Maharashtra Shops and Establishments Act applies to Clinics, maternity home, Nursing Homes Employing 10 Persons: Bombay HC

In a landmark Judgment, the Bombay High Court on 2nd November 2018 held that establishment of any   medical   practitioner (including hospitals, dispensary, clinic, polyclinic, maternity home and such other that employ 10 or more persons shall come under the purview of the Maharashtra Shops and Establishment Act, 2017.

The previous Bombay Shops and Establishments Act, 1948 was initially applicable to shops and “commercial establishments”. However, in the year 1977, the State Government of Maharashtra amended the Bombay Shops and Establishments Act, 1948 with a view to including all professionals, including medical practitioners, within the ambit of the Bombay Shops and Establishments Act, 1948.

When Government of Maharashtra introduced the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 the new Act categorically included doctors and hospitals in the definition of “establishment” which is only applicable to medical practitioners and their establishments if they employ 10 of more employees.

Nagpur-based surgeon Dr Pradeep Arora had challenged the new Act saying it is not applicable to a medical professional on the ground that it violates Article 19(1)(g) of the Constitution of India that relates to freedom to practice a profession or to carry on any occupation or business beyond legislative competence.  Arora contended that considering the earlier Supreme Court and high court orders, inclusion of the medical profession and establishments in the definition of the term “establishment” in the new Act is liable to be struck down.

In this case, the Bombay High court took the view that the provisions of the new Act are designed after careful consideration. The old Bombay Shops and Establishments Act, 1948 used the term “commercial establishment” whereas the Maharashtra Shops and Establishment Act, 2017 removed the term “commercial”, and thus explicitly covered the non-commercial establishments including charitable establishments employing ten or more persons.

The Court also considered that if activity carried out in cooperation amongst all the partners in the establishment to render services to the community, it is covered by the definition of “establishment” under Section 2(4) of the new Act. Whether the establishment is running for profit gain or not is of no consequence. Again, while formulating the definition of an establishment, care is taken to include the establishment of a medical practitioner, architect, engineer, accountant, tax consultant or any other technical or professional consultant. The criteria for applicability are 10 or more employees. So, covering a category of establishment by a labour welfare legislation does not violate the freedom to practice a profession or trade guaranteed by the Constitution of India.

Thus, the Judgment has validated that medical practitioners, clinics, polyclinics, maternity homes, hospitals and dispensaries employing less than ten persons are exempt from applicability of this act. And if they employ more than 10 employees must register under this Act and comply with all the provisions of the Act.

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