Kalidas Dhanjibhai vs The State Of Bombay

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Criminal Appeal No. 80 of 1953

Decision Date: 29 October, 1954

Coram: Vivian Bose, B.K. Mukherjea, B. Jagannadhadas

In this case, the Court recorded that the matter concerned an appeal arising out of a judgment and order dated 23 September 1952 of the High Court of Judicature at Bombay in Criminal Appeal No 828 of 1952, which itself stemmed from a judgment and order dated 27 March 1952 of the Stipendiary Magistrate in Ahmedabad in Summary Case No 3029 of 1954. The appeal was taken to the Supreme Court by special leave granted on 9 February 1953. The appellant, identified as the owner of a small establishment called Honesty Engineering Works situated in Ahmedabad, State of Bombay, employed three workers. He conducted his business by visiting local mills, obtaining orders for spare parts, manufacturing those parts in his workshop, delivering the finished items to the mills and receiving payment. No purchase or sale of goods took place on the premises of the establishment.

The Court noted that a fine of fifty rupees, twenty‑five rupees on each of two counts, had been imposed for breaches of section 52(f) of the Bombay Shops and Establishments Act, 1948, read with rule 18(5) and (6) of the Rules made under that Act. Although the fine was modest, the Court considered the question raised to be of general importance in the State of Bombay because it affected a large number of similar establishments. Consequently, the matter was selected as a test case for clarification of the law.

The legal issue presented was whether an establishment of the kind described fell within the meaning of “shop” as defined in section 2(27) of the Bombay Shops and Establishments Act, 1948 (Bombay Act LXXIX of 1948). The learned trial magistrate had held that the premises did not constitute a “shop” and therefore acquitted the appellant. On appeal, the High Court reversed that finding, held the premises to be a “shop” and affirmed a conviction. It was admitted that the appellant did not maintain any leave registers and did not provide his workers with leave books. The Government Inspector of Establishments discovered this deficiency during an inspection of the appellant’s works on 12 January 1951.

The Court reproduced the statutory definition of “shop” contained in section 2(27): “Shop means any premises where goods are sold, either by retail or wholesale or where services are rendered to customers, and includes an office, a store room, godown, warehouse or workplace, whether in the same premises or otherwise, mainly used in connection with such trade or business but does not include a factory.” The Court explained that the determination of whether the appellant’s establishment fell within this definition would decide whether the appellant was guilty under the Act. If the premises were a “shop” within the meaning of the statute, the appellant would be liable; if not, he would be exonerated.

In this case the appellant owned a modest establishment called Honesty Engineering Works located in Ahmedabad, Bombay State. The business employed three workers and operated by receiving orders for spare parts from local mills, fabricating the parts in its workshop, delivering the finished items to the mills and receiving payment there. No buying or selling of goods was carried out on the premises, and no services were rendered directly to customers at that location. The central issue was whether such a concern fell within the meaning of “shop” as defined in section 2(27) of the Bombay Shops and Establishments Act, 1948. The learned magistrate concluded that the workshop was not a shop and acquitted the appellant. On appeal, the High Court held that the workshop was a shop and convicted the appellant for breaching sections 52(f) and the relevant rules. It was admitted that the appellant kept no leave registers and gave his workers no leave books, facts discovered by the Government Inspector of Establishments during an inspection on 12 January 1951. The definition of “shop” in the statute reads: ‘Shop means any premises where goods are sold, either by retail or wholesale or where services are rendered to customers, and includes an office, a store‑room, godown, warehouse or work place, whether in the same premises or otherwise, mainly used in connection with such trade or business but does not include a factory, a commercial establishment, residential hotel, restaurant, eating house, theatre or other place of public amusement or entertainment.’ The appellant acknowledged that no goods were sold on the premises and that no services were rendered to customers there, arguing that the manufacture of spare parts for sale elsewhere could not be characterised as services. The Attorney‑General argued that the definition should be read to give effect to the phrase “work place mainly used in connection with such trade or business,” contending that the word “such” referred back to the opening words “any premises where goods are sold.” He maintained that the emphasis lay on the sale of goods rather than on the premises themselves, and that once a business involves selling, any workplace primarily used in connection with that business, regardless of its location, falls within the definition.

The opposing counsel relied on the ejusdem generis rule, asserting that the trade or business contemplated by the main portion of the definition was limited to those trades where the selling occurs on defined premises. According to that argument, the concept of a shop connotes a room, place, or building where goods are actually sold, and the subsidiary terms—store‑room, godown, workplace—merely qualify ancillary spaces connected to that core idea. The counsel further explained that “business” in the definition should be interpreted as the specific segment of selling that is confined to defined premises, not the broader notion of selling in general. To illustrate, the counsel described the business of selling in general as a large circle, with the business of selling on defined premises as a smaller portion carved out of that circle; the secondary part of the definition—places mainly used in connection with the business—should be linked to this carved‑out portion rather than to the entire, broader concept of selling. This reasoning was presented to support the view that the appellant’s workshop, which manufactured parts for sale elsewhere, did not satisfy the statutory meaning of a “shop.”

