SCA/1055/1997 1/83 JUDGMENT THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 1055 of 1997 For Approval and Signature: HONOURABLE MR.JUSTICE H.K.RATHOD ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= TEXTILES LABOUR ASSOCIATION - Petitioner(s) Versus PADMABEN MANILAL PARMAR & 1 - Respondent(s) ========================================================= Appearance : MR DS VASAVADA for Petitioner(s) : 1, MR AK CLERK for Respondent(s) : 1, DELETED for Respondent(s) : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE H.K.RATHOD Date : 03/08/2006 ORAL JUDGMENT 1. Heard the learned advocate Mr. D.S. Vasavada appearing on behalf of the petitioner – Textiles Labour Association and learned advocate Mr. A.K. Clerk appearing on behalf of the respondent – workman. SCA/1055/1997 2/83 JUDGMENT 2. The petitioner - Textiles Labour Association has challenged the award passed by the Labour Court, Ahmedabad in Reference No.1048 of 1985 dated 31st August 1996. The Labour Court, Ahmedabad has partly allowed the reference granted reinstatement with continuity of service with 70% back wages of interim period. This Court, while issuing rule, has granted interim relief against the implementation of the award subject to compliance of Section 17-B of the Industrial Disputes Act, 1947 by order dated 18th March 1997. From the record of the petition, an affidavit has been filed on behalf of petitioner by one Mahendrakumar A. Maniar, office bearer of petitioner Association, to bring on record the certain events and facts which have occurred during the pendency of petition. There is no affidavit–in reply filed by the respondent workman. Learned advocate Mr. Vasavada submitted that during the pendency of this petition, the last drawn wages has been paid to respondent – workman by the petitioner. 3. Learned advocate Mr. Vasavada challenging the award in question raising certain contentions before this Court. He submitted that Textiles Labour Association was established in the year 1917. The Textiles Labour Association is a registered trade union in the year 1936 under the provisions of the Trade Union Act, 1926. The petitioner – union is a representative union under the provisions of the Bombay Industrial Relation Act, 1946. According to SCA/1055/1997 3/83 JUDGMENT him, petitioner union having his own constitution and according to the constitution, all the activities are based on such constitution of the Union. The respondent was appointed as a trainee in the month of January 1981. Initially, work was assigned for posting of entry in respect to subscription of members received by petitioner union, then she was given a work of Telephone Operator and ultimately, by notice dated 24th September 1984, her service was terminated with effect from 31st December 1984. The respondent had filed petition before this Court challenging the termination which was withdrawn and then dispute was raised which referred for adjudication to the Labour Court. The award of the Labour Court is published on 10th December 1996, then learned advocate Mr. Vasavada submitted that the crucial question is that whether petitioner being a trade union is an 'industry' or not? He read before this Court Page 19, 20 and other relevant pages of the award passed by the Labour Court. He also emphasis the constitution of the Union and pointed out that Union is not having any activities beyond the constitution. He submitted that because of the large membership handling by elected body, some short of organization is bound to be there cannot change the nature of union activities. He also submitted that finding given by the Labour Court is absolutely erroneous and perverse. The petitioner union is answerable to the member meaning thereby accountable to the members. The petitioner union having only the membership of Mill Company. No other persons became a SCA/1055/1997 4/83 JUDGMENT member of the petitioner union. The decision of the Bangalore Water Supply is not applicable to the case of the petitioner union activities and while referring page 22/23, he again emphasis that Labour Court has committed further error in coming to the conclusion that petitioner union is an 'industry'. He also submitted that the function of the trade union is to satisfy grievance of the members viz. Textiles Industries. The petitioner – union is not running any Khadi Shop. He relied upon the decision of Full Bench of this Court in case of Gujarat Forest Producers, Gatherers & Forest Workers Union v. State of Gujarat reported in 2004(2) GLR 1488, the relevant page 1516, Para 20, Para 26(1) and Para 73 and he read over all these paragraphs by emphasis the facts that trade union activities are not satisfied the triple tests laid down by the Apex Court and considered by full bench of this Court. He distinguished the decision of the Bombay High Court in case of Vasudeo Ambre v. State of