State of Punjab vs Kidar Nath

G.S. Singhvi, J.—The only question that arises for adjudication in this appeal filed by the State of Punjab against the order dated January 25, 1991 passed 5 by the learned Single Judge upholding the award of Labour Court, Gurdaspur, is whether the Labour Court had the jurisdiction to entertain the reference made by the State Government for decision of the dispute relating to termination of services of the respondent-workman.

Shri Rupinder Khosla argued that the reference made by the Government to the Labour Court was not maintainable because neither the Zila Sainik Board falls within the definition of Industry u/s 20) of the Industrial Disputes Act, 1947 (hereinafter referred to as the Act) nor the respondent No. 1 is covered by the definition of workman u/s 2(s) of the 5 Act. Learned counsel argued that the Labour Court and the Learned Single Judge have seriously erred in rejecting the objection raised on behalf of the employer to the maintainability of the reference.

We have thoughtfully considered the submission of Shri Khosla but do not find any merit in it. A careful reading of the award passed by the Labour Court shows that the employer (appellant herein) has challenged the maintainability of the reference on the ground that the Zila Sainik Board neither undertakes any commercial activity akin to trade or business nor any profit is earned by it and therefore, the provisions of the Act cannot be invoked by its employees. The Labour Court rejected this plea by making the following observations :

"The AR for the respondent submitted that the respondent is not profit earning and it is not engaged in any industrial activity. However, I do not find any merit in this contention because the profit motive is irrelevant. It has been repeatedly ruled by our Apex Court that even educational institutions fall within the definition of Industry. The test to determine whether a particular organisation, institution or department is an Industry or not is if there is any relationship of employer and employee and if so, the employer is carrying on any organised activity in cooperation with the employee. In the instant case, certainly the respondent is carrying on an organised activity in cooperation with its employees although for the benefit of welfare of ex-servicemen. In my opinion, therefore, the workman is a workman and the respondent an Industry within the meaning of Sections 2(s) and 20) of the Act respectively."

The learned Single Judge relied on the judgment of the 7 Judges Bench in Bangalore Water Supply and Sewerage Board Vs. A. Rajappa and Others, and affirmed the finding of the Labour Court that the Zila Sainik Board is covered by the definition of Industry and the Respondent No. 1 falls within the definition of Workman.

In our opinion the concurrent finding recorded by the Labour Court and the learned Single Judge about the nature of activities of Zila Sainik board do not suffer from any error of law O requiring interference in the letters patent jurisdiction. Indeed. Shri Khosla has not suggested that the functions of the Zila Sainik Board are part and parcel of the sovereign or regal functions of the State. Rather, his emphasis is on the 5 absence of profit motive in the activities of the Zila Sainik Board. However, in view of the pronouncement of the Judges Bench in Bangalore Water Supply and Sewerage Board v. A. Rajappa and others (supra) which is in tune with o the views expressed in D.N. Banerji Vs. P.R. Mukherjee and Others, The Corporation of the City of Nagpur Vs. Its Employees, The State of Bombay and Others Vs. The Hospital Mazdoor Sabha and Others, and The Bombay Panjrapole, Bhuleshwar Vs. The Workmen and Another, the absence of profit motive cannot be the sole criteria for declaring that the activity 0 of a Government Department falls outside the wider meaning given to the definition of Industry. In para 161 of the judgment of the Judges Bench, the Apex Court culled out the following guidelines for determination of the issue whether or not a particular activity is covered by the definition of Industry u/s 20). The same reads as :

(a) Where (i) systematic activity, (ii) organized by co-operation 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 i.e. 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 5 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 philanthrophy animating the undertaking.

Although Section 20) uses words of the widest amplitude in it., 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, 21 calling and the like. This yields the inference that organised activity possessing the triple elements in (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 industrial undertakings, calling and services, adventures analogous to the carrying on of trade or business. All features, 31 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 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 M 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) co-operatives, (v) research institutes (vi) charitable projects and (vii) other kindred adventures, if they fulfil the triple tests listed in (supra), cannot be exempted from the scope of Section 20).

(b) a restricted category of professions, clubs, co-operatives 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 the non-employee character 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 service 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 undertaking alone are except 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 not, involves employees on the total undertaking, some of whom are not workmen as in University of Delhi and Another Vs. Ram Nath, 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 (supra) 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 the 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) Constitutional and competently enacted legislative provisions may well remove from the scope of the Act categories which otherwise may be covered thereby."

In some recent decisions- Sub-Divisional Inspector of Post, Vaikam, and others Vs. Theyyam Joseph, etc.,, and Bombay Telephone Canteen Employees'' Association, Prabhadevi Telephone Exchange Vs. Union of India and another, an apparent note of discordant was struck by the Bench of two-Judges but both the decisions have been over ruled in General Manager, Telecom v. Srinivasa Rao and others (1998 I LLJ 255). In the last mentioned decision, a three-Judges Bench held that the Benches of smaller number of Judges cannot take a view contrary to the judgment of seven - Judges in Bangalore Water Supply and Sewerage Board v. A. Rajappa and others (supra) which has held field for two decades.

On the basis of the above discussion, we confirm the concurrent findings recorded by the Labour Court and the learned Single Judge that Zila Sainik Board is covered by the definition of industry u/s 2G) of the Act.

On the second question the learned Deputy Advocate General could not place any material before us or cite any reason to substantiate 4 his argument that the respondent No. 1 does not fall within the definition of workman. As a matter of fact, a bare perusal of the nature of duties enumerated in annexure P-7 shows that the duties of the welfare worker are akin to ministerial duties. In terms of that document, a welfare worker engaged in the District Sainik Welfare Board is required to discharge the following duties :

a) To verify the various types of cases of ex-servicemen as well as serving soldiers.

b) To complete the pension cases of widows of the deceased soldiers who die in harness.

c) To complete the necessary forms/ papers of various grants admissible to ex-servicemen, disabled soldiers and widows of the deceased soldiers is

(d) To give wide publicity amongst the ex-servicemen regarding the various types of concessions/grants/loans given by the Directorate as well as Director General Resettlement and adore agencies.

e) To verify the fact that marriage has been solemnized in case of marriage grant cases.

f) To maintain the date of Ex-servicemen widow/Gallantry/Awardees Blue Star affected army deserters.

g) To finalise applications of female for loan from Punjab Women and Children Development Corporation.

h) To complete the cases of ex-servicemen above the age of 65 years for old age pension.

i) To complete loan cases under all D.G.R. Schemes.

j) To complete forms of widows for grant of Sewing Machines.

k) Will maintain an upto-date census register giving the following information

i) Retired Senior Officers.

ii) Details of all retired defence personnel in his area.

iii) List of War Widows.

iv) List of Senior Serving Officers (above Lt. Colonel).

1) Attend the office as directed by District Sainik Welfare Officer.

m) Maintain an up-to-date copy of Salute to the Soldiers.

n) Visit the families of the deceased soldiers on occurrence and apprise them of various facilities available to them.

o) To promote Semfex I & II Schemes for Self employment."

Having perused the duties required to be performed by the welfare workers, we do not have slightest hesitation to concur with the learned Labour Court and the learned Single Judge that the Respondent No. 1 is a workman within the meaning of Section 2(s) of the Act.

No other point has been argued.

For the reasons mentioned above, the appeal is dismissed.