BCCI engaged in commercial activities; liable to pay employees contribution under ESI Act: Bombay High Court

The Board of Control for Cricket in India (BCCI) is engaged in commercial activities and earning profits from the same and is, therefore, covered under the Employees State Insurance (ESI) Act, the Bombay High Court has held [BCCI vs Regional Director, ESI Corporation]..This would mean that the BCCI is liable to pay employer's contribution to the ESI corporation, which looks after welfare of employees of any company.Single-judge Justice Bharati Dangre in her order explained the various commercial activities undertaken by the BCCI including the Indian Premier League, which the Court said is the most attended cricket league in the world."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 judge noted..Hence, though the Memorandum of Association of the BCCI prescribe that the income, funds and properties of the BCCI shall be utilized solely for promotion of objects of BCCI, to aid and assist financially, or otherwise to promote, encourage, advance and develop the game of cricket, the fact that the Board engages itself in it’s various commercial activities would mean that BCCI is 'shop' under under the provisions of Mumbai Shop and Establishment Act.Consequently, it will come under the ambit of ESI Act, the Court ruled."I have no hesitancy to hold that the nature of activities conducted by the Board are commercial in nature and hence, covered under the term ‘shop’ for the purpose of ESI Act and notification issued thereunder," the judge held..The Court was hearing an appeal filed by the BCCI challenging decision of the ESI Court in Mumbai, which had held that the board can be categorised as "shop" under Mumbai Shop and Establishment Act and would, therefore, be covered by ESI Act.This decision was taken following a surprise inspection by an Insurance Inspector in April-May 2011, wherein employees and their salaries, present on the board office premises were examined. Subsequently, a notice was sent in Proforma C-18 dated July 1, 2014, claiming contribution amount to the tune of ₹5,04,075 as Employees State Insurance Contribution for the period commencing from May 2007 to March 2014.The BCCI on the other hand, claimed that it couldn't be covered under the ESI Act, since it is a governing body for cricket in India and its primary object is to administer, promote and control the game of cricket throughout the country, including women’s cricket and to encourage formation of State, regional and other cricket associations. Therefore, it is not covered or registered as ‘shop’ under the provisions of Mumbai Shop and Establishment Act..In her order, Justice Dangre noted that the ESI Act, 1948, seeks to secure maintenance of health of an insured workman by recognising the right to medical benefit as a fundamental right under the Constitution.It is intended to confer certain benefits upon the employee in case of sickness, maternity and employment injury and to make provision for certain other benefits."Thus, the enactment is intended to operate as a beneficial piece of legislation to attain general welfare of the employees," the judge held.To categorise the BCCI as a shop, the judge adverted to the "systematic commercial profit making activity" of the Board, which has it’s source of income on different counts like holding of international tours, income from IPL, selling rights of broadcasting the cricket matches, sponsorship, sale of tickets, etc."The Board is admittedly involved in entertaining and carrying out systematic commercial activity and is engaged in providing services to public at large by engaging its employees, organizing events, promoting cricket as a source of entertainment and thereby collecting funds. It is also engaged in acquisition or purchase of movable or immovable assets, tangible or intangible and authorised to sale or transfer the same for achieving its objectives," the judge noted further.Therefore, the Court upheld the decision of the ESI court to hold that BCCI falls under the ambit of ESI Act..Advocates Aditya Thakkar, Ranjit Shetty and Rahul Dev along with Argus Partners appeared for the BCCI.Advocates Shailesh Pathak and Jay Vora represented the respondents..[Read Judgment]