IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 11206 of 2000 For Approval and Signature: HON'BLE MR.JUSTICE H.K.RATHOD ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : YES of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- GUJARAT WATER SUPPLY AND SEWERAGE BOARD Versus PAGI MALABHAI ANDARBHAI -------------------------------------------------------------- Appearance: 1. Special Civil Application No. 11206 of 2000 MR DG CHAUHAN for Petitioner No. 1 MR YV SHAH for Respondent No. 1 -------------------------------------------------------------- CORAM : HON'BLE MR.JUSTICE H.K.RATHOD Date of decision: 17/12/2003 ORAL JUDGEMENT The observations made by the Hon'ble apex court in the matter of Central Inland Water Transport Corporation Ltd. and another versus Brojo Nath and another, reported in AIR 1986 SC 1571 are relevant in the facts of the present case. They are, therefore, reproduced as under: "28. The law exists to serve the needs of the society which is governed by it. If the law is to play its allotted role of serving the needs of the society, it must reflect the ideas and ideologies of that society. It must keep time with the heartbeats of the society and with the needs and aspirations Of the people. As the society changes, the law cannot remain immutable. The early nineteenth century essayist and wit, Sydney Smith, said, 'Then I hear any man talk of an unalterable law, I am convinced that he is an unalterable fool." The law must, therefore, in a changing society march in tune with the changed ideas and ideologies. Legislatures are, however, not best fitted for the role of adapting the law to the necessities of the time, for the legislative process is too slow and the legislatures often divided by politics, slowed down by periodic elections and overburdened with myriad other legislative activities. A constitutional document is even less suited to this task, for the philosophy and the ideologies underlying it must of necessity be expressed in broad and general terms and the process of amending a Constitution is too cumbersome and time-consuming to meet the immediate needs. This task must, therefore, of necessity fall upon the courts because the courts can by the process of judicial interpretation adapt the law to suit the needs of the society." #. Heard learned advocate Mr. D.G. Chauhan for the petitioner. Learned advocate Mr. Y.V. Shah is appearing for the respondents. In this petition, the petitioner GUJARAT WATER SUPPLY AND SEWERAGE BOARD has challenged the award made by the labour court, Godhra in Reference No. 570 of 1992 dated 20th August, 1999 wherein the labour court has set aside the order of termination and has granted reinstatement in service without back wages for the intervening period with a direction to the petitioner to implement the award in question within thirty days from the date of publication thereof. On 18th July, 2001, while admitting the petition by issuing rule thereon, this Court has granted ad.interim relief in terms of para 12(B) of the petition. The workman has filed affidavit of unemployment dated 16th July, 2002, copy of which has been served upon the advocate for the petitioner on 18th July, 2002. Said affidavit of unemployment filed by the workman has not been controverted by the petitioner. Thereafter, on 14th September, 2001, this court has while continuing the ad.interim relief with modification, observed that the petitioner may comply with the provisions of section 17-B of the Industrial Disputes Act, 1947 from the date of the award in question and the workman was directed to file necessary affidavit under section 17-B of the ID Act, 1947. Learned advocate Mr.D.G. Chauhan appearing for the petitioner has submitted that he is not able to make statement as to whether any payment has been made or not by the petitioner to the workman in compliance of section 17-B of the ID Act, 1947. #. Learned advocate MR. Chauhan has, first of all, referred to the statement of claim filed by the workman dated 8th January, 1993 wherein two facts have been high lighted by him that the workman was appointed on 11th May, 1987 and his services were terminated on 30th April, 1989 and he raised the industrial dispute on 2nd November, 1992 after a period of three years. Thereafter, he referred to the written statement Annexure-B page 16 and has thereafter read para 2 thereof before this court and submitted that the petitioner was appointed in scarcity work and after completion of the said work, his services were not required and, therefore, his services were terminated by the petitioner. Thereafter, he referred to the evidence of the workman which is at page 20, Annexure-C where he referred to the undertaking or affidavit page 21 tendered by the workman at the time when the appointment was given to the workman in which he agreed that he is accepting the appointment orders for a period of 28 days and he will not raise any claim for future service from the petitioner and that he is aware that this service is for a short term in view of scarcity of water. In second para of the said affidavit, it has been stated by him consciously that he will not approach the Court for further services in this regard. In para 3 of the said affidavit, the workman has stated that as and when he is relieved, he shall be considered to have been discharged with effect from that point of