Sewerage Board v. A. Rajappa, AIR 1978 SC 553
  15. 2011 SCC OnLine AP 686
  16. (2001) 2 SCC 115


Award Winning Article Is Written By: Ms.Nisha Agarwal

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