Umashankar Jaswal vs Royal Auto Centre and Another

R.M. Lodha, J.—The employer Royal Auto Centre as well as the employee Shri Umashankar Jaswal are aggrieved by the award dated 1.1.1995 passed by 3rd Labour Court and both of them have filed separate writ petitions. Writ Petition No. 627 of 95 is filed at the instance of the employee wherein he seeks to challenge the award dated 1.1.95 passed by 3rd Labour Court whereby his demand that he should be reinstated with continuity of service and full backwages w.e.f. 12.3.91 was rejected. On the other hand the employer M/s. Royal Auto Centre in its writ petition no. 698 of 97 impugns the correctness of the finding recorded by the said Labour Court on issue no. 4A relating to the question whether the employer has proved that no industrial dispute existed between the parties on the date of reference. In case no merit is found in W.P. 627/96 filed by the employee, the writ petition filed by the employer is not required to be examined on merits.

Shri Umashankar Jaswal (employee) was employed by M/s. Royal Auto Centre (employer) in the month of April, 1987. The employee joined Mumbai Kamgar Sabha in the month of January, 1988. It is the case of the employee that during the period from December, 1990 to February 1, 1991 his father was sick and therefore he look leave from the employer and went to his native place. The employee''s services were terminated on 12th March, 1991. The employee took up the matter before the Commissioner of Labour. Ultimately, the conciliation failed and the conciliation officer submitted his failure report and an industrial dispute was referred by the appropriate government to the Labour Court to the effect whether the employee was entitled to be reinstated in service with continuity of service and full back wages w.e.f. 12.3.1991. The employee filed his statement of claim on 22nd January, 1993. The employer contested the statement of claim and in its written statement setup the plea that it was not industry within the meaning of Sec. 2(i) of the Industrial Disputes Act, 1947. The parties led oral as well as documentary evidence. The employee examined himself as well as Shri Chandrakant Desai in support of his case while the employer examined Shri Kuldip Singh Chadha. The Labour Court after recording the evidence and hearing the parties held that the employer was not an industry as defined under Sec. 2(j) of the I.D. Act, 1947. The Labour Court also held that the employer failed to establish that no industrial dispute existed between the parties on the date of reference. However, in view of its finding that employer was not industry under Sec. 2(j) of the I.D. Act, 1947. The reference was rejected.

Mr. Gehani, the learned counsel appearing for the employee urged that employer was an industry within the meaning of Sec. 2(j) of the I.D. Act and the triple test laid-down by the Apex Court in Bangalore Water Supply and Sewerage Board Vs. A. Rajappa and Others, is fully satisfied and, therefore, the Labour Court erred in holding that employer was not an industry within the meaning of Sec. 2(j) of the I.D. Act, 1947.

Per contra, Mr. Patil, the learned counsel appearing for the employer urged that the employer was a petty businessman doing up marketing on his own. There was no organised labour and engagement of isolated employee to assist the employer will not bring the employer within the purview of Sec. 2(j) of the I.D. Act and reiterated the reasons recorded by the Labour Court.

There appears to be sufficient material and evidence on record that the employer is a proprietary concern and Shri Kuldip Singh Chadha is its owner. Establishment run by the employer is apparently small and admittedly had the employee as the only employee in the establishment and one trainee during the period from 1987-88 and 1988-89. The employer has produced on record the Income Tax returns for assessment years 1988-89 to 1993-94 and that clearly shows that from 1.4.89 to 31.3.93 there was no employee in the establishment of the employer. The question is whether in these facts the employer can be said to be an industry within the meaning of Sec. 2(j) of the I.D. Act, 1947. In Bangalore Water Supply after considering the large number of cases the Apex court has elaborately and at great length examined the definition of industry as provided in Sec. 2(j) and in paragraph-161 of the report held thus :

"161. ''Industry'', as defined in S. 2(j) and explained in D.N. Banerji Vs. P.R. Mukherjee and Others, has a wide import.

(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 special emphasis on the employer-employee relations.

(d) If the organization is a trade or business it does not cease to be one because of philanthropy animating the undertaking.

II. Although Sec. 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 organized activity possessing the triple elements in I (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 ''industry'' undertakings, casings 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 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 or resultant of the economic operations. The ideology 6f 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 I (supra), cannot be exempted from the scope of Section 2(j).

(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 honoria 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 or ashramites working at the bidding of the holiness, divinity or like central personality, and the services are supplied free or 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 are exempt - 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 the 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 The Corporation of the City of Nagpur Vs. Its Employees, 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 S. 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.

