ESI not applicable to Professionals or their Firm

The Employees State Insurance Act, 1948, is application to all the factories [wherein ten or more people are employed for manufacturing process if carried on with the aid of power; twenty or more people employed, incase there is no utilization of power] and to various other industrial/commercial/agriculture establishments which are specifically notified by the concerned Government.

Most of the State Governments have notified Hotels, Restaurants, Shops, Cinema Theatres etc as covered under the ESI Act. The ESI Corporation has an adament baleful practice of booking professionals like advocates, doctors etc. under the headings of ‘shops’/ ‘commercial establishments’, inorder to demand contributions from them, despite several rulings of the Supreme Court and various High Courts that ‘Professionals are not enaged in any trade or business and their establishmet cannot be classified as a shop.’ [AIR 1984 SC 1700; 1963 II LLJ 1657; (2005) 7 SCC 283].

A recent judgment in the above line of reasoning was pronounced by the Madras High Court in Pithavadian v. ESI Corp.,in the matter an Architects’ firm.  The court held that ‘professionals like architect, who are governed by statutes and regulations, could not be equated to a businessmen or trader.. Service rendered to their clients, for a consideration, cannot be termed as trade or business.. Therefore, ESI cannot demand contribution from Professionals like Architects or their firm.’

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About Thomas Geeverghese

Advocate, Ernakulam
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