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Madhya Pradesh Shops and Establishments Act, 1958

Madhya Pradesh Shops and Establishments Act, 1958

December 8, 2023

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This article is written by Ziya ur Rahman Karimi. This article provides a detailed and comprehensive analysis of the Madhya Pradesh Shops and Establishment Act, 1958. The article further comprehensively explains the provisions of the Act, like the procedure for registration of establishments and shops, the rights of workers regarding hours of work, leaves, and payment of wages. It also discusses the duties and responsibilities of the authorities and the provisions of offences and penalties under this Act.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

Madhya Pradesh is a large state where numerous shops and establishments exist and form part of its economy. Have you ever thought, based on which laws and rules, these establishments and shops, which include restaurants and theatres, amongst other things, are carried out smoothly in Madhya Pradesh? Well, it is the Madhya Pradesh Shops and Establishments Act, 1958, and this article provides a detailed and comprehensive analysis of the said Act.

The Madhya Pradesh Shops and Establishment Act, 1958, is a set of guidelines that lays down the rules and laws for ensuring the smooth and fair functioning of shops and establishments like restaurants, eating houses, residential hotels, theatres, or other places of public amusement or entertainment. This legislation covers topics like the registration process of establishments, the opening and closing hours of different categories of shops and establishments, how many working hours are fixed for an employee in these establishments, as well as the holidays and provisions regarding leaves and payment of wages. It also gives certain rules and guidelines regarding the employment of young persons and women and completely prohibits the child from working in any establishment. It is pertinent to mention here that this legislation empowers a few authorities responsible for ensuring that the provisions under this Act are followed by employers and owners. It also imposes penalties for certain offences and, thus, ensures complete enforcement of this Act.

Therefore, whether you are a business person, owner of a shop, or academician and you are here just for the purpose of research or someone who is just keen to explore this legislation to understand how things work regarding the functioning of the shops and establishments in Madhya Pradesh, just go through this article once. You will learn all about the Madhya Pradesh Shops and Establishments Act, 1958.

Objectives of Madhya Pradesh Shops and Establishments Act, 1958

To protect the rights of employees: One of the main objectives of this Act is to ensure and safeguard the rights and interests of workers. This Act provides various provisions regarding working hours, the right to leave, and provisions regarding wages and holidays.
To ensure uniformity in the functioning of shops and establishments: This Act aims to ensure uniformity and consistency of practice in the operation of shops and commercial establishments, and, for this purpose, it provides guidelines regarding opening and closing hours.
To promote safety and health at the workplace: This Act seeks a safe and healthy environment for work, and for that, it gives guidelines for cleanliness, proper ventilation, and precautions against fire incidents.
To regulate the operation of shops and establishments in accordance with the Act: This Act makes the registration of establishments mandatory to make sure that they are following the rules and regulations as specified in the Act.

Important definitions

There are thirty definitions described under Section 2 of this Act. Let us discuss the important ones below.

Shop

Section 2(24) defines the term “shop” as any premises where goods are sold either by retail or wholesale, or both, or where services are provided to customers. It includes offices, store rooms, godowns, warehouses, and workplaces, whether on the same property or somewhere else, that are used in connection with such trade or business. However, this definition does not include a commercial establishment, residential hotel, restaurant, eating establishment, theatre, or other place of public entertainment or a shop that is attached to a factory where the employees are entitled to benefit under the Factories Act, 1948.

Establishment

Section 2(8) of the Act defines the term “establishment.” As per this Section, establishment refers to a shop, commercial establishment, hotel, restaurant, eating-house, theatre, or other public amusement or entertainment place to which this Act is applicable.

In addition to this, the Government has the power to notify and designate any other establishment having a similar nature to those mentioned in this provision as an “establishment.”

Residential hotel

According to Section 2(22) of the Act, a residential hotel refers to any premises where a bona fide business of supplying payment, lodging, or board and lodging to travellers and other members of the public is carried on. It also includes a residential club.

