ivil Appeal No 617 NL of 1975
From the Judgment and Order dated 4121973 of the Madhya Pradesh High Court in Misc
Petition No 713 of 1971
MK Ramamurthy Vineet Kumar and NDV Raju for the Appellant
GB Pai SK Gambhir Ashok Mahajan and Ms section Kirpalani for the Respondents
The Judgment of the Court was delivered by KHALID J
This is an appeal by certificate issued by the High Court of Madhya Pradesh under Article 1331 of the Constitution of India against the Judgment of a Division Bench of that Court setting aside the Order passed by the Labour Court Ujjain confirmed in revision by the Industrial Court Madhya Pradesh allowing an application filed by the appellant under Section 31 of the Madhya Pradesh Industrial Relations Act 1960 hereinafter referred to as the Act in which he had challenged his termination which challenge was accepted and his reinstatement was ordered
The facts in brief necessary for disposal of this appeal are as follows 2
The appellant was appointed as Store Keeper Cum Accountant on 1421957 in the Madhya Pradesh Khadi and Village Industries Board Budhwara Bhopal
This Board is a body corporate constituted under the MP Khadi and Village Industries Act 1959 and is engaged among others in activities of encouraging production of Khadi and helping other village industries
It has 644 different branches in the State of Madhya Pradesh
One such centre was established at Berdi in Chhindwara district
The Board supplied raw wool to the Co optative Societies and after getting them woven by the societies into blankets received back blankets as finished goods
m e services of the appellant were terminated as per Order dated 2391964 after giving one month s notice
He challenged this Order of termination as one amounting to retrenchment and having been passed without complying with the provisions of the Act that govern his relationship with the Board
He stated that a charge sheet was given to him on 2741964 based on false and baseless grounds and that there was no enquiry held into the said charges before his removal
The appellant thereupon moved the Labour Court at Ujjain on 761975 for his reinstatement with full wages
The Board contested the application contending inter alia that the Board was not an industry and that neither the MP Industrial Relations Act 1960 nor the applied to it
The Labour Court Ujjain framed necessary issues on the rival contentions and after recording evidence held that the termination of the appellant amounted to retrenchment set aside the Order of termination and directed the Board to reinstate him with half salary front the date of the Order till reinstatement
Aggrieved by this Order the Board preferred a revision before the Industrial Court in Madhya Pradesh Indore repeating the contentions raised before the Labour Court
m e Industrial Court by its order dated 321967 affirmed the order of the Labour Court and dismissed the revision petition
The Board pursued the matter further by moving the Madhya Pradesh High Court by a petition under Article 226 and 227 of the Constitution of India
The High Court by its order dated 19121969 allowed the Writ Petition quashed the order of the Industrial Court and remitted the case to it to decide the facts afresh with due regard to the relevant provisions of the MP Industrial Relations Act 1960
After remand the Industrial Court proceeded to decide the question itself after taking fresh evidence and again held in favour of the appellant and against the Board reaffirming its previous decision to reinstate the appellant
The matter was taken to the High Court again by the Board by means of a Writ Petition
The High Court set aside the orders of the Industrial Court and the Labour Court on the ground that they acted without jurisdiction
However since the 645 High Court felt that the matter was not free from doubt and was debatable granted certificate to the appellant to appeal to this Court
It is thus that the matter is before us
In the State of Madhya Pradesh there is a separate Act to regulate the relations of employees in certain matters and to make provisions for settlement of industrial disputes and other connected matters
mis Act is called the Madhya Pradesh Industrial Relations Act 1960
Section 2 19 defines Industry as under Industry means a any business trade manufacture undertaking or calling of employers b any calling service employment handicraft or industrial occupation or a vocation of employees and Includes i agriculture and agricultural operations ii any branch of any industry or group of industries which the State Government may by notification declare to be an industry for the purposes of this Act
Section 2 33 defines undertaking as follows Undertaking means a concern in any industry 
Thus any concern to become an industry has to satisfy the above definitions to attract the Provisions of the Act
Such concerns have to satisfy another condition to attract the provisions of the Act and that is about the number of employees the concern employs
This is provided in a Notification issued under the Act which reads as follows No 9952 XVI dated 31st December 1960
