Appeal No 1604 of 1967
From the judgment and order dated the 8th February 1967 of Le Delhi High Court in Civil Writ No 531 D of 1964
PP Rao and R N Sachthey for the appellants
GP Pai P C Bhartari and O C Mathur for respondents nos
1  2
The Judgment of the Court was delivered by SARKARIA J
Whether the Federation of Indian Chambers of Commerce and Industry New Delhi Respondent 1 is a commercial establishment within the meaning of s25 of the Delhi Shops and Establishments Act 1954 for short the Act is the sale question that falls for determination in this appeal by certificate directed against the judgment dated February 8 1967 of the High Court of Delhi
The facts bearing on this question may now be stated Respondent 1 hereinafter referred to as the Federation is a Company registered under section 26 of the Indian Companies Act 1913
The primary objects of the Federation as given in the Memorandum of Association are a To promote Indian business in matters of inland and foreign trade transport industry and manufactures finance and all other economic subjects and to encourage Indian banking shipping and insurance
b To encourage friendly feeling end unanimity among business community and association on all subjects connected with the common good of Indian business
c To secure organised action on all subjects mentioned above
d To collect and disseminate statistical and other information and to make effort for the spread of commercial and economic knowledge
e To take all steps by lawful means which may be necessary for promoting supporting or opposing legislation or other action affecting the aforesaid economic interests and in general to take the initiative to assist and promote trade commerce and industry
fTo provide for arbitration in respect of disputes arising in the course of trade industry or transport or other business matters and to secure the services 350 of expert technical and other men to that end if necessary or desirable
g To conduct undertake the conduct of and participate in national and international exhibitions
h To set up museums or show rooms to exhibit the products of India and other countries and to participate in such activities
1 To secure the interests and well being of the Indian business communities abroad
k To attain those advantages by united action which each member may not be able to accomplish in its separate capacity
m To help in the Organisation of Chambers of Commerce or Commercial Associations in different commercial centres of the country
n O p q r s t u v x y To sell or dispose of the undertaking of the Federation or any part thereof for such consideration as the Federation may think fit and in particular for shares debentures or securities of any other association or company having objects altogether or in similar to those of the Federation
z To take or otherwise acquire and hold shares in any other association or company having objects altogether or in part similar to those of the Federation
zl To establish a Trust or Trusts andor appoint Trustees thereof from time to time and vest the funds or the surplus income or any property of the Federation in the Trustees who shall hold and deal with the funds surplus income or property in such manner as the Committee may decide
z2 351 z3To draw make accept discount execute and issue bills of exchange promissory notes bills of lading warrants debentures and other negotible instruments or securities
z4 4 The income and property of the Federation whencesoever derived shall be applied solely towards the promotion of the objects of the Federation as set forth in the Memorandum of Association and no portion thereof shall be paid or transferred directly or indirectly by way of dividend bonus or otherwise by way of profit to the members of the Federation
The Articles of Association inter alia provide that a Chamber or an Association can become an ordinary member of the Federation on payment of annual subscription of Rs 1000 or such higher amount as may from time to time be fixed by the Federation in addition to the admission fee of Rs 5001 
The scales of subscription on the basis of turnover deposits or premia for associate members have also been prescribed
The Chief Inspector of Shops and Establishments Delhi Appellant 2 herein called upon the Federation to register its establishment he under the Act The Federation failed to comply with the direction and contended that it was not an establishment as defined in section 29 of the Act
This contention did not find favour with the Chief Inspector who in consequence made a complaint under the Act for prosecution of the Secretary of the Federation Respondent 2 herein under the appropriate penal provisions of the Act in the Court of the Magistrate
1st Class Parliament Street New Delhi
The Federation then moved the High Court under Article 226 of the Constitution for bringing up and quashing the order dated February 4 1964 passed by the Chief Inspector Appellant 2
They further prayed for a writ of Prohibition directing the Magistrate not to proceed with the complaint
Before the High Court the contention of the Federation was that the premises in which the registered office of the Federation is located is not a commercial establishment within the meaning of section 25 of the Act which in consequence had no application
From the side of the present appellant at first a half hearted attempt was made to show that the Federation is carrying on a profession as it is tendering advice to all businessmen and traders
This contention was negatived in these terms    that contention overlooks the fact that the advice in question is not tendered for any consideration
It is done in the interest of trade and business of the country
The 1st petitioner is not tendering any advice or giving any assistance to any trader in particular
It deals with the trade or busi ness in general to secure the interest of the country
it is predominantly a charitable organization and not a professional one
 352 It was then contended that the activities of the Federation carried on in the premises in question amounted to work in connection with or incidental or ancillary to trade or business in general within the latter part of the definition of commercial establishment
