The Division Bench of the High Court of Calcutta has recently held that organizations and institutions  which are either of a charitable or educational nature and bound to employ teachers and staff for imparting education fall under the purview of ‘establishments’ under Section 1(5) of the Employees’ State Insurance Act, 1948.

In this case, the appellants, OM Dayal Educational & Research Society & Ors. Had stated that they are a charitable and educational society that manages Delhi Public School Ruby Park, Kolkata and Delhi Public School, Durapur. They had challenged two notifications which were published in the Kolkata Gazette which stated that exercise of powers conferred under subsection (5) of Section 1 of the Employees’ State Insurance Act, 1948, inter alia with approval from the Central Government, the Labour department extended the provisions of the said 1948 Act to educational institutions run by individuals, trusts, societies, or other organizations.

In the judgment issued by the single judge bench of the High Court of Calcutta based on the writ petition, it was stated that the argument that the institutions of the appellants were a ‘commercial establishment’ under Section 2(2) of the West Bengal Shops and Establishments Act, 1963 and carrying on business, trade, profession, or any work in connection with, or incidental to, or ancillary to any business, trade, or profession, could not be accepted.

The Court has interpreted the word ‘establishment’ as well as ‘institution’ to see how it exactly fits within the meaning of the word ‘establishment’.

The Court stated the definition according to the Black’s Law Dictionary,

Institution (14c) – An established organization, especially one of a public character, such as a facility for the treatment of mentally disabled persons…”

The Court also relied on the Judicial Dictionary which states,

Institution – According to the dictionary meaning, the term means a body or organization of an association brought into being for the purpose of achieving some object.

Oxford English Dictionary defines an ‘institution’ as an establishment, organization, or association, instituted for the promotion of some object, especially one of public or general utility, religious, charitable, educational etc.

The court also relied on The Major Law Lexicon where the ‘institution’ is defined as “organization, particularly one concerned with the promotion of specific subject or some public object.

Thus, taking into account all these dictionary meanings and citing the Bangalore Turf Club case law which states, an establishment includes an institution which is engaged in the act of achieving a certain purpose, mostly a public purpose (including charity and education), and in the process is engaged in employing persons for providing a good or service to the community, the Court stated.

The Court added that the appellants being a charitable and educational society that runs two schools, most certainly falls within the ambit of the said notification and also within the meaning of establishments under Section 1(5) of the said 1948 Act.

Link to judgment:

The Principal Secretary, Department of Labour v. Om Dayal Educational and Research Society & Ors.

Link to image: