Madras High Court
The Management vs Inspector Of Labour on 1 June, 2023
Author: S.Srimathy
Bench: S.Srimathy
W.P.(MD)No.9322 of 2014
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
RESERVED ON : 12.01.2023
PRONOUNCED ON : 01.06.2023
CORAM
THE HONOURABLE MRS.JUSTICE S.SRIMATHY
W.P.(MD)No.9322 of 2014
and
M.P.(MD)No.1 of 2014
The Management,
Cotton Research Station,
Tamil Nadu Agricultural University,
Srivilliputhur,
Virudhunagar District. ... Petitioner
vs.
1.Inspector of Labour,
(Authority under Tamilnadu conferment
of permanent status act 1981),
Labour Department,
Virudhunagar.
2.V.Gurusamy ... Respondents
PRAYER: Writ Petition filed under Article 226 of the Constitution of India for
issuance of Writ of Certiorari, to call for the records relating to the proceeding of
the 1st respondent passed in Na.Ka.No.27/2012-6, dated 31.01.2014 and to quash
the same.
1/43
https://www.mhc.tn.gov.in/judis
W.P.(MD)No.9322 of 2014
For Petitioner : Mr.S.Kadarkarai
For R2 : Mr.S.M.Mohan Gandhi
ORDER
This Writ Petition is filed for issuance of a Writ of Certiorari, to quash the impugned proceeding of the 1st respondent, dated 31.01.2014. The 2nd respondent has filed a petition before the 1st respondent under Conferment of Permanent Status Act, 1981 and the same was allowed. Aggrieved over the same, the present writ petition is filed.
2. The contention of the petitioner is that the petitioner institution is Cotton Research Station, engaged in developing cotton seeds for the invention of new hybrid crop varieties and new agricultural technologies and extension of such research finding to the farmers through Government Department. The petitioner research station is a constituent unit of the Tamil Nadu Agricultural University, Coimbatore, which has been established and governed by the Special Act called Tamil Nadu Agricultural University Act, 1971, enacted by the Legislature of the State of Tamil Nadu and the Statutes and Regulations framed thereunder. The petitioner institute has regularly appointed employees for 2/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 attending regular farms operations. The 2nd respondent was engaged as agricultural casual laborers on and off, as and when contingencies and exigencies arose in the seasonal agricultural operations in research fields. The engagement of agricultural casual labourers is only sporadic and the agricultural casual labourers who seek work in the petitioner research station is engaged in required number on need basis and on day-to-day basis subject to availability of work, climatic conditions, nature of work, fund availability for this purpose etc., and they are not engaged continuously. The 2nd respondent was originally engaged as a daily wager in the year 1982 and he is not engaged for a continuous period of 280 days for 4 years till 1985 and he was never treated as a regular employee in the petitioner's research station. Thereafter he has not turned for work till 1996. Thereafter. The 2nd respondent approached the Labour Court seeking continuous job with backwages from the year 1988. The Labor Court passed an award, dated 13.07.2009, to the effect that directing the petitioner herein to take back the 2nd respondent as a casual labour without any backwages. As per the said direction of the Labour Court, the petitioner engaged the 2nd respondent as a daily wager from 10.02.2010 and now he is working as a casual labour. Thereafter, the 2 nd respondent and other six persons filed applications before the 1st respondent 3/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 seeking Conferment of Permanent Status in the petitioner institution and contended that they are continuously working for more that 480 days.
3. The further contention of the petitioner institution is that the University adopts a Selection policy by interviewing eligible candidates and recruits suitable candidates to fill-up vacancies. But the agricultural casual labourers are not recruited and appointed against any sanctioned posts. Therefore, the petitioner herein resisted the petition by filing detailed counter and additional counter statements wherein a specific plea was raised that the Tamil Nadu Agricultural is not an establishment under Shops and Establishments Act as held by this Court. Further as per section 4 of the Tamil Nadu Agricultural University Act, the objects of the University are to impart Education in different branches of Agricultural and allied sciences. It is not a factory or plantation or an establishment and therefore, the petitioner institute is not an industrial establishment under Tamil Nadu Industrial Establishment (Conferment Permanent Status to Workmen) Act, 1981. It is not an establishment notified by the Government under Shops and Establishments Act. Further, the petitioner institution is not a plantation and not registered under Plantation Labour act. The 4/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 2nd respondent is an agricultural coolie (casual laborers) and engaged on daily wages. Since these factors are not considered by the 1 st respondent while passing the impugned order, the present writ petition is filed.
4. The 2nd respondent has filed written arguments stating that the petitioner establishment is not only involved in research but also doing business of sales of its products viz., Cotton, Paddy and oil seeds etc., and the 2nd Respondent has also proved that the above said sales by documentary evidences and the 1st respondent has examined the relevant documents and rendered a finding that the petitioner establishment is an Industrial establishment under section 2(6) of Tamilnadu Shops and Establishments Act, 1947. The 2nd Respondent has worked more than 480 days continuously as a full-time daily wage employee in the petitioner's establishment and the 1st respondent has also verified the records and has come to the conclusion that the 2nd respondent has worked from June 1984 and has completed the statutory period of 480 days. The petitioner establishment has not filed any valid evidences to support their case and not filed any valid evidences to disprove the said completion of 480 days of continuous work. Moreover, Educational Institutions are running under profit motive then they come under 5/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 Industry as held in Bangalore Water Supply case. The petitioner institution indulges in commercial activities by selling the cotton, paddy, oil seeds and hence they come under the definition of Industry under Industrial Dispute Act. The respondents relied on several judgments and submitted that the petitioner institution is “industry” and covered under the relevant Acts, therefore prayed to dismiss the writ petition.
5. Heard Mr.S.Kadarkarai, learned Counsel appearing for the petitioner and Mr.S.M.Mohan Gandhi, learned Counsel appearing for the 2nd respondent and perused the records.
