IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN FRIDAY, THE 8TH AUGUST 2008 / 17TH SRAVANA 1930 WP(C).No. 5306 of 2005(F) --------------------------------------- PETITIONER: -------------------- COSMOPOLITAN HOSPITALS PRIVATE LIMITED., MURINJAPALAM, THIRUVANANTHAPURAM-695 004, REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER. BY ADV. SRI.K.ANAND (A.201) SMT.LATHA KRISHNAN RESPONDENTS: ------------------------- 1. T.S.ANILKUMAR, T.C.7/1121, AJI BHAVAN, VATTIYOORKAVU P.O., THIRUVANANTHAPURAM. 2. LABOUR COURT, KOLLAM. 3. THE DY.LABOUR COMMISSIONER & SECRETARY, CERTIFYING OFFICER UNDER THE EMPLOYMENT STANDING ORDERS ACT 1946, TRIVANDRUM. BY ADV. SRI.BIJU BALAKRISHNAN - R1 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08/08/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss WPC.NO.5306/2005 F APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE TEMPORARY APPOINTMENT ORDER DTD. 1/12/1989 ISSUED TO THE 1ST RESPONDENT. EXT.P2: COPY OF THE ACKNOWLEDGEMENT AND AGREEMENT DTD. 2/12/1989 FURNISHED BY THE 1ST RESPONDENT. EXT.P3: COPY OF THE ORDER DTD. ½/1990 APPOINTING THE 1ST RESPONDENT ON PROBATION. EXT.P4: COPY OF THE SERVICE AND CONDUCT RULES OF THE PETITIONER MANAGEMENT. EXT.P5: COPY OF LETTER DTD. 9/05/1991 ISSUED BY THE PETITIONER TO THE 1ST RESPONDENT. EXT.P6: COPY OF ORDER G.O.RT.NO.1878/94 LBR DTD.5/8/1994, ISSUED BY THE GOVERNMENT. EXT.P7: COPY OF THE COMPLAINT DTD. 6/11/1993 FILED BY THE 1ST RESPONDENT BEFORE THE DISTRICT LABOUR OFFICER. EXT.P8: COPY OF THE CLAIM STATEMENT DTD. 3/08/1995 FILED BY THE 1ST RESPONDENT. EXT.P9: COPY OF THE WRITTEN STATEMENT FILED BY THE MANAGEMENT BEFORE THE 2ND RESPONDENT DTD. 5/07/1996. EXT.P10: COPY OF THE ORDER DTD. 4/10/2004 ISSUED BY THE 2ND RESPONDENT IN I.D.95/94. EXT.P11: COPY OF THE NOTICE DTD. 14/12/2004 ISSUED BY THE 2ND RESPONDENT IN I.D.95/94. EXT.P12: COPY OF THE SHOW CAUSE NOTICE DTD. 20/01/2005 ISSUED BY THE 3RD RESPONDENT. RESPONDENT'S EXHIBITS: N I L /TRUE COPY/ P.A.TO JUDGE Kss S. SIRI JAGAN, J. ------------------------------------ W.P.(C)No.5306 OF 2005 ---------------------------------------- Dated this the 8th day of August, 2008 JUDGMENT The management in I.D.No.95 of 1994 before the Labour Court, Kollam is the petitioner herein. He is challenging Ext.P10 award of the Labour Court in that I.D. The issue referred for adjudication was: “Denial of employment to Sri. T.S. Anilkumar, Hospital Aid of Cosmopolitan Hospitals (P) Ltd., Thiruvananthapuram. 2. The workman claimed that he was permanently appointed in the management establishment as a Hospital Aid and he was denied employment with effect from 1.6.1991 without any reasonable cause. The management in their written statement took the contention that the workman was appointed as a probationer for a period of 12 months initially subject to an extension for a maximum period of six months in accordance with Ext.P4 Service and Conduct Rules applicable to the employees of the management. After a temporary appointment for a period of one month, he was originally appointed for three months on W.P.(c)No.5306/05 2 probation which was extended from time to time and by Ext.P5 order, the workman was informed that during the period of his service as a probationer his performance and conduct, was not satisfactory and therefore, he was being given another opportunity for a month to improve his performance and conduct, failing which it was stated that no further extension would be given to him. The management contended that since he did not show any improvement in his performance and conduct, the workman’s service was not extended any further and accordingly, after the period of extension of service he automatically ceased to be an employee of the management. The Labour Court after considering the evidence in the case came to the finding that since the Industrial Employment (Standing Orders) Act, 1946 was applicable to the management establishment and the management did not get any standing orders certified by the Certifying Officer, the model standing orders as per the Kerala Rules under the Industrial Employment (Standing Orders) Act became automatically applicable to the management establishment by virtue of Section 13A of the Industrial Employment (Standing W.P.