Case: Bombay Telephone Canteen Employees' Association, Prabhadevi Telephone Exchange Vs. Union of India

3. The admitted position is that therepresenting five dismissed employees, had sought reference under Section 10(1) of the Industrial Disputes Act, 1947 (for short, the `Act) to the Tribunal. The dispute arose on account of termination by theof the services of the said employees on April 28, 1989; it was alleged that the termination was without any notice and payment of retrenchment compensation under SectionThe reference came to be made on April 19, 1991. The Tribunal has held that the Telephone Nigam Limited, Bombay is not an `industry. It, therefore, has no jurisdiction to adjudicate the dispute. Prabhadevi Exchange had a total strength of 3000 employees of the Telecommunication Department, working in three shifts. As per the Administrative Instructions issued by the Government, for the first shift there should be a `3A type canteen, for the second shift `A type canteen and for the third shift there should be `C type canteen. It was averred that for Type `3A canteen, there should be 57 employees, but only 24 employees were working on 27.4.1989. The claim of the petitioner is that the dismissed employees had joined the service in 1987. They are claiming wages as per the directions of this Court, i.e., as per the Fourth Pay Commissions recommendations. Since they were insisting upon payment of the wages, it is alleged, the services of five employees were terminated without giving any notice or giving any retrenchment compensation as enjoined by Sectionof the Act. Therefore, they sought reinstatement into service with full back wages and with continuity of service. The respondents, on the other hand, contended that the employees working in the canteen are not `workmen within the definition of Section 2(s) of the Act nor is the respondent an `industry under Section 2(j). They are "treated as holding civil posts in the Central Government." They were paid monthly salaries devised by the Canteen Committee depending upon the increases in the cost of living etc. The provisions of Chapterof the Act are inapplicable to them. The Tribunal noted the findings as underTelephone Exchange employed about 4000 employees which is required under the provisions of Administrative Instructions to have one departmental canteen. In `A type canteen, 19 employees are required per shift. It works from 5 a.m. to 12 midnight. In three shifts, there at the relevant time are 24 employees including the concerned five workmen. In view of a judgment of this Court,canteen employees are entitled to the benefits of the recommendations of Third and Fourth Pay Commissions. The Director of Canteen accordingly directed the Department concerned to pay the canteen employees wages as per the recommendations of the Pay Commission. Departmental Canteen, it is contended by the management, is not an `industry as per the Memorandum dated January 12, 1982 of the Director (Welfare), Indian Posts and Telegraphs Department.Relying upon the judgment of this Court inInspector of Posts, Vaikkam and others v. Theyyam Joseph, (1996) 2 SCC 293  : 1996(3) SCT 786 (SC), the Tribunal has held that departmental canteen is not an `industry. However, on merits, it has held that termination of the services of the five employees is bad in law. Calling the decision in question, the above special leave petition has been directly filed under Article 136, contending that the ratio in Theyyam Josephs case is contrary to the judgment of this court in Bangalore& Sewerage Board, etc. v. R. Rajappa and others (1978)3 SCR 207 . The judgment, therefore, in Josephs case is not correct in law. When its correctness was questioned in another case, notice was issued. It is, therefore, contended that the ratio of the Constitution bench judgment of seven Judges in Bangalore Water Supply case applies to the facts herein. The judgment in Josephs case was rendered without reference to the former and hence the matter needs fresh examination. The question is: whether the view taken is correct in law ? This Court is aware of the decision in Bangalore Water Supply case in which this Court had held the test to determine whether an establishment is an `industry within the meaning of the Act. Therein, the employees of the appellant Board were fined for misconduct and the fine was recovered from them. They filed an application under Sectionof the Act. The question was whether the Tribunal has jurisdiction under Sectionof the Act ? The High Court had held it to be an industry and, therefore, the application was maintainable. On appeal, this Court laid down the tests as underterm "analogous to the trade of business" could not cut down the scope of the term "industry". The said words can reasonably mean only activity which results in goods made and manufactured or service rendered which are capable of being converted into saleable ones. They must be capable of entering the world of "res commercial", although they may be kept out of the market for some reason. It is not the motive of an activity in making goods or running a service but the possibility of making them marketable if one who makes, goods or renders service so desires, that should determine whether the activity lies within the domain or circle of industry. But even this may not be always a satisfactory test. By this test the type of services which are rendered purely for the satisfaction of spiritual or psychological urges of persons rendering those services would be excluded. Whenever an industrial dispute would arise between either employers and their workmen or between workmen and workmen, it should be considered an area within the sphere of "industry" but not otherwise. In other words, the nature of the activity will be determined by the conditions which give rise to the livelihood of the occurrence of such disputes and their actual occurrence in the sphere.The term "sovereign" should be reserved technically and more correctly for the sphere of ultimate decisions. Sovereignty operates on a sovereign place of its own. Only those services which are governed by separate rules and constitutional provisions such as Articles 310 and 311 should, strictly speaking, be excluded from the sphere of industry by a necessary implication.The special excludes the applicability of the general. Certain public utility services which are carried out by governmental agencies or Corporations are treated by the Act itself as within the sphere of industry. If express rules under other enactments govern the relationship between the State as an employer and its servants as employees, it may be contended on the strength of such provisions that a particular set of employees are outside the scope of the Industrial Disputes