Case: Management Of The Federation Of Indian Chambers Of Commerc Vs. Their Workman, Shri R. K. Mittal

In February, 1965, the 20th Congress of International Chamber of Commerce was held in Delhi for which purpose a Committee known as the Indian National Committee of International Chamber of Commerce was brought into existence and the services of the Respondent along with other workmen were loaned to it by the Federation. The Respondent worked for about 40 days but was only paid overtime for about 7 days and consequently he claimed overtime for the remainder of the days as according to him other workmen had also been paid similarly. This claim was not admitted by the Federation with the result that the Respondent caused a Lawyers notice to be issued to the Federation, to the Indian National Committee of International Chambers of Commerce and to the International Chamber of Commerce with its Head Office at Paris, demanding payment of his dues amounting to about Rs.. When no replies were received, he caused another notice to be served threatening to file a suit whereupon the International Chamber of Commerce sent a telegram to the Federation enquiring whether it should deal with the matter or whether they would deal with it. To this the Federation replied that it will deal with it, but it appears that the claim of the Respondent was not settled. The Respondent then filed a suit for the payment of the arrears. The Federation felt that this action of the Respondent in causing legal notices to be served on the International Chamber of Commerce was taken with a view to bringing the Federation into disrepute, and it was capable of so bringing it in the eyes of the International Chamber of Commerce which Act being inconsistent with his duties and obligations as an employee constituted misconduct. At was served on the Respondent and a domestic enquiry was held in which he was held to be guilty of misconduct. This finding was forwarded to the Secretary who instead of dismissing him took a lenient view and terminated his services. Thereafter it is alleged that he filed a suit against the Federation and subsequently raised an Industrial dispute which was referred to the Labour Court for determination of the following issues namely whether the termination of the services of Shri R. K. Mittal is illegal and unjustified and if so what directions are necessary in this respect. After this reference it is stated that the suit filed by him have been withdrawn2. It was alleged that the workmans grievance was unjustified and in spite of his being informed that no discrimination has been practised he with a view to harass the management and compell it by unfair means to pay him more than what was legitimately due to him, started making complaints simultaneously to the Federation and International Chamber of Commerce which did not employ him and with the full knowledge that whatever grievance he legitimately had, had to be resolved only by a reference to the Federation which was his employer. It was avered that the enquiry conducted was fully in accordance with the principles of natural justice and requirements of law, that the findings of the Enquiry Officer were fair, reasonable and fully supported by the records of the enquiry and that these definitely established the guilt of the Respondent. In any case the Federation was not an industry. On behalf of the Respondent it was contended that the Federation alone was not the host but it was the Indian National Committee of the International Chamber of Commerce constituted of some officials of the Federation and the International Chamber of Commerce which conducted the 20th Congress and it was this Committee that employed the Respondent and paid him and the other workmen their remunerations. The attendance of the workmen was marked in a separate attendance register maintained for all such workmen who were engaged to work for the Congress irrespective of the fact whether those were the employees of the Federation or otherwise, that in spite of the representations when the management did not reply, the Respondent consulted two Lawyers and instructed them to serve necessary legal notices who advised him that as the work related to the 20th Congress was managed by an independent Committee his claim for the remuneration against the Federation alone would not lie and that he would have to make a claim on all the three bodies namely the Federation, the Indian national Committee of International Chamber of Commerce and the International Chamber of Commerce, Paris, who constituted and managed the affairs of the Congress. He denied that there was any mala fide on his part nor did he ever intend to defame the Federation by serving a notice in accordance with the legal advice given to him. He, however, expressed his sincere regrets to the management and submitted his appeal to the Secretary General of the Federation and requested him to consider the matter, but it was not even acknowledged. In any case the punishment of discharge in such a small matter is too severe and completely out of proportion and smacks of victimisation. The assertion that the Federation was not an industry was denied

Court's reasoning:
6. The promotion of trade and commerce, it is submitted is a charitable object which is the dominant object of the Federation and hence it is not an industry as held in some of the recent cases by this Court. What has to be seen is whether the promotion of trade, commerce or industry which is considered to be a charitable object can be termed as a business or trade resulting in the production of material services within the meaning of an industry under Section 2(j) of the Act. In brief it was argued that if both the ends and means are charitable, the ends being the activity and the means the object, the undertaking cannot come within the definition of industry. In support of this, several decisions rendered under the Indianx Act have been pressed into service and relied upon10. A cursory examination of the definition of industry is Section 2(j) without the assistance of the case law would show that it has been divided into two parts; the first is, as meaning any business, trade, undertaking, manufacture or calling of employers and the second is, as including any calling, service, employment, handicraft, or industrial occupation or avocation of workmen. The first part defines it in relation to the activities of the undertaking, i.e. the employer while the second, in relation to the nature