GOPAL v.

THE ALtlINIS'IRATIVE OFFICER, MADHYA PRADESH KllADI AND VILLAGE INDUSTRIES

• BOARD AND ORS.

AUGUST 19, 1985

[V. l!ALAKRISHNA ERADI AND V. KHALID, JJ ·]

Labour and Service - Industrial Disputes Act, 1947 - M.P. c Industrial Relations Act, 1960 - s. 2 (19) and (33) - M.P. Khadi and Village Industries Act, 1959 - s. 14 - Khadi and Village Industries Board - Whether "Industry" and "Undertaking"- Applicability of Notifiction No. 9952 - XVI dt. 31st December, 1960.

The appellant was appointed as Store Keeper-cum-Accountant D in one of the branches of the Madhya Pradesh Khadi and Village Industries Board, a body corporate constituted under the

M.P.

Khadi aDd Village Industries Act, 1959. His' service& were terminated by an Order dated 23.9.1964 after giving one month's notice.

The termination was challenged before the Labour Court as amounting to retrenchment because it had been passed without

complying with provisions of the M.P. Industrial Relations Act, 1960, the charge sheet that was given to him on 27.4.1964 was based on falae aDd baseless grouruls aDd no enquiry was held prior to removal. The appellant claimed reinstatement with full wages.

The Respondent Board contested the application contending that

F the Board was not an industry aDd that neither the M.P.

Industrial Relations Act, 1960 nor the Industrial Disputes Act, 1947 applied to it.

The Labour Court held that the termination of the services of the appellant amounted to retrenchment, set aside the Order of

termination aDd directed reinstatement with half salary from the G date of the Order till reinstatement.

The Board preferred a revision. The Industrial Court affirmed the order of the Labour Court aDd dismissed the revision petition.

 SUPP.EMF. COURT REPORTS [1985] SUPP.2 s.c.R.

The Board filed a petition under Art. 226 and 227. The High Court allowed the writ petition, quashed the ordP.r of the Industrial Court and remitted the case to it to decide the facts afresh. The Industrial Court after taking fresh evidence, again held in favour of the appellant, reaffirming its previous decision to reinstate the appellant.

The Board again moved the High Court, wMch set aside the orders of the Industrial Court and the Labour Court on the ground that they acted without jurisdition. The appellant appealed to this Court by certificate which was resisted by the Board on two grounds: (i) that it is not an industry within the meaning of the Act and (ii) that J.t does not P.mploy more than 100 persons.

Allowing the appeal of the appellant-employee,

HELD: 1. The order passed by the High Court is set aside and that of the Labour Court and the Industrial Court are restored.

[651 B-C]

2 •. The M.P.

Industrial Relations Act, 1960 is a separate Act in the State of Madhya Pre.desh to regulate the relations of employees in certain matters and makes provisions for settlement of industrial disputes. Any concern, to become an industry, has to satisfy the definitions of "industry" and "undertaking" as contained in ss. 2(19) and 2(33) thereof. Such concerns have to satisfy yet another condition to attract the provisions of the said Act which relates to the number of the employees the. concern employs. Notification No. 9952 XVI dated 31st December, 1960 issued under sub s. (3) of s. 1 of the Act, makes the provisions of the Act applicable only to an undertaking in the industries specified in the Schedule wherein the number of the employees on any date during twelve months preceeding or on the date of the notification or any day thereafter was or is more than one hundred. In the instant case, the evidence on record admits of no doubt that tlie Board employed more than 100 persons• [ 645 A-ii;

646 A-D; 647 CJ

3 •. One of the functions of the Board 'under s .• 14 of the M.P.

