Patna High Court
Jamshedpur Notified Area Committee vs Presiding Officer, Industrial ... on 26 March, 1991
Equivalent citations: 1992(1)BLJR501
Author: S.B. Sinha
Bench: S.B. Sinha
JUDGMENT S.B. Sinha, J.
1. This application is directed against an award dated 23rd March, 1988 passed by respondent No. 1 in Reference Case No. 3/85 whereby the reference made to him was answered in favour of the workman and against the petitioner.
2. By reason of a notification dated 24-4-1985, the Government of Bihar referred the following industrial dispute for adjudication before respondent No. 1:--
Whether the retrenchment and termination of services of 19 employees (list enclosed) of Cattle Squad Department, by the management from 1-3-1981 is proper and justified ? If not, what relief these workers are entitled to ?
3. The aforementioned industrial dispute arose in the following circumstances:--
The petitioner Jamshedpur Notified Area Committee constituted under the provisions of Bihar and Orissa Municipal Act, purported to have taken up a scheme of appointing a cattle squade on experimental basis at the instance and assistance of M/. Tata Iron and Steel Co. Ltd., Jamshedpur.
Pursuant to the said scheme respondent Nos. 3 to 21 were appointed initially for a prior of three months but their services were continued. However, the services of the said respondents were terminated on 2-8-1980, but they were again appointed and ultimately terminated on 1-3-1981 when allegedly the scheme of cattle squad was finally abandoned.
4. The petitioners have contended that the idea of the aforementioned scheme was mooted out in view of the outbreak of encephalitis which necessitated the urgency of controlling stray cattle nuisance in the town of Jamshedpur, where for the Tata Iron and Steel Company, Jamshedpur, agreed to reimburse the expenditure of the staff of Cattle Squad so appointed. The petitioners have contended that in terms of Section 37 of the Bihar and Orissa Municipal Act, the State of Bihar did not give their approval to the appointments of the said respondents and the aforementioned Tata Iron and Steel Co. also stopped extending financial assistance in the matter.
In this situation, according to the petitioners, the services of the concerned workmen were terminated.
5. On the other hand the case of the workmen was that there was no reasonable cause for termination of their services and prior to passing the order of termination neither any wages in lieu of notice was paid nor any compensation was paid to them. Tue workmen, Therefore, contended that the order of termination was wholly illegal and void being in violation of Section 25-F of the Industrial Disputes Act.
6. By reason of the impugned award the respondent No. 1 held that the action on the part of the petitioner in terminating the services of the concerned workmen being not in conformity with the provisions of Section 25-F of the Industrial Disputes Act, 1947, the same was wholly illegal and as such the said concerned workmen arc entitled to reinstatement with full back wages. Respondent No. 1 further granted a declaration that the concerned respondents should continue to be in service with all consequential benefits, namely, back wages in full and other benefits.
7. Mr. Debi Prasad learned Counsel appearing for the petitioner firstly submitted that the Notified Area Committee having been constituted under the provisions of Bihar and Orissa Municipal Act is not an 'industry' within the meaning of Section 2(i) of the Industrial Disputes Act. According to the learned Counsel, the scheme of appointment of Cattle Squad having been formulated for a specific purpose and on an experimental basis and thus the said activity cannot be said to be a systematic activity so as to bring the petitioner within the mischief of definition of 'industry' as contained in Section 2(j) of the Industrial Disputes Act.
Learned Counsel in this connection has relied upon Abdul Sabir Khan and Ors. v. Municipal Council reported in AIR 1970 Lab IC 588; D.N. Banerjee v. P.R. Mukherjee and Ors. ; Bangalore Water Supply and Sewerage Board v. A. Rajappa ; Des Raj v. State of Punjab and Ors. Miss A. Sundarambal v. Government of Goa, Daman and Diu .
8. Learned Counsel next contended that the State of Bihar having not approved the appointment of the respondents, Nos. 3 to 21 in terms of the provisions contained in Section 37 of the Bihar and Orissa Municipal Act, their appointments were void ab initio and in that view of the matter, the concerned workmen were not entitled to only relief at all far less the relief of reinstatement.