Restaurant or eating-house

Section 2(23) defines the term “restaurant or eating-house” as any premises that are principally or wholly used for the business of supplying meals or refreshments for consumption on the premises; it also includes a Halwai’s shop. However, a restaurant or a canteen attached to a factory will not come under this definition if their employees are entitled to the benefits provided for the workers under the Factories Act, 1948.

Theatre

Section 2(26) defines the term “theatre” as any premises that are primarily or entirely for exhibiting pictures or any other optical effects using a cinematograph or such other suitable apparatus, or for a dramatic performance, or any other public amusement or entertainment.

Commercial establishment

Section 2(4) of the Act defines the term “commercial establishment.” As per this Section, a commercial establishment refers to an establishment that carries on any business, trade, or profession or performs any work having a connection with any business, trade, or profession.

The commercial establishment includes the following:

A registered society under the Madhya Pradesh Societies Registration Act, 1959, or deemed to have been registered under the said Act, and a charitable or other trust, whether registered or not, that conducts any business, trade, profession or work which Is connected with or incidental or ancillary to such business, trade, or profession, whether for profit or not;
An establishment which is engaged in advertisement, commission agency, forwarding, or commercial agency or which is a clerical department of a factory or any industrial or commercial undertaking;
An insurance company, joint stock company, bank, broker’s office and exchange;

However, the term “commercial establishment” does not include a factory, shop, residential hotel, restaurant, eating house, theatre, or other place of public amusement or entertainment.

Exceptions to Madhya Pradesh Shops and Establishments Act, 1958

Section 3(1) provides that this Act will not apply to certain persons and establishments, which are as follows:

Persons come under clause (a) of sub-section (2) of Section 6 and hold positions of management or are employed in a confidential capacity. But the condition is that they must not be more than ten percent of the total number of employees in the establishment or three in number, whichever is less;
Persons engaged in work that is inherently intermittent, such as watchmen, caretakers, travellers, and canvassers, are also exempted from the application of this Act.
Persons engaged exclusively in preparatory or complementary tasks, for example, clearing or forwarding clerks, responsible for the despatching of goods by rail or other means, customs formalities or as messengers;
Persons exclusively employed in the collection, delivery or transportation of goods;
Offices of the Union or State Government, local authorities, the Reserve Bank of India, the State Bank of India, and the Life Insurance Corporation.
Establishments completely dedicated to the treatment or care of the sick, infirm, destitute or mentally unfit;
Bazaars, fairs or exhibitions for charitable purposes or any other such purpose from which no profit is derived;
Stalls and refreshment rooms at railway stations or railway dining cars;
Non-residential clubs; and
The government has the power to declare any other class of establishments or class of persons under this category by notification.

How to register a shop or establishment under Madhya Pradesh Shops and Establishments Act, 1958

Section 6(1) of the Act provides that all establishments that come under the definition must have to be registered as per the procedure provided under this section.

The procedure of registration

The complete procedure of registration as provided under Section 6(2) is being discussed step by step as follows:

Submission of statement to the inspector

The employer of an establishment to which this act is applicable has to send a statement to the inspector of the concerned area. Such a statement must be in accordance with the prescribed form, accompanied by the specified fees, and have to be sent within 30 days from the date when this Act becomes applicable to an establishment.

Such a statement must include the following.

The name of the employer, the manager, and, if a person holds any kind of position in the management of such establishments, names of all these persons should also be inserted;
The postal address and the date when the business was started;
The name of the establishment, if any;
The category of the establishment, i.e., to specify whether it is a commercial establishment, shop, eating-house, residential hotel, restaurant, eating-house, theatre, etc.
Any other information, as may be prescribed.

Now, shops or establishments can also be registered online. Click here to proceed with online registration.

Registration certificate

Section 6(3) authorises the inspector to, after receiving the statement and fees and after verifying the authenticity and genuineness of all the information, register the establishment. After registration, the inspector will issue a registration certificate, as per the prescribed format. It is also necessary to display the registration certificate at the establishment.