Maharashtra & Others reported in 1988 Lab.I.C. 554 = 1988(1) LLJ 464. He submitted that this decision is not applicable which has been relied by the Labour Court because in that case, the question was challenging the refusal of referring the dispute by the authority and no real question has been examined by the Bombay High Court. He relied upon the decision of Bombay High Court in case of Kiran Industrial Premises Co-operative Society Ltd. v. Janata kamgar Union and Others reported in 2001-I LLJ 1499 Para 2 that Society collects the subscription or some amount of maintenance from the SCA/1055/1997 5/83 JUDGMENT members cannot to be an 'industry' within the meaning of Section 2-J of the Industrial Disputes Act, 1947. He also relied upon the decision of Division Bench of Karnataka High Court in case of Radhakrishna Bhakta v. Subramanya Shastri and Another reported in 2006-II LLJ 669 then decision of Apex Court reported in 2001- II LLJ 1064 in case of Bharat Bhawan Trust v. Bharat Bhawan Artists' Association and Another. He relied upon Para 7 that promotion of art or artistic talent cannot be satisfied the human wants and wishes and therefore, it is not an 'industry'. He rightly emphasis the nature of work which has been identified by the trade union that trade union has to work for workman / members. He relied upon one decision of Madhyapradesh High Court in case of Project Director, District Literacy Samity v. Ms. Mamta Shrivastava and Another reported in 2006-I LLJ 103 and then he also relied the decision of the Apex Court in case of Physical Research Laboratory v. K.G. Sharma reported in 1997 SC 1855. He also relied upon the decision of Madhyapradesh High Court that State Farm Corporation is not held to be an 'industry'. He also submitted that recently by Apex Court in case of State of U.P. v. Jaibir Singh reported in 2005-II LLJ 831, the decision of Bangalore Water Supply has been questioned and referred to larger bench for reconsideration. Therefore, decision of Bangalore Water Supply cannot be now, made to applicable or to rely in this case. 4. On merits, learned advocate Mr. Vasavada SCA/1055/1997 6/83 JUDGMENT submitted that respondent having four years service alternatively he relied upon the decision of the Apex Court in case of Haryana State Electronics Development Corporation Ltd. V. Mamni reported in 2006-II LLJ 744 and submitted that in such circumstances, when reinstatement is not possible, then Court can grant compensation to the concerned workmen. He also relied upon another decision in case of Nagar Mahapalika (Now Municipal Corporation) v. State of U.P. And Others reported in 2006-II LLJ 748 in respect to the back wages, the question is that workman is not entitled for any amount of back wages. He also submitted that relying upon the decision of the Apex Court in case of Pasupuleti Venkateswarlu v. The Motor & General Traders reported in AIR 1975 SC 1409 that while granting the relief Court can mould the relief considering the subsequent events and financial condition of petitioner. He also relied upon the certain decision of this Court of learned Single Judge where the question of back wages has been examined relying upon the decision of Apex Court that in such circumstances, back wages should not have to be granted to the workman though termination order has been set aside by the Labour Court. Except these, no other submissions are made by the learned advocate Mr. D.S. Vasavada and any other decision is relied by learned advocate Mr.Vasavada. 5. Learned advocate Mr. A.K. Clerk appearing on behalf of the respondent – workman submitted that award passed by the Labour Court is based on legal SCA/1055/1997 7/83 JUDGMENT evidence and no error has been committed by the Labour Court while passing the award. The question on 'industry' has been examined by the Labour Court on the basis of the evidence led before it and there was no justification for terminating the service of workmen proved by the petitioner before the Labour Court. The principles of natural justice has been violated as well as Section 25-F is also violated by the petitioner and therefore, Labour Court has rightly granted the reinstatement with 70% back wages while keeping in mind the status of the petitioner – trade union and position of the trade union. He also submitted that petitioner has not produced on record except constitution of the Union and annual report of the Union. He also submitted that affidavit in respect to subsequent event cannot be taken into account while examining the award in question. He also submitted that this Court having very limited power under Article 227 of the Constitution of India and this Court may not interfere in such award where examined the fact based on evidence. Except that learned advocate Mr. Clerk has not made any other submissions and relied upon any decision. 