Khadi and Village Industries Act 1959 is "to support, encourage, assist and carry on Khadi and Village Industries and in the matters incidental to such trade or business". The evidence.shows that the Board supplies raw wool to Co-operative Societies, so

GOPAL v. M.P. KHADl VILLAGE BOARD [KHALID, J.] 643

that the Societies can engage themselves in useful work. The Society after weaving raw wool, convert them into spun blankets and supply them to the Board. The blankets so spun are not the properties of the Societies. They have to be given back to the . Board. The blankets so supplied from various .centres to the

Board, have necessarily to be sold in the open market. This act B of sale would clearly cmne within the definition of the word 'trade' or 'business' as contemplated in Section 2(19) of the Act. The conclusion is, therefore, irresistible 'that the Board

engages itself in the business of selling blankets. It has, therefore, to be held that the Board is an 'industry' within the meaning of the Act. [650 B-D; 651 A-BJ C

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 617 (NL) of 1975.

From the Judgment and Order dated 4.12.1973 of the Madhya Pradesh High Court in Misc. Petition No. 713 of 1971.

M.K.

Ramamurthy, Vineet Kumar and N.o.v. Raju for the Appellant.

G.B. Pai, S.K. Gambhir, Ashok Mahajan and Ms. s. Kirp'1lani for the Respondents.

lhe Judgment of the Court was delivered by

KHALID, J. This is an appeal by certificate, issued by the High Court of Madhya Pradesh under Article 133(1) of the Constitution of India against the Judgment of a Division Bench of that Court setting aside the Order passed by the Labour Court, Ujjain,.

F co1uirmed in revision by the Industrial Court, Madhya Pradesh, allowing an application filed by the appellant under Section 31 of the Madhya Pradesh Industrial Relations Act, 1960 (hereinafter referred to as the Act) in which l)e had chall.enged his tennination which challenge was accepted and his reinstatement was ordered. The facts in brief, necessary for disposal of this appeal are as follows: G

2. The appellant was appointed as Store Keeper Cum Accountant on 14.2.1957, in the Madhya Pradesh Khadi and Village Industries Board, Budhwara, Bhopal. This Board is a body corporate constituted under the M.-P. Khadi and Village Industries Act 1959 and is engaged_ among others, in activities of encouraging H production of Khadi and helping other village industries. It ha~

different branches in the State of Madhya Pradesh. One such centre was established at Berdi in Chhindwara district. The Board supplied raw wool to the Cooperative Societies and after getting them woven by the societies into blankets, received back blankets as finished goods. The services of the appellant were terminated as per Order dated 23.9.1964, after giving one month's notice. He challenged this Order of termination as . one amounting to retrenchment and having been passed without complying with the provisions of the Act that govern his relationship with the Board.

He stated that a charge sheet was given to him on 27.4.1964, based on false and baseless grounds and that there was no enquiry held into the said charges before his removal. The appellant thereupon moved the Labour Court at Ujjain on 7.6.1975, for his reinstatement with full wages.

3. The Board contested the application contending inter alia that the Board was not an industry and that neither the M.P.

Industrial Relations Act, 1960 nor the Industrial Disputes Act, 1947 applied to it. The Labour Court, Ujjain framed necessary issues on the rival contentions and after recording evidence, held that the termination of the appellant amounted to retrenchment, set aside the Order of termination and directed the Board to reinstate him with half salary from the date of the Order till reinstatement.

4. Aggrieved by this Order the Board preferred a revision E before the Industrial Court in Madhya Pradesh, Indore, repeating the contentions raised before the Labour Court. The Industrial Court by its order dated 3.2.1967, affirmed the order of the Labour Court and dismissed the revision petition.

5. The Board pursued the matter further by moving the Madhya F Pradesh High Court by a petition under Article 226 and 227 of the Constitution of India. The High Court by its order dated 19.12.1969, allowed the Writ Petition, quashed the order of the Industrial Court and remitted the case to it to decide the facts afresh with due regard to the relevant provisions of the M.P.