6. The learned Counsel appearing for the petitioner relied on the judgment rendered by this Court in the case of the Secretary Kovilpatti Agricultural University Workers Union, which is another division of Agricultural University. The case is reported as the Management, Agricultural University Vs. Commissioner of Labour and another reported in 1999 (1) CTC 75, wherein it has been held as under:
6/43
https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 “5. It is not in dispute that the Research Station was formerly run by the State Government, and that it was handed over to University, after the University, namely, the Tamil Nadu Agricultural University Act 1971. The principal work done in the Research Station is research in agriculture that, the crops grown on the land of the Research station, as also the cattle maintained there are for purpose connected with research, is not in dispute. It is also not disputed that the portion of the crop raised which is surplus to the requirements of the Station is sold and that the milk produced is also sold. According to the petitioner, it is sold to the employees while the respondents contend that some of it are also sold to the outsiders. The income realized by the sale of milk is less than 5% of the total amount expended on the Research station. The university has filed into court a statement showing the budget of the Station as also the details of the amounts realized from the sale of milk as also other income.
6. The persons employed in the Research Station are agricultural scientists as also skilled and unskilled labour for performing the works of the land and for the maintenance of the cattle population in the Research Station.
....
15. Section 31 of the Act requires the Government every year to make non- lapsable lump sum grants to the University. The grants so made shall not be less than the expenditure which had been incurred on the activities of the institution which had been transferred to the University. The Finance Committee provided for in Section 32, is required to have two of the ex- officio members of the Government, the Secretary to Government, Agricultural Department and the Secretary Government, Finance Department as its members.
16. Section 33 of the Act provides that the annual accounts shall be submitted to the Government and the Government in turn is required to place the same before both Houses of Legislature.
17. Section 49 requires the submission of the annual report to the Government, which report is to be placed before the Legislature. 7/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014
18. By Section 53 of the Act, the Government is empowered to amend the schedule to the Act or omit any college or institution specified in the schedule.
19. These provisions of the Act indicate the abundance of power conferred on the Government in relation to the affairs of the University. The Governor of the State besides being the Chancellor has power to annul any decision of the University in certain circumstances. He is the authority who appoints all the members of the Board of Management excluding 3. The Board comprises of number of officers of the Government, who hold their position in the Board ex-officio. Two of them are also to be members of the Finance Committee. The Government may at any time, inquire into any matte concerning the University and give direction which the University is bound to obey. The money required for meeting the expenses of the University is to be provided to the substantial extent by the Government
20. These provisions of the Act show that the University though a statutory body and autonomous within the frame work of the Act is an establishment, which is under the State.
21. The Supreme Court in the case of C.V. Raman v. Bank of India, 1988 (2) L.L.J. 423 had occasion to consider Section 4(1)(c) of the Act. The court, after examining the provisions of the State Bank India Act and the Banking Companies Act held that the banks constituted under those enactment though possessed of corporate personality and autonomous within the frame work of the state were establishments "under" the State. The court therein pointed out that word "under" does mean that it should be a Department of the Government and if the Government had deep a pervasive control over the establishment even though such establishment had a juristic persona of its own, such an establishment will still be one under the Government.” 8/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014
7. The aforesaid judgment further relied on the AIR India Statutory Corporation etc. Vs. United Labour Union and other reported in 1997 (1) LLJ 113 wherein it has been exhaustively dealt with the question as to when autonomous juristic entity which is an agent or instrumentality or the State is to be regarded as functioning under Government. Hence, the Act is not applicable to the University. After discussing the provisions of the Agricultural University Act, 1971 the Learned Single Judge has held as under:
“From the above discussion, the following principles would emerge;
(1) The constitution of the Corporation or instrumentality or agency or corporation aggregate or Corporation sole is not of sole material relevance to decide whether it is by or under the control of the appropriate Government under the Act.
(2) If it is a statutory Corporation, it is an instrumentality agency of the state. If it is a company owned wholly or partially by a share capital, floated from public exchequer, it gives indices that it is controlled by or under the authority of the appropriate Government (3) In commercial activities carried on by a corporation established by or under the control of the appropriate Government having protection under Articles 14 and 19(2) it is an instrumentality or agency of the State.
(4) The State is a Service Corporation. It acts through instrumentalities, agencies or personal natural or jurisdictional. (5) The governing power, wherever located, must be subject to the fundamental constitutional limitations, and abide by the principles laid in the Directive Principles.9/43
https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 (6) The frame work of service regulation made in the appropriate rules or regulations should be consistent with and subject to the same public law principles and limitations.
(7) Though the instrumentality, agency or person conducts commercial activities according to business principles and are separately accountable under their appropriate bye-laws or Memorandum of Association they become the arm of the Government. (8) The existence of deep and pervasive state control depends upon the facts and circumstances in a given situation and in the altered situation it is not the sole criterion to decide whether the agency or instrumentality or persons is by or under the control of the appropriate Government.
(9) Functions of an-instrumentality, agency or person are of Public importance following public interest element.
(10) The instrumentality, agency or person must have an element of authority or ability to effect the relations with its employees or public by virtue of power vested in it by law, memorandum of association or bye-laws or articles of association.
(11) The instrumentality, agency or person render an element of public service and is accountable to health and strength of the workers, men and workmen, adequate means of livelihood, the security for payment of living wages, reasonable condition of work, decent standard of life and opportunity to enjoy Full- latered and social and cultural activities to the workman.
(12) Every action of public authority, agency or instrumentality or the person acting in public interest or any act that gives rise to public element should be guided by public interest in exercise of public or action hedged with public element and is open to challenge. It must meet the test of reasonableness, fairness and justness. (13) If the exercise of the power is arbitrary, unjust and unfair, the public authority, instrumentality agency or the person acting in public interest, though in the filed of private law, is not free to prefer be any unconstitutional conditions or limitations in their actions." 10/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014
23. If the functions of the instrumentality or agency one of public importance, with a public interest element, and there exists deep and pervasive state control, such an establishment should be regarded as one under the Government. Though the apex Court in that case was concerned with the provisions of the Contract Labour (Regulation and abolition) Act as also of the Industrial Disputes Act, and the discussion was in relation to the juristic entities constituted under the provisions of the Companies Act, which are capable of being regarded as agents or instrumentalities of the State it is clear therefore, that the word "under" used in an enactment in relation to the establishments under the Government is to be construed liberally.
