Himachal Pradesh High Court
Decided On: 25.06.2025 vs Secretary on 25 June, 2025
Author: Ajay Mohan Goel
Bench: Ajay Mohan Goel
2025:HHC:19797-DB
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
CWP No.6245 of 2012
Decided on: 25.06.2025
Sarvjeet Singh & others ... Petitioners
.
Versus
Secretary, Gram Panchayat, Dharampur,
District Solan, H.P. ... Respondent
Coram
Hon'ble Mr. Justice Ajay Mohan Goel, Judge.
Whether approved for reporting?1Yes
____________________________________________________ _
For the petitioners : Mr. Anuj Gupta, Advocate.
For the respondent : Mr. Rajeev Sood, Advocate.
Ajay Mohan Goel, Judge (Oral)
By way of this writ petition, the petitioners have assailed Award dated 24.01.2012, passed by learned Presiding Judge, Industrial Tribunal-cum-Labour Court, Shimla, H.P., in Reference No.72 of 2007, titled as Sarvjeet Singh & others Versus Pradhan/ Secretary, Gram Panchayat, Dharampur, District Solan, H.P., in terms whereof, the Reference made by the appropriate Government, was decided as under:-
"In the result, the Reference is answered in negative and as such the petitioners are not entitled to any relief as claimed. Let a copy of this award be sent to the appropriate government for publication in official gazette. File, after completion, be consigned to records."
2. Brief facts necessary for the adjudication of the present petition are that the appropriate Government forwarded the following Reference to learned Labour Court for adjudication:-
"Whether the termination of services of S/Shri Sarvjeet Singh S/o Shri Jasmer Singh, Devinder 1 Whether reporters of the local papers may be allowed to see the judgment?::: Downloaded on - 30/06/2025 21:16:28 :::CIS 2
2025:HHC:19797-DB Chand S/o Shri Gopal Chand, Ramesh Kumar S/o Shri Mohan Lal Devki Nandan S/o Shri Narain Dass workmen by the Pradhan/Secretary, Gram Panchyat them chargesheet and without holding any domestic .
enquiry and without complying with the provisions of the Industrial Disputes Act, 1947 is proper and justified? If not, what relief of service benefits and amount of compensation, the above aggrieved Shimla-- workmen are entitled to?"
3. The case of the workmen/claimants (hereinafter to be referred as "the claimants") before learned Labour Court was that they were engaged as Tax Collectors against permanent posts on different dates in between the years 1989 to 1992 and their services were terminated by resorting to Hire and Fire Policy on 31.05.2005. According to the claimants, their services were terminated so that work could be awarded to a Contractor, which was being done by them. According to the claimants, as they had put in more than 240 days in each calendar year and even in the last 12 months preceding the date of their illegal termination, same was in violation of the provisions of the Industrial Disputes Act. As per the claimants, their services stood terminated without any inquiry etc.
4. The respondent denied the claim of the claimants. As per the respondent, the claimants were engaged as Tax Collectors on casual basis and there was no separate Tax Department in the Gram Panchayat concerned. It was also the contention of the respondent that the provisions of the Industrial Disputes Act were not applicable to it as it was a Statutory Body. It was denied that any ::: Downloaded on - 30/06/2025 21:16:28 :::CIS 3 2025:HHC:19797-DB Hire and Fire Policy was being adopted by the respondents. As per the respondents, it had served a Notice of termination upon the claimants for non performance of their duties, which was never .
replied by them and therefore, the claim was not maintainable. It was also the stand of the respondents that the Gram Panchayat is not an industry and therefore, it was not amiable to the jurisdiction of the Industrial Disputes Act. It was further the stand of the employer that the work of the claimants was never up to the mark and they misconducted tothemselves in the course employment and misappropriated the money collected by them for their personal gains. According to the respondent, there was no of their occasion for the respondents to hold any inquiry in the matter, for the reason that when the claimants did not respond to any Show Cause Notice, it amounted to admission of the contents of the Show Cause Notice.