In exercise of the powers conferred by Sub Section 3 of Section 1 of the Madhya Pradesh Industrial Relations Act 1960 No 27 of 1960 the State Government hereby directs that all the provisions of the said Act other than section 1 and 112 thereof shall be into 646 force on 31st December 1960 in respect of undertaking in the industries specified in the schedule below wherein the number of employees on any date during twelve months preceding or on the date of this notification or any day thereafter was or is more than one hundred  SCHEDULE 1
Textile including cotton silk artificial silk staple fibre jute and carpet
                     This notification thus makes the provisions of the Act applicable only to undertaking in the industries specified in the schedule where the number of employees on the date mentioned therein was or is more than 100
We are concerned here only with item No 1 in the schedule and therefore have left out the other items
Before considering the rival contentions raised before us we may extract the relevant sections of the Act under which the Board was constituted to understand the functions and duties of the Board
For our purpose it is enough to quote Sections 14 1  14 2 a alone Clause b to m are not necessary for the resolution of the dispute involved in this case and hence are omitted
Functions of Board
1 It shall be the duty of the Board to organise develop and regulate Khadi and Village Industries and perform such functions as the State Government may prescribe
2 Without prejudice to the generality of the provisions of the sub section 1 the Board shall also in particular discharge and perform all or any of the following duties and functions namely a To start encourage assist and carry on Khadi and Village Industries and in the matters incidental to such trade or business 647 With this background we will advert to the facts of the case
8The Board resisted the appellant s case on two grounds i that it is not an industry within the meaning of the Act and ii that it does not employ more than 100 persons
It is necessary to note at this stage that the Board had not originally urged any plea that it did not employ sufficient employees to attract the Act
It was during the course of argument that this plea about the number of appointees was urged by the Board
However both the Labour Court and the Industrial Court considered the two jurisdictional questions as to whether the Board was an industry and as to whether it had employed more than 100 persons
We have gone through the orders passed by the labour Court and the Industrial Court carefully
According to us a close examination of the evidence adduced in the case and the discussions bearing on them by the Labour Court in particular and the Industrial Court admits of no doubt that the Board employed more than 100 persons
For this purpose we content ourselves by extracting the following paragraph from the order of the Labour Court while considering the first point namely whether the provisions of the Act are applicable to the Board Thus the applicant s contention that the Parishad s cloth weaving centres were in existence till 2 years before and his contention in respect of the number of workers engaged at Mandsaur Gwalior Anjad entries etc have not been refuted by the nor applicant
It is therefore concluded them at sic 60 40 4  3 workers were working at Parishad s centres situated at Mandsaur Gwalior Anjad and Parsinga
Besides this there were officials working at Chanderi  Maneshwar weaving centres
The non applicant who is in possession of the records of appointment and who is also not disclosing the exact figures of the workers therefore the conclusions go against the non applicant
This finding on the appreciation of the evidence given by the witnesses concludes the parties according to us regarding the number of the employees employed by the Board
Even so when the matter went before the High Court the High Court felt that the jurisdictional question was not properly considered by the Labour Court
Therefore in the first round the matter was remanded by the High Court and the High Court made the following observations 648 The relevant notification applied the provisions of the Act to undertaking in the industries specified in the schedule wherein the number of employees was or is more than one hundred
Evidently it had no application to smaller establishments of notified industries that employed less than 100 persons
That being so it is plain enough that the Courts below misdirected themselves by taking into account the total number of the employees of the Board without regard to the consideration whether they were employed or not in the establishment relating to textiles and the findings recorded by them on the jurisdictional facts do not bear examination and cannot be sustained
Since the facts bearing on the question have not been properly ascertained it would be right to set aside the order of the Industrial Court and leave it to that Court to decide these facts afresh with due regard to all the relevant provisions of the MP Industrial Relations Act 1960 and then to dispose of the claim made by the respondent 3 on merits