time itself and that he is agreeable for such discharge without raising any claim for further service and that he is not entitled for any public holidays. This affidavit was made by the workman in the capacity of work charge helper before the Deputy Executive Engineer, Public Health (Scarcity) Sub Division, GUJARAT WATER SUPPLY AND SEWERAGE BOARD, Lunavada. Thereafter, he referred to the award made by the labour court which is at Annexure-D page 22. He read from paragraph 9 and thereafter, two contentions were raised by Mr. Chauhan that the workman was appointed in scarcity work and the workmen whose names have been mentioned in the award at page 29 were not working in the post of hand pump repairing helper and it was not proved by the workmen that they were working on that post and it was not proved that such kind of work was performed by them and thus such facts were not proved by the workmen and, therefore, the labour court has committed gross error in coming to such conclusion that the workmen should continue in service. He relied upon the decision of this court in the matter of JJ Shrimali v. District Development Officer, Mehsana & Ors., reported in 1989 (1) GLR page 396 which is the judgment of the Division Bench of this Court. He also relied upon the decision of the Full Bench of this court in the matter of H.K. Makwana versus State of Gujarat & Ors., reported in 1994 (2) GLH page 213 and submitted that the decision of the division bench of this court reported in 1989(1) GLR 396 has been confirmed by the full bench of this court [1994 (2) GLH 213]. In short, it was his submission that the labour court was having no jurisdiction to adjudicate the reference; provisions of the Industrial Disputes Act, 1947 are not applicable to the petitioner; division bench as well as the full bench of this court has held that the scarcity work is the sovereign function of the State and, therefore, provisions of the Industrial Disputes Act, 1947 are not applicable and the labour court was knowing fully well that the workmen were appointed for scarcity work and yet the labour court adjudicated the reference and passed the impugned award and in doing so, the labour court has erred and, therefore, the award in question is required to be quashed and set aside. Save and except these submissions, no other submissions were made by the learned advocate Mr. Chauhan before this court. Save and except the documents referred to hereinabove, no other documents were referred to by Mr. Chauhan. Save and except the decisions referred to hereinabove, no other decisions were cited by the learned advocate Mr. Chauhan before this Court. #. On the other hand, learned advocate Mr. Y.V. Shah appearing for the respondent workmen has supported the award in question and has prayed for dismissing this petition with costs. #. The petitioner is the GUJARAT WATER SUPPLY AND SEWERAGE BOARD and is not the State of Gujarat. The workman was appointed by the petitioner. Though the undertaking on an affidavit was obtained by the petitioner board on safer side from the workman that he will not claim any right in respect of the services given by the petitioner, it is necessary to note that no appointment order has been issued by the petitioner in favour of the respondent workman. It is clear that such an undertaking on an affidavit has been obtained by the petitioner at the time of offering the job to the workman and, therefore, it cannot be said that it is an undertaking or agreement between the equal parties. The petitioner was in dominating position and was in a position to obtain any writing desired by it while obtaining such an undertaking on affidavit. Such type of undertakings on affidavit that the workman who, if given job, will not claim any right by filing any case against the petitioner about future service as and when his services are terminated by the petitioner are contrary to the public policy and also contrary to the provisions of section 23 of the Contract Act. While offering job to a needy workman, it is very easy for the petitioner to obtain any type of undertaking or affidavit or writing in its favour in these hard days of unemployment in the State. Any undertaking which is contrary to the statutory provisions or obtained by the petitioner board which may come in the way of an employee for enforcing his legal right is considered to be null, void and contrary to the public policy. At this stage, it is required to be noted that the present petitioner is the GUJARAT WATER SUPPLY AND SEWERAGE BOARD. #. Before this Court, the petitioner has produced an undertaking on affidavit alleged to have been made by the workman where the legal rights of workman have been taken away or the workman has surrendered the same in favour of the petitioner. In view of that, the question arising for this Court's consideration is as to whether such type of undertaking on an affidavit can be considered to be legal and valid or not ? From the perusal of the record, it is clear that the said undertaking on affidavit has not been referred to by the petitioner in its written statement; no evidence has been led in respect of that undertaking before the labour court and the same has also not been produced by the petitioner before the labour court for consideration thereof and no submissions were made by the petitioner to that effect before the labour court