5. On the basis of pleadings of the parties, learned Labour Court framed the following Issues:-
"1. Whether the termination of services of petitioners by the Pradhan/Secretary of respondent Gram Panchyat w.e.f. 31.5.2005 without serving them chargesheet, without holding any domestic enquiry and without complying the provisions of I.D act, 1947 is improper and unjustified as alleged? OPP
2. If issue no.1 proved, to what relief of service benefits and amount of compensation, the petitioners are entitled to? OPP
3. Whether the claim is neither competent nor ::: Downloaded on - 30/06/2025 21:16:28 :::CIS 4 2025:HHC:19797-DB maintainable? OPR
4. Whether this Court has no jurisdiction to try and determine this reference as alleged? OPR
5. Whether the respondent is not an industry as .
alleged? OPR
6. Relief."
6. On the strength of the evidence led by the parties in support of their respective contentions, the Issues were decided by learned Labour Court, as under:-
"Issue No.1 No
Issue No.2 Not entitled to any relief
Issue No.3 Yes
Issue No.4 Yes
Issue No.5 No
Relief Reference answered in negative per
operative part of award"
7. While deciding Issue No.1, learned Labour Court held that in terms of the judgment of Hon'ble Supreme Court in Bangalore Water Supply & Sewerage Versus A. Rajappa and Others, (1978) 2 Supreme Court Cases 213, as tax collection could not be regarded as an undertaking analogous to trade or business and as tax collection was not organized or arranged in a manner in which trade or business is generally organized or arranged, therefore, the function or the duty being performed by the claimants was a sovereign function entrusted to the Gram Panchayat by the Lagislature in exercise of the power vested under the Constitution of India as the tax so collected was to be spent on welfare activity and therefore, it could not be held that the job being performed by the ::: Downloaded on - 30/06/2025 21:16:28 :::CIS 5 2025:HHC:19797-DB claimants was a systematic activity whereby there was cooperation of employee and employer who associate together to render material service to the public. On these basis, learned Labour Court held that .
the activity of tax collection performed by the claimants was not covered under the definition of Industrial Disputes Act as the Panchayat, by authorizing the claimants to collect the tax was just performing sovereign function. Learned Labour Court answered the Reference by holding that as the claimants were not workmen, therefore, they are not entitled for the relief claimed for.
8. Feeling aggrieved, the claimants/petitioners have filed this petition.
9. Learned counsel for the petitioners vehemently argued that the findings returned by learned Labour Court are not sustainable in law. He submitted that the duty being performed by the claimants was that they were engaged to collect money from the persons who were parking their Cars in a Parking Lot belonging to the Panchayat. He submitted that dehors the name given to this mode of collection of amount or the nomenclature attached with the engagement of the petitioners, the same by no stretch of imagination could be termed to be 'sovereign function' being performed by the Panchayat. He submitted that a 'sovereign function' is which only a sovereign can perform, whereas the Parking Lots and charging fee for allowing the vehicles to stand thereupon was a business activity which could be carried out by anyone. Learned counsel argued that the judgment of Hon'ble Supreme Court was completely ::: Downloaded on - 30/06/2025 21:16:28 :::CIS 6 2025:HHC:19797-DB misconstrued by learned Labour Court and it erred in not appreciating that no sovereign function was being performed either by the Panchayat or by the petitioners in the course of collection of .
parking fee and as this extremely important aspect of the matter was ignored by learned Labour Court, therefore, the Award passed by it deserves to be quashed and set aside. Learned counsel further submitted that the findings returned by learned Labour Court that the claimants were not workmen were wrong findings and learned the respondent-Panchayat r to Labour Court erred in not appreciating that as it was the stand of that the claimants were misconducting themselves and a Show Cause Notice was also issued allegedly to them, it was incumbent upon the respondent to have held a domestic inquiry in accordance with law and the respondent having failed to do so is liable to re-engage the petitioners from the date of disengagement with all consequential benefits.