Labour commissioner

Section 6(4) says if there is any doubt as to the uncertainty or disagreement between an employer and the Inspector regarding the appropriate category of the establishment, the Inspector shall refer the matter to the Labour Commissioner. The Labour Commissioner, after conducting an inquiry in this regard, will decide the matter and determine the category of the establishment. The decision of the Labour Commissioner shall be final for the purposes of this Act.

Renewal of registration certificate

Under Section 6(5), the government has the authority to ask for the renewal of the registration certificate. But the time of renewal must not be less than 5 years. On the renewal of registration, the employer has to pay fees as the government prescribes. However, as provided under Section 6(6), the registration fee and the renewal fee shall not exceed two hundred and fifty rupees per establishment.

Reporting changes to the inspector

According to Section 7 of the Act, it is the duty of an employer to inform the inspector about any changes regarding the information that was provided in the statement under Section 6. This information must be given within seven days after the change has happened.

If necessary, the inspector will make amendments to the register of the establishment and update the details accordingly, or issue a fresh registration certificate. However, the condition is that the inspector must be satisfied with the correctness of the information received.

Notification of closure of establishment to the inspector

The employer must notify the inspector in writing within ten days of closing the establishment. The inspector, after verifying and being satisfied with the correctness of the information, will remove the establishment from the register and cancel the registration certificate.

Important provisions of Madhya Pradesh Shops and Establishments Act, 1958

Provisions for shops and commercial establishments

Opening and closing hours

Section 9 of the Act provides that the government will prescribe timing for the opening and closing hours of shops and commercial establishments. It will not be allowed for them to open before or close after the prescribed time. However, opening and closing hours may vary depending on the area in which the shop or commercial establishment is located and the category to which they belong.

Prohibition of hawking outside permitted hours

According to Section 10, it is not permissible to sell the same class of goods in or close to a street or public area before or after the hours set by the government in Section 9. However, this section will not apply to newspapers.

If someone violates the above provisions, their goods will be seized by the inspector and returned only upon paying fifty rupees as security for an appearance in court. If the violator does not pay the amount seized, goods will be presented before the court of law as early as possible, and the court can give an order for temporary custody and disposal of goods as per the Code of Criminal Procedure, 1973.

Hours of work in shops and commercial establishments

Section 11 sets 48 hours as the maximum limit for an employee to work in a shop or commercial establishment in a week. This rule is subject to the following conditions:

In the case of the shop, the maximum limit for a day is nine hours.
In the case of the commercial establishment, the maximum limit for a day is ten hours.

No employee shall be required to work more than this limit.

However, employees can work for more than the above limit with certain conditions, which are as follows:

Employees can work for a period exceeding the hours specified above, but these extra hours must not exceed six hours in a week.
Employees are also allowed to work up to twenty-four hours on specific occasions, as determined by the government, but these specific occasions must not be more than six days in a year.

Rule 9 of the Madhya Pradesh Shops and Establishments Rules, 1959 states that the following days shall be the days for additional overtime for purposes of making accounts, stock-taking or settlement:

31st day of March;
Day of Diwali;
30th day of September;
Last day of Vikram Samvat.
30th day of June;
31st day of December; and

Spread-over in shops and commercial establishments

According to Section 12, the spread-over of a worker’s hours of working in any shop or commercial establishment must not exceed 12 hours on a day. However, in certain circumstances, spread-over may extend to thirteen or fourteen hours, for example, in cases where, on any day, a shop or commercial establishment is completely closed for three continuous hours. Further, the government can also increase the spread-over period.

Weekly holidays in shops and commercial establishments

Section 13 of the Act provides that it is mandatory for every shop and commercial establishment to be closed one day a week. It is unlawful for employers to call employees to work on a weekly holiday. Further, the government has the authority to fix any day of the week as a closed day for all categories of shops or commercial establishments, and the employer cannot alter it.

If a public festival coincides with any holiday, the employer is allowed to keep the shop or establishment open, but he must close it any other day within three days before or after the festival. No deductions can be made from the wages of employees for days the establishment or shop remains closed, as per this Section.