but this was the first time this contention, while producing the undertaking on affidavit before this court, has been taken by the petitioner. Such type of undertaking on affidavit between unequal has been considered by the apex court in the matter of Central Inland Water Transport Corporation Ltd. and another versus Brojo Nath and another, reported in AIR 1986 SC 1571. Relevant observations made by the apex court in the said decision in that regard are reproduced as under: "(C) Constitution of India, Arts. 14, 39(a), 41 and 226 - Central Inland Water Transport Corporation Ltd. Service Discipline and Appeal Rules (1979), R. 9(i) - R.9(i) empowering Corporation to terminate services of permanent employees without giving any reason and by giving notice - It is void under S. 23 of Contract Act as being opposed to public policy - It is also ultra vires Art. 14 of Constitution and also violative of Directive Principles contained in Arts. 39(a) and 41 - However, right to resign is not void. (Contract Act (9 of 1872), S. 23). 1986 Lab IC 494 (Cal), partly Reversed. Whereas various other provisions of the service Rules of the Corporation mention grounds on which services of an employee can be terminated, Cl. (i) of Rule is void under S. 23 of the Contract Act is being opposed to public policy and is also ultra vires Art. 14 of the Constitution to the extent that it confers upon the Corporation the right to terminate the employment of a permanent employee by giving him three months' notice in writing or by paying him the equivalent of three months' basic pay and dearness allowance in lieu of such notice in that, besides being arbitrary and unreasonable, it wholly ignores and audi alteram partem rule. It is also violative of directive principles contained in Arts. 39(a) and 41. It cannot be supported on the basis of mutuality on the ground similar right is conferred on employees also. The right conferred on the employee by the clause to resign is, however, not void. 1986 Lab IC 494 (Cal), partly reversed. (Paras 99, 111, 106, 113) The principle deducible from various precedents is that the Courts will not enforce and will, then called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. For instance, the above principle will apply where the inequality of bargaining power is the result of the great disparity in the economic strength of the contracting parties. It will apply where the inequality is the result of circumstances, whether of the creation of the parties or not. It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them. It will also apply where as man has no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however, unfair, unreasonable and unconscionable a clause in that contract or form or rules may be. The types of contracts to which the principle formulated above applies are not contracts which are tainted with illegality but are contracts which contain terms which are so unfair and unreasonable that they shock the conscience of the Court. They are opposed to public policy and require to be adjudged void. The Officers of the Corporation challenging the validity of the Rules had no real option when they accepted the appointment with the Corporation when the Company in which they were serving was dissolved by the order of High Court after the High Court approved the Scheme of Arrangement entered into by the Company with the Corporation. They had also no choice in the matter of acceptance of the Rules when they were framed as non acceptance would have resulted in termination of their services. The Rules in question form part of the contract of employment between the Corporation and its employees who are not workmen. These employees had no powerful workmen's Union to support them. They had no voice in the framing of the said rules. They had no choice but to accept the said Rules as part of their contract of employment. There is gross disparity between the Corporation and its employees, whether they be workmen or officers. The Corporation can afford to dispense with the services of an officer. It will find hundreds of others to take his place but an officer cannot afford to lose his job because if he does so, there are not hundreds of jobs waiting for him. A clause such as clause (i) of R. 9 is against right and reason. It is wholly unconscionable. It has been entered into between parties between whom there is gross inequality of bargaining power. R. 9(i) is a term of the contract between the Corporation and all its officers. It affects a large number of persons and it squarely falls within the principle formulated above. A clause such as R. 9(i) in a Contract of employment affecting large sections of the public is harmful and injurious to the public interest for its tends to create a sense of insecurity in the minds of those to whom it applies and consequently is against public good. Such a clause, therefore, is opposed to public policy and being opposed to public policy, it is void under S. 23 of the Contract Act. (Paras 90, 94, 101) #. In the matter of Bangalore Water Supply and Sewerage Board v. A. Rajappa (AIR 1978 SC 548), the Constitution Bench of the apex court has held that the Bangalore Water Supply and Sewerage Board is an industry within the meaning of section 2(j) of the ID Act, 1947. In case of COIR BOARD ERNAKULAM KERALA STATE AND ANOTHER V/s. INDIRA DEVAI P.S. AND OTHERS, reported