6. I have considered the submission made by both the learned advocate and I have also appreciated the vehemence on the part of learned advocate Mr. Vasavada. The reference was made by appropriate Government on 3rd October 1985 and the service of the workman was terminated on 31st December 1984. Before the Labour Court, the respondent workman had filed SCA/1055/1997 8/83 JUDGMENT statement of claim vide Exh.4. According to the respondent, she was working for more than six years as a Telephone Operator and without any reason and justification with a victimization, her service was terminated on 31st December 1984. Against the statement of claim, the petitioner has filed reply before the Labour Court vide Exh.9 raising the contention that petitioner is not covered by definition of 'industry' and respondent workman was appointed as a trainee operator and stipend was paid to the respondent workmen. The respondent was appointed due to recommendation made by representative of the petitioner union. Her work was not found satisfactory but with a hope that she will work properly. She was made confirmed with effect from 1st May 1984 and thereafter within a period of eight months, her service was terminated on 31st December 1984. It is also a case of the petitioner that while working as Telephone Operator, she was not prepared to work in any shift including night shift. Therefore, her service was terminated. The financial condition of Union is not good and petitioner is not able to absorb or reinstate the respondent workman. The notice was given to the workman and thereafter, her service was terminated. According to the petitioner, in all, she has rendered two years and two months service as a permanent employee. Therefore, reference is required to be dismissed. 7. The workman was examined vide Exh.13 before the Labour Court and one Fazalur Raheman Abdul Rafiq – SCA/1055/1997 9/83 JUDGMENT Telephone Operator examined vide Exh.28. Except that, either side was not examined any witness before the Labour Court. Both the parties were submitted the written arguments to the Labour Court then Labour Court has examined the question of an 'industry'. In light of the definition given in the provisions of Section 2-J of the Industrial Disputes Act, 1947. The Labour Court while appreciating the evidence of workmen at Exh.13, number of activities carried out by petitioner being a printing press, typing classes, shorthand classes, watch repairing work and work of printing as well as shorthand and other work has been taken from outsider and doing manually by petitioner union and on that basis, the service rendered to the society satisfying the human wants and wishes and having more than 400 to 450 workmen working in the petitioner union on the basis of the salary, therefore, Labour Court has considered the oral evidence of the workman vide Exh.13. The Labour Court has considered that in cross-examination of the said workman, petitioner has not challenged to such activities which has been deposed by the workman and there is no denial has been taken by the petitioner from the workman. So, in short, evidence of the workman giving details about the various activities carried out by petitioner remained unchallenged and no rebuttal evidence has been produced by the petitioner before the Labour Court. Then, Labour Court has further considered the cross examination of the workman that there are number of office bearers, president, secretary, in all, they were five persons SCA/1055/1997 10/83 JUDGMENT having separate cabin and also having separate extension. The petitioner union maintained the complaint department, legal department, central department, account department, 'latta' department and also maintaining the office of union with the help of non trade union employees working in the petitioner union. The respondent workman has to work as a Telephone Operator. She attending each and every telephone received from outside and management committee or board having the supervision and total control upon the workmen who were appointed by the petitioner union. There were sufficient committees working under the Joint Management Committee and upon that, a managerial board/mandal was there which satisfied the requirement of employer. Thereafter, Labour Court has considered the object of the union on the basis of the constitution which was produced by the petitioner before the Labour Court. The Labour Court has considered various object which is to be maintained / implemented by the petitioner union but satisfy the human wants/wishes and to develop the labour condition by helping to the labourers for satisfying their social obligations. To maintain the good relations with the employer and workman as a sole collective bargaining agent at being a representative union under the Bombay Industrial Relations Act, 1946, therefore, according to the petitioner, the