(c)No.5306/05 3 Orders) Act. Since under the model standing orders the maximum period of probation prescribed was three months and the workman continued in service for almost seventeen months, the Labour Court took the stand that after three months of service, the workman ceased to be a probationer and became a permanent employee, as a result of which he could not have been denied employment except in accordance with the provisions of the Industrial Disputes Act. Finding that the same has not been done, the Labour Court came to the finding that there was unjust denial of employment and the workman was directed to be reinstated in service with backwages and attendant benefits within one month. That award is under challenge before me. 3. The contention before me is that the order of the Labour Court is unsustainable in so far as the decision relied upon by the Labour Court namely, Indraprastha Medical Corporation V. Government of NCT of Delhi and another [2001(3) LLN 562], which is a decision of the High Court of Delhi was later reversed by a Division Bench of the same Court in Indraprastha Medical Corporation Ltd V. NCT of Delhi and W.P.(c)No.5306/05 4 others [2006-II-LLJ 231], the very basis of the award of the Labour Court falls down and on that ground alone Ext.P10 award is liable to be set aside. In the Division Bench decision, the Delhi High Court took the view that going by the definition of ‘Industrial Establishment’ in the Industrial Employment (Standing Orders) Act, the management hospital could have been brought within the purview of the Act, only if it was a factory as defined under the Factories Act. The Division Bench came to the conclusion that the Hospital cannot be a factory as defined under the Factories Act. As a corollary, the Division Bench entered a finding that a hospital is not an industrial establishment liable to be covered under the Industrial Employment (Standing Orders) Act. Resultantly, the model standing orders would not become applicable to a hospital, meaning thereby other service conditions agreed upon between the management and the employee could be the one applicable. In so far as in this case the workman himself had at the time of appointment agreed to abide by Ext.P4 Service and Conduct Rules of the establishment, which provided for continuation of probation up to 18 months, the discharge of W.P.(c)No.5306/05 5 the workman for unsatisfactory performance and conduct during the period of probation cannot be stated to be denial of employment is the contention raised. 4. The learned counsel for the workman opposes these contentions. First of all he would submit that, the Division Bench decision of the High Court of Delhi is not the correct law on the subject and a hospital would also be a factory and an industrial establishment, in which case the award would be sustainable. He would also submit that in any event after the period of probation he has not been given any written order to the effect that his services are being discharged on account of unsatisfactory performance and conduct during the period of probation. His further contention is that in any event the same would also amount to retrenchment as defined in the Industrial Disputes Act, the procedure for which has not been complied with by the petitioner management. He therefore argues for sustaining the award. 5. I have considered the rival contentions in detail. 6. A reading of Ext.P10 award would go to show that the reasoning adopted by the Labour Court was purely based W.P.(c)No.5306/05 6 on the decision of the learned Single Judge in Indraprastha Medical Corporation’s case of the High Court of Delhi. The said decision has been overruled by the Division Bench of the same High Court. That being so the substrata of Ext.P10 award goes. I have gone through the Division Bench decision. In that Division Bench decision, the Delhi High Court had considered the definition of ‘Industrial Establishment’, in the Industrial Employment (Standing Orders) Act, which contains three parts. In so far as the first and third parts were clearly inapplicable to a hospital, the Division Bench considered the question as to whether the other part namely whether a hospital would be covered as a factory was considered. Thereafter, the Division Bench came to the following conclusion: “19. It is true that the expression ‘manufacturing process’ gives a much wider meaning to the word ‘manufacture’ than what is understood in common parlance. The Legislature is free to make such deeming provisions which amounts to a legal fiction, and legal fictions are well known in law. 20. However, in our opinion, an establishment would be a factory if the main work of the establishment is the work of making, altering, repairing, finishing, packing, oiling, washing, cleaning, breaking up or generating, transforming power or composing types for printing, or preserving or storing any article in a cold storage. Such activity will come within the W.P.