ORDER: This Appeal has been preferred by the Employees State Insurance Corporation, which is the opposite party in O.A.No.1 of 1998 on the file of the Principal Senior Civil Judge, Kurnool. 2. The respondent herein filed the Application under Section 75 of the Employees' State Insurance Act, 1948 (for short 'E.S.I. Act') against the opposite party to declare that the order of demand, dated 16-09-1997 calling for the contributions for the period from 26- 03-1978 to 31-03-1993 is null and void and for consequential injunction restraining the opposite party from acting on the show cause notice, dated 16-09-1997. 3. The Applicant filed the Application by contending that the notice is null and void and it is not covered by the provisions of the E.S.I. Act, therefore, the respondent is not liable to pay the contribution under the said Act. The lower Court accepted the said contention and allowed the Application by declaring that the Applicant is not covered by the provisions of the E.S.I. Act and it is not liable to pay contribution under the Act. Being aggrieved by the said order, dated 25-10-2002, the present Appeal has been filed by the opposite party. 4. The Application was filed before the lower Court by contending that the Applicant is a society having its administrative office at Kurnool and branches at various places in the District. The main activity of the Applicant is distribution of fertilizers and pesticides, equipment to the farmers, supply of provisions to hostels run by the social welfare department and distribution of essential commodities to fair price shops. It is also contended that the said society is undertaking distribution of free market rice and oil, nationalized text books as and when government entrusted such works. The Applicant does not have any processing or production activity. None of its offices have the strength of employees exceeding 20, therefore, it is not covered under the E.S.I. Act. Despite the above position, due to pressure of the authorities under the E.S.I. Act, the Applicant implemented the insurance scheme to its employees with effect from 01-04-1993 and different identification numbers have been issued to its offices at Kurnool, Nandyal, Yemmiganur and remitting the contributions from October, 1993 onwards. Despite the above position, due to pressure of the authorities under the E.S.I. Act, the Applicant implemented the insurance scheme to its employees with effect from 01-04-1993 and different identification numbers have been issued to its offices at Kurnool, Nandyal, Yemmiganur and remitting the contributions from October, 1993 onwards. The opposite party issued a show cause notice, dated 16-09-1997 threatening criminal prosecution for non- compliance with the provisions of the E.S.I. Act and the Regulations framed thereunder demanding Rs.2,86,772/- towards contribution for the period from 26- 03-1978 to 31-03-1993. Though the Applicant does not fall within the purview of the E.S.I. Act, the respondent resorted to issue such demand notice, which is barred by time as it was made 5 years after the period for which the demand was made. 5. The opposite party filed a counter contending that the provisions of Section 1 (5) of the E.S.I. Act are extended to Kurnool under G.O.Ms.No.187, dated 02-03-1978, therefore, the E.S.I. Act is applicable to all shops and establishments. The employer is expected to apply for registration to the concerned authorities under the Act. But the Applicant failed to submit such Application. The Inspector of E.S.I. Corporation visited the establishment of the Applicant on 26-03-1978 and after verification of office record relating to the period from January, 1977 found that 21 employees were working in the administrative office and 27 employees were working in various branches and thus total 48 persons were working under it, therefore, the Applicant satisfied the requirement under Section 1 (5) of the E.S.I. Act with effect from 26-03-1978. Hence, code number was allotted to the Applicant. The Applicant also submitted the registration form disclosing the strength of the employees at 47 till March, 1978 and was remitting the contributions with effect from 01-04-1993. Since the Applicant failed to comply with the payment of contribution, a show cause notice was issued according to the provisions of the E.S.I. Act. Under Section 77 (1- A) (b) of E.S.I. Act, the claim is not barred since the recovery certificate was sent to the District Collector, Kurnool for recovery of dues from 16-04-1979 to 15-10-1993, therefore, the Application is liable to be dismissed. 6. In pursuance of the averments made by both parties, the Applicant examined PWs.1 and 2 and marked Exs.A-1 to A-9. The opposite party-E.S.I. Corporation examined RW-1 and marked Exs.B-1 to B-27. 6. In pursuance of the averments made by both parties, the Applicant examined PWs.1 and 2 and marked Exs.A-1 to A-9. The opposite party-E.S.I. Corporation examined RW-1 and marked Exs.B-1 to B-27. The authority under the Act passed the impugned order by holding that the Applicant is not liable to pay any contribution as it is not covered under the provisions of the E.S.I. Act. 7. The learned counsel for the Appellant submitted that since the respondent society established branches at other places under its administrative control by keeping the head office at Kurnool, the head office and branches together shall be treated as one entity and as there are more than 20 workers under the respondent-society, they come within the definition of Employer under the E.S.I. Act and they are liable to pay the contribution. 