This contention was also rejected with the observation that since the earlier part of the definition refers to some particular business or trade carried on in a premises the words any work in connection with or incidental or necessary thereto obviously refer to such particular business or trade and not to trade or business in general 
In the result it was held that the premises of the Federation were not a commercial establish ment and the writ petition was allowed
A certificate however was granted under Article 1331 c of the Constitution that the case was fit for appeal to this Court
Hence this appeal
Before dealing with the contentions canvassed before us it will be useful to notice briefly the scheme and the relevant provisions of the Act
The title of the Act is Delhi Shops and Establishments Act 1954
The main object of the Act as stated in its preamble is regulation of hours of work payment of wages leave holiday terms of service and other conditions of work of persons employed in shop commercial establishment establishments for public entertainment or amusement and other establishments and to provide for certain matters connected therewith Section 14 indicates its extent and application
It shall apply in the first instance
only to the municipal areas notified areas of Delhi and New Delhi etc but Government may by notification extend or apply it to shops and establishments in the other local area or areas
The definitions of commercial establishment establishment and shop given in sub sections 5 9 and 27 of section 2 are material for our purpose
They read Commercial establishment means any premises wherein any trade business or profession or any work in connection with or incidental or ancillary thereto is carried on and includes a society registered under the  and charitable or other trust whether registered or not which carries on any business trade or profession or work in connection with or incidental or ancillary thereto  journalistic and printing establishments quarries and mines not governed by the  educational or other Institutions run for private gain and premises in which business of banking insurance stocks and shares brokerage or produce exchange is carried on but does not include a shop or a factory registered under the  or theaters cinemas restaurants eating houses residential hotels clubs or other places of public amusement or entertainment
 Establishment means a shop a commercial establishment residential hotel restaurant eating house theatre or other places of public amusement or entertainment to which this Act applies and includes such other establishment as Government may by notification in the Official Gazette 35 3 declare to be an establishment for the purposes of the Act
  Shop means any premises where goods are sold either by retail or wholesale Or where services are rendered to customers and includes an office a stoic room godown warehouse or workhouse or work place whether in the same premises or otherwise used in or in connection with such trade or business but does not include a factory or commercial establishment
 It will be seen that while the definition of establishment includes a shop  and commercial establishment the definitions of shop  and commercial establishment  are mutually exclusive
Further the definition of commercial establishment is wider than that of shop
A place in order to fall within the definition of commercial Establishment must in the first instance be premises
Secondly it should be premises wherein a any trade business or profession is carried on or b any work in connection with or incidental or ancillary thereto is carried on
Sub clause b is only ancillary to a
There is no doubt that the registered office of the Federation is premises
The controversy centres round the questions whether the activity of the Federation carried on in these premises is a trade business or profession within the meaning of pari a of the definition
This question is not res integra
It came up for consideration before this Court in Management of the Federation of Indian Chambers of Commerce and Industry vs Their workman Shri R K Mittal1 After considering its Memorandum of Association Articles of Association and other material which was more or less the same as in the present case it was held by this Court that the activity of this Federation is in the nature of a business or trade
Mr Rao learned Counsel for the appellants strongly relies on the aforesaid decision
Mr Pai learned Counsel for the Federation has firstly raised a preliminary objection that before the High Court at no stage it was urged on behalf of the Appellants that the activity of the Federation carried on in the premises was a business or trade
It is added that a half hearted argument was adVanced that its activity was a profession  and that too was soon given UP In these circumstances it is submitted the appellants should not be allowed to commit a volte face and take up in this Court a stand which was either not taken or was given no in the High Court
In the alternative learned Counsel contends that even if this plea is allowed to be raised then also the primary activity of the Federation cannot by any stretch of reasoning be called a trade business of profession within the definition of commercial establishment given in the Act
According to Counsel the activity of the Federation is one of general utility the only source of its income is from subscriptions
The occasional exhibitions or  museums organised by it are activities which are only incidental or ancillary to the primary charitable object of the Federation
No divi 1 1972 2 SCR 353
354 dends are declared no profits are shared or divided among the Individual members and no goods are sold or exchanged
in support of his contentions learned Counsel has referred to Commissioner of Income tax vs Andhra Chamber of Commerce
 Mr Pai further maintains that the ratio in R K Mittal s case supra is not applicable to the instant case because the definition of  industry in section 2j of the is far wider than that of commercial establishment in section 25 of the Act
Mr Pai further doubts the correctness of the decision in R K Mittal s case supra inasmuch as it holds that the activity of the Federation partakes the character of trade or business
This finding it is urged is based on a misapprehension of facts and requires reconsideration
It is pointed out that it was wrongly assumed in Mittal s case supra that the Federation was systematically assisting not only its members but also other business men and industrialists even if they were not its members