9. Learned Counsel further submitted that in any event, the concerned workmen having not completed 240 days of continuous service in employment, the provision of Section 25-F of the Industrial Disputes Act had no application. According to the learned Counsel, from a perusal of the materials on record, it would appear that although the workmen were initially appointed for a period of three months from 5-1-1979 their services were terminated on on 2-8-1980 when they had deposited alt the articles given to them to enable them in work and they were reappointed on 7-8-1980 and joined their posts on 8-8-1980 and in that view of the matter, their services having been terminated on 1-3-1981, they cannot be said to have completed 240 days of continuous service in between 8-8-1980 and 1-3-1981.
10. Learned Counsel lastly contended that in any event in view of the fact that the scheme having been abolished, the respondent No. 1 misdirected himself in passing an award of reinstatement with full back wages.
11. Mr. N. K. Prasad appearing on behalf of the workmen, on the other hand submitted that in view of definition of 'industry' as contained in Section 2(j) of the Industrial Disputes Act, there cannot be any doubt that the respondents come within the purview thereof. Learned Counsel in this connection relied upon Baroda Borough Municipality v. Its Workmen and Ors. ; The Corporation of the City of Nagpur v. Its Employees reported in AIR 1960 SC 675.
12. It was further submitted that the question as to whether the State of Bihar approved the services of the concerned workmen or not is wholly immaterial inasmuch as the services of the concerned workmen were protected in view of the fact that they continuously worked for a period of of 240 days and, thus, termination of their services being in violation of the provisions of Section 25-F of the Industrial Disputes Act, 1947, the respondent No. 1 has rightly held the order of termination to be void and of no effect.
13. Learned Counsel next contended that from a perusal of the impugned award itself, it would appear that all the concerned workmen were in employment for more than 240 days continuously and the said finding being finding of fact, this Court should not interfere therewith.
14. Mr. N.K. Prasad further submitted that it is not correct that the scheme to appoint cattle squade was meant for a particular purpose or for a particular period and, in fact, the petitioner had kept serveral persons in employment which goes to show that the job is of permanent nature and in that view of the matter, it cannot be said that respondent misdirected himself in passing the award directing the petitioner to reinstate the concerned workmen with full back wages and other benefits.
15. In view of rival contentions raised by the Counsel, the following questions arise for consideration:
1. Whether the petitioner is an 'industry' within the meaning of Industrial Disputes Act?
2. Whether the workmen completed 240 days of service before the orders of their termination was passed?
3. Whether the Respondent No. 1 should have passed an award reinstating the workmen with full back wages?
16. Ref. Question No. 1:
'Industry' has been defined in Section 2(j) of the Industrial Disputes Act.
From a perusal of the said definition, it would appear that the same is of wide import.
The Supreme Court in various decisions as would be noticed hereinafter held that the word 'industry' not only brings within its purview an activity of trade or business but even charitable and humanitarian institutions wherein a systematic activity is being carried out through workmen by the Management.
The Act contemplates cases of industrial disputes 'where the Government or local authority or a public utility service may become employer within the meaning of the provisions of the said Act. The Municipal activity in the form of protective nature is a feature of all developing welfare State which is consideration necessary because it leads to welfare without exploitation of workmen and makes the production of goods and services cheaper by eliminating profit. Only such operations of the Government who are purely administrative or governmental character, cannot be regarded as an 'industry'.