petitioner has not satisfied the triple tests laid down by the Bangalore Water Supply case. The Labour Court further considering the various activities and come to the conclusion that a SCA/1055/1997 11/83 JUDGMENT systematic activities are going on with the help of employees/employer relationship and such activities are satisfied the human wants/wishes rendering the services to the society by the petitioner union. It is not union which having only a special or personal skill for various activities. It is not a religious or spirituous activities carried out by the petitioner union. These are the aspects which taken into account by the Labour Court and also considered Exh.34 – Budget of 1995 and 1996 produced by the petitioner wherein Labour Court has found that looking to the Budget as well as revised Budge of the petitioner union and considering the figure of income and expenses, it satisfied that petitioner Union carried out various kind of welfare, social and other similar activities in the society not only limited to the members / labourers of the Textile Mill. Therefore, Labour Court has considered that looking to the Budget of two years, the petitioner union is not doing only activities of the trade union but various kind of semi business activities having more than 400 to 450 employees and maintaining the complaint department, legal department, central department, account department and 'latta' department having union office with various kind of semi business and commercial activities carried out with the help of relationship with non trade union employees/employer. The salary was paid by the petitioner union to each workmen. There is a recruitment procedure also how to employed the workman in petitioner union, therefore, according to SCA/1055/1997 12/83 JUDGMENT Labour Court, while appreciating the oral evidence of the workman and documentary evidence of Budget and Constitution, the Labour Court has come to the conclusion that activities which have been carried out as per the evidence of the workman and budget, the triple tests laid down by the Apex Court in Bangalore Water Supply case has been fully satisfied by the petitioner union. Thereafter, Labour Court has considered the merits of the matter and come to the conclusion that termination of the respondent workman without any justification, it is also bad and in respect to the allegation, no reasonable opportunity was given to the workmen and therefore, Labour Court has come to the conclusion that on both the grounds either it may be considered simple termination, other way, it may be retrenchment and if it is considered to be a stigma or allegation, no departmental inquiry was initiated against the workman, therefore, termination is bad and ultimately, Labour Court has come to the conclusion that when termination order has been set aside then workman is entitled the normal relief of reinstatement. Labour Court has considered the past record wherein nothing was pointed out by the petitioner and also appreciated the certificate which has been given by the petitioner vide Exh.16 dated 12th December 1984 that conduct of the respondent workman is good and she is honest and hard worker which has been considered by the Labour Court and ultimately come to the conclusion that order of termination is bad, illegal and workman was prepared to join the duty according SCA/1055/1997 13/83 JUDGMENT to her evidence vide Exh.13 but petitioner was not ready to reinstate the workman during the pendency of reference. The specific affidavit was filed by the workman on 5th March 1993 that inspite of sincere efforts made by respondent workman for getting job/employment but she was not able to get any employment or any gainful employment and still she remained unemployed. Against that affidavit, no counter affidavit is filed by the petitioner before the Labour Court, therefore, Labour Court has believed it and relied upon such affidavit as well as keeping in mind the activities of trade union, Labour Court has reduced the back wages from 100% to 70% of interim period. 8. I have considered the affidavit which has been filed by the petitioner wherein it was pointed out that deteriorate condition of the petitioner union, the membership of the petitioner union is reduced each year from 1985 to 2005 and also reducing the employees from 178 to 39 and some of were retired and some of were got VRS. According to petitioner union, in all, 37 persons were obtained VRS and more than Rs. 8 lakhs have been paid by the petitioner to such workmen. In subsequent affidavit, financial constrain has been pointed out by the petitioner union. 