Act.The State today increasingly undertakes commercial functions and economic activities and services as part of its duties in a welfare state. Hence to artificially excludeindustry from the sphere of the Act, unless the statutory provisions expressly or by necessary implication have that effect, would not be correct.Section 2(j) of the Industrial Disputes Act, 1947 which defines "industry" contains words of wide import, as wide as the legislature could have possibly made them. The problem of what limitations could and should be reasonably read in interpreting the wide words used in Section 2(j) is far tooto be satisfactorily settled by judicial decisions. The Parliament must step in legislate in a manner which will leave no doubt as to its intention. That alone can afford a satisfactory solution to the question which has agitated and perplexed the judiciary at all levels.Hospital Mazdoor Sabha was correctly decided in so far as it held that the JJ Group of Hospitals was an industry but the same cannot be said in regard to the view of the Court that certain activities ought to be treated as falling outside the definition clause.There is no justification for excepting the categories of public utility activities undertaken by the Government in the exercise of its inalienable functions under the Constitution, call it regal or sovereign or by any other name, from the definition of "industry". If it be true that one must have regard to the nature of the activity and not to who engages in it, it is beside the point to enquire whether the activity is undertaken by the State, and further, if so, whether it is undertaken in fulfilment of the States constitutional obligations or in discharge of its constitutional functions. In fact, to concede the benefit of an exception to the States activities which are in the nature of sovereign functions is really to have regard not so much to the nature of the activity as to the consideration who engages in that activity; for, sovereign functions can only be discharged by the State and not by a private person. If the States inalienable functions are excepted from the sweep of the definition contained in section 2(j), one shall have unwittingly rejected the fundamental test that it is the nature of the activity which ought to determine whether the activity is an industry. Indeed, in this respect, it should make no difference whether on the one hand, an activity is undertaken by a corporate body in the discharge of its statutory functions or, on the other, by the State itself in the exercise of its inalienable functions. If the water supply and sewerage schemes or fire fighting establishments run by a Municipality can be industries, so ought to be the manufacture of coins and currency, arms and ammunition and the winning of oil and uranium. The fact that these latter kinds of activities are, or can only be undertaken by the State does not furnish any answer to the question whether these activities are industries. When undertaken by a private individual they are industries, therefore, when undertaken by the State, they are industries. The nature of the activity is the determining factor and that does not change according to who undertakes it. Items 8, 11, 12, 17 and 18 of the First Schedule read with Section 2(n)(vi) of the Industrial Disputes Act render support to this view. These provisions which were described in Hospital Mazdoor Sabha as `very significant at least show that, conceivably, a Defence Establishment, a Mint or a Security Press can be an industry even though these activities are, ought to be and can only be undertaken by the State in the discharge of its constitutional obligations or functions. The State does not trade when it prints a currency note or strikes a coin. And yet, considering the nature of the activity, it is engaged in an industry when it does so.A systematic activity which is organised or arranged in a manner in which the trade or business is generally organised or arranged would be an industry despite the fact that it proceeds from charitable motives. It is in the nature of the activity that one has to consider and it is upon the application of that test that the States inalienable functions fall within the definition of industry. The very same principles must yield the result that just as the consideration as to who conducts the activity, is irrelevant for determining whether the activity is an industry in so is the fact that the activity is charitable nature or is undertaken with a charitable motive. The status or capacity corporate or constitutional, of the employer would have, if at all, closer nexus, than his motive on the question whether the activity is an industry. The motive which propels the activity is yet another step removed and ex hypothesis can have no relevance on the question as to what is the nature of the activity. It is never true to say that the nature of the activities is charitable. The subjective motive force of of an activity can be charity but for the purpose of deciding whether an activity is an industry one has to look at the process involved in the activity, objectively. The jural foundation of any attempt to except charitable enterprises from the scope of the definition can only be that such enterprises are not undertaken for profit. But then, that clearly, is to introduce the profit concept by a side wind, a concept which has been rejected consistently over the years. If any principle can be said to be settled law in this vexed field it is this : the twin considerations of profit motive and capital investment is irrelevant for determining whether an activity is an industry. Therefore, activities which are dominated by charitable motives either in the sense that the profits which they yield are diverted to charitable purposes, are not beyond the pale of the definition of section 2(j). It is as much beside the point to inquire who is the employer as it is to inquire, why is the activity undertaken and what the employer does with the profits, if any.By this test a Solicitors establishment would be an industry. A Solicitor undoubtedly does not carry on a trade or business when he acts for his client or advises him or pleads for him if and when pleading is permissible to him. He pursues a profession which is variously and justifiably described as learned, liberal or noble. But it is difficult to infer from the language of the definition in Section 2(j) that the Legislature could not have intended to bring in a liberal profession like that of an Attorney within the ambit of the definition of `industry.In Hospital Mazdoor Sabha the court while evolving a working principle stated that an industrial activity generally involved, inter alia, the cooperation of the employer and the