ESI Act Applicable To BCCI As Its Activities Are Commercial In Nature : Bombay High Court

Justice Bharati Dangre, in a judgement passed last week, dismissed an appeal filed by the BCCI and upheld the finding of the Employee Insurance Court (ESI Court) that the Board was covered under the notification dated 18/9/1978 issued under the provision of Section 1(5) of the Employee State Insurance (ESI) Act by the Maharashtra Government.

This makes BCCI liable for contributing for its employees under the ESI Act, 1948 – liability fixed for the period May 2007 to March 2014 stood at Rs 5,04,075. However, on a plea by BCCI's counsels, implementation of the judgement was stayed by the court for six weeks.

Justice Dangre relied heavily on the interpretation of the apex judgement in the case of ESI Corporation Vs Hyderabad Race Club, 2004 (6) SCC 191 – and observed that the ESI Court too had correctly interpreted that judgement to arrive at its conclusion.

In that judgement the Supreme Court had ruled in favour of the ESIC and observed: The ESI Act being a Social Welfare Legislation intended to benefit as far as possible workers belonging to all categories, one has to be liberal in interpreting the words in such a welfare legislation. The definition of a shop which meant a house or building where goods are sold or purchased has now undergone a great change. The word 'shop' occurring in the notification is used in the larger sense than its ordinary meaning. What is now required is a systematic economic or commercial activity and that is sufficient to bring that place within the sphere of a 'shop'.

The ESI Court and Justice Dangre noted that while it was correct that the Board's main objective was to administer, promote and control the game of Cricket throughout the country, including Women's Cricket, the Board was selling Television broadcasting rights to the concerned Television Company by auction; was receiving amount from sponsorship of Indian Cricket Team; exercised the control over IPL Cricket matches and receiving income from sponsorship from these matches.

"It can be seen that the BCCI is carrying out a business, commercial activity and earn money out of the said activity. Furthermore, it's activities are not only restricted to providing entertainment, but TV broadcasting rights are also sold by the Board to TV companies by auction, which is again a systematic commercial activity. By conducting Indian Premier League (IPL) and exercising control over this tournament, founded by the BCCI in the year 2007, which is the most attended cricket league in the world and ranked 6th by average attendance amongst all sports leagues is the major sporting event in the world to be broadcast live on various channels," the court further observed.

The Regional Director of the ESIC, based on a surprise inspection by an Insurance Inspector in April-May 2011, wherein employees and their salaries, present on the board office premises were examined, had concluded that the BCCI would be covered under the provisions of ESI Act with effect from January 1, 2007.

Apart from the BCCI's arguments mentioned earlier, the board argued – which were rejected by the ESI Court as well as the Bombay HC – that it was an autonomous, non-profit making sports body and it is neither a 'shop' nor a 'commercial establishment' as contemplated under the provisions of the Bombay Shop and Establishment Act, but it is only the governing body for the sport of cricket and its functions are not akin to any commercial business trading activities.

It is further submitted that merely because the Board generated some revenue through sponsorship and from selling of broadcasting rights to promote the game of cricket in India, it cannot be assumed that the Board was a 'shop' within the meaning of ESI Act, and that the Corporation as well as the ESI Court had failed to consider the purpose of constituting the Board and the predominant activities, undertaken by it.

The ESI Court, after referring to the various documents produced before it, including BCCI's Memorandum of Association, Rules and Regulations, annual reports, the Court delved upon the nature of functioning of the Board, including its activities like conducting international cricket matches, IPL Cricket matches, Indian Cricket League, Champion league etc repelled the contention advanced on behalf of the Board.

The ESI Court concluded, which was not disturbed by the HC: "So all above stated facts clearly show that applicant board is engaged in systematic commercial activities and profit earning institution. It is working in entertainment industry and providing entertainment to its customers at price i.e. by selling tickets. Therefore, it is liable to pay ESI contribution on the wages paid to the coverable employees."

Case Title: The Board of Control for Cricket in India Versus Regional Director Employees State Insurance Corporation and anr

Citation: 2022 LiveLaw (Bom) 239