of the work done by the employees and gives an extended connotation though this part standing alone cannot define what an industry is. In either case the activity whether of the undertaking or the employees of that undertaking are to be determined in relation to its being a business, trade, undertaking, manufacture or calling of employers. In several cases decided by this Court, these definitions have been understood differently in their application to the facts and circumstances of each case which prompted Hidayatullah, J., as he then was, in the Secretary, Madras Gymkhana Club Employees Union v. Management of the Gymkhana Club [1968 1 SCR 742   : AIR 1968 SC 554  .], after pointing out that the definitions in the Act are borrowed from other statutes particularly the latter part of the definition of industry was taken from Section 4 of the Commonwealth Conciliation and Arbitration Act, which had caused some trouble, to say "Decisions rendered on these definitions (and some others very similar) have naturally influenced opinion making in this Court. The Australian cases in particular "have been subrosa all the time". (p. 754.)It appears that the test matches were held in the Stadium of the club. It also appears that the club was making a large income therefrom. Of the 17 matches held there during the period, each match meted nearly 2 lakhs. Even so, it was held that holding of test matches or the catering provided in the stalls at the time of these matches was a subsidiary purpose to the promotion and encouragement of the persons whose interest in the game of cricket was not systematic and consequently was not in the nature of carrying on trade or business but were activities in the promotion of the game of cricket. The income derived from all these activities was incidental which income was later utilised for the purpose of fulfilling its other objects as incorporated in the Memorandum of AssociationIn these three cases it was found that none of them carry on an economic activity analogous to trade or business. The criteria that in the two latter hospitals the object was charitable does not appear to have been the sole test for concluding that they were not industries. In one case the dominant activity was research and training which necessarily involved treatment also. In the other case though the activity it carried on was training, research and treatment, the distribution of surplus as profit was prohibited. The cumulative effect of these activities and the nature of such activities determined the question whether these institutions were an industry or not, not that because their respective objects were charitable, that alone was considered to be the criteria for not considering it as an industry31. It appears to us that the tests for determining whether a dispute is an industrial dispute, or not have been enunciated and the principles crystallised as a result of the several decisions of this Court which is what are applicable to this case. There is, therefore, no warrant to allow any other element to be added to the criteria laid down for determining what an industry is. In our view then of the definition of industry is to ascertain the systematic activity which the organisation is discharging namely whether it par takes the nature of a business or trade, or is an undertaking or manufacture or calling of employers. If it is that and there isn of the employer and the employee resulting in the production of material services, it is an industry notwithstanding that is objects are charitable or that it does not make profit or even where profits are made, they are not distributed among the membersIn furtherance of these objects the Federation publishes a Fortnightly Review, organised two exhibitions in which huge profits were made, though no doubt in collaboration with the Government. It has constituted Tribunals for Arbitration. It is claimed in the Brochure issued by the Federation under the titlen andFunctions that membership of Federation confers certain rights and privileges, such as for instance it "endeavours to take up with the concerned authorities the specific difficulties experienced by members in their day to day business." It has entered into arbitration agreement with America, Russia, German Democratic Republic, Poland and Hungary for the purposes of having the disputes of claims arising out of or relating to contracts between nationals of India and the country concerned for being settled by arbitration. It promotes Indias exports and economic development. It undertakes publication of periodicals for the benefit of the businessmen, big or small; it brings out Fortnightly Review in which there is a section for Trade enquiries of special interest to importers and exporters. This facility is also thrown open to the nonmembers who can subscribe to the Bulletin though it is sent free to all the constituents of the Federation. A cyclostyled publication entitled "Export News" is also issued every fortnight and gives general hints to the exporters as to how to promote their exports. It appears from the report of Proceedings of the Executive Committee for the year 1965, that more specific issues were taken up direct with the Department of Government concerned relating to export performance and shortages of imported raw materials, components and machinery with a view to alleviate difficulties in the case of specific products. It also takes up matters relating to the grant for more facilities abroad, introduction of concessions such as Railway freights, etc. Among important ad hoc matters taken up were cargo seized by Pakistan in the course of hostilities during 1965. It also facilitates the resolution of various difficulties in respect of foreign exchange and export promotion which are being experienced by the trade in respect of foreign exchange allocation for export promotion purposes and made several suggestions regarding granting of foreign exchange for business facilities abroad and the need to avoid delay in sanctioning foreign exchange, increase in existing scales of allowances, liberal allocation of thes service. It took up the cause of the established exporters other than manufactures who were barred from entering into export trade in. It sponsored the cause of the exporters of precious stones to allow reasonable time for submission of their reports and calling back the consignments if, there was no sale. In Company Law matters also it sponsored the cause of the various Companies and the