The learned counsel argued that the definition in question does not cover every conceivable business of selling, regardless of how or where it is carried out. Instead, it applies only to those trades in which the act of selling takes place on premises that are specifically defined. According to the counsel, the very notion of a “shop” in this context implies a room, a place, or a building where goods are actually sold. The remainder of the definition, the counsel said, merely attaches ancillary locations—such as storerooms, godowns, or workplaces—to the primary definition, and these ancillary places are “mainly used in connection with” the business. The term “business” is therefore understood to refer to the kind of business described in the earlier part of the definition, meaning it is not a reference to business in general, nor even to the business of selling in general, but only to that segment of the selling business that is confined to selling on some defined premises. To illustrate the point, the counsel likened the totality of selling activities to a large circle, while the portion of selling that occurs on defined premises is a smaller segment carved out of that circle. The second part of the definition, the counsel held, attaches to this carved‑out segment rather than to the larger circle as a whole. The word “such” therefore limits what follows to what has been previously described, and what has been described is not the broad trade of selling in general but only that part of the trade that is conducted on defined premises. The counsel maintained that there is no justification for disregarding the limitation that the Legislature placed on the main portion of the definition and for interpreting “such” as referring to a much broader class of selling activities, a class that the main portion of the definition neither contemplates nor intends to include. In the Court’s view, this plain construction is logical and appropriate.

The learned Attorney‑General responded that, even if the counsel’s construction is possible, the Attorney‑General’s interpretation is also tenable and therefore, when two plausible readings exist, the interpretation that best conforms to the policy underlying the Act should be adopted. He guided the Court through the purpose of the legislation, describing it as a piece of social legislation intended, in part, to prevent the existence of sweated labour and the undesirable employment of women and young children, and, in another part, to safeguard the health and ensure the safety of workmen and employees. He argued that excluding small establishments of the type under discussion from the Act’s coverage would partly frustrate this purpose, because such establishments are numerous and the persons employed by them are entitled to, and in need of, the same level of protection afforded to those employed in larger concerns. After careful consideration, the Court concluded that this fear is unfounded because the Act itself contains an express provision to address such contingencies. Specifically, Section 5 empowers the State Government to extend the Act, by a simple notification in the Official Gazette, to any establishment, class of establishments, person, or class of persons to which the Act or any of its provisions does not otherwise apply. This provision demonstrates that the Legislature intentionally reserved the power to bring small establishments within the Act’s ambit when deemed desirable, thereby preserving the protective purpose of the legislation without the need for a broader interpretation of the definition.

In its view, the Legislature did not originally intend to bring small establishments of this kind within the scope of the Act, but instead conferred on the State Government the authority to do so when it deemed such an extension desirable, using the straightforward mechanism of issuing a notification in the Official Gazette. While reaching this conclusion, the Court was guided by the policy adopted by the Central Legislature on a related matter. The Court did not wish to disturb the general principle that it is undesirable to interpret the provisions of one statute by reference to another statute enacted by a different Legislature. However, having already settled the issue of construction and interpretation, and now considering only the broader policy of the State Legislature, the Court found it appropriate to view the matter in a wider perspective for the special reasons that would be set out subsequently.

The Court noted that the Central Factories Act of 1948 received assent on 23 September 1948, whereas the Bombay Act, though numbered Act LXXIX of 1948, was not enacted until 11 January 1949. It was apparent that the Bombay Legislature kept the Central Act in mind while drafting its own legislation, as evidenced by section 2(27), which provides that a “shop” shall not include a “factory,” and by section 2(9), which defines “factory” to include any premises that constitute a factory within the meaning of section 2 of the Central Act or that are deemed to be a factory under section 85 of that Act. Under the Central Act, section 2(m) specifies that an establishment cannot be classified as a factory unless it employs more than ten workmen, or unless it is artificially designated as a factory by means of a notification in the Official Gazette. Because the appellant employed fewer than ten workmen, his concern would not have been classified as a factory under the Central Act, and consequently would not have been excluded from the definition of “shop” in the Bombay Act, given that he carried out a manufacturing process in his workshop with the aid of power—a fact that was not contested.

The Court observed that the Central Legislature clearly intended to exclude small concerns such as the appellant’s from the purview of the Central Act, except where the Government chose otherwise. The reference to the Central Act within section 2(27) of the Bombay Act led the Court to conclude that the Bombay Legislature shared this intention. Accordingly, even if, as contended by the Attorney‑General, two possible interpretations of section 2(27) existed, the Court preferred the interpretation that more logically aligned with the construction of the language used. The Court further held that the learned High Court Judges had been influenced by matters that the Court considered inconclusive. The appellant had applied for registration under the Bombay Act and, in the statement filed under section 7, described his establishment as a “workshop” and characterized the nature of his business as a “factory.”

The judges observed that the use of the term “shop” within the word “workshop” effectively imported an admission that the appellant’s establishment was a shop. Such an admission could have given rise to an inference of fact against the appellant if no other evidence had been presented. However, when the full set of facts previously detailed is taken into account and admitted, the appellant’s personal view on the legal effect of those facts becomes irrelevant for the construction of the statutory provision. Consequently, the court held that no estoppel could be said to arise from the alleged admission because the statutory interpretation does not depend on the appellant’s subjective understanding. The appellant explained that because the legal position appeared doubtful, he applied for registration in order to avoid possible penalties for operating without registration should the Act later be found to apply to his concern. It should be noted that although the application was submitted on 12 April 1949, the registration was not completed until 4 May 1950, and the registration certificate was finally delivered on 8 January 1951. The criminal prosecution against the appellant was instituted on 4 April 1951, shortly after the certificate had been issued. Even the Government appeared uncertain about the correct classification, although that uncertainty was not decisive for the present determination. The court found that placing the burden of proof on the appellant in a criminal proceeding, solely because of a purported admission, was erroneous. The High Court judges had also noted that the appellant’s concern was entered in the register as a shop. The appellant neither protested that entry nor invoked the remedial provisions contained in section 7(3) of the Act. The court concluded that section 7(3) of the Act had no relevance to the matter before it because the provision dealt with a different procedural circumstance not applicable here. Accordingly, the appeal was allowed, the conviction and sentence were set aside, and the judgment of the trial magistrate acquitting the appellant was restored. Any fines that had been paid by the appellant were ordered to be refunded to him in full, as the conviction had been set aside.