10. On the other hand, learned counsel for the respondent- Gram Panchayat submitted that there is no infirmity with the Award passed by learned Labour Court. Learned counsel submitted that it was the own case of the petitioners that they were appointed as Tax Collectors. Learned counsel submitted that once the petitioners themselves took the stand that they were Tax Collectors, now they cannot be permitted to rescind from this stand of theirs. Learned Counsel drew the attention of the Court to Section 100 (3) of the Panchayati Raj Act, 1994 and submitted that in terms of sub-section (3) of Section 4, the Panchayat was empowered to levy certain fees at ::: Downloaded on - 30/06/2025 21:16:28 :::CIS 7 2025:HHC:19797-DB such rates and in such manner as it deemed fit in the Panchayat area and this inter alia included service fee for parking of vehicles. Learned counsel submitted that as the claimants were engaged for .
this particular purpose which was a 'sovereign function' being performed by the Gram Panchayat as has been rightly held by learned Labour Court, therefore, as there is no merit in the present petition, the same be dismissed. Learned counsel also referred to Rule 137 of the Panchayati Raj Rules and by placing reliance thereupon, he submitted that otherwise also, if the claimants were aggrieved by their termination, then they ought to have had approached the Authority concerned in terms of Rule 137 of the Panchayati Raj Rules and raising of industrial dispute neither was justified nor was maintainable.
11. I have heard learned counsel for the parties and have also carefully gone through the pleadings as well as the record of the case.
12. Few facts which are not in dispute are that the claimants were engaged by the respondent-Gram Panchayat for the purpose of collection of parking fee from those vehicle owners who parked their vehicles in the Parking Lot of the Gram Panchayat. This undisputedly was the purpose for which the claimants were engaged, though their nomenclature was that of a Tax Collector. Whereas, as per the claimants, they were appointed as Tax Collectors against permanent post, according to the Gram Panchayat, they were engaged as such on casual basis.
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2025:HHC:19797-DB
13. Be that as it may, it is the specific stand of the the Gram Panchayat that there is not Tax Department per se in the said Panchayat. In this backdrop, what this Court has to examine is as to .
whether the work which was being done by the claimants on behalf of the Panchayat, could be said to be a 'sovereign function' being performed by and for the Panchayat or not.
14. Before proceeding further, at this stage, it is necessary to refer to Section 2 (j) of the Industrial Disputes Act, which defines 'Industry'. The same reads as under:-
"Section 2(j)- Industry "means any business, trade, undertaking, manufacture or calling of employers and includes any calling service, employment, handicraft or industrial occupation or avocation of workmen."
15. In terms of Black's Law Dictionary, Sixth Edition, the word "sovereign' has been defined as under:-
"Sovereign. A person, body, or state in which independent and supreme authority is vested; a chief ruler with supreme power; a king or other rules in a monarchy."
16. In the said Dictionary, 'sovereign right' has been defined as under:-
"Sovereign right. A right which the state alone, or some of its governmental agencies, can possess, and which it possesses in the character of a sovereign, for the common benefit, and to enable it to carry out its proper functions; distinguished from such "proprietary"
rights as a state, like any private person, may have in property or demands which it owns."
17. Thus, the 'sovereign right' has been defined as a right ::: Downloaded on - 30/06/2025 21:16:28 :::CIS 9 2025:HHC:19797-DB which the State alone, or some of its Governmental Agencies can possess and which it possesses in the character of a sovereign, for the common benefit and to enable it to carry out its proper function;
.
distinguished from such 'proprietary' rights as a state, like any private person, may have in property or demand which it owns.