However, it is apt to mention that as per a notification published on November 17, 2020, it is now permitted for all the registered shops to be opened on weekly holidays, and Section 13 will not apply to them, but the condition is that the employer has to pay separately to employees for week holidays.

Provisions for residential hotels, restaurants, and eating-houses

Opening and Closing Hours of Restaurants and Eating-Houses

Section 14 provides that restaurants and eating houses must follow the following regulations regarding the opening and closing hours:

Residential hotels, restaurants, and eating houses must not open before 5 a.m. and not remain open after 1:30 a.m. for service.
Employees cannot commence work before 4:30 a.m. and they must not work after 2 a.m.
If a customer was present and being served or was waiting to be served at the time of closing, service will be provided to the customer in half an hour following the closing hour.

The government has the authority to fix different opening and closing hours for different restaurants for different areas, festivals, or special occasions.

Restrictions on the selling of products

Section 15 lays down that, except for consumption in premises, products of a similar nature that are sold in such shops must not be sold in any restaurant or eating-house before or after the hours fixed for the opening and closure of such shops under Section 9.

Provisions regarding working hours, spread-over periods, and holidays are almost the same as those provided for shops and commercial establishments. However, for further details, Sections 16, 17, and 28 of the Act can be referred to.

Identity cards for employees in residential hotels, restaurants, and eating houses

Section 18A makes it necessary for employers to provide workers with an identity card. These cards must contain the following details:

Name of the employer and employee;
Name of the establishment, if any;
hours of work, the interval for rest if any and the holiday of the employee;
age of the employee;
the signature (with date) of the employer;
the identity mark of an employee; and
signature or thumb impression of the employee.

During working hours, employees must carry the identity card containing the aforementioned information.

Provisions for theatres and other places of public amusement or entertainment

Closing hours of theatres and places of entertainment

Section 19 of the Act states that theatres or any other place of entertainment must be closed by 1 a.m. It is also provided under Section 20 that after the closing hours of shops under Section 9, no such products of a similar nature that are sold in such shops will be sold in theatres or other places of public amusement or entertainment except for consumption on the premises.

Working hours

As per Section 21, no employee of a theatre or other place of public enjoyment or amusement will be required or permitted to work more than 48 hours per week, or 9 hours in a day. Section 22 says that a worker’s spread-over in a theatre or other place of public enjoyment or amusement cannot go beyond twelve hours a day. However, the government has the power to increase the spread-over period, whether generally or in the case of a particular theatre or other place of public amusement or entertainment.

Provision regarding the employment of children, young persons and women

Prohibition of children to work in any establishment

Section 24 of the Act provides that no child will be allowed to work in any establishment, even if the child is a family member of the employer. For the purpose of the application of this provision, the child doesn’t need to be working as an employee; any other kind of work is also prohibited. Section 2(2) of the Act defines the word “child” as a person whose age is below 14 years.

Young persons and women at work

The following are the rules for employees who are young persons or women

As per Section 25 of the Act, young persons and women, even if they are members of the employer’s family, are allowed to work in any establishment before 7 a.m. and after 9 p.m. Section 2(30) defines “young person” as a person who is between 14 to 17 years of age.
Section 25A sets the limit of work hours for young persons, it provides that the maximum work hour for young persons is 5 hours in a day, and, after three hours, there must be an interval of at least half an hour for rest.
Further, Section 25B prohibits employers from asking women and young persons to do any work that, as per the government, is dangerous to life, health or morals.
Rule 19 of the Madhya Pradesh Shops and Establishments Rules, 1959 gives the inspector the authority to ask the employer to produce documents for any worker if he suspects that the employee is a child or young person.

It is important to mention that the State Government of Madhya Pradesh, through a notification on August 1, 2022, has now permitted women to work between 9 p.m. and 7 a.m., but for this, shops and establishments have to ensure the fulfilment of the terms and conditions that have been provided in the same notification for the safety and security of working women.

Leave and payment of wages

Employee’s right to leave

Section 26 of the Act deals with the provisions regarding the provision of leaves to an employee. It provides as follows:

Every worker has the right to leave for one month after completing every 12 months of continuous work, despite taking breaks due to illness, authorised leave of up to 90 days, or due to lockout or legal strike.
Every year, employees shall be entitled to avail casual leave for up to 14 days.