24. The Commissioner of Labour was therefore, in error in holding that the Tamil Nadu Shops and Establishments Act is applicable to the University. The University being one under the State Government is exempt from the provisions of the Act under section 4(1)(c). Having regard to this conclusion I do not consider it necessary to examine other aspects of the case considered by the commissioner of Labour, which has been done on the erroneous basis that the Act is applicable. The impugned order of the Commissioner cannot be sustained and the same is set aside. The writ petition is allowed. In view of the disposal of the main writ petition, W.M.P. No.10393 of 1988 is dismissed. The Learned Counsel for the petitioner submitted since in the petitioner’s own case (the only difference is the aforesaid judgment rendered in Kovilpatti Unit but in the present case is Srivilliputtur Unit) the Learned Single Judge has exhaustively dealt with the issue, the same is applicable to the present case also. Hence the Learned Counsel for the petitioner submitted that the issued is covered in the above judgment and prayed to allow the writ petition. 11/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014
8. The contention of the 2nd respondent is that the Judgment reported in 1998 (1) LLN 717 (Agricultural Research Station, Tamil Nadu Agricultural University, Velayuthapuram, Kovilpatti Vs. Commissioner of Labour, Madras and another) was distinguished in the subsequent order of this Court in W.P. (MD)No.10691 of 2007, dated 19.07.2011 [The Management, Agricultural College and Research Institute, Tuticorin District Vs. The Inspector of Labour, Tuticorin and others). In an identical case rendered in W.P.No.3359 of 2009, it was held that the Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1981, applies to the Tamil Nadu Agricultural University. The above said view has been followed by this Court in judgment, dated 02.09.2022, in W.P.(MD)Nos. 9317 to 9321 of 2014. Let us analyse the judgment of each case one by one.
9. Firstly the Learned Counsel for the 2nd respondent relied on the judgment rendered in W.P.No.3359 of 2009, wherein the Learned Single Judge had relied on the Judgment of Bangalore Water Supply and held that even Educational Institutions are covered under the Industrial Disputes Act. The Learned Single Judge had further held that the University is covered under Payment of Gratuity 12/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 Act, Employees Provident Fund Act then the same would come under the purview of Shops and Establishment Act. The Learned Single Judge further held that the Payment of Subsistence Allowance Act is applicable to the University, therefore the petitioner would come under the definition of Industry. This Court is of the considered opinion that such proposition cannot be taken to determine whether the petitioner research institute is an industry, since each Act has different definition and different purpose. Moreover, even if an employee work for minimum numbers of days, then the employee would be entitled to provident fund. In such circumstances the other Acts as stated supra cannot be relied on to come to the conclusion that the petitioner research institution as industry.
10. The Learned Counsel for the 2nd respondent further relied on the judgments rendered in W.P.(MD)No.10691 of 2007, wherein the Court has held that “14. The contention of the Learned Counsel for the petitioner that the Tamil Nadu Shops and Establishment Act is not appliable to the respondent 2 to 19 therefore the order passed by the Learned Labour Court is bad in law, also cannot be sustained as definition of “industrial establishment” under the Establishment Act [i.e. Tamil Nadu Industrial Establishment (Conferment of Permanent Status to Workmen) Act, 1981] is mere comprehensive than the definition under the Tamil Nadu Shops and Establishment Act and hence the 13/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 industrial establishment under the Act would cover the petitioner university once it is held to be an industry.” This Court is of the considered opinion that the Learned Single Judge has held that Agricultural Research Institution is establishment under Shops and Establishment Act and if so then the Conferment of Permanent Status Act is applicable. This Court is of the considered opinion that the judgment cannot be relied on since the Learned Judge has not taken into consideration the definition stated in Shops and Establishment Act. It is seen aggrieved over the Learned Single Judge’s order, the Research Institute had filed writ appeal in W.A. (MD)No. 1235 of 2011, however the Hon’ble Division Bench has passed an order directing to regularise, since some of them were regularized, only few was left out. Hence the Hon’ble Division Bench directed to regularize the left-out employees. Since there is no ratio decidendi in the Hon’ble Division order this Court is of the considered opinion the same cannot be cited as precedent.
11. The Learned Counsel for the 2nd respondent relied on the judgement dated 02.09.2022 rendered in W.P.(MD)Nos.9317 to 9321 of 2014, 14/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 which had followed the judgments W.P.(MD)No.10691 of 2007, which was confirmed in W.A.(MD)No.1235 of 2011. Also followed the judgement rendered in W.P.No.3359 of 2009 and also followed the Bangalore Water Supply case. As stated supra the judgments rendered in the writ petitions in W.P.(MD)No.10691 of 2007 and W.P.No.3359 of 2009 cannot be relied on as precedent, therefore the judgment rendered in W.P.(MD)Nos.9317 to 9321 of 2014, which had relied on the aforesaid judgments can also be not relied on. Therefore the judgement rendered in aforesaid writ petitions cannot be relied on. Moreover, the sum and substance of the above judgment are that the Bangalore Water Supply had held that the Educational Institutions are also Industry, therefore the petitioner is also Industry. Even the Learned Counsel appearing for the 2nd respondent have relied on the Bangalore Water Supply case.