Industrial Relations Act, 1960. After remand, the Industrial G Court proceeded to decide the question itself after taking fresh . evidence and again held in favour of the appellant and against the Board, reaffirming its previous decision to reinstate the appellant. The matter was taken to the High Court again by the Board by means of a Writ Petition. The High Court set aside the orders of the Industrial Court and the Labour Court, on the H ground that they acted without jurisdiction. However, since the

GOPAL v. M'.P' KHADI VILLAGE BOARD [KHALID, J.] 645

High Court felt that the matter was not free from doubt and was debatable, granted certificate to the appellant to appeal to this Court. It is thus that the matter is before US•

6. In the State of Madhya Pradesh there is a separate Act to regulate the relations of employees in certain matters and to make provisions for settlement of industrial disputes and other connected matters. This Act is called the Madhya Pradesh Industrial Relations Act, 1960. Section 2 (19) defines Industry as under:

~Indus try" means

(a) any business, trade, manufacture, underta~ or calling of employers;

(b) any calling, service, employment, handicraft or industrial occupation or a vocation of employees; and includes -

(i) agriculture and agricultural operatioris;

(ii) any branch of any industry or group of industries which the State Government may, _by notification, declare to be an industry for the purposes of this Act."

Section 2 (33) defines undertaking as follows:

"Undertaking means A concern in any industry".

Thus, any concern, to become an industry, has to satisfy the above definitions to attract the provisions of the Act. Such concerns have to satisfy another condition to attract the provisions of the Act and that is about the nuniber of employees the concern employs. This is provided in a Notification issued under the Act which reads as follows:

"No. 9952-XVI, dated 31st December, 1960.

In exercise of the powers conferred by Sub-Section (3) of Section l of the Madhya Pradesh Industrial Rel.a- tions Act 1960 (No. 27 of 1960), the State Goven:mient hereby directs that all the provisions of the said Act other than section l and 112 thereof shall come into

force . on Jlst December, 1%0, in respect of undertaking in the industries specified in the Schedule below wherein the number of employees on any date during twelve months preceding or on the date of this notification or any day thereafter was or is more than one hundred:.

SCHEDULE

1. Textile including cotton, silk, artificlal silk staple fibre, jute and carpet.

2••••••••••••~•••••••••••e••••••••••••

•••••••••••••••••• Q ••••••••••••••••

This notification, thus, makes the provisions of the Act applicable only to un, dertaking in the industries specified in the schedule, where th~ number of employees, on the date mentioned therein was or is wore than 100_. We are concerned here only with item No. 1 in the schedule and therefore, have left out the other items.

7. Before considering the rival contentions raised before us, .. we may extract the relevant sections of the Act under which the Board was constituted, to understand the functions and duties of the Board. For our purpose it is enough to quote Sections 14

(1) & 14 (2) (a) alone. Clause (o) to (m) are not necessary for the resolution of the dispute involved in this case and hence are omitted.

"14. Functions of Boad.

(1) It shi.11 be the duty of the Board to organise, develop and regulate Khadi and Village Industries and perform such functions as .the State Government ""1Y prescribe.· ·

(2) Without prejudice to the generality of the provisions q_f ttie sub section (1) the Board shall also in particular discharge and perform _all or any of the following duties . and fimcticns namely;

(a) To tart, encourage,· assist, and carry on Khadi and ·v11iage, Indiistries and in the matters incidental to such trade or business."

GOPAL v. M.P. KHADI VILL&<Jll BOARD (KHALID, J.] 647

With this background we will advert to the facts of the case.

8. The Board resisted the appellant's case on two grdunds

(i) that it' is not an industry within the meaning of the Act and

(ii) that it does not employ more than 100 persons. It is necessary to note at this stage that the Board had not' originally urged any plea that it did not employ sufficient employees to attract B the Act. In was during the. course of argument that this plea

abou~ the number of appointees was urged by the Board. However, both the Labour Court and the Industrial Court considerd the two jurisdictional questions as to whether the Board was an industry and as to whether it had employed more than 100 persons.