However, the following points must be considered in this regard:

An employee can accumulate privilege leave under sub-clause (a) only up to a maximum period of 3 months.
Holidays under Sections 13, 18, and 23 will also be included in these leaves.
Casual leave cannot be combined with privilege leave.

If an employee entitled to leave is fired by the employer before taking it or quits his employment after applying for leave but the leave was not granted, the employer must pay the employee as per Section 27 of the Act and in case of refusal by the employer.

Employee’s right of payment during leave

Section 27 of the Act provides that every employee is entitled to get payment during leave as per the average daily wages for the three preceding months; overtime earnings will not be considered. According to Section 28, an employee entitled to leave under Section 26 must be paid half of the total amount for the leave period before leave starts.

The inspector has the authority to take legal action on behalf of workers as per Section 29 of the Act to recover unpaid amounts.

Health and safety at the workplace

According to Section 31 of the Act, the premises of every establishment must be clean and free from any foul odours arising from drains, privies, or other nuisances. Proper ventilation is also mandatory, as per Section 32, to ensure that the indoor environment is suitable, healthy, and comfortable for employees. Similarly, Section 33 makes it necessary for every establishment to take adequate precautions against fire.

Authorities for enforcement and inspection

Duties and power of local authority

Section 34 of the Act deals with the powers and duties of local authorities as follows:

It is the responsibility of local authorities empowered by the government to ensure the enforcement of the provisions of this Act within their jurisdiction.
These local authorities can give any of their powers and functions, except the power of making by-laws, to any of their officers.
The government has the power to cancel the empowerment order of a local authority at any time.

To ensure effective control over the local authorities entrusted with duties under this Act, the government can authorise an officer, who must not be below the rank of a labour officer, to supervise and direct the enforcement of this Act, and, for this purpose, such officer will have all the powers of an inspector. Section 35 of the Act empowers local authorities to make by-laws to carry out the provisions of the Act, provided that the by-laws must not be inconsistent with the provisions of this Act.

Annual report

Under Section 36, it will be the duty of local authorities to submit to the government an annual report on the enforcement and working of the Act within its jurisdiction. Such a report must be submitted within three months after the closing of the year.

Appointment of inspectors

Section 40 of the Act provides that local authorities have to appoint a sufficient number of qualified persons as inspectors for the area of its jurisdiction. According to Rule 17 of the Madhya Pradesh Shops and Establishments Rules, 1959, a person is qualified to be appointed as inspector under this section if he can speak, read, and write Hindi and is either a graduate or a matriculate with at least seven years of experience of service under the government or a local authority. Further, a person cannot be appointed as an inspector if he has any kind of interest or share in any establishment that comes within the area of his jurisdiction.

Duties and powers of inspector

Section 41 provides the following powers to an inspector:

The inspector has the authority to enter establishments or any place that he reasonably believes to be an establishment.
To make examinations of the premises, records, and registers and to take any other evidence as he thinks necessary to carry out the purpose of this Act.
An inspector has powers similar to those of an officer-in-charge of a Police Station under the Code of Criminal Procedure, 1973 for the purpose of investigation of offences under this Act.

Offences and penalties

This Act provides various punishments and penalties for different offences to make sure that no one can violate the provisions of the Act. These offences and their penalties are discussed in the following table, along with relevant sections.