We may even at this stage point out that the High Court could have set aside the order of the Labour Court and the Industrial Court on the ground that the Board did not according to it satisfy the definition of industry without remanding the case to the Industrial Court to determine the number of employees
We are making this statement in view of an objection taken by the appellant s counsel before us that the respondent cannot in this appeal reagitate that question he having been concluded by the remand order which was restricted only to the number of employees in the Board
After remand the Industrial Court considered the question again
The Industrial Court understood the remand order and according to us rightly as follows After the remand the parties have adduced evidence which is common in both cases
The exact question I am called upon to answer is the number of employees employed by the parishad in its textiles activity and not all other activities such as Oil Paper Carpentry Gur Tannery Pottery etc
me best evidence will be the record kept with the parishad
The oral evidence will not be of much help though it may have some additional value
649 13
After discussing the evidence in detail the Industrial Court came to the conclusion thus For all these reasons I hold that in the textile activity of the Board parishad the number of employees is or has been over and more than 100 from 11259 to 311260 vide Ex D1 and therefore the employees had a right to file the application under the Act
The Industrial Court again held in favour of the appellant The matter went to the High Court again in the Second round at the instance of the Board
On the question of number of employees in the Board in paragraphs 10  11 of the Judgment the High Court observed thus 
Thus from the statement of this witness there can be no doubt that there were more than 100 persons in all at the wool weaving centres in the State and at some of the centres the number was more than 100
The witness further stated that there are 16 industries under the Board such as Paper Industry Soap Industry Khadi Industry Wool Industry and so on
Similarly in the connected case namely MP No 713 of 1971 in pursuance of the remand order the statement of Gunadeo Patil Petitioner s Annexure F and the other witness Sadashiv Patil Petitioner s Annexure f1 were recorded
The statements of these two witnesses were similar to the statements in the main case
The High Court was dealing with the case of two employees in Misc
Petition No 7121971 and 7131971 and that is why mention is MADE about the connected case 15
After holding thus the High Court spent considerable part of the Judgment for considering the kindred question whether the board was an industry or not
The appellant s counsel raised an objection that it was not open to raise this question as it was covered by the remand order which was confined only to the number of employees
In our view this objection is well founded and has to be upheld
According to us the appellant is entitled to succeed on this ground alone
However we would like to answer 650 the other question also for the purpose of completion of this Judgment and to set at rest possible future controversies on the subject 
The definition clause in the Act is far from satisfactory
The definition of word industry  in Section 219 and the word undertaking  in Section 233 does not make happy reading but this unhappy phraseology need not vex us
If from the evidence available we can say that the Board carries on trade or business it would straightaway become an industry under the Act
We have already seen that one of the functions of the Board is to support encourage assist and carry on Khadi and Village Industries and in the matters incidental to such trade or BUSINESS
What the Board does is to supply raw wool to Cooperative Societies so that the Societies can engage themselves in useful work
The Societies after weaving raw wool convert them into spun blankets and supply them to the Board
The blankets so spun are not the properties of the Societies
They have to be given back to the Board
The blankets so supplied from various centres to the Board have necessarily to be sold in the open market
This act of sale would clearly come within the definition of the word trade or business as contemplated in Section 2 19 of the Act
This finding of ours is supported by the evidence in the case also
The appellant in his evidence stated that at the centre where he was posted weaving of woolen blankets was done by the Societies and other centres constituted at various places and the woven blankets were supplied back to the Board
Three witnesses were examined on behalf of the Board
Choudhary the first witness and Sh
Patil the next witness admitted that the spinning and weaving work of cotton and woolen cloth was got done by the Board through various Societies
These two said witnesses admitted that the looms belonged to the Board and the Board supplied wool and other materials and implements and sold manufactured goods after obtaining them from the Societies
They also made an important admission that the Society could not sell the goods prepared out of the wool supplied by the Board to anybody else
The third witness also supported this case though differed from the second witness and stated that the Board extended marketing facilities to the Societies