12. The Learned Counsel for the 2nd respondent contended that the judgment rendered in the case of Bangalore Water Supply and Sewerage Board, etc. and A.Rajappa and others, etc., reported in AIR 1978 SC 548 (equivalent citation 1978 (1) LJ 349) by Hon'ble Seven Member Bench of the Hon'ble 15/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 Supreme Court is applicable to the present case. The reference in the Bangalore Water Supply case is “In order that there should be a comprehensive, clear and conclusive declaration as to what is an “industry” under the Industrial Disputes Act as it now stands, this matter was placed before a larger bench of seven judges.” The Hon’ble Bench has considered whether (i) professions, (ii) clubs, (iii) educational institutions, (iv) co- operatives, (v) Research institutes, (vi) charitable projects and (vii) other kindred activities are industries and has held that if they fulfil the Triple Test, they cannot be exempted from section 2(j). Exemption to a restricted category like gurukulas, voluntary legal service clinics, similar voluntary service by doctors in their spare time also exempted. Also, the dominant nature test, whether the statutory body performing what is in essence regal functions by providing the basic amenities to the citizens is outside the scope of the definition ought to be tested. The relevant portion is extracted hereunder:
“Our endeavour in this decision is to provide such working principles. This Court, within a few years of the enactment of the salutary statute, explained the benign sweep of 'industry' in Banerji which served' as 16/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 beacon in later years Ahmedabad Textile Research acted on it, Hospital Mazdoor Sabha and Nagpur Corporation marched in its sheen. The law shed steady light on industrial inter-relations and the country's. tribunals and courts settled down to evolve a progressive labour jurisprudence, burying the bad memories of laissez faire and bitter struggles in this field and nourishing new sprouts of legality fertilised by the seminal ratio in Banerji Indeed, every great judgment is not merely an adjudication of an existing lis but an appeal addressed by the present to the emerging future. And here the future responded, harmonising with the human escape hopefully projected by Part IV of the Constitution. But the drama of a nation's life, especially when it confronts die-hard forces, develops situations of imbroglio and tendencies to back-track. And Law quibbles where Life wobbles. Judges only read signs and translate symbols in the national sky. So ensued An era of islands of exception dredged up by judicial process. Great clubs were privileged out, liberal professions swam to safety, educational institutions, vast and small, were helped out, divers charities, ,disinclined to be charitable to their own weaker workmen, made pious pleas and philanthropic appeals to be extricated. A procession of decisions Solicitors' case, University of Delhi, Gymkhana Club, Cricket 'Club of India (supra) Chartered Accountants(1) climaxed by Safdarjung, carved out sanctuaries. The six-member bench-the largest which sat on this court conceptually to reconstruct 'industry', affirmed and reversed, held profit motive irrelevant but upheld charitable service ,as exemptive, and in its lights and shadows, judicial thinking became ambivalent and industrial jurisprudence landed itself in a legal quagmire. Pinjrapoles sought salvation and succeeded in principle (.Bombay Panjrapole), Chambers of, Commerce fought and failed, hospitals battled to victory (Dhanrajgirji Hospital), standards institute made a vain bid to extricate (I.S.I. Case), research institutes,. at the High Court level, waged and won non-industry status in Madras and Kerala. The murky legal sky paralysed tribunals and courts and administration and then came, in consequence, this reference to a larger bench of seven judges.
Banerji, complified by Corporation of Nagpur, in effect met with its Waterloo in Safdarjung. But in this latter case two voices could be 17/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 heard and subsequent rulings zigzaged and conflicted precisely because of this built-in ambivalence. It behaves us, therefore, hopefully to abolish blurred edges, illumine penumbral areas and over-rule what we regard as wrong. Hesitancy, half-tones and hunting with the hounds and running with the hare can claim heavy penalty in the shape of industrial confusion, adjudicatory quandary and administrative perplexity at a time when the nation is striving to promote employment through diverse strategies which need for their smooth fulfilment, less stress and distress, more mutual understanding and trust based on a dynamic rule of law which speaks clearly, firmly and humanely. If the salt of law lose its savour of progressive certainty wherewith shall it be salted ? So we proceed to formulate the principles, deducible from our discussion, which are decisive, positively and negatively, of the identity of 'industry' under the Act. We speak, not exhaustively but to the extent covered by the debate at the bar and, to that extent, authoritatively, until over-ruled by a larger bench or superseded by the legislative branch.
'Industry', as defined in Sec, 2 (j) and explained in Banerji, 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.18/43
https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 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 of 'industry' undertakings, callings and services adventure '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 off 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 other 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 mom.
(a) The consequences are (i) professions, (ii) Clubs (iii) educational institutions (iii) co-operatives, (iv) research institutes (v) charitable projects and (vi) other kindred adventures, if they fulfil the triple tests listed in I (supra), cannot be exempted from the scope of sec. 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, in single simple ventures, no employees are entertained but in minimal 19/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 matters, marginal employees are hired without destroying the non- employee character of the unit.
(c) If in a pious or altruistic mission many employ them- selves, free or for small honoraria, or likely return mainly 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 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 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 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.20/43
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(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.
We over-rule Safdarjung, Solicitors' case, Gymkhana, Delhi University, Dhanrajgirji Hospital and other rulings whose ratio runs counter to the principles enunciated above, and Hospital Mazdoor Sabha is hereby rehabilitated.
We conclude with diffidence because Parliament which has the commitment to the political nation to legislate promptly in vital areas like industry and trade and articulate the welfare expectations in the conscience' portion of the constitution, has hardly intervened to restructure the rather clumsy, vaporous and tall-and-dwarf definition or tidy up the scheme although Judicial thesis and anti-thesis, disclosed in the two decades long decisions, should have produced a legislative synthesis becoming of a welfare State and Socialistic Society, in a world setting where I.L.O. norms are advancing and India needs updating. We feel confident, in another sense, since counsel stated at the bar that a bill on the subject is in the offing. The rule of law, we are sure, will run with the rule of Life-Indian Life-at the threshold of the decade of new development in which Labour and Management, guided by the State, will constructively partner the better production and fair diffusion of national wealth. We have stated that, save the Bangalore Water Supply and Sewerage Board-appeal, we are not disposing of the others on the merits. We dismiss that appeal with costs and direct that all the others be posted before a smaller bench for disposal on the merits in accordance with the principles of Law herein laid down.” 21/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 Based on the above judgment the Learned Counsel submitted that the industry should be interpreted wider so as to include the Educational Institutions and Research Institutions. If the above triple test is satisfied then, the establishment should be considered as an industry under the Tamil Nadu Industrial Establishment (Conferment Permanent Status to Workmen) Act, 1981.