(v) We overrule Safdarjung The Management of Safdarjung Hospital, New Delhi Vs. Kuldip Singh Sethi, , The National Union of Commercial Employees and Another Vs. M.R. Meher, Industrial Tribunal, Bombay and Others, , Secretary, Madras Gymkhana Club Employees'' Union Vs. Management of the Gymkhana Club, , University of Delhi and Another Vs. Ram Nath, , The Dhanrajgirji Hospital Vs. The Workmen, and other rulings whose ratio runs counter to the principles enunciated above, and The State of Bombay and Others Vs. The Hospital Mazdoor Sabha and Others, is hereby rehabilitated."

The learned counsel for the Petitioner sought to emphasis that in the present case it is proved that employer is engaged in systematic activity which is organised by cooperation between employer-employee for distribution of goods and, therefore, the employer is established as an industry. I am afraid the contention raised by the learned counsel for the employee cannot be accepted. The activity done by the employer is substantially and mainly carried on by him and is not and cannot be said to be organised by co-operation between him and the employee. The present case as a matter of fact is squarely covered by the observations made by the Apex Court in paragraph-111 of the report which reads thus

The result of this discussion is that the The National Union of Commercial Employees and Another Vs. M.R. Meher, Industrial Tribunal, Bombay and Others, is wrongly decided and must, therefore, be overruled. We must hasten, however, to repeat that a small category, perhaps large in numbers in the muffasil, may not squarely fall within the definition of industry. A single lawyer, a rural medical practitioner or urban doctor with a little assistant and/or menial servant may ply a profession but may not be said to run an industry. That is not because the employee does not make a contribution or because the profession is too high to be classified as a trade or industry with its commercial connotations but because there is nothing like organised labour in such employment. The image of industry or even quasi-industry is one of a plurality of workmen, not an isolated or single little assistant or attendant. The latter category is more or less like personal avocation for livelihood taking some paid or part-time from another. The whole purpose of the Industrial Disputes Act is to focus on resolution of industrial disputes and regulation of industrial relations and not to meddle with every little carpenter in a village or blacksmith in a town who sits with his son or assistant to work for the customers who trek in. The ordinary spectacle of a cobbler and his assistant or a cycle repairer with a helper, we come across in the pavements of cities and town, repels the idea of industry and industrial dispute. For this reasons, which applies all along the line, to small professions, petty handicraftsmen, domestic servants and the like, the solicitor or doctor or rural engineer, even like the butcher, the baker and the candle-stick maker, with an assistant or without, does not fall within the definition of industry. In regular industries, of course, even a few employees are enough to bring them within S. 2(f). Otherwise automated industries will slip through the net Education."

From the evidence on record it cannot be said that there is any organised labour in the employment of the employer nor can it. be said that image of the employer is of a plurality of workmen. A small upmarketing business activity carried on by the employer cannot be termed as systematic activity organised by co-operation between employer and employee for distribution of goods and it does not fall within the definition of industry.

The Labour Court in para-15 of the order held thus :

"15. In view of above observation of higher courts I am of the opinion that the establishment of the first party company is not an industry within the definition of industry because the establishment was having only two employees i.e. the workman and another trainee for doing packing work of Automobiles parts. There was no organised Labour force for distribution of goods or rendering any services in the establishment of first party company. The owner of the establishment of first party company can do the work of packing without assistance of the employee. There is no need of co-operation between employer and employee to render services or to distribute goods in the establishment of the first party company. Without the help of workers/employees owner can in a such small shop which is dealing in automobile parts can render the services in their absence. Applying the test laid down as aforesaid case on the point of Industry, to the facts of the present case the establishment of the first party company does not fall within section 2(j) of the Act. In view of this discussion I answer this issue in the positive."

The aforesaid reasons given by the Labour Court while holding that the employer is not industry cannot be said to be unjustified. The finding of the Labour Court is in consonance and in accordance with the observations made by the Apex Court in para-111 of its report referred to hereinabove. In this view of the matter the finding recorded by the Labour Court that employer was not industry is justified and does not suffer from any infirmity warranting interference by this Court in extraordinary jurisdiction.

Accordingly, the conclusion reached by the Labour Court that the employer was not an industry and the workman was not entitled to any relief cannot be faulted and writ petition filed by the employee is liable to be dismissed and is dismissed accordingly. In view of the dismissal of the writ petition filed by the employee, in my view, there is no necessity in going into the merits of the writ petition filed by the employer. At this stage Mr. Patil submits that he may be permitted to withdraw the writ petition filed by employer Petitioner.

Accordingly, writ petition No. 627 of 1996 filed by the employee is dismissed for the reasons aforestated. Writ Petition No. 698 of 1997 is dismissed as withdrawn.

Rule in both the writ petitions is discharged. No costs. Certified copy expedited.