The fact of the matter is that the Respondent is a Federation of Federations and not an association of any individual traders industrialists or businessmen
As regards the preliminary objection it is true that before the High Court it was not argued that the activity of the Federation amounts to the carrying on of any business or trade in the premises in question
All that was attempted to argue there was that its activity amounted to a profession 
Alternatively it was contended that the case fell within part b of the definition of commercial establishment inasmuch as its activities were connected with trade and business generally
We do not think it proper to shut out the contentions now raised before us about the activity of the Federation being a trade or business merely on the ground that the point was not properly put before the High Court
This point will not require any additional material for its decision
The question is only of drawing a correct inference about the point in issue from the material already on record
We therefore overrule the preliminary objection
This takes us to the merits of the case
In R K Mittal s case this Court was considering the activity of this Federation in the context of industry  as defined in s2j of the 
That definition reads  Industry means any business trade undertaking manufacture or calling of employers and includes any calling service employment handicraft or industrial occupa tion or evocation of workmen
 It will be seen that any business trade is an element common to the definitions of commercial establishment and industry given in the respective statutes
That was why the question whether the activity of the Federation is a business or trade activity was directly 1  355 and substantially in issue in R K Mittal s case
therein the Memorandum of Association Articles of Association and the other material placed before the court were closely examined
The entire case law was surveyed
The contentions now canvassed were also raised and considered in that case
Jagnmohan Reddy J speaking for the Court
posed the question for decision thus  In our view the linch pin of the definition of industry  is to ascertain the systematic activity which the organization is discharging namely whether it partakes the nature of a business or trade or is an undertaking or manufacture or calling of employers
emphasis added The answer given to this question has been correctly summed up in the head note of the Report as under The above being the position in law the were fact that the appellant Federation had charitable aims and objects would not take it out of the definition of industry
An examination of the activities of the Federation showed that the Federation carried on systematic activities to assist its members and other businessmen and industrialists and even to non members as for instance in giving them the right to subscribe to their bulletin in taking up their cases and solving their difficulties and in obtaining concessions and facilities from them from the Government
These activities were business activities and material services rendered to businessmen traders and industrialists who are members of the constituents of the Federation
There could be no doubt that the Federation was an industry within the meaning of s2j of the Act The crucial words are those that have been underlined
The case under the Income tax Act wherein the main object of the organization was charitable were also considered and found of little assistance
It was observed that the object of an Organisation may be charitable but nevertheless its activity may be commercial so as to satisfy the definition of an industry as explained and illustrated by this Court particularly in Safdarjang Hospital s case1 We could therefore envisage an institution having its aims and objects charitable and yet its activities could bring it within the definition of industry
The above observations were made in the context of the definition of industry  but they are equally applicable in the present case
The very definition of commercial establishment indicates that the activity of a registered society charitable or other trust will not take it out of the definition if the activity carried on by it amounts to a busi 11971 1 SCR 177
356 ness trade or profession or any work in connection therewith or incidental thereto
No doubt the effective membership as distinguished from Honorary membership of the Federation is open only to Chambers of Commerce or Commercial Associations of requisite strength and standing but the fact remains that it carries on systematic activities not only to assist its members but also other traders or businessmen members of the constituents of the Federation
It has set up Tribunals for arbitration in disputes arising between individual traders or business concerns in the course of trade industry or other business matters
It takes up with the concerned authorities the specific difficulties experienced by the trade in the day today business and endeavours to attain for the traders and industrialists those material advantages by unified action which they may not be able to achieve in their individual capacity
It helps businessmen and industrialists by securing for them the services of expert technical men vide clauses f and k of the Memorandum of Association
It undertakes regular publication of periodicals bulletins Reviews etc
for the benefit of businessmen big or small and whether or not they are members of the Federation
These publications are available on payment of subscription or price even to individual businessmen or traders who are not members of the Federation
All these are business activities are carried on systematically
We therefore do not think that R K Mittal s case supra was incorrectly decided and needs reconsideration
It is true that in R K Mittal s case supra it was held that these activities of the Federation are also in the nature of material services within the wider definition of industry 
Though the rendering or services is not specifically mentioned as an element of the definition of commercial establishment yet this very element appears in the definition of shop  in section 227 of the Act
Any premises where services are rendered to customers fall within the definition of a shop
These services are material services