18. Now, in the backdrop of the definition of the word 'sovereign', if one peruses Section 100 of the Panchayati Raj Act, one finds that same, inter alia, empowers a Gram Panchayat to levy a tax, levy a duty, levy a cess and levy fees. Meaning thereby, that in terms of the provisions of Section 100 of the Act, the empowerment of a Gram Panchayat is to levy taxes which are different from duty, taxes and duty which are different from cess, taxes, duty and cess which are different from fee and fee which is different from all above other terms. Therefore, the words 'taxes, 'duty,' 'cess' and 'fee' not only have been used disconjuctively, but, they have to be also read as such, meaning thereby 'separate and distinct' from each other. Therefore, 'tax' is not 'fee' and 'fee' cannot be treated as a 'tax'.
19. As per Section 100 of the Panchayati Raj Act, one finds that the power conferred upon the Gram Panchayat therein, inter alia, is to levy property tax at such rates and in such manner as it may deem fit on residential commercial building in the Sabha area and it can also levy taxes on persons carrying on any profession, trade, calling an employment other than agriculture in Sabha area. For convenience, Section 100 of the Panchayati Raj Act is quoted hereinbelow:-
::: Downloaded on - 30/06/2025 21:16:28 :::CIS 10
2025:HHC:19797-DB "100. Levy of taxes, duty, cess and fees by Gram Panchayats.--
(1) A Gram Panchayat may, through a resolution and after previous publication, levy property tax at .
such rates and in such manner as it may deem fit on residential and commercial buildings in the Sabha area:
Provided that property tax levied under this sub-
section shall be payable by the owner of such building. (2) Subject to such maximum rates as the Government may fix and the provisions of the rules made under this Act or any order made by the Government in this behalf, a Gram Panchayat may levy,-
r (a) with the previous approval of the Government, a tax on persons carrying on any profession, trade, calling and employment other than agriculture in the Sabha area; provided such tax has not been levied in the Sabha area by any other local authority under any law for the time being in force;
(b) if so authorized by the Government, a duty on transfer of property in the form of a surcharge on the duty levied under the Indian Stamp Act, 1899, in its application to Himachal Pradesh, on instruments of sale, gift and mortgage with possession of immovable property situated in the Sabha area at such rate as may be fixed by the Government not exceeding two per cent on, as the case may be, the amount of the consideration, the value of the property or the amount secured by the mortgage, as set forth in the instrument; and
(c) if so authorized by the Government, any other ::: Downloaded on - 30/06/2025 21:16:28 :::CIS 11 2025:HHC:19797-DB tax, duty or cess which the Legislative Assembly of Himachal Pradesh has power to levy: Provided that if the Gram Panchayat fails to levy the tax, duty or cess, the Government may take .
necessary steps to levy it and the tax, duty or cess so levied shall be deemed to have been levied by the Gram Panchayat:
Provided further that the Government may at any time withdraw the authorisation under clause (b) or clause (c) whereupon the tax, duty or cess shall cease to be levied.
(3) A Gram Panchayat may, through a resolution and after previous publication, levy following fees at such rates and in such manner as it may deem fit in the Sabha area, namely:--
(i) teh-bazari from the shop-keepers in fairs;
(ii) service fee for cleaning of streets, lighting of streets, sanitation, solid and liquid waste management, parking of vehicles, as the case may be ;
(iii) fee for registration of animals sold in the Sabha area; and
(iv) water rate where water is supplied by the Gram Panchayat."
20. What sub-section (3) of Section 100 envisages is that the Gram Panchayat may through a Resolution after previous publication levy, inter alia, fees at such rate and in such manner as it deemed fit in Sabha area for parking of vehicles. Therefore, what is being charged by the Panchayat for parking of vehicles in Sabha area is 'fee' and not 'taxes'.
21. As per the Black's Law Dictionary, the word 'fee' is ::: Downloaded on - 30/06/2025 21:16:28 :::CIS 12 2025:HHC:19797-DB defined as under:-
"Fee. A charge fixed by law for services of public officers or for use of a privilege under control of .
government. Fort Smith Gas Co. v. Wiseman, 189 Ark.
