DELHI HC ORDERS PROFESSIONAL FIRMS TO MEET STATUTORY PAYMENT NORMS

The Delhi High Court (HC) has held that a firm of architects or engineers is obliged to contribute to the Employees State Insurance Fund (ESIF). Whenever an establishment carries on activities in the nature of trade or commerce, it must be held that the premises being used is a “shop” by giving an expanded meaning to the definition of the word “shop” in the Employee State Insurance Act (ESI). It is not only a place where “goods” are sold which comes within the meaning of the word “shop”. A place where “services” are sold has also been legally interpreted to be a “shop”. The High Court (HC) state that the company by its own admission, is carrying on consultancy services, for which it charges its clients. The services are not being rendered as gratuitous or for charity, but admittedly for remuneration and therefore rejected the argument of the company that the law covered only factories and establishments where either some manufacturing process goes on or where business of selling and purchase takes place as a commercial activity.