17. The Departments of Health and Irrigation have been held to be falling within the ambit of the definition of 'industry':--
18. In D.N. Banerjee v. P.R. Mukherjee and Ors. , it was held:--
A public utility service such as railways, telephones and the supply of power, light or water to the public may be carried on by private companies or business corporations. Even conservancy or sanitation may be so carried on, though after the introduction of local self-government this work has in almost every country been assigned as a duty to local bodies like our Municipalities or District Boards or Local Board. A dispute in these services between employers and workmen is an industrial dispute, and the proviso to Section 10 lays down that where such a dispute arises and a notice under Section 22 has been given, the appropriate Government shall make a reference under the sub-section. If the public utility service is carried on by a corporation like a Municipality which is the creature of a statute, and which functions under the limitations imposed by the statute does it cease to be an industry for this reasons. The only ground on which one could saw that what would amount to the carrying on of an industry if it is done by a private person ceased to be so if the same work is carried on by a local body like a Municipality is that in the latter there is nothing like the investment of any capital or the existence of a profit earning motive as there generally is in a business. But neither the one nor the other seems a 'sine qua nori" or necessary element in the modern conception of industry.
The very idea underlying the entrustment of such duties or functions to local bodies is not to take them out of the sphere of industry but to secure the substitution of public authorities in the place of private employers and to eliminate the motive of profit making as far as possible. The levy of taxes for the maintenance of the services of sanitation and conservancy or the supply of light and water is a method adopted and devised to make up for the absence of capital. The undertaking or the service will still remain within the ambit of what we understand by an industry though it is carried on with the aid of taxation, and no immediate material gain by way of profit is envisaged.
19. In Baroda Borough Municipality v. Its Workmen and Ors. , the Supreme Court followed the decision in D.N. Banerjee's case. It was held that an industrial disputes includes disputes between Municipalities and their employees in branches of work that can be regarded as analogous to the carrying on of a trade or business.
20. In Corporation of the City of Nagpur v. Its Employees and Ors. , it was held that the regal functions are making laws disposal of certain cases judicially and other welfare activities. The Supreme Court held that if a service performed by an individual is an 'industry' it will continue to be so notwithstanding that its undertaking is taken over by a Corporation. It was also held that the condition of the services rendered to the citizens on the basis of quid pro quo would not bring the Municipality out of purview of the 'industry' inasmuch monetary consideration for service is not an essential characteristics 'industry' in a modern State.
The Supreme Court proceeded:
The learned Counsel then sought to demarcate the activities of a municipality into three categories, namely, (i) the activities of the department which performs the services; (ii) those of the departments which only impose taxes, collect them arid administer them; and (iii) those of the departments which are purely in administrative charge of other departments. We do not see, any justification for this artificial division of municipal activities. Barring the regal functions of a municipality, if such other activities of it, is under-' taken by an individual, would be industry then they would equally be industry in the hands of a municipality. It would be unrealistic to draw a line between a department doing a service and a department controlling or feeding it. Supervision actual performance of service are integral part of the same activity. In other words, whether these three functions are carried out by one department or divided between three departments, the entire organizational activity would be an industry.
21. In that case, it was held that integrated activities of a Municipality cannot be separated to taking some under the definition of 'industry' and exclude others from it. The Supreme Court in that case summarised the decision thus:
(1) The definition of 'industry' in the Act is very comprehensive. It is in two parts one part defines it from the stand point of the employer and the other from the stand point of the employee. If an activity falls under either part of the definition, it will be an industry within the meaning of the Act.
(2) The history of industrial disputes and the legislation recognizes the basis concept that the activity shall be an organized one and not that which pertains to private or personal employment.
(3) The regal functions described as primary and inalienable functions of State though statutorily delegated to a corporation are necessarily excluded from the purview of the definition. Such regal functions shall be confined to legislative power, administration of law and judicial power.
(4) If a service rendered by an individual or a private person would be an industry, it would equally be an industry in the hands of a corporation.
(5) If a service rendered by a corporation is an industry, the employees in the departments connected with that service, whether financial, administrative, or executive would be entitled to the benefits of the Act.
(6) If a department of a municipality discharges many functions, same pertaining to industry as defined in the Act and other non-industrial activities, the predominant functions of the department shall be the criterion for the purposes of the Act.
22. In Bangalore Water Supply and Sewerage Board v. A. Rajappa and Ors. , Beg, C.J. who wrote a separate judgment stated:
In his heroic efforts, my learned brother Krishna Iyer if I may say so with great respect, has no discarded the tests of industry formulated in the past. Indeed, he has actually restored the tests laid down by this Court in D.N. Banerjee's case 1953 SCR 302 : and, after that, in the Corporation of the City of Nagpur v. Its Employees State of Bombay v. Hospital Mazdoor Sabha to their pristine glory.