difficulties that they were encountering. It would appear that on the request of Goa Mineral Ore Exporters Association, the Committee requested the Government to give the matter sympathetic consideration. It also took up cases of the contractors bills where there was inordinate delay in payment of contractor bills for lack of funds. In the report for 1964, it was stated that where in certain cases import licences were issued subject to the condition that the validity of the licences depended on the production of thex clearance certificate in spite of the fact that the applicant had quoted the registered number in hisx verification, the Federation requested the Chief Controller of Imports and Exports to discontinue the practice in future. Where the import policy for the year5 allowed 5% quota for silk bolting cloth to established importers, representation to the Chief Controller of Imports and Exports was made for this cloth to be granted to flour millers direct whenever they apply for it, if necessary on ad hoc basis. The case for freight concession for iron ore exported from Rajasthan for extending it to high grade ore as well, was also taken up. It was further pointed out that the Company management and other concerned with Company law have frequently complained of many practical difficulties in complying with the provisions of the Company Act, rules etc. In order to help the Federation constituents in such matters and provide necessary service to them the Federation has been maintaining a separate division namely the Company Division to which members were requested to forward their problems and difficulties. Principal bodies were also requested to advise their constituents in regard to the services offered by the Federation33. These extracts have been given in some extenso to show that the Federation carries on systematic activities to assist its members and otherbusinessmenand industrialistsand even tos as for instance in giving them the right to subscribe to their bulletin; in taking up their cases and solving their difficulties and in obtaining concessions and facilities for them from the Government. These activities are business activities are material services which are not necessarily confirmed to the illustrations giver by Hidayatullah, C.J., in the Gymkhana (supra), by way of illustration only, rendered to, tradersand industrialistswho are members of the constituents of the Federation. There can in our view be no doubt that the Federation is an industry within the meaning of Section 2(j) of the Act34. Now coming to the merits of the case we find little substance in the contention of the Federation that the respondent had issued legal notices to the International Chamber of Commerce with a view to bring discredit to the Federationits employer. The charge of misconduct that was framed against the respondent was that he having acted in a manner inconsistent with his duties and obligation as an employee of the Federation he caused to be addressed without any justification copies of the letters to the International Chamber of Commerce "with a view of bring and/or capable of bringing disrepute to the Federation in the eyes of the International Chamber of Commerce. The Enquiry Officer in the domestic enquiry held that having regard to the emphatic assertion of the respondent that he had no intention to bring disrepute to the Federation in any way and that he was only trying to get his legitimate dues "it is not necessary to analyse the exact intention, but the effect has been to convey to the International Chamber of Commerce a low impression about theFederationand therebyto bring down the prestige of theFederationin the eyes of the International Chamber of Commerce". In spite of this finding the Enquiry Officer found that the respondents action was clearly subversive of discipline and in his opinion deserved to be so treatedIt is, therefore, clear that it is not theFederationthat conducted the Congress but another organisation which was brought into being for that purpose. It is this Committee namely the Indian National Committed which employed the respondent and in the circumstances there is little justification for taking umbrage when the respondent in spite of his demand to settle his claim was not given satisfaction if he issued a notice to all the three organisations namely the, the Indian National Committee and the International Chamber of Commerce and Industry. At any rate the fact that the respondent did not intend to cast any aspersion against theFederationbecame also evident from the manner in which he tendered his apology and said that he never had any such intention. Notwithstanding this apology the punishment of discharge for a workman who has served theFederationfor 12 years without any cause for complaint and had worked for 40 days receiving overtime payment for only seven days was far in excess of what he deservedeven if he was considered to be guilty of any misconduct. It is not denied that there are no standing orders specifying the misconduct which would justify dismissal and what misconduct would justify other disciplinary action. In these circumstances it is open to the Tribunal to go into the question whether the punishment was disproportionate to the misconduct complained of as to amount to victimisation. In W. M. Agnani v. Badri Dass and Others, [1963 1 LLJ 634.] it was so held by this Court. It was also held in Hindn andEngineering Co. Ltd. v. Their Workmen, [1965 2 SCR 85   : AIR 1965 SC 917  .] that although it is a settled rule that the award of punishment for misconduct is a matter for the management to decide and if there is justification for punishment imposed, the Tribunal should not interfere; but where the punishment is so disproportionate that no reasonable employer would ever have imposed it in like circumstance, the Tribunal may treat the imposition of such punishment as itself showing victimisation or unfair labour practice. In view of the fact that the domestic Tribunal acted on no evidence at all because it was found that the intention with which the respondent had issued the notices to the International Chamber of Commerce and Industry could not be ascertained, the Tribunal was justified in allowing evidence to be led and on that evidence to come to the conclusion that the termination of service was wrong. We cannot help feeling that theFederationhad made a mountain out of a mole hill and made a trivial matter into one involving loss of its prestige and reputation. I