(c)No.5306/05 7 ambit of Section 2(k) provided it is the main activity of the establishment. For instance, if there is a laundry shop which is doing the main work of washing and cleaning clothes, it will amount to a manufacturing process because the definition of “manufacturing Process” is wide enough to include washing and cleaning. Similarly, if there is power station doing the main work of generating power, or if there is cold storage doing the main work of storage of food and other articles, it will amount to a manufacturing process. However, where such activities of cleaning, washing, generating of power, preserving articles in cold storage etc., are only incidental activities, then that will not make the establishment a factory. 21. The main activity of a Hospital is to cure disease and ailments and not to do washing, cleaning, generating, cold storage etc. These latter are only incidental activities. In other words, to determine whether an establishment is a factory or not under Section 2(m) of the Factories Act, we have to see what is the main activity which is being conducted in the establishment. If the main activity is of repairing, washing, cleaning, power generating etc. then it will certainly be a factory, but not if that is only an incidental work. 22. In our opinion, by no stretch of imagination can it be said that the main work of a Hospital is cleaning, washing, packing, oiling, generating power etc. No doubt cleaning of the floor, washing of the linen etc. has to be done in a Hospital so as to ensure that the hospital remains free from infection. However, that is not the main function of a Hospital. They are only incidental activities to ensure proper cleanliness etc. in a hospital. 23. If we accept the submission of Mr. Prashant Bhushan then every establishment will have to be held to be a factory, because in every establishment there has to be washing and cleaning. Surely that was not the intention of the legislature. 24. Learned single judge has relied on the decision of the Supreme Court in Bangalore Water Supply & Sewerage Board v. A. Rajappa & Others AIR 1978 SC 548: (AIR 1978 SC 969): 1978 (2) SCC 213: 1978-I-LLJ-349:(1978-II-LLJ-73) in which W.P.(c)No.5306/05 8 it has been held that a Hospital is an industry. That decision was given while interpreting Section 2(k) of the Industrial Disputes Act. In the present case we are not concerned with the Industrial Disputes Act, but with the Standing Orders Act where the definition of ‘industrial establishment’ is very different from the definition of ‘industry’ in the Industrial Disputes Act. Hence in our opinion, the decision in Bangalore Water Supply & Sewerage Board V. A. Rajappa & Others etc. (supra) has no application. 25. The learned single judge in the impugned judgment has observed: “By adopting a proactive approach and not imparting an insular meaning to ‘industrial establishment’, hospital would also be construed as an ‘industrial establishments’.” 26. With respect, we cannot agree. As already stated above, the definition of ‘industrial establishment’ in the Standing Orders Act is very different from that of ‘industry’ in the Industrial Disputes Act. Hence, the decision of the Supreme Court interpreting the work ‘industry’ in the Industrial Disputes Act has no application to the interpretation of the words ‘industrial establishment’ in the Standing Orders Act”. I respectfully agree with the reasoning of the Division Bench of the Delhi High Court in that decision. 7. Automatically it follows that the management hospital is not liable to be covered as an industrial establishment under the Industrial Establishments (Standing Orders) Act. In that view, the model standing orders would not be applicable to the petitioner management. At the time of appointment of the workman, he had specifically, by Ext.P2 W.P.