13. But the learned Counsel appearing for the petitioner submitted that the Hon’ble Supreme Court in the case of Physical Research Laboratory Vs K.G. Sharma reported in (1997) 4 SCC 257 has explained and applied the Bangalore Water Supply case and has held that as follows:
“Therefore, the question whether PRL is an 'industry' under the I.D. Act will have to be decided by applying the above principles; but , at the same time it has to be kept in mind that these principles were formulated as this court found the definition of the word 'industry' as vague and "rather clumsy, vapourous and tall-and-dwarf". Therefore, while interpreting the words 'undertaking' calling and 'service' which are of much wider import, the principle of 'noscitur a sociis' was applied and it was held that they would be 'industry' only if they are found to be analogous to trade of business. Furthermore an activity undertaken by the Government cannot be regarded as 'industry' if it is done in discharge of its sovereign function. one more aspect to be kept in mind is that the aforesaid principles are not exhaustive either as regards what can be said to be sovereign function or as regards the other aspects dealt with by the court.22/43
https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 In this context, it is useful to Chief Conservator of Forests and another Vs. Jagannath Maruthi Kondhare, 1969(2) SCC 293 wherein this court, while rejecting the contention that as sovereignty vests in the people the concept of sovereign functions would include all welfare activities on the ground that talking of such a view would erode the ratio in Bangalore water supply, case. Observed that "the dichotomy of sovereign and non-sovereign function does not really exit - it would all depend on the nature or the power and manner of its exercise" After referring to the three traditional sovereign function namely legislative power the administration of laws and the exercise of the judicial power and also the decision of the exercise of the judicial power and also the decision of the Gujarat High court in J.J. Shrimali Vs. District Development Officer 1989(1) GLR 396, wherein famine and drought relief works undertaken by the state Government were held not to and 'industry' this court observed that "what really follows from this judgment is that apart from the aforesaid three functions there may be some others functions also regarding which a view could be taken that the same too is a sovereign function".
In sub Divisional Inspector of Post, Vaikam and others Vs. Theyyam Joseph and others 1996 (8) SCC 489, this court had to sub-Divisional Inspector of post at Vaikam is an 'industry'. Therein this court has observed that "India as a sovereign, socialist, secular, democratic republic has to establish an egalitarian social order under rule of law. The welfare measures partake the character of sovereign function and the traditional duty to maintain law and order is no longer the concept of the state. Directive principles of state policy enjoin on the state diverse duties under part IV of the constitution and the performance of the duties are constitutional functions. One of the duties of the state is to provide telecommunication service to the general public and an amenity and so is an essential part of the sovereign functions of the state as a welfare state. It is not , therefore, an industry" . While taking this view this court was also influenced by the fact that, the method of recruitment, the conditions of the Extra-Departmental Agents employed said establishment are governed by the statutory rules and regulations and that those employees are civil servants Therefore, while applying the traditional test, approved by this court in Bangalore water supply case to determine what can be regarded as sovereign function the change in the concept of sovereign function of a constitutional government has to be kept in mind. Relying 23/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 upon these two in Chief Conservator of Forests and another Vs. Jagannath Maruthi Kondhare (supra ) and sub-Divisional Inspector of post vs. Theyyam Joseph and others (supra), it was contended by the learned work carried on by PRL should be regarded as a sovereign or governmental function.
With respect to research institutes this court in Bangalore water supply has observed as under :
"Does research involve collaboration between employer and employee ? It does. The employer is the institution the employee are the scientists, para - scientists and other personnel. Is scientific research service ? Undoubtedly. It is. Its discoveries are valuable contributions to the wealth of the nations, such discoveries may be sold for a heavy price in the industrial of other markets.
Technology has to be paid for any technological inventions and innovations may be patented and sold. In our scientific and technological age nothing has more case value, as intangible goods and invaluable services than discoveries . it has been said that his brain had the highest cash value in history for he made the word vibrate with the miraculous discovery of recorded sound. unlike most inventors he did not have he received it munificently on this gratified and grateful earth thanks to conversion of his inventions into money aplenty. Research benefits industry even though a research institute may be a separate entity disconnected from the many industries which funded the institute may be a separate entity disconnected from the many industries which funded the institute itself it can be regarded as an organisation propelled by systematic activity modelled on cooperation between employer and employee and inventions and useful solutions which benefit individual industries and the nation in terms of goods and services and wealth.
It follows that research institutes, albeit run without profit-motive, are industries."
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 24/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 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. 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.
It is nobody`s 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. We, therefore, allow this appeal and set aside the award passed by the Labour Court at Ahmedabad in Reference No. LCA 105 of 1982. However, in view of the facts and circumstances of the case there shall be no order as to costs.” 25/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 The Hon’ble Supreme Court after elaborately considering the Bangalore Water Supply case has held that the Research Institution is not industry. The Hon’ble Court has also held that the activity cannot be termed as economic venture or a commercial enterprise. In the present case the contention of the 2nd respondent is that the petitioner institution is selling the seeds and therefore they would come under the definition of commercial enterprise. But the contention of the petitioner is that the major activity of the University is only research activity. While doing research, the products that are produced are sold to the employees of the institution itself and some portion is sold to outsiders. Since it is agricultural activity, the ancillary activity is to rear the cattle and the by-product is milk. From the said cattle, the by-product is also sold to the employees as well as outsiders. Prior to the conferment of Tamil Nadu Agricultural University Act, 1971, the Research Station was run by the State Government. After the enactment of Tamil Nadu Agricultural University Act, 1971, the Research Station was handed over to the University. The provisions of the said Act, especially Section 31, wherein the Government is providing one lump sum grant to the University. Under Section 53 of Tamil Nadu Agricultural University Act, 1971, the Government is empowered to amend or add to the Schedule or omit any 26/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 College or institutions specified in the Schedule. Infact this aspect was considered by the Learned Single Judge in the the Management, Agricultural University Vs. Commissioner of Labour and another reported in 1999 (1) CTC 75 and has held that “the income realized by the sale of milk is less than 5% of the total amount expended on the Research station. The university has filed into court a statement showing the budget of the Station as also the details of the amounts realized from the sale of milk as also other income.” This Court is totally agreeing with the Learned Single Judge and is of the considered opinion that the said activity cannot be termed as commercial activity as it is understood in Economic parlance.