For the application of the Act to the Federation it is immaterial whether its activities bring its premises within the ambit of a shop or a commercial establishment 
It is well settled that a systematic activity can be a business activity even if no dividends are declared or profits shared
In the matter
of Incorporated Council of Law Reporting for England and Wales 1 the Queens Bench was considering the interpretation of the expression trade or business in section 11 of the English Customs and Inland Revenue Act 1885 with reference to the activity of the Incorporated Council of Law Reporting for England and Wales
The association was established for the objects of preparing and publishing under gratuitous professional control reports of judicial decisions of issuing digests and other publications relating to legal subjects
In carrying them out the association employed editors reporters printers and publishers and supplied its publications to subscribers and others for payment
It was condended that the activity of the Association was not a business or trade because by the Memorandum of Associ 1 357 ation all the property and income of the association were applicable solely to the promotion of the above objects and no part thereof could be paid as dividend or otherwise to any member
Holding that the association was established for a trade or business Lord Coleridge C J repelled the contention in these terms Though it may be true that in the great majority of cases the carrying on of a trade does in fact include the idea of profit yet the definition of the mere word trade  does not necessarily mean something by which a profit is made
But putting aside the question whether they carry on a trade how can it be denied that the Council carry on a business They are incorporated they have a secretary they employ editors reporters and printers they print books they sell those books they do all that is ordinarily done in carrying on the business of a bookseller
 The above observations apply mutatis mutandis to the activity of the Federation
It will bear repetition that the Federation also publishes periodicals bulletins etc
and issues the same to member free of this Court in R K Mittal s case supra we would hold that the commercial or industrial exhibitions runs museums and makes profits
Of course that profit is ploughed back for the purposes of the Federation as set out in its Memorandum of Association and is not distributed among its members
But that does not alter the fact that its activity is a trading or business activity
For all the foregoing reasons particularly in view of the decision of this Court in R K Mittals case supra we would hold that the pre premises of the Federation are a commercial establishment within the meaning of section 25 of the Act
In the result we allow this appeal set aside the judgment of the High Court and dismiss the writ petition
In the circumstances of the case we make no order as to costs
VPS Appeal allowed


Summary:
The respondent was required by the Chief Inspector of Shops and Establishments to register its establishment  under the Delhi Shops and Establishments Act 1954
The respondent contended that it was not an establishment  which is defined in section 29 as meaning a shop or a commercial estab lishment  and did not comply with the direction
Proceedings for prosecution of its Secretary were instituted where upon the respondent filed a petition in the High Court for quashing the order of the appellant and for directing the Magistrate not to proceed with the complaint
Before the High Court the appellant contended that the respondent was a commercial establishment  because the activity of the respondent amounted to a Profession  and alternatively that the case fell within the latter part of the definition of commercial establishment  in section 25 inasmuch as its activities were connected with trade and business generally but it was not urged that the activity of the respondent amounted to carrying on any business or trade  in its premises
The writ petition was allowed by the High Court holding that premises of the respondent were not a commercial establishment 
In appeal to this Court it was contended that the activities of the respondent amounted to a trade or business  that therefore it was a commercial establishment  and that the matter was covered by Management of the Federation of Indian Chambers of Commerce and Industry vs Sri R K Mittal 1972 2 SCR 353
Allowing the appeal
HELD  1 It is not proper to shut out the contentions of the appellant now raised about the activity of the respondent being a trade or business  merely on the ground that the point was not properly put before the High Court
The question is only one of drawing a correct inference about the point in issue from the material already on record and will not require any additional material for decision
354E F 2A place in order to fall within the definition of commercial establishment  must in the first instance be premises 
and secondly should be premises wherein a any trade business or profession is carried on or b any work in connection with or incidental or ancillary thereto is carried on
353C D 3 The registered office of the respondent is premises 
353D 4 All the activities of the respondent are business activities and are carried on systematically
Though the profit made by it is ploughed back for its purposes as set out in its Memorandum of Association and is not distributed among its members
Therefore the decision in Mittal s case 1972 2 SCR 353 that the activity of the respondent is in the nature of business or trade  is correct and that case does not require reconsideration
356A E 357D E 5A systematic activity can be a business activity even if no dividends are declared or profits shared
356F G In the matter of Incorporated Council of Law Reporting for England and Wales  applied
6The premises of the respondent therefore are a commercial establishment
357E 349 7For the application of the Act to the respondent it is immaterial whether its activities bring its premises within the ambit of a shop  or commercial establishment within the meaning of the Act
In Mittal s case it was held that the activities of the respondent are also in the nature of material services within the wider definition of industry  and any premises where services are rendered to customers fall within the definition of a shop
356E F