8. The learned counsel for the respondent society submitted that the society had head office at Kurnool and branches at other places and none of the branches of the head office independently do not employ more than 20 workers at any time, therefore, it cannot be treated as an employer under the E.S.I. Act. 9. In the light of the contentions made by both parties, it has to be considered whether the respondent society employed 20 or more employees at any time and whether the employees engaged in all the branches shall be taken into consideration for the purpose of bringing the society under the definition of establishment and whether it is liable to pay contribution for the period from 26-03-1978 to 31-03-1993. 10. It is an undisputed fact that the respondent is a cooperative society having its head office at kurnool and branches at Kurnool, Nandyal and Yemmiganur. It is also an undisputed fact that the respondent-society is conducting activity of distribution of fertilizers and pesticides, equipment to the farmers, supply of provisions to hostels run by the social welfare department and distribution of essential commodities to fair price shops and distribution of free market rice and oil, nationalized text books and such other work that is being entrusted by the Government under various schemes. It is also an undisputed fact that the respondent-society is paying contribution under the E.S.I. Act from 01-04-1993 without any protest for treatment of the society as an establishment within the definition of the E.S.I. Act. It is also an undisputed fact that the respondent-society is paying contribution under the E.S.I. Act from 01-04-1993 without any protest for treatment of the society as an establishment within the definition of the E.S.I. Act. The demand notice was issued by the E.S.I. Corporation for the period from 26-03-1978 to 31-03-1993. Though the respondent-society is not an industry, it comes within the definition of establishment under the Shops and Establishments Act and the E.S.I. Act is made applicable to Kurnool District also under Section 1 (5) of the E.S.I. Act through G.O.Ms.No.187, dated 02-03-1978. But the respondent- society failed to submit any Application or returns to the E.S.I. Corporation, therefore, the Inspector of the Corporation visited the establishment of the Applicant on 26-03-1978, verified the records for the period from January, 1977 to 21-06-1978 and noticed that 21 employees were working in the head office and 27 employees were working in various branches and thus, the society employed 48 persons, therefore, he observed that the Applicant is satisfying the requirement under Section 1 (5) of the E.S.I. Act with effect from 26-03-1978 and he also allotted code number to the said society. It is also seen that the Applicant submitted a registration form disclosing the strength of the employees at 47 till March, 1978. 11. The lower Court observed that since separate registration numbers were given to the head office and branches offices of the society under shops and Establishments Act, it conclusively established that the main office and branch offices have independently registered under the relevant enactments. The lower Court further observed that according to the evidence of PW-2, the total number of employees in all the branches and the Administrative Office were 28 in the year 1978. The burden is on the opposite party to prove that the Applicant falls within the purview of the E.S.I. Act. The lower Court further observed that a factory or establishment to be brought within the purview of the E.S.I. Act should indulge in manufacturing process with the aid of power or without the aid of power. The Applicant-society is only a marketing society selling commodities which are made available by the Government and it cannot be treated as an establishment covered under the E.S.I. Act. Since the branches of the society are independent bodies with the head office, they cannot be amalgamated to attract the provisions of E.S.I. Act. The Applicant-society is only a marketing society selling commodities which are made available by the Government and it cannot be treated as an establishment covered under the E.S.I. Act. Since the branches of the society are independent bodies with the head office, they cannot be amalgamated to attract the provisions of E.S.I. Act. Accordingly, the lower Court allowed the Application by further observing that the payment of demand under the E.S.I. Act from 01-04-1993 is not a factor subjecting the society to come within the purview of E.S.I. Act on account of mistake or inadvertent omission or commission on the part of the Applicant, therefore, the principle of estoppel from raising the plea that it will not come within the purview of the E.S.I. Act is not attracted. The lower Court also observed that since there is no proof that the opposite party has raised claims