14. Even if for arguments sake, it is taken Bangalore Water Supply case is applicable as far as the term “Industry” is concerned, I am afraid whether the above definition is applicable to the present case. Since in the present case the petitioner is seeking relief under the Tamil Nadu Industrial Establishment (Conferment Permanent Status to Workmen) Act, 1981. Under section 3 of the Act has specific definition for “industrial establishment” and it is to be noted that the Bangalore Water Supply case the word “Industry” was considered and in the 27/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 present case the word “Industrial Establishment” ought to be considered. The relevant portion of the provision is extracted hereunder:
“(3) “ industrial establishment ” means---
(a) a factory as defined in clause (m) of Section 2 of the Factories Act, 1948 (Central Act LXIII of 1948) or any place which is deemed to be a factory under sub-section (2) of section 85 of that Act; or
(b) a plantation as defined in clause (f) of section 2 of the Plantations Labour Act, 1951 (Central Act LXIX of 1951); or
(c) a motor transport undertaking as defined in clause (g) of section 2 of the Motor Transport Workers Act, 1961 (Central Act 27 of 1961); or
(d) a beedi industrial premises as defined in clause (i) of section 2 of the Beedi and Cigar Workers (conditions of employment) Act, 1966. (Central Act 32 of 1966); or
(e) an establishment as defined in clause (6) of section 2 of the Tamil Nadu Shops and Establishment Act, 1947 (Tamil Nadu Act XXXVI of 1947); or
(f) a catering establishment as defined in clause(1) of section 2 of the Tamil Nadu Catering Establishment Act, 1958.(Tamil Nadu Act XIII of 1958) ; or
(g) any other establishment which the Government may, by notification, declare to be an industrial establishment for the purpose of this Act;” The petitioner research institution cannot be termed as factory, plantation, motor transport, beedi industry, catering and the petitioner institution is not notified by the government. Then only Shops and Establishment Act would be made applicable as per the above definition. Under the Shops and Establishment Act the definition under section 2 clause (6) is stated as under:28/43
https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 “(6) ‘establishment´ means a shop, commercial establishment, restaurant, eating-house, residential hotel, theatre or any place of public amusement or entertainment and includes such establishment as the [State] Government may by notification declare to be an establishment for the purposes of this Act;” Admittedly the petitioner cannot be termed as shop, restaurant, eating house, residential hotel, theatre or any place of public amusement or entertainment and petitioner institution is not notified by the state government. Now the only nearest phrase is “commercial establishment”. The phrase “commercial establishment” was also defined in the Act under sub clause (3) and the same is as under:
(3) ‘commercial establishment´ means an establishment which is not a shop but which carries on the business of advertising, commission, forwarding or commercial agency, or which is a clerical department of a factory or industrial undertaking or which is an insurance company, joint stock company, bank, broker’s office or exchange and includes such other establishments as the State Government may by notification declare to be a commercial establishment for the purposes of this Act.
The petitioner institution would never come under business of advertising, commission, forwarding or commercial agency, or clerical department of a factory or industrial undertaking or an insurance company, joint stock company, bank, broker’s office or exchange. From the above definition it would be evident 29/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 that the Legislature intended that Research Institution and Educational Institutions should be outside the purview of the Conferment of Permanent Status Act. Therefore the Learned Single Judge in the the Management, Agricultural University Vs. Commissioner of Labour and another reported in 1999 (1) CTC 75 is right in stating that the petitioner Research Institution cannot be termed as doing commercial activity.
15. Now comes whether the judgment rendered by Seven Judges Bench in Bangalore Water Supply is having precedent and whether there is judicial indiscipline for not following the seven judges bench judgement. It is seen in the Bangalore Water Supply case the reference before the Court is whether the Educational Institutions, Research Institutions etc. would come under the definition of “industry” in section 2(j) of Industrial Disputes Act, 1947. But in the present case the question is under Conferment of Permanent Status Act. Therefore there would not be any judicial indiscipline. On the other hand there will be judicial discipline if the Division Bench judgment rendered by Supreme Court in Physical Research Laboratory Vs. K.G. Sharma is followed. Moreover as stated supra that the Conferment of Permanent Status Act was enacted in the year 1981, 30/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 but the judgment in Bangalore Water Supply case was rendered in 1978. Therefore this Court is of the considered opinion that the subsequent enactment ought to be interpreted based on the definition clause stated in the Act. Therefore this Court is of the considered opinion that as rightly held by the learned Single Judge in the case of the Management, Agricultural University Vs. Commissioner of Labour reported in 1999 (1) CTC 75 and as held in Physical Research Laboratory Vs. K.G. Sharma reported in (1997) 4 SCC 257, the Agricultural University will not come under the purview of establishment both under the Tamilnadu Shops and Establishments Act, 1947, as well as Tamil Nadu Industrial Establishment (Conferment Permanent Status to Workmen) Act, 1981. Therefore, the 1st respondent has come to the erroneous conclusion that the University will come within the purview of the Act.
16. At this juncture the Learned Counsel appearing for the petitioner institution submitted that the correctness of the Bangalore Water Supply case was considered by Five Judges Bench and placed the papers before the Hon’ble Chief Justice of India to constitute nine member bench in the case of State of U.P. Vs. 31/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 Jai Bir Singh which is reported in (2017) 3 SCC 311 and the relevant portion of the order is extracted hereunder:
“1. We have heard Learned Counsel for the parties at considerable length. We have also been taken through relevant passages of the decision of this Court in Bangalore Water Supply & Sewerage Board etc. Vs. A. Rajappa and others etc. (1978) 2 SCC 213 and the reference order passed by the Five Judges Bench of this Court pursuant to which these matters have been placed before us. Having given our anxious consideration to the contentions urged at the bar and the serious and wide ranging implications of the issue that fall for determination as also the fact that serious doubts have been expressed in the reference order about the correctness of the view taken in Bangalore Water Supply case (supra) we are of the opinion that these appeals need to be placed before a Bench comprising Nine Judges to be constituted by the Chief Justice.
2. We order accordingly. The papers be now placed before the Chief Justice for constitution an appropriate Nine Judges Bench to answer the questions passed by the Five Judges Bench in State of U.P. Vs. Jai Bir Singh (2005) 5 SCC 1” This fact is simply recorded by this Court and this cannot make the judgment of Bangalore Water Supply as overruled. The Hon’ble Supreme Court is reconsidering the judgment and the process is on.
