Clinics, Nursing Homes Employing Over 10 Persons Come Under Purview Of Maharashtra Shops And Establishments Act: Bombay HC [Read Judgment]

In an important decision, the Bombay High Court has held that medical clinics, nursing homes, hospitals and dispensaries that employ 10 or more persons will come under the purview of the newly amended Maharashtra Shops and Establishments Act, 2017.

Justice RK Deshpande and Justice Vinay Joshi of the Nagpur bench were hearing a writ petition filed by Dr. Pradeep Arora, who is a paediatric surgeon running a nursing home in Nagpur. The bench upheld the vires of the newly amended Act.

Case Background

Arora challenged the definition of “establishment” under Section 2(4) of the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017, brought into force with effect from September 7, 2017, to the extent it applies to the profession and the establishment of any medical   practitioner (including hospital, dispensary, clinic, polyclinic, maternity home and such others) and the amendment requires such an establishment to comply with the provision of Section 6 in respect of its registration with the facilitator if the employees engaged are ten or more, and under Section 7, intimation of it to be given if the strength of the employees engaged is less than ten.

The challenge was on the ground that it violates the right of the petitioner contained in Article 19(1)(g) of the Constitution of India to practise a profession or to carry on any occupation or business.

Submissions and Judgment

The petitioner appeared in person, former AG and senior advocate Sunil Manohar was appointed the amicus curiae in the matter to assist the court, whereas Advocate-General AA Kumbhakoni appeared on behalf of the State.

Sunil Manohar relied upon various case laws to explain the position of law in this matter. He relied on the decision of apex court in the case of Dr. Devendra M. Surti v. State of Gujarat, 1969, and the decisions of the high court in the case of State of Maharashtra v. Dhanlaxmi Meisheri and Narendra Keshrichand Fulandi and another v.  State of Maharashtra.

AG Kumbhakoni submitted that the state government took a stand that the activity covered under the new Act has now to satisfy three tests –

(i)  There should be systematic activity,

(ii) Organized by cooperation between employer and employee, and

(iii) For the production and/or distribution of goods and services calculated to satisfy human wants and wishes.

The court accepted the AG’s interpretation and said-

“In our view, it is the harmonious activity carried out in cooperation amongst all the partners in the establishment to render material services to the community with the help of capital, which is covered by the definition of “establishment” under Section 2(4) of the new Act. Whether the establishment is running in profit or loss is of no consequence.  We find that Shri Kumbhkoni is right in urging that it is a matter of legislative policy and wisdom as to the types of establishments to be included in the definition.”

Thus, the court found that such medical establishments, clinics and dispensaries that employ 10 or more persons come under the purview of the new Act-

“Section 1 of the new Act, is designed to bring only such establishments, which partake the character of an industrial establishment. It would not be a matter of exaggeration on our part if we call this provision as the backbone of the new Act. The legislation has taken care to maintain the distance between the activity carried on by an individual by his personal skill and intelligence and those carried on or organised by cooperation between the employer and the employee in rendering material services to the Society.  We find this to be in conformity with what is expressed in relation to commercial establishment by the Apex Court in Dr. Devendra Surti's case.”

The court concluded that the petitioner’s fundamental rights were not being violated in any manner and upheld the vires of the newly amended Act.