in 2000 SCC (L & S) 120, larger bench of the apex court has considered whether reconsideration of the decision in Bangalore Water Supply and Sewerage Board (supra) would require reconsideration or not and ultimately request for reconsideration of the said decision was rejected. Therefore, in view of the decision given by the apex court in the matter of Bangalore Water Supply and Sewerage Board v. A. Rajappa (AIR 1978 SC 548), the petitioner GUJARAT WATER SUPPLY AND SEWERAGE BOARD is also an industry within the meaning of section 2(j) of the Industrial Disputes Act, 1947. The decision of the apex court in the matter of Bangalore Water Supply and Sewerage Board v. A. Rajappa (AIR 1978 SC 548) is conclusive and binding to the petitioner. #. Earlier, in the matter of GUJARAT WATER SUPPLY AND SEWERAGE BOARD versus HIRABHAI BHURABHAI, reported in 2002 (2) GLH 717, this court had an occasion to consider the question as to whether the petitioner GUJARAT WATER SUPPLY AND SEWERAGE BOARD is an industry or not. This Court, after considering the decision of the Constitution Bench of the apex court in the matter of Bangalore Water Supply and Sewerage Board v. A. Rajappa (AIR 1978 SC 548) and also after considering the activities carried out by the petitioner, has held that the petitioner is an industry within the meaning of section 2(j) of the ID Act, 1947. The Board is not having power to function any sovereign function. The powers to function any sovereign function are enjoyed only by the State of Gujarat. No other body or person or corporate body are having such powers. The scarcity work wherein the State of Gujarat has declared any project or work of relief with a view to help the affected citizens, then only in such cases where the State has performed the work during the scarcity has been considered to be the sovereign function and not covered by the provisions of the ID Act, 1947 which is not so in this case. In this case, first of all, the petitioner has not raised such plea before the labour court. Even if it is believed that such plea has been raised by the petitioner before the labour court, considering the activities of the board, the petitioner board is having their own systematic activities organized by the cooperation between the employer and the employee for the production and/or distribution of the goods and services calculated to satisfy the human wants and wishes. Therefore, prima facie, there is an industry in that enterprise. The apex court has observed as under in the matter of Bangalore Water Supply and Sewerage Board v. A. Rajappa (AIR 1978 SC 548) in para 161 of the said judgment: "161. 'Industry', as defined in Sec, 2 (j) and explained hi 1. 'Industry', as defined in Sec, 2 (j) and explained hi Banerji, has a wide import. (a) Where (i) systematic activity, (ii) organized by cooperation 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 that enterprise. (b) Absence of profit motive or gainful objective is irrelevant, be the venture in the public, joint private or other sector. (c) The true focus is functional and the decisive test is the nature of the activity with special emphasis on the employer-employee relations. (d) If the Organisation is a trade or business, it does not cease to, be one because of philanthropy animating the undertaking. 11. Although sec. 2(j) uses, words of the widest amplitude in its two limbs, their meaning cannot be magnified to overreach itself. (a) 'Undertaking' must suffer a contextual and associational shrinkage as explained in Banerji and in this judgment, so also, service, calling and the like. This yields the inference that all organized activity possessing the triple elements in I (supra), although not trade or business, may still be 'industry' (provided the nature of the activity, viz. the employer-employee basis, bears resemblance to what we find in trade or business. This takes into the- fold of 'industry' undertakings, callings and services adventure '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 off the employment terms there is analogy. III. Application of these guidelines should not stop short of their logical reach by invocation of creeds, cults or inner sense of incongruity or other sense of motivation for 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 mom. (a) The consequences are (i) professions, (ii) Clubs (iii) educational institutions (iiia) co-operatives, (iv) research institutes (v) charitable projects and (vi) other kindred adventures, if they fulfil the triple tests listed in I (supra), cannot be exempted from the scope of sec. 2 (j). (b) A restricted category of professions, clubs, cooperatives and even Gurukulas and little research labs, may qualify for exemption if in simple ventures substantially and going by the dominant nature criterion substantively, in single simple ventures, no employees are entertained but in minimal matters, marginal employees are hired without destroying the nonemployee character of the unit. (c) If in a pious or altruistic mission many employ themselves, free or for small honoraria, or likely return mainly 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 centre 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 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. IV The dominant nature test : (a) where a complex of activities, some of which qualify for exemption others