Relevant Sections	Offences	Penalties
Section 44	This Section provides punishment for offences, which are as follows:If an employer fails to send a statement, notification of change or notification of closing of the establishment within the period specified respectively under Sections 6, 7, and 8 of the Act; orIf there is any violation of the provisions of Sections 9, 13, 14, 15, 19, 20, 31, 32, or 33; orIf any establishment allows any person to work in contravention of Sections 11, 12, 16, 17, 18, 21, 22, or 23; orIf in any establishment a child,woman, or young person is allowed to work in violation of Sections 24, 25A, or 25B; orIf an employer does anything against the provisions of Sections 43, 54, 57 or 58; orIf there is a violation of any of the provisions of this Act for which no specific punishment has been provided.	Punishment with a fine note of less than fifty rupees which may extend up to five hundred rupees.
Section 44 (Proviso)	If the employer continues to violate the provisions of sub-sections (2) and (5) of Section 6 after the expiry of the tenth day following the conviction.	An additional fine will be imposed on the employer, which may be up to fifty rupees for each day till the contravention continues.
Section 45	If a person violates the provisions of Section 10.	Punishment with a fine of up to one hundred rupees.
Section 46	If a worker violates the provisions of sub-section (3) of Section 13, sub-section (2) of Section 18, sub-section (2) of Section 25, or Section 57.	The employee, upon conviction, shall be punished with a fine of up to 50 rupees.
Section 47	This Section provides punishment for offences as follows:If an employer, with the purpose of deceiving makes or causes to be made false entries in any such register, record or notice that has been prescribed under this Act to be maintained; orIf an employer with the purpose to deceive wilfully omits any entry which was required to be maintained under this Act from any such register, notice or record as mentioned above; orIf an employer maintains more than one set of registers, records or notices; orIf an employer sends or allows an inspector to send false information or statements.	Imprisonment up to one year with a fine that may extend up to one thousand rupees. Offences mentioned under this section shall be tried in the court of a judicial magistrate.
Section 48	If an employer previously convicted under Sections 9, 11, 12, 13, 14, 16, 17, 18, 19, 21, 22, 23, 24, 25, 25A, 25-B, 43, 49, 54, or 58, found guilty again under any of the sections mentioned above.	Punishment of at least fifty rupees up to one thousand rupees.
Section 49	If any person obstructs the inspector wilfully in the exercise of any power under Section 41.	Punishment of at least fifty rupees up to one thousand rupees.

Liability of owners, directors, and shareholders

Section 50 of the Act provides for liability in cases of a company, firm, or association, as follows:

Liability of partners or members in a firm or association

If the owner of an establishment is a firm or association of individuals, all the members and partners will be prosecuted and punished similar to that of an employer.

Liability of directors or shareholders in a company

Where the owner of an establishment is a company, all the directors, or in the case of a private company, all the shareholders, will be held liable similar to that of an employer.

Liability of employer for the first offence

Where an offence is committed for the first time under this Act, the manager or the employer will be held liable similar to that of an employer.

Conclusion

It is clear from the above discussion that this Act plays a crucial role in managing the fair operation of shops and establishments within the state. It ensures that employers and owners are fulfilling their responsibilities and that the rights of employees and workers are not violated. Adherence to the regulatory framework as provided under the Act becomes crucial not only for legal compliance but also for the functioning of business in an era of dynamic economic evolution.

Frequently asked questions

What is the Madhya Pradesh Shops and Establishment Act, 1958?

This is a state legislation that primarily deals with shops and commercial establishments in Madhya Pradesh. It provides comprehensive rules and regulations for the operation of shops and establishments and various aspects like working hours, opening and closing hours, holidays and leave policies, wages of workers, penalties for offences and violations, etc.

Is it mandatory for all establishments to register under this Act?

Yes, it is mandatory for all shops and establishments that come under the definition provided by this Act to be registered.

Can a government authority visit a shop or establishment for inspection?

Yes, this Act gives authorities the power to visit and inspect shops and establishments to make sure that they are following the provisions of the Act. This inspection process might be in the form of examining premises, registers, and records and taking appropriate action in cases of violations.

Is there any provision under this Act for the wages of workers who do overtime work?

Yes, it says that if an employee is required to work more than the limit of hours of work, he will be paid at the rate of twice the overtime as compared to his ordinary wages.

Can an employee in any such establishment or shop be fired from the job all of sudden or is there any procedure for dismissal?

Section 58 of the Act says that if a person has been employed for three months or more, he cannot be removed from employment without prior notice of at least one month or wages instead of such prior notice. However, if such an employee is found guilty of misconduct, the employer can remove him without following this procedure.

References

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