9. We have gone through the orders passed by the Labour Court and the Industrial Court, carefully. According to us a close examination of the eyidence adduced in the case and the discussions bearing on them by the Labour Court in particular and the Industrial Court, admits of no doubt that the Board employed

more than 100 persoiis. For this purpose, we content ourselves bJ D extracting the following paragraph from the order of the Labour Court while considering the first point namely.whether tµa provi- .• sions of the Act are applicable to the Board.

"Thus the applicant' 5 contention that the parishad •s cloth weaving centres. were in erlstence till 2 years E before and his contention in respect of the number of workers engaged at Mandsaur, Gwalior, Anjad entries

etc. have not been refuted by the no" applicant. It is therefore concluded them at (sic) 60, 40, 4 . & 3 workers were working at Parishad's centres situated at Mandsaur, Gwalior, Anjad and Parsinga. Besides this there were' officials working at Chanderi & Maneshwar F weaving centres. The non applicant who is ip possession of the records of appointment and who is also not disclosing the exact figures (of the workers), therefore the conclu'sions go agai'Ilst the non applicant."

10. This finding on the appreciation of the evidence given c by the witnesses concludes the parties acco'rding to us, regarding the number of the employees employed by th~ Board. Even so, when. the matter went before the High Court, the High Court felc that the jur.isdictional question was not properly, considered by the Labour Court.' Therefore, in the first roUnd the matter was remand<id by the High Coutt, and the High Court made the following observations: H

SUPKEME COURT REPORTS [1985] SUPP.2 s.c.R.

"The relevant notification applied the provisions of .. ' the Act to undertaking in the industries specified in the schedule wherein the number of employees, was or is more than one hundred. Evidently, it had no application to smaller establishments of notified industries that employed less than 100 persons. That being so, it is plain enough that the Courts below misdirectP.d themselves by taking into account the total number of the employees of the Board without regard to the consideration whether they were employed or not in the establishment relating to textiles and the findings recorded by them on the jurisdictional facts do not bear examination and cannot be sustained. Since the facts bearing on the question have not been properly ascertained it would be right to set aside the order of the Industrial Court and leave it to that Court to decide these facts afesh with due regard to all the relevant provisions of the M.P. Industrial Relations Act, 1960 and then to dispose of the claim made by the respondent 3 on merits."

11. We may, even at this stage, point out that the High ".

Court could have set aside the order of the Labour Court and the Industrial Court, on the ground that the Board did not, according to it, satisfy the definition of industry without remanding the E case to the Industrial Court to determine the number of employees. We are making this statement in view of an objection taken by the appellant's counsel before us that the respondent cannot, in this appeal, reagitate that question, he having been concluded by the remand order which was restricted only to the number of employees in the Board.

12. After remand, the Industrial Court considered the question again. The Indusrial Court understood the remand order and, according to us, rightly, as follows:

"After the remand the parties have adduced evidence which is common in both cases. The exact question I am called upon to answer is , the nmnber of employes employed by the parishad in its textiles activity and not all other activities such as Oil, Paper Carpentry, Gur Tannery, Pottery etc. The best evidence will be

the record kept with the parishad. The oral evidence will not be of much help, though it may have some additional value."

GOPAL v. M.P. KHADI VILLAGE BOAR.') [KHALID, J. J 649

13. After discussing the evidence in detail, the Industrial Court came to the conclusion thus:

"For all these reasons, I hold that in the textile activity of the Board (parishad) the number of employees is or has been over and more than 100 from 1.12.59 to 31.12.60, vide Ex-D/l and, therefore the employees had a right to file the application under the Act." ,..

14. The Industrial Court again held in favour of the-appellant. The matter went to the High Court again in the Second round, at the instance of the Board. On the question of number of employees in the Board, in paragraphs 10 & 11 of the Judgment, the High Court observed thus:

" .... Thus from the statement of this witness, there can be no doubt that there were more than 100 persons in all at the wool weaving centres in the State and at some of the centres the nlllllber was more than 100.