675, 74 S.W.2d 789, 790. A recompense for an official or professional service or a charge or emolument or compensation for a particular act or service. A fixed charge or perquisite charged as recompense for labor; reward, compensation, or wage given to a person for performance of services or something done or to be done."
Similarly, the word 'tax' is defined as under:-
"Tax. A charge by the government on the income of an individual, corporation, or trust, as well as the value of an estate or gift. The objective in assessing the tax is to generate revenue to be used for the needs of the public.
A pecuniary burden laid upon individuals or property to support the government, and is a payment exacted by legislative authority. In re Mytinger, D.C.Tex., 31 F.Supp. 977, 978, 979. Essential characteristics of a tax are that it is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority. Michigan Employment Sec. Commission v. Patt, 4 Mich. App. 228, 144 N.W.2d 663, 665. Annual compensation paid to government for annual protection and for current support of government. Alabama Pow-er Co. v. Federal Power Commission, C.C.A.5, 134 F.2d 602, 608. A ratable portion of the produce of the property and labor of the individual citizens, taken by the nation, in the exercise of its sovereign rights, for the support of government, for the administration of the laws, and as the means for continuing in operation the various ::: Downloaded on - 30/06/2025 21:16:28 :::CIS 13 2025:HHC:19797-DB legitimate functions of the state. An enforced contribution of money or other property, assessed in accordance with some reasonable rule or apportionment by authority of a sovereign state on .
persons or property within its jurisdiction for the purpose of defraying the public expenses.
In a general sense, any contribution imposed by government upon individuals, for the use and service of the state, whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name. And in its essential characteristics is not a debt. City of Newark v. Jos. Hollander, Inc., 136 N.J.Eq. 539, 42 A.2d 872, 875. "
22. Thus, in this backdrop, fact of the matter remains that though the petitioners might have been engaged by assigning them the nomenclature of a Tax Collector, but for all intents and purposes, they were just collecting fee for the parking of vehicles in Gram Panchayat areas, which fee was imposed by the Panchayat in terms of provisions of sub-section (3) of Section 100 of the Panchayati Raj Act.
23. This activity undertaken by the Gram Panchayat of charging fee for the purpose of parking of vehicles in Sabha area, in the considered view of this Court, cannot be termed to be a 'sovereign function'. This is for the reason that whereas on one hand a sovereign function can only be performed by a sovereign and none else, for example, levy of property tax etc., the collection of fee for parking of vehicles can be undertaken even by a private individual.
24. That being the case, this kind of activity being ::: Downloaded on - 30/06/2025 21:16:28 :::CIS 14 2025:HHC:19797-DB undertaken by the Panchayat cannot be termed to be sovereign activity simply for the reason that the Gram Panchayat is a Statutory Functionary. This extremely important aspect of the matter has not .
been appreciated by learned Labour Court while answering the Reference. Learned Labour Court erred in not appreciating that as the collection of fee for the parking of vehicles was not per se collection of taxes, therefore, the judgment of Hon'ble Supreme Court in Bangalore Water Supply & Sewerage Versus A. Rajappa and
25.
r to Others (supra) was not at all attracted in the facts of the present case.
Thus, the findings returned by learned Labour Court to the effect that the petitioners were not workmen, are perverse findings. In fact, if these findings of learned Labour Court are upheld, then no Class-IV employee engaged by functionaries like Municipal Corporations, Municipal Councils or Gram Panchayats, if aggrieved by his or her illegal termination or discharge etc. can invoke the provisions of the Industrial Disputes Act in the garb of a 'sovereign function' being performed by said entities. Every action of such like entities cannot be termed to be a 'sovereign function' and whether or not, in the facts of a case, it can be said that the function relatable to the dispute is a 'sovereign function' or not, would depend upon the facts of said case.
