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Gujarat High Court · body

2016 DIGILAW 1057 (GUJ)

Manuben Mohanbhai Harijan v. Chokha Research Scientific Centre

2016-06-08

K.M.THAKER

body2016
JUDGMENT : K.M. Thaker, J. 1. Heard Mr. Desai, learned advocate for the petitioner corporation and Mr. Chauhan, learned advocate for the respondent. 2. The petitioner has brought under challenge award dated 28.6.2004 passed by the learned Labour Court in Reference (LCN) No. 203 of 1994 whereby the learned Labour Court dismissed the reference only on the ground that the opponent establishment/employer would not come within the purview of the definition of the term 'industry' as defined under Section 2(j) of the Industrial Disputes Act, 1947. 3. The said award and directions are challenged by the workman on a limited ground viz. the learned Labour Court committed error in taking into account the definition of the term 'Industry' which was in operation at the time when the service of the petitioner was terminated and/or when the order of reference was passed and/or when the award was passed and that, therefore, the impugned award is erroneous and contrary to the statutory provisions as well as in disregard to the decision of the Hon'ble Apex Court in case of Bangalore Water Supply and Sewerage Board vs. A. Rajappa and others, AIR 1978 SC 548 . 4. So far as the factual background is concerned, it has emerged from the record and from the submissions by learned advocates for the petitioner and the respondent that present respondent raised industrial dispute on the ground that the opponent employer terminated her service without following procedure prescribed by law. The appropriate Government referred the said dispute for adjudication to the learned Labour Court at Nadiad. The dispute was registered as Reference (LCN) No. 203 of 1994. During the proceeding the petitioner filed statement of claim on the allegation that she joined the service with opponent employer in 1981 and she worked with the opponent employer for almost 13 years and then in May 1995 the opponent employer terminated her services by oral order dated 9.5.1994 without following procedure prescribed by law. 5. The reference was opposed by the opponent employer, i.e. present respondent. In the written statement the opponent employer raised objection against the maintainability of the reference on the ground that the establishment is Research Centre run by Gujarat Agriculture University and is engaged in research activity related to agriculture produce. It was also claimed that the establishment is managed and run with aid of 100% grant from the Government. In the written statement the opponent employer raised objection against the maintainability of the reference on the ground that the establishment is Research Centre run by Gujarat Agriculture University and is engaged in research activity related to agriculture produce. It was also claimed that the establishment is managed and run with aid of 100% grant from the Government. In the written statement, the opponent employer also claimed that on 9.5.1994, the opponent employer had decided to retrench the respondent and therefore, she was asked to collect retrenchment compensation and the order, however, she had not gone to accept the order and retrenchment compensation and therefore, the amount was forwarded to the respondent on 30.5.1994 and since due to clerical error, there was mistake in calculating the amount of compensation the amount of difference payable towards retrenchment compensation was forwarded to the respondent on 8.6.1994. The opponent employer also claimed that since the claimant's services were not required, she was terminated. 6. In this background, the learned Tribunal examined rival contentions and passed impugned order and rejected the reference. 7. The reference is rejected on solitary ground viz. the opponent employer cannot be termed 'industry' within the meaning of the said term defined under section 2(j) of the Act. 8. On examination of the award, it appears that any evidence, by either side, with regard to activity of the research centre was not placed on record before the learned Labour Court. It also comes out that the learned Labour Court has not examined the nature of activity carried on by the opponent employer and the decision in respect of the issue as to whether the petitioner can be termed as 'industry' or not is taken without taking into account the nature and range of activity of the opponent employer. 9. On this count it is pertinent to note that there was no evidence available on record before the learned Labour Court with regard to the nature of activities of the respondent institute (i.e. original opponent - employer - establishment). 9. On this count it is pertinent to note that there was no evidence available on record before the learned Labour Court with regard to the nature of activities of the respondent institute (i.e. original opponent - employer - establishment). In absence of relevant evidence with regard to the nature and range of activities of the original opponent - employer - establishment, the learned Labour Court, only on the basis of the name of the establishment (which uses the word 'research') could not have reached the conclusion that the opponent - employer - establishment does not fulfill the triple test explained by Hon'ble Apex Court in case of Bangalore Water Supply & Sewerage Board v. A. Rajappa & Ors., AIR 1978 SC 548 . In paragraph No. 161 of the said decision, Hon'ble Apex Court has observed, inter alia, that:- "161. 'Industry as defined 'in Sec. 2(j) and explained in Banerji's case has a wide import. (a) Where (i) systematic activity, (ii) organized 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 the employer-employee relations. (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 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 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 of 'industry' undertakings, callings 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 fulfill the triple tests listed in (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 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 services clinic or doctors serving in their spare hours in a free medical centre on asramites 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 are exempt-not other generosity, compassion, developmental passion or project. IV. 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 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 of 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. V. We overrule Safdarjung ( AIR 1970 SC 1407 ), Solicitors' case ( AIR 1962 SC 1080 ), Gymkhana ( AIR 1968 SC 554 ), Delhi University ( AIR 1963 SC 1873 ) Dhanrajgirji Hospital ( AIR 1975 SC 2032 ) and other rulings whose ratio runs counter to the principles enunciated above, and Hospital Mazdoor Sabha ( AIR 1960 SC 610 ) is hereby rehabilitated." 10. Thus, as observed by Hon'ble Apex Court, certain/little research labs or charitable projects may qualify for exemption, provided such research laboratories, substantially and going by the dominant nature criterion, do not substantively engage/employ employees but in minimal matters hire marginal number of employees without destroying the non-employee character of the unit. Otherwise, professionals, clubs, educational institutes, cooperatives, research institutes, charitable projects, etc. if they fulfill the triple test laid down by Hon'ble Apex Court in the said decision, cannot be exempted from the scope of Section 2(j). 