against the Applicant within five years of the period to which such claims related to for the period from 26-03- 1978 to 31-03-1993, it cannot be stated that the claim made under Ex.A-1 is within time and at the most, the claim for the period from 01-04-1992 to 31-03- 1993 alone can be treated as one within time. The claim is barred by time except to the extent covering the period from 01-04-1992 to 31-03-1993. As Ex.A-1, demand notice, covers the period barred by time, it cannot be treated as a valid notice, therefore, it is liable to be declared as null and void. 12. In SOUTHERN AGENCIES, RAJAMUNDRY v. A.P.E.S.I.C. 1 the Supreme Court considered the scope of expression 'shop' and it's expanded meaning. In the case covered by the above decision, the Southern Agencies is a partnership firm engaged in the retail sale of Godrej Steel Furniture, Usha Fans and similar items having its administrative office at Rajamundry. There is also a sales office at Rajamundry. The appellant has separate units at Kakinada, Visakhapatnam, Vizianagaram, Srikakulam, Khammam and Warangal. The Government of Andhra Pradesh extended the application of the provisions of the E.S.I. Act to different classes of establishments, including shop. By a communication sent on 19-11-1982, the Corporation asked the appellant to furnish the details of its branch offices together with the number of employees working therein as the appellant is covered by the Act pursuant to the notification, dated 02-03-1978 issued by the Government of Andhra Pradesh. By a communication sent on 19-11-1982, the Corporation asked the appellant to furnish the details of its branch offices together with the number of employees working therein as the appellant is covered by the Act pursuant to the notification, dated 02-03-1978 issued by the Government of Andhra Pradesh. The appellant contended that in none of these outlets, there are employees exceeding 10 and each of these outlets is a separate unit and they cannot be clubbed together. It is further contended that the sale offices situated in different districts are not covered under the Act as no sale takes place there and it is purely an administrative office. The appellant filed an O.P. before the E.I. Court, Rajamundry and the stand taken by the respondent that the Act applies to the firm has been negatived by the Court. The matter was carried to the High Court and a Division Bench of the A.P. High Court referred the matter to a Full Bench for giving its decision whether the Southern Agencies will come within the purview of the E.S.I. Act. The Full Bench took a view that for the purpose of the Act the office of the appellant at Rajamundry can be treated as a shop and dismissed the Appeal. Being aggrieved by the same, the Southern Agencies preferred an Appeal by Special Leave and the Supreme Court held as follows: "The evidence tendered by the General Manager indicate that the branches are responsible and answerable to the appellant; that the head office keeps track of the efficiency of each branch and its profitability; that the head office has control over the branch offices and gets information periodically as to stocks received and goods sold from each branch from time to time; that the business in respect of all branches is carried on with the same funds and there are transfers of employees as well from one branch to another branch; that a single audit is made by preparing a single statement of accounts including sales in all the branches which are put together. The above factors clearly indicate that the administrative office at Rajamundry is nothing but a controlling office to supervise the sales taking place in different branches and thus falls within the definition of expression 'shop'." In the light of the above Judgment of the Supreme Court and in the light of the identical facts of the decision to the present case, it can be said that the head office of the society is the controlling office to supervise the sales taking place in different branches and thus falls within the definition of expression 'shop'. 13. In ESI CORPORATION v. R.K. SWAMY & ORS. 2, the Supreme Court held that: "We have examined the scope of the expression shop used in the notification issued under the Act and held that the word shop has acquired an expanded meaning. Where in a premises any economic activity is carried on leading to sale or purchase that premises will have to be held as shop for the purpose of the Act even though there is no actual giving or taking of goods in such premises. If the business carried on in a premises results in having some nexus with the purchase or sale of goods is sufficient to be shop for the purpose of Act." In the light of the above Judgment also, the Court categorically observed that where the economic activity carried on in the premises of the shop leading to sale or purchase of any commodities, the said premises will have to be treated as 'shop' for the purpose of the Act. 14. Section 1 (5) of the E.S.I. Act reads as follows: "1 (5). 