17. The next contention of the Learned Counsel for the 2nd respondent is that in the case of Tamil Nadu Agricultural University Vs. The Inspector of 32/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 Labour in W.P.(MD)No. 9321 of 2014 it has been held that if the petitioner had not produced any contra evidence to disprove the claim of the 2nd respondent, there is no illegality to accept the attendance register and other documents produced by the employee to come to the conclusion that he has completed 480 days. The High Court of Madras in W.P.No.3359 of 2009, (Tamilnadu Agricultural University Yercaud) observed that once the records concerned were not produced, it is always open to the authority to draw adverse inference and presume that the particulars given by the workmen is correct. Since the petitioner establishment is involved in the business of sales of its products viz., Cotton, Paddy and Oil seeds etc., and the 2nd respondent worked as a full-time daily wage employee for more than 480 days continuously in the petitioner's establishment, the 2nd respondent has right to seek conferment under the Tamil Nadu Industrial Establishment (Conferment Permanent Status to Workmen) Act, 1981. Moreover, the main object of the said Act is to curb various unfair labour practices. The petitioner has not produced any evidence that he has worked in the institution, but is shifting the burden on the petitioner institution to prove the negative. It is settled proposition that the employee who is claiming permanency ought to prove the same and discharge his burden. The Conferment of Permanency Act also 33/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 directs the authority to inspect the records in the employers premises. Moreover this Court has held that the petitioner institution is not industry, therefore the question considering 480 days would not arise.
18. The next contention of the 2nd respondent is that the Tamil Nadu Legislative Assembly having power and has passed the Conferment of Permanent Status Act and this is the scheme for regularization. Three Judges of Apex Court has also clarified in State of Jammu Kashmir & others Vs District Bar Association, Bandipora in Civil Appeal No. 36084 of 2016 dated 08.12.2016 that the Umadevi’s judgment is not an authority for the proposition that the executive or the legislature cannot frame a scheme for regularisation. Uma Devi does not denude the State or its instrumentalities from framing a scheme for regularisation. Hence the case of Uma Devi will not affect the rights of the 2nd respondent. The 2nd respondent is confused with the concept of regularisation, absorption and permanency. The regularisation of temporary employee is within the domain and policy decision of the Government and the Government has discretionary power to regularise and the same would come into effect from the date as mentioned in 34/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 the regularisation order. As far as absorption, the employee would have been appointed with all qualifications, but would be working in a different department, the government may intend to absorb the employee in a different department on deputation or on permanent basis. As far as conferment of permanent status, the Act provides for the same. The Conferment of Permanent Status Act is not applicable to all employees or workers and it is applicable to some of the workers as stated in the definition clause. But the Learned Counsel for the 2 nd respondent submitted that the conferment of permanent status itself is a scheme formulated by the government and relied on the judgment rendered in Jammu Kashmir’s case stated supra. The Conferment of Permanent Status Act is not a scheme formulated, but an Act and the said Act is applicable only if it satisfy the provisions. Moreover the said judgment only states that the government is empowered to formulated a scheme if the employees have served for more than 10 years. In the present case there is no such scheme formulated by the government or the Agricultural University and its units. Therefore this Court is of the considered opinion that this contention also in not in favour of the 2nd respondent.
35/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014
19. The next contention of the 2nd respondent is that the daily rated labours are entitled to Permanent Status under the Permanent Status Act. The Hon'ble Apex Court in the case of G.B.Pant University of Agriculture & Technology, Pantnagar Vs State of Uttar Pradesh & others and Gujarat Agricultural University Vs. Rathod Labhu Bechar & others in SLP(Civil)No.1490 of 1999 has held that daily rated labours are entitle for permanent status under the Permanent Status Act. The above judgement were rendered based on the scheme formulated by the concerned employers. As stated supra the government has not formulated any scheme for regularisation and hence the said case cannot be applicable to the case on hand.
20. The next contention of the 2nd respondent is that the Constitutional validity of Tamilnadu Industrial Establishment (Conferment of Permanent Status to Workman) Act, 1981, was upheld by the Hon'ble Supreme Court, vide judgment in State of Tamilnadu Vs Nellai Cotton Mills Limited and others reported in 1990 (2) SCC 518. In the case of Hindustan Petroleum Corporation Limited and another Vs The presiding officer, Central Government Labour 36/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 Court Chennai and another, reported in 2008 (4) CTC 819, the Honourable Apex Court has also held as follows:
"38. Once there is a valid State enactment providing for relief to such of those workmen deemed permanency to those who had completed 480 days of service within a period of two calendar years then, such workmen getting permanent status cannot be questioned by any Management.” No doubt that the constitutional validity of the Act is upheld, but the Permanency Act would be applicable is the employee is coming within the purview of the Act.
In the present case as held supra the petitioner is not coming within the definition clause, hence the 2nd respondent is not entitled to claim permanency.
21. It is seen that the 2nd respondent was originally engaged as a daily wager in the year 1982 and he is not engaged for a continuous period of 280 days for 4 years till 1985 and he was never treated as a regular employee in the petitioner's research station. Thereafter he has not turned for work till 1996. Thereafter. The 2nd respondent approached the Labour Court seeking continuous job with backwages from the year 1988. The Labour Court passed an award, dated 13.07.2009, to the effect that directing the petitioner herein to take back the 2nd respondent as a casual labour without any backwages. As per the said 37/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 direction of the Labour Court, the petitioner engaged the 2nd respondent as a daily wager from 10.02.2010 and now he is working as a casual labour. Thereafter, the 2nd respondent and other six persons filed applications before the 1st respondent seeking Conferment of Permanent Status in the petitioner institution and contended that they are continuously working for more that 480 days and the 1 st respondent has granted permanent status from 1987 onwards. This Court is of the considered opinion in the earlier round of litigation the Labour Court has directed the petitioner to allow the 2nd respondent to work as daily wager and thereafter he was allowed as daily wager from 10.02.2010. Now in the present petition the Inspector of Labour has granted permanency from 1987 onwards and it is contrary to the Labour Court award. Moreover from 1985 to 1996 the 2nd respondent was not in service at all. On this issue also the Inspector of Labour’s order is liable to be set aside.