We thought it necessary to refer to the evidence in the case to disabuse an impression attempted to be created that the Board did not sell the blankets it got from the various societies spun out of the wool supplied to them
There is a clear admission by one witness that the Societies cannot sell the blankets 651 prepared out of the wool supplied by the Board to any one else
No argument is necessary to hold that the blankets received by the Board from various centres have only to be sold and not used by the Board for its own purpose
this evidence the conclusion is irresistible that the Board engages itself in the business of selling blankets
It has therefore to be held that the Board is an industry within the meaning of the Act
The appellant is entitled to succeed on both the grounds
We set aside the order passed by the High Court and restore the orders passed by the labour Court and the Industrial Court
The appellant will get his cost from the first Respondent quantified at Rs 2500
APJ Appeal allowed


Summary:
The appellant was appointed as Store Keeper cum Accountant in one of the branches of the Madhya Pradesh Khadi and Village Industries Board a body corporate constituted under the MP Khadi and Village Industries Act 1959
His services were terminated by an Order dated 2391964 after giving one month s notice
The termination Was challenged before the Labour Court as amounting to retrenchment because it hat been passed without complying with provisions of the MP Industrial Relations Act 1960 the charge sheet that was given to him on 2741964 was based on false and baseless grounds and no enquiry was held prior to removal
The appellant claimed reinstatement with full wages
The Respondent Board contested the application contending that the Board was not an industry and that neither the MP Industrial Relations Act 1960 nor the applied to it
The Labour Court held that the termination of the services of the appellant amounted to retrenchment set aside the Order of termination and directed reinstatement with half salary from the date of the Order till reinstatement
The Board preferred a revision
The Industrial Court affirm ed the order of the Labour Court and dismissed the revision petition
642 The Board filed a petition under article 225 and 227
The High Court allowed the writ petition quashed the order of the Industrial Court and remitted the case to it to decide the facts afresh
The Industrial Court after taking fresh evidence again held in favour of the appellant reaffirming its previous decision to reinstate the appellant
The Board again moved the High Court which set aside the orders of the Industrial Court and the Labour Court on the ground that they acted without jurisdiction
The appellant appealed to this Court by certificate which was resisted by the Board on two grounds i that it is not an industry within the meaning of the Act and ii that it does not employ more than 100 persons
Allowing the appeal of the appellant employee  HELD 1
The order passed by the High Court is set aside and that of the Labour Court and the Industrial Court are restored
651 B C 2
The MP Industrial Relations Act 1960 is a separate Act in the State of Madhya Pradesh to regulate the relations of employees in certain matters and makes provisions for settlement of Industrial disputes
Any concern to become an industry has to satisfy the definitions of industry and undertaking as contained in sections 219 and 233 thereof
Such concerns have to satisfy yet another condition to attract the provisions of the said Act which relates to the number of the employees the concern employs
Notification No 9952 XVI dated 31st December 1960 issued under sub 8
3 of 8 1 of the Act makes the provisions of the Act applicable only to an undertaking in the industries specified in the Schedule wherein the number of the employees on any date during Twelve months preceeding or on the date of the notification or any day thereafter was or is more than one hundred
In the instant case the evidence on record admits of no doubt that the Board employed more than 100 persons
645 A H 646 A 4 647 C 3
One of the functions of the Board under 8
14 of the MP Khadi and Village Industries Act 1959 is to support encourage assist and carry on Khadi and Village Industries and in the matters incidental to such trade or business
The evidence shows that the Board supplies raw wool to Co operative Societies so 643 that the Societies can engage themselves in useful work
The Society after weaving raw wool convert them into spun blankets and supply them to the Board
The blankets so spun are not the properties of the Societies
They have to be given back to the Board
The blankets so supplied from various centres to the Board have necessarily to be sold in the open market
This act of sale would clearly come within the definition of the word trade  or business  as contemplated in Section 219 of the Act
m e conclusion is therefore irresistible that the Board engages itself in the business of selling blankets
It has therefore to be held that the Board is an industry  within the meaning of the Act
650 B D 651 A B