14. Section 1 (5) of the E.S.I. Act reads as follows: "1 (5). The appropriate Government may, in consultation with the Corporation and where the appropriate Government is a State Government, with the approval of the Central Government, after giving six months' notice of its intention of so doing by notification in the Official Gazette, extend the provision of this Act or any of them, to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise: Provided that where the provisions of this Act have been brought into force in any part of a State, the said provisions shall stand extended to any such establishment or class of establishments within that part if the provisions have already been extended to similar establishment or class of establishments in another part of that State." Under Section 2 (13) of the E.S.I. Act, 'immediate employer' was defined which reads as follows: "2 (13). 'immediate employer', in relation to employees employed by or through him, means a person who has undertaken the execution, on the premises of a factory or an establishment to which this Act applies or under the supervision of the principal employer or his agent, of the whole or any part of any work which is ordinarily part of the work of the factory or establishment of the principal employer or is preliminary to the work carried on in, or incidental to the purpose of, any such factory or establishment, and includes a person by whom the services of an employee who has entered into a contract of service with him are temporarily lent or let on hire to the principal employer and includes a contractor." The lower Court under the impression that Section 2 (13) is applicable to the factory or an industry, which manufactures goods, held that if an Employer runs the establishment as defined under the Shops and Establishments Act, it will not come within the definition of the factory for the application of the provisions of the E.S.I. Act. 15. The learned counsel for the respondent contended that the notice is barred by limitation, therefore, the notice is liable to be set aside. Section 77 (1A) of the E.S.I. reads as follows: "77. Commencement of proceedings:-- (1) The proceedings before an Employees' Insurance Court shall be commenced by application. 15. The learned counsel for the respondent contended that the notice is barred by limitation, therefore, the notice is liable to be set aside. Section 77 (1A) of the E.S.I. reads as follows: "77. Commencement of proceedings:-- (1) The proceedings before an Employees' Insurance Court shall be commenced by application. (1A) Every such application shall be made within a period of three years from the date on which the cause of action arose. Explanation:-- For the purpose of this sub-section- (a) the cause of action in respect of a claim for benefit shall not be deemed to arise unless the insured person or in the case of dependants' benefit, the dependants of the insured person claims or claim that benefit in accordance with the regulations made in that behalf within a period of twelve months after the claim became due or within such further period as the Employees' Insurance Court may allow on grounds which appear it to be reasonable; (b) the cause of action in respect of a claim by the Corporation for recovering contributions (including interest and damages) from the principal employer shall be deemed to have arisen on the date on which such claim is made by the Corporation for the first time: Provided that no claim shall be made by the Corporation after five years of the period to which the claim relates; (c) the cause of action in respect of a claim by the principal employer for recovering contributions from an immediate employer shall not be deemed to arise till the date by which the evidence of contributions having been paid is due to be received by the Corporation under the regulations." Section 77 (1A) deals with the period of limitation under the E.S.I. Act. Section 77 (1A) Explanation-b provides that no claim shall be made by Corporation after five years of the period to which the claim relates. 16. Though the Appellant-opposite party contended that a recovery certificate was sent to the Collector, Kurnool for the recovery of the dues from 16-04-1979 to 15-10-1993, therefore, the claim is not barred under section 77 (1A) of the E.S.I. Act, no such document has been filed by the Appellant in proof of sending that certificate, therefore, the plea of the Appellant cannot be accepted that the claim covered by the impugned notice is not barred by time. 17. 17. In view of the above provision, the Corporation is not entitled to claim the amount beyond the period of five years, therefore, the Corporation is entitled to recover the amount for a period of five years immediately preceding the date of demand notice i.e., 16-09-1997, as the rest of the claim is barred by limitation. 18. In the result, the Appeal is allowed in part. The order of the lower Court, dated 25-10-2002 is set aside. The respondent-applicant, which comprises the administrative office and branch offices, will come within the purview of the E.S.I. Act and it is liable to pay contribution for a period of five years immediately preceding the date of demand notice. It was mentioned in the counter of the applicant that the contribution was being paid from 01-04- 1993. The Appellant is entitled to recover the contribution for a period of five years immediately preceding 16-09-1997 only. No order as to costs.