employees. That the production of goods or the rendering of material services to the community must be the direct and proximate result of such cooperation is a further extension of that principle and it is broadly by the application thereof that a Solicitors establishment is held not to attract the definition clause. These refinements are, with respect not warranted by the words of the definition, apart from the consideration that in practice they make the application of the definition to concrete cases dependent upon a factual assessment so highly subjective as to lead to confusion and uncertainty in the understanding of the true legal position. Granting that the language of the definition is so wide that some limitation ought to be read into it, one must stop at a point beyond which the definition will skid into a domain too rarefied to be realistic. Whether the cooperation between the employer and the employee is the proximate cause of the ultimate product and bears direct nexus with it is a test which is almost impossible of application with any degree of assurance or certitude. It will be as much true to say that the Solicitors Assistant, Managing Clerk, Librarian and the Typist do not directly contribute to the intellectual end product which is a creation of his personal professional skill, as that, without their active assistance and cooperation, it will be impossible for him to function effectively. The unhappy state of affairs in which the law is marooned will continue to baffle the skilled professional and his employees alike as also the Judge who has to perform the unenviable task of sitting in judgment over the directness of the cooperation between the employer and the employee, until such time as the legislature decides to manifest its intention by the use of clear and indubious language. Beside the fact that this Court has so held in National Union of Commercial Employees the Legislature will find a plausible case for exempting the learned and liberal professions of Lawyers, Solicitors, Doctors, Engineers, Chartered Accountants and the like from the operation of industrial laws. But until that happens, in the present state of the law it is difficult by judicial interpretation to create exemptions in favour of any particular class.The case of the clubs on the present definition is weaker still. The definition squarely covers them and there is no justification for amending the law so as to exclude them from the operation of the industrial laws. The fact that the running of clubs is not a calling of the club or its managing committee, that the club has no existence apart from its members that it exists for its members though occasionally strangers take the benefit of its services and that even after the admission of guests, the club remains a membersinstitution does not touch the core of the problem.(1) "Industry as defined in Sec. 2(j) and explained in Banerjis case has a wide import.I.(a) Where (i) systematic activity, (ii) organised 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 therelations.(d) If the organisation is a trade or business it does not cease to be one because of philanthropy animating the undertaking.II. Although section 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 organised activity possessing the triple elements in I (supra), although not trade or business, may still be `industry provided the nature of the activity, viz. thebasis bears resemblance to what we find in trade or business. This takes into the fold of `industry undertakings, calling 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 cooperation between employer and employee, may be dissimilar. It does not matter, if on 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 outer 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 more.(a) The consequences are (i) professions, (ii) clubs (iii) educational institutions (iv) cooperatives, (v) research institutes (vi) charitable projects and (vii) other kindred adventures, if they fulfil the triple tests listed in I (supra), cannot be exempted from the scope of section 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 no employees are entertained but in minimal matters, marginal employees are hired without destroying thecharacter of the unit.(c) 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 centre of 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 areother generosity, compassion, developmental passion or project.IV. The dominant nature test :(a) 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 as in the University of Delhi case 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 as explained in the Corporation of Nagpur, will be the true test. The whole undertaking will be `industry although those who are not `workmen by definition may not benefit by the status.(b) Notwithstanding the previous clauses, sovereign functions, strictly understood (alone), qualify for exemption, not the welfare activities or economic adventures undertaken by Government or statutory bodies.(c) Even in departments discharging sovereign functions if there are units which are industries and they are substantially severable, then they can be considered to come within sec. 2(j).(d) Constitutionally and competently enacted legislative provisions may well remove from the scope of the Act categories which otherwise may be covered thereby.It is not necessary to refer to the dissenting judgment. Beg, C.J. in his concurring judgment, at page 221, placitum E to G, has held thuswould also like to make a few observations about the so called "sovereign" functions which have been placed outside the field of industry. I do not feel happy about the use of the term "sovereign" here. I think that the term "sovereign" should be reserved, technically and more correctly, for the sphere of ultimate decisions. Sovereignty operates on a sovereign place of its own as I suggested in Keshavananda Bharatis case supported by a quotation from Ernest Barkers "Social and Political Theory". Again the term "Regal", from which the term "sovereign" functions appears to be derived, seems to be a misfit in a Republic where the citizen shares the political sovereignty in which he has even a legal share, however, small, inasmuch as he exercises the right to vote. What is meant by the use of the term "sovereign", in relation to the activities of the State, is more accurately brought out by using the term "governmental" functions although there are difficulties here also inasmuch as the Government has entered largely now fields of industry. Therefore, only those services which are governed by separate rules and constitutional provisions, such as Article 310 and 311 should, strictly speaking, be excluded from the sphere of industry by necessary implication."

