BCCI conducts commercial activities, should pay employees’ insurance contribution, says Bombay HC

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The Bombay High Court recently held that the Board of Control for Cricket in India (BCCI) is conducting systematic commercial activities generating profits from it, and therefore falls within the definition of ‘shop’ as per the Bombay Shops and Establishment Act, 1948.

Observing this, the court rejected BCCI’s appeal against an order of the Employees State Insurance (ESI) court. The court held that since it falls within the concept of ‘shop’ as per the 1948 law, it is covered under the Employees State Insurance (ESI) Act.

The bench upheld the ESI court’s decision that asked the cricket governing body to pay nearly Rs 5 lakh as employer’s share towards employee insurance. However, it stayed an operation of its order for six weeks to enable the BCCI to approach the Supreme Court.

A single-judge bench of Justice Bharti Dangre observed, “It can be seen that the BCCI is carrying out a business, commercial activity and earning money out of the said activity. Furthermore, its 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.”

The judge also referred to the BCCI conducting the Indian Premier League (IPL) and exercising control over the tournament. The judge noted that IPL tickets are sold by holding franchise teams and there is an agreement between the board and the franchisee for management of the team and that is clearly indicative of a “commercial relationship”.

Justice Dangre passed a judgment on June 24 in BCCI’s appeal against regional director, Employees State Insurance Corporation, challenging a September 2021 decision of the ESI court in Mumbai, which had held that the BCCI can be categorized as ‘shop’ under the Mumbai Shop and Establishment Act and therefore is covered by ESI Act.

The corporation had taken a decision following a surprise inspection by its insurance inspector in April-May 2011, in which employees and their salaries present on BCCI office premises were examined. Thereafter, a notice was sent in July 2014 claiming contribution amount of nearly Rs 5 lakh as Employees State Insurance contribution for May 2007 to March 2014 period. The BCCI moved ESI court against the corporation’s decision, which rejected its plea, prompting it to approach the high court.

Advocate Aditya Thakker for BCCI argued that the board is an autonomous, non-profit making sports body and it is neither a ‘shop’ nor a ‘commercial establishment’ as contemplated under the provisions of law.

The board further submitted that merely because it 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 is a ‘shop’ within the meaning of the ESI Act, therefore the ECI court decision be set aside.

However, advocate Shailesh Pathak for the corporation submitted that the board carries out activities like selling tickets of cricket matches and providing entertainment which could be clearly classified as rendering the services for a price.

Pathak added that the board’s annual report comprises its income from international tours and the income from IPL. Opposing the appeal, he said that the systematic economic commercial activity carried out by BCCI clearly makes it fall within the purview of ESI Act and the appeal be dismissed.

“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,” Justice Dangre held and dismissed BCCI’s appeal.

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