(c)No.5306/05 9 acknowledgement of the appointment agreed that he had read Ext.P4 Service and Conduct Rules of the management establishment and he would abide by the same. Later on, he was appointed as a probationer by Ext.P3 order on the same terms and conditions stipulated in the original temporary appointment on 1.12.1989 namely, Ext.P1. Therefore, the workman now cannot contend that Ext.P4 Service and Conduct Rules of the management are not applicable to him. In Ext.P4, it is specifically stated that every employee of the hospital recruited on a regular basis shall, unless otherwise specifically mentioned in the appointment order, be on probation for a period, which shall be 12 months initially subject to extension for a maximum period of 6 months. By Ext.P5 order, the workman was specifically informed thus: “This is to inform you that the extended period of your one month’s probationary appointment expires on 1-5-1991. For giving you further extension of service, the report from your superiors about your work, conduct and general performance has been considered. The report shows there is deterioration in your work ability, behaviour towards patients, colleagues and superiors, and your general performance is not up to the mark. It is also reported that there is negligence in performance of your duties especially after night duty (Example – leaving basin unclean after sitz-bath). Moreover, you are not alert enough in the W.P.(c)No.5306/05 10 careful handling of equipments. In spite of previous direction, warning, Last and Final warning and personal advice given in the presence of undersigned, Medical Superintendent and Dy. Medical Superintendent to you for improvement, you never seem to pay heed to them and do things in your own way. However, in spite of such deteriorating conduct and performance, the Management, out of sheer generosity and consideration is giving you extension of service for one month more with effect from 2-5-1991 with the firm belief that your will change your behaviour and rise upto our expectations, failing which, no further extension will be given to you. You will note that the Management is giving you maximum tolerance, and accommodation for improving your attitude to work, and behaviour”. After the period of extension of service there was no further order extending the service of the workman or confirming him in service. That being so it is very clear that the workman had been discharged from service for unsatisfactory completion of the period of probation. These facts were specifically pleaded in Ext.P9 written statement of the management, in spite of which in Ext.P10 award the Labour Court entered a finding that “ in the written statement filed by the management nowhere is it affirmed that the termination of service of the employee was consequent to the non-completion of the probation period satisfactorily ---------”. In the written statement filed by the W.P.(c)No.5306/05 11 management, it is specifically averred that the termination of the service of the employee was consequent to the non- completion of the probation period satisfactorily. On that ground also the finding of the Labour Court is clearly unsustainable. Further in the pleadings of the workman, he never disputed the fact that as per his service conditions, the period of probation was 12 months extendable by six months. It was in the award that such a case was considered and upheld by the Labour Court. In any event, from the materials available with the Labour Court, it was very evident that the workman was discharged from service for unsatisfactory completion of probation, in view of Ext.P5, which the workman had never disputed. I cannot hold that such discharge from service on account of unsatisfactory completion of probation is in any way bad. I am satisfied that the stand of the management, that there was no denial of employment as such, but only discharge on account of unsatisfactory performance and conduct during the period of probation is clearly sustainable. Accordingly, Ext.P10 award is quashed and it is declared that the workman involved in the dispute is not W.P.(c)No.5306/05 12 entitled to any relief in the industrial dispute. In this writ petition the petitioner also challenges Ext.P12 show cause notice issued by the Certifying Officer under the Industrial Employment (Standing Orders) Act initiating proceedings under the said Act. I have held that the said Act is not applicable to the petitioner establishment. Therefore I make it clear that in the proceedings initiated by Ext.P12 notice, it would be open to the petitioner management to contend that, in view of this judgment, no further proceedings may be initiated pursuant thereto, and the 3rd respondent shall consider such contention in the light of this judgment. The writ petition is allowed as above. S. SIRI JAGAN, JUDGE Acd W.P.(c)No.5306/05 13