9. In view of the aforesaid observations made by this Court while examining the award in question, the contention which has been raised by the learned advocate Mr. Vasavada is that whether petitioner SCA/1055/1997 14/83 JUDGMENT union is an 'industry' or not? Therefore, the definition of Section 2-J of the Industrial Disputes Act, 1947 is quoted as under : “Section 2-J : 'industry' means any business, trade, undertaking, manufacture or calling of employees and includes any calling service, employment, handicraft, or industrial occupation or avocation of workman.“ 10. The decision of the Apex Court in case of Banglore Water Supply and Sewerage Board v. A. Rajappa and others reported in AIR 1978 SC 548, deciding the triple tests for examining the question of industry is quoted as under : “Industry" as defined in S. 2 (j) has a wide import. Where there is (i) systematic activity, (ii) organized by co-operation between employer and employee (the direct and substantial element is chimerical), (iii) for the production and/or distribution of goods and services calculated to satisfy human wants and wishes (not spiritual or religious but inclusive of material things or services geared to celestial bliss e.g. making, on a large scale, prasad or food,) prima facie, there is an "industry" in the enterprise. Absence of profit motive or gainful objective is irrelevant, be the venture in the public, SCA/1055/1997 15/83 JUDGMENT joint, private or other sector. The true focus is functional and the decisive test is the nature of the activity with special emphasis on the employer-employee relations. If the organization is a trade or business it does not cease to be one because of philanthropy animating the undertaking. Although S. 2 (j) uses words of the widest amplitude in its two limbs, their meaning cannot be magnified to over-reach itself. "Undertaking" must suffer a contextual and associational shrinkage as explained in AIR 1953 SC 58, so also, service, calling and the like. This yields the inference that all organised activity possessing the triple elements above mentioned, although not trade or business, may still be "industry" provided the nature of the activity viz., the employer-employee basis, bears resemblance to what is found in trade or business. This takes into the fold of "industry" undertakings, callings and services adventures analogous to the carrying on of trade or business. All features, other than the methodology of carrying on the activity viz., in organizing the co-operation between employer and employee, may be dissimilar. It does not matter, if on the employment terms there is analogy. Application of these guidelines should not stop short of their logical reach by invocation of creeds, cults or inner sense of incongruity or outer sense of motivation for SCA/1055/1997 16/83 JUDGMENT or resultant of the economic operations. The ideology of the Act being industrial peace, regulation and resolution of industrial disputes between employer and workmen, the range of this statutory ideology must inform the reach of the statutory definition. Nothing less, nothing more. The consequences are (i) professions, (ii) clubs (iii) educational institutions, co- operatives, (iv) research institutes, (v) charitable projects and (vi) other kindred adventures, if they fulfil the triple tests listed above, cannot be exempted from the scope of S. 2 (j). A restricted category of professions, clubs, co-operatives and even gurukulas and little research labs, may qualify for exemption if in simple ventures, substantially and, going by the dominant nature criterion, substantively, no employees are entertained but in minimal matters marginal employees are hired without destroying the non-employee character of the unit. If, in a pious or altruistic mission, many employ themselves, free or for small honoraria or like return, mainly drawn by sharing in the purpose or cause, such as lawyers volunteering to run a free legal services clinic or doctors serving in their spare hours in a free medical center or ashramites working at the bidding of the holiness, divinity or like central personality, and the services are supplied free or at nominal cost and those who serve SCA/1055/1997 17/83 JUDGMENT are not engaged for remuneration or on the basis of master and servant relationship, then the institution is not an industry even if stray servants, manual or technical, are hired. Such eleemosynary or like undertakings alone are exempt, not other generosity, compassion, developmental passion or project. The dominant nature test : Where a complex of activities, some of which qualify for exemption, others not, involves employees on the total undertaking, some of whom are not "workmen" or some departments are not productive of goods and services if isolated, even then, the predominant nature of the services and the integrated nature of the departments will be true test. The whole undertaking will be "industry" although those who are not "workmen" by definition may not benefit by the status. Sovereign functions, strictly understood, (alone) qualify for exemption, not the welfare