The witness further stated that there are 16 industr.ies under the Board, such as Paper Industry, Soap Industry, Khadi Industry, Wool Industry and s~ on.

8imilarly, in the connected case, namely M.P. No. 713 of ~971, in pursuance of the remand order, the statement of Gunadeo Patil (Petitioner's Annexure-F) and the other witness, Sadashiv Patil (Petitioner's Annexure-f/l) were recorded. The statements of these two witnesses were similar to the statements' in the main case.

(The High Court was dealing with the case of two employees in Misc. Petition No. 712/1971 and 713/1971 and that is why mention is made about the connected case.)

15. After holding thus, the High Court spent considerable part of the Judgment for considering the kindred question whether the board was an industry or not. The appellant's counsel raised an objection that it was not open to raise this question as it was covered by the remand order (which was confined only to the number of employees). In our -view, this objection is well founded and has to be upheld. According to us, the appellant is entitled to succeed on this ground alone. However, we. would like to answer

the other question also for the purpose of completion of this Judgment and to set at rest possible future controversies on the subject.

16. The definition clause in the Act is far from satisfactory. The definition of word 'industry' in Section 2(19) and the word 'undertaking' in Section 2(33) does not make happy reading but this unhappy phraseology need not vex us. If from the evidence available, we c.an say, that the Board carries on trade or business, it would straightaway become an industry under the Act. We have already seen that one of the functions of the Board is "to support, encourage, assist and carry on Khadi and Viilage Industries and in the matters incidental to such trade or business." What the Board does is to supply raw wool to Cooperative Societies, so that the Societies can engage themselves in useful work. The Societies after weaving raw wool, convert them into spun blankets and supply them to the Board. The blankets so spun are not the properties of the Societies. They have to be given back to the Board. The blankets so supplied from various centres to the Board, have necessarily to be sold in the open market. This act of sale would clearly come within the definition of the word trade or business as contemplated in Section 2 (19) of the Act. lhis finding of ours is supported by the evidence in the case also. The appellant in his evidence stated that at the centre where he was posted, weaving of woolen blankets was done by the Societies and other centres constituted at various places and the woven blankets were supplied back to the Board. Three witnesses were examined on behalf of the Board. Sh. Choudhary, the first witness and Sh. Patil the neit witness, admitted that. the spinning and weaving work of cotton and woollen cloth waS got done by the Board through various Societies. These two said witnesses admitted that the looms belonged to the Board and the Board supplied wool and other materials and implements and sold manufactured goods after obtaining them from the Societies. They also made an important admission that the Society could not sell the goods prepared out of the wool supplied by the Board to anybody else •. The third witness also supported this case though differed from the second witness and stated that the .Board extended marketing facilities to the Societies.

17. We thought it necessary to refer to the evidence in the case to disabuse an impression attempted to be Created that the Board did not sell the blankets it got from the various societies spun out of the wool supplied to them. There is a clear admission by one witness that the Societies cannot sell the blankets

GOPAL v. M.~. KHADI VILLAGE JlOARD [KHALID, J.J 651

prepared out of the ~"Ool supplied by the &>ard to any one else.

No argument is necessary to hold that the blankets received by the. Joard from various centres have only to be sold and rtot used by the Board for its own purpose. On this evidence the conclusion is irresistible that the Board engages itself in the ousiness of selling blankets. It has therefor<> to be hld that the Board is an industry within the meaning of the Act.

18. The appellant is ntitled' to succeed en hoth the grounds. We set aside the order pessed by the High Court and restore .the. orders passed. by. t:1e Lc.bou: Cqtirt and the Industr.ial Cou<t. The appellant will get. his cost from the first respondent quantifJ.ed at Rs. 2,500. ·

A.P.J.

Appeal allo.wed •.