11. True it is that the amendment in the definition of the term 'Industry' brought about after i.e. in 1982 the judgment in the case of Bangalore Water Supply & Sewerage Board (supra), however, equally relevant fact is that the said amendment in the definition (i.e. the amended definition) is yet not brought in operation. 11. True it is that the amendment in the definition of the term 'Industry' brought about after i.e. in 1982 the judgment in the case of Bangalore Water Supply & Sewerage Board (supra), however, equally relevant fact is that the said amendment in the definition (i.e. the amended definition) is yet not brought in operation. 12. In view of the said observation by Hon'ble Apex Court, it was necessary for the learned Labour Court, before reaching to the conclusion that the opponent - employer - establishment would not come within purview of Section 2(j) of the Act, to take into account and examine the nature of activities of the opponent - employer - establishment. 13. However, in present case, the learned Labour Court, without undertaking the said process and without calling for evidence and/or without examining relevant evidence, recorded the conclusion that the opponent - employer - establishment would not come within the purview of the term defined under Section 2(j) of the Act. 14. The learned Labour Court has relied on the decision in case of Physical Research Laboratory v. K.G. Sharma, 1997 Labour & Industrial Cases 1912, however, when the observations by the Hon'ble Apex Court in the said decision are taken into account, it comes out that the decision of the Hon'ble Apex Court is that Physical Research Laboratory is not an industry within meaning of Section 2(j). The said observation is based on the nature and range of the activities of the institute. In paragraph Nos. 12 and 13 of the said decision, Hon'ble Apex Court has observed, inter alia, that:- "12. PRL is an institution under the Government of India's Department of Space. It is engaged in pure research work is already stated earlier. The purpose of the research is to acquire knowledge about the formation and evolution of the universe but the knowledge thus acquired is not intended for sale. The Labour Court has recorded a categorical finding that the research work carried on by PRL is not connected with production supply or distribution of material goods or services. The material on record further discloses that PRL is conducting research not for the benefit or use of others. Though the results of the research work done by it are occasionally published they have never been sold. The material on record further discloses that PRL is conducting research not for the benefit or use of others. Though the results of the research work done by it are occasionally published they have never been sold. There is no material to show that the knowledge so acquired by PRL is marketable or has any commercial value. IT has not been pointed out how the knowledge acquired by PRL or the results of the research occasionally published by it will be useful to persons other than discloses that the object type of study. The material discloses that the object with which the research activity is undertaken by PRL is to obtain knowledge for the benefit of the Department of Space. Its object is not to render services to others nor in fact it does so expect in an indirect manner. 13. It is nobody's case that PRL is engaged in an activity which can be called business trade or manufacture. Neither from the nature of its organisation nor from the nature and character of the activity carried on by it, it can be said to be an `undertaking' analogous to business or trade. It is not engaged in a commercial industrial activity and it cannot be described as an economic venture or a commercial enterprise as it is not its object to produce and distribute services which would satisfy wants and needs of the consumer community. It is more an institution discharging Governmental functions and a domestic enterprise than a commercial enterprise. We are, therefore, of the opinion that PRL is not an industry even though it is carrying on the activity of research in a systematic manner with the help of its employees as it lacks that element which would make it an organisation carrying on an activity which can be said to be analogous to the carrying on of a trade or business because it is not producing and distributing services which are intended or meant for satisfying human wants and needs, as ordinarily understood." (Emphasis supplied) 15. Thus, in the said case specific evidence regarding the nature and range and scale of activities was placed on record and was taken into account for determining the status and character of the institute. 16. Likewise, in the decision in case of Central Agricultural Research Institute & Anr. Thus, in the said case specific evidence regarding the nature and range and scale of activities was placed on record and was taken into account for determining the status and character of the institute. 16. Likewise, in the decision in case of Central Agricultural Research Institute & Anr. v. Presiding Officer, Labour Court & Ors., 1998 Labour & Industrial Cases 1490 on which the learned Labour Court has placed reliance, Hon'ble Apex Court took into consideration the nature of the activities of the institute. 17. Whereas in present case, any evidence was not recorded with reference to the nature and range of petitioner's activities and without considering the nature and range of activities of the opponent - institute, the learned Labour Court rejected the reference. Therefore, the decision cannot be sustained and the said decision deserves to be set aside. 18. For the purpose of determination of the issue as to whether the opponent institute, in light of the nature and range of its activities, would come within purview of the term "industry" in light of the nature of its activities, the case is required to be remanded. 19. Further, the case is required to be remanded to the learned Labour Court also for the reason that if on proper examination of the relevant evidence, the Court comes to the conclusion that the opponent institute would come within purview of the term "industry" then the allegations by the petitioner with regard to his termination will have to be examined on merits. 20. For the aforesaid reasons, the impugned award is set aside and the case is remanded to the learned Labour Court for re-consideration. The learned Labour Court shall allow the parties to place on record appropriate evidence with regard to the nature of activities of the institute and after considering the evidence about the activities of the institute, the learned Labour Court will decide the issue afresh in accordance with law and on merits. 21. It is clarified that this Court has not expressed any view or opinion with regard to the institute i.e. as to whether it would come within purview of the term "industry" or not. The learned Labour Court shall decide the said aspect independently on the basis of the evidence available on record in accordance with law. With the aforesaid directions, present petition is partly allowed. Rule is made absolute to the aforesaid extent.