26. At this stage, it is necessary to refer to the judgment of Hon'ble Supreme Court of India in Balmer Lawrie & Company Limited and Others Versus Partha Sarathi Sen Roy and Others, (2013) ::: Downloaded on - 30/06/2025 21:16:28 :::CIS 15 2025:HHC:19797-DB 8 Supreme Court Cases 345, in which judgment Hon'ble Supreme Court after referring to its earlier judgment has been pleased to reiterate as to what are sovereign functions. Relevant paras thereof .
are being quoted hereinbelow:-
"18. Often, there is confusion when the concept of sovereign functions is extended to include all welfare activities. However, the court must be very conscious whilst taking a decision as regards the said issue, and must take into consideration the nature of the body's powers and the manner in which they are exercised. What functions have been approved to be sovereign are, the defence of the country, the raising of armed forces, making peace or waging war, foreign affairs, the power to acquire and retain territory etc. and the same are not amenable to the jurisdiction of ordinary civil courts. (Vide: N. Nagendra Rao & Co. v. State of A.P., AIR 1994 SC 2663; and Chief Conservator of Forests & Anr. v. Jagannath Maruti Kondhare etc.etc., AIR 1996 SC 2898).
19. In Bangalore Water Supply & Sewerage Board v. A. Rajappa & Ors., AIR 1978 SC 548, this Court dealt with the terms "Regal" and "Sovereign" functions, and held that such terms are used to define the term "governmental" functions, despite the fact that there are difficulties that arise while giving such a meaning to the said terms, for the reason that the government has now entered largely the field of industry. Therefore, only those services, which are governed by separate rules and constitutional provisions such as Articles 310 and 311, should strictly speaking, be excluded from the sphere of industry by necessary implication.
20. Every governmental function need not be sovereign. State activities are multifarious. Therefore, a scheme or a ::: Downloaded on - 30/06/2025 21:16:28 :::CIS 16 2025:HHC:19797-DB project, sponsoring trading activities may well be among the State's essential functions, which contribute towards its welfare activities aimed at the benefit of its subjects, and such activities can also be undertaken by private .
persons, corporates and companies. Thus, considering the wide ramifications, sovereign functions should be restricted to those functions, which are primarily inalienable, and which can be performed by the State alone. Such functions may include legislative functions, the administration of law, eminent domain, maintenance of law and order, internal and external security, grant of pardon etc. Therefore, mere dealing in a subject by the State, or the monopoly of the State in a particular field, would not render an enterprise sovereign in nature. (Vide:
Agricultural Produce Market Committee v. Ashok Harikuni & Anr, State of U.P. v. Jai Bir Singh, (2005) 5 SCC 1; Assam Small Scale Ind. Dev Corporation Ltd. & Ors. v.
M/s. J.D. Pharmaceuticals & Anr., and Haryana State Industrial Development Corpn. v. Hari Om Enterprises."
27. Accordingly, in the light of above discussion, this writ petition is allowed. Award dated 24.01.2012, passed by learned Presiding Judge, Industrial Tribunal-cum-Labour Court, Shimla, H.P., in Reference No.72 of 2007, titled as Sarvjeet Singh & others Versus Pradhan/ Secretary, Gram Panchayat, Dharampur, District Solan, H.P., is quashed and set aside and the matter is remanded back to learned Labour Court for adjudication afresh on merit. As far as the submissions of learned counsel for the respondent that the petitioners ought to have had invoked the provisions of Rules 137 of the Panchayati Raj Rules, all that this Court can observe is that as these are points which still can be agitated by the respondent ::: Downloaded on - 30/06/2025 21:16:28 :::CIS 17 2025:HHC:19797-DB before learned Labour Court, therefore, this Court is not making any observation on it. It is clarified that this Court has not made any observation as far as the merit of the respective case of the parties .
are concerned and learned Labour Court shall answer the Reference uninfluenced by the observations made by this Court in this petition.
28. The petition stands disposed of. Pending miscellaneous application(s), if any also stand disposed of accordingly.
June 25, 2025
r to (Ajay Mohan Goel)
Judge
(Rishi)
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