Court's reasoning:
11. On an overall view, we hold that the employees working in the statutory canteen, in view of the admission made in thethat they are holding civil posts and are being paid monthly salary and are employees, the necessary conclusion would be that the Tribunal has no jurisdiction to adjudicate the dispute on a reference under Section 10(1) of the Act. On the other hand, the remedy to approach the constitutional court under article 226 is available. Equally, the remedy under Section 19 of the Administrative Tribunal Act is available. But, generally, the practice which has grown is to direct the citizen to avail, in the first instance, the remedy under Article 226 or under Section 19 of the Administrative Tribunal Act and then avail the right under Article 136 of the Constitution by special leave to this Court etc. Thus, in view of the admission made by the respondents in theirthat the workmen of theare holding civil posts and are being paid monthly wages and benefits and are considered to be employees, the jurisdiction of the Industrial Tribunal stands excluded. It is open to the aggrieved party to approach appropriate authority in accordance with law. In that view, the finding of the Tribunal in the impugned judgment is legal and warrants no interference. It is open to the respondents to avail of such remedy as is available to a regular employee including the right to approach the Central Administrative Tribunal or the High Court or this Court thereafter for redressal of legal injury.It is, therefore, clear that there have been two streams of thinking simultaneously in the process of development to give protection to the employees of the Corporation. Its actions are controlled as an instrumentality of the State and the rules are made amenable to judicial review. Where there exists no statutory or analogous rules/instructions, the provisions of the Act get attracted. The employees are entitled to avail constitutional remedy under Article 226 or 32 or 136, as the case may be. The remedy of judicial review to every citizen or every person has expressly been provided in the Constitution. It is a fundamental right of every citizen. In the absence of statutory/administrative instruction in operation, the remedy of reference under Section 10 of the Act is available. Therefore, two streams, namely remedy under the Act by way of reference and remedy of judicial redressal by way of proceedings under Article 226 or a petition filed before the Administrative Tribunal to the aggrieved persons, areIf the doctrine laid in Bangalore Water Supply Board case is strictly applied, the consequence is catastrophic and would give a carte blanche power with laissez faire legitimacy which was buried fathom deep under the lethal blow of Article 14 of the Constitution which assures to every person just, fair and reasonable procedure before terminating the services of an employee. Instead, it gives the management/employer the power to dismiss the employee/workman with one months notice or pay in lieu thereof, and/or payment of retrenchment compensation under the Act. The security of tenure would be in great jeopardy. The employee would be at the beck and call of the employer, always keeping his order of employment in a grave uncertainty and in a fluid state like Democles sword hangs over the neck. On the other hand, if the interpretation of providing efficacious remedy under Article 226 gives protection to the workmen/employee the speedy remedy under Article 226/Section 19 of the Administrative Tribunal Act would protect the employee/workman from arbitrary action of the employer subserving the constitutional scheme and philosophy. The Court would, therefore, strike a balance between the competing rights of the individual and the State/agency or instrumentality and decide the validity of action taken by the Management. Necessarily, if the service conditions stand attracted, all the conditions laid therein would become applicable to the employees with a fixity of tenure and guarantee of service, subject to disciplinary action. His removal should be in accordance with the just and fair procedure envisaged under the Rules or application of the principles of natural justice, as the case may be, in which event the security of the tenure of the employee is assured and the whim and fancy and vagary of the employer would be detered and if unfair and unjust action is found established, it would be declared as an arbitrary, unjust or unfair procedure. On the other hand, if the finding is that there exist no statutory rules or certified standing orders exist or they are not either made or are inapplicable, the remedy of reference under Section 10 of the Act would always be available and availed of as it is an industry and indicia laid in Bangalore Water Supply Board case gets attracted.