22. The Hon'ble Division Bench of the High Court in the case of Superintending Engineer, Erode Vs. Inspector of Labour and others reported in 2022 SCC Online Mad 1003 had an occasion to deal with the issue under Tamil Nadu Industrial Establishment (Conferment Permanent Status to Workmen) Act, 38/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 1981 and also a question arises whether the Tamil Nadu Industrial Establishment (Conferment Permanent Status to Workmen) Act, 1981, is applicable and whether other Acts are applicable. The Hon'ble Division Bench has held if any complicated question of fact or law arises, the Inspector of Labour will not have power to deal with the case and is only the Labour Court which is empowered. The relevant portion of the judgment is extracted hereunder:
“22. In view of the above, while we are of the view that the Labour Inspector has the power to issue appropriate order to grant permanency to the workmen, it cannot be by adjudicating the complicated questions of fact and law. A perusal of the Act of 1981 does not provide power in Labour Inspector of the nature given to the Industrial Adjudicator, i.e., the Industrial Tribunal or Labour Court, as complete framework with procedure for it has been given under the Act of 1947. Certain provisions of the Civil Procedure Code have been made applicable therein for proper adjudication which does not exist under the Act of 1981.
23. If the facts of this case are taken into consideration, we find that the Labour Inspector has recorded his finding in reference to the Act of 1970 while adjudicating the issue. Such powers have not been conferred on him, rather he can pass appropriate order after summary enquiry. The view expressed by the Single Judge of this court in the case of Superintending Engineer, Vellore Electricity Distribution Circle, Vellore and others, supra, is not in conflict with the view aforesaid, rather in paragraph 35 of the said judgment, the difference between the power of Labour Inspector and Labour Court or Industrial Tribunal under the Act of 1947 has been made. Paragraph (35) of judgment, referred supra, is extracted hereunder:
"35. Therefore, I am unable to accept the submission made on behalf of the Board that the exercise of the power by the Inspector of Labour in conferring permanent status after holding necessary enquiries contemplated under S. 5 read along with rule 6(4) should be construed as arrogating to himself the powers available to the other adjudicatory forums created under the provisions of the Industrial 39/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 Disputes Act, 1947. It will have to be stated that while the exercise of powers vested with the Inspector under the provisions of the Act is summary in nature, the one under the provisions of the Industrial Disputes Act may be an elaborate one. Nevertheless the same does not mean that by exercising the power under the provisions of the Act the Inspector of Labour would be trespassing into the adjudication process contemplated under the provisions of the Industrial Disputes Act. In this context, if the judgment of the Supreme Court in Nirchiliya case [1990 (2) L.L.N. 4] (vide supra) is applied, it can be safely held that where there is no prohibition under the provisions of either the Industrial Disputes Act or the Act, exercise of the power in the manner in which it can be done by the Inspector of Labour under the Act cannot be found fault with. It will have to be stated that such an exercise would be well within the statutory limitations provided under the Act. In fact, in the above-referred to judgment of the Hon'ble Supreme Court, the question for consideration was whether the workmen who initially raised an industrial dispute under the Industrial Disputes Act and who did not pursue it till its logical end when chose to move the authority under the then Madras Shops and Commercial Establishment Act, the Hon'ble Supreme Court held that in the absence of any prohibition under either of the enactments, such a course adopted by the workmen cannot be faulted. Therefore, applying the said ratio to the case on hand, it can be safely held that the concerned workmen here were placed in a better footing when they chose to straightaway move the Inspector of Labour under the Act, inasmuch as according to the workmen, having regard to the facts prevailing as on date, they were entitled for the conferment of permanent status as provided under the Act. If such a claim of the workmen was not factually maintainable, it was for the Board to have resisted the said claim with all available materials and could have convinced the Inspector of Labour as the claim ought not to have been countenanced. The Board having miserably failed to perform its duties in the manner expected of it, it cannot be now allowed to contend or complain against the powers exercised by the Inspector of Labour which was within the provisions of the Act. In this context, if the judgment of the Division Bench of this Court in Metal Powder Company, Ltd. case [1985 (2) L.L.N. 738] (vide supra), is applied, then also it can be safely held that the Inspector of Labour was well within his jurisdiction in holding the proceedings in the manner it was held and in passing the order by 40/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 directing the petitioner/Board to confer permanent status on the workmen."
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34. We have considered the submission aforesaid and find that the order passed by the Labour Inspector needs to be interfered with remand of the case. It is, however, to be made clear that the Labour Inspector would not cause enquiry beyond the powers given under the Act of 1981 and thereby would not be having jurisdiction to adjudicate the complicated questions of fact and law in reference to any other statute than the Act of 1981. The Labour Inspector may, for the purpose of conducting summary enquiry, allow the parties to produce documents and if any of the workmen has completed 480 days of continuous service in 24 calendar months, appropriate directions can be issued for granting permanency. However, even if such an order is issued, it should be with a clear finding about each workman and the number of working days by referring to the period of 24 calendar months. The benefit as to the consequences thereupon would be only for the period of employment and if any of the workman is discontinued or not in service, he would be entitled to the benefit only for the period of service and not beyond that and, that too, after the completion of continuous service of 480 days in 24 calendar months, and not for a prior period. The direction aforesaid is not driven by the settlement for the reason that the workmen herein are those who were not extended the benefit of settlement and, therefore, sought claims by maintaining claim separately. However, it would not preclude both the sides from entering into settlement, if they so choose, during the period of summary enquiry by the Labour Inspector. The issue as to whether the respondents fall within the definition of "workman" is however decided against the petitioner Corporation, as not only a settlement was entered, but adjudication about claim to seek permanency has been decided earlier in reference to similarly placed.”
23. In the present case, since complicated question of law and complicated question of facts are involved, especially, whether the triple test is applicable, whether University is coming within the purview of the Tamil Nadu Industrial Establishment (Conferment Permanent Status to Workmen) Act, 1981, the 41/43 https://www.mhc.tn.gov.in/judis W.P.(MD)No.9322 of 2014 Inspector of Labour is not empowered to deal with the same. Hence the order of the Inspector of Labour is without any authority and on this issue also the petitioner is entitled to the relief.
24. For the reasons stated supra, this Court is inclined to allow the writ petition. Hence the order passed by the 1st respondent is quashed and the writ petition is allowed. Even though this Court has held the 2nd respondent is not entitled to permanency, the petitioner is directed to allow the 2nd respondent to continue his service as daily wager under the petitioner University.
25. With the above said observation, the writ petition is allowed. No costs. Consequently, connected miscellaneous petition is closed.
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