The Supreme Court after taking into consideration its earlier decision laid down the tests which would bring an activity within the purview of 'industry', inter alia held:
The dominant nature test:
(a) Where a complex of activities, some of which qualify for exemption, others not, involves employees on the total under taking, 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.
(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 Section 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.
The Supreme Court held:
Banerjee AIR 1953 SC 58 amplified by Corporation of Nagpur AIR 1960 SC 675 in effect met with its Waterloo in Safderjung AIR 1970 SC 1407. But in this latter case, two voices could be heard and subsequent rulings zigzaged and conflicted precisely because of this built in ambivalence. It behaves us therefore, hopefully to abolish blurred edges, illumine penmbral areas and overrule what we regard as wrong. Hesitancy half-tones and hunting with the bounds 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 nature is striving to promote employment through diverse strategies which need, for their smooth fulfilment, less stress and distress, more mutual under-Standing and trust based on a. dynamic rule of Jaw which speaks clearly, firmly and humanely. If the salt of law lose its savour of progressive certainty where with shall it be salted ? So we proceed to formulate the principles, deducible from out 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, that extent, authoritatively, until overruled by a larger bench or superseded by the legislative branch.
23. In Des Raj etc. v. State of Punjab and Ors. , the Supreme Court held that Irrigation Department of Government is an 'industry'. The Supreme Court observed:
We have already referred to The Dominant Nature test evolved by Krishna Iyer, J. The main functions of the Irrigation Department when subjected to the Dominant Nature test clearly come within the ambit of industry.
24. In Miss A. Sundarambal v. Government of Goa, Daman and Diu and Ors. , the Supreme Court held that 'school' is an 'industry'.
In Purnea Zila Mazdoor Union v. State of Bihar reported in 1989 PLJR 493 I have held that the activity of the State in rendering irrigational facility comes within the purview of 'industry'.
25. In view of the authoritative pronouncement aforementioned, there cannot be any doubt that the petitioner Notified Area Committee which, carries on public utility services to its citizens in lieu of taxes imposed upon them, would come within the purview of 'industry'.
26. The decisions cited by Mr. D. Prasad, there ore, runs counter to his contentions.
In Abdul Sabir Khan and Ors. v. Municipal, Council reported in 1970 Lab IC 588, the Bombay High Court held that collection of octroi duty does not come within the purview of industrial activities on the ground that imposition, collection and levy of taxes is the function of the State and no-one else can do the same and thus primarily it is governmental function.
In that case rightly it was held that collection of octroi is a regal function.
27. The said decision, therefore, has no application to the facts of this case.
28. Ref. question No. 2.
The question as to whether concerned workmen have completed 240 days of continuous services or not is a pure question of fact.
Respondent No. 1 in his impugned award held:
The Register of attendance filed by the Management is Ext. M/16 to M/29. The calculation has been made by the. learned counsel for the workmen and he has filed a chart prepare! on the basis of the Ext-M/16 to M/29 A copy of this chart h is been given to the lawyer for the other side. This court shows that during the period of 12 months prior to the date of their termination of service of these workmen each of them had worked for more than 240 days. This has not been challenged on behalf of the Management and it is therefore manifest that each of these workmen had worked for more than 240 days prior to their termination of service and as such they will be demeed to have worked for a continuous period for more than one year prior to their termination of their services in view of the provisions of Section 258 of the Industrial Disputes Act.
It is, therefore clear that the concerned workmen, on its own showing by the petitioner completed 240 days of continuous service within the meaning of Section 258 of the Industrial Disputes Act, 1947.
29. Sub-section (2) of Section 258 and Section 2(eee) which was substituted by the Industrial Disputes (Amendment) Act, 1964 incorporates another fiction whereby a situation where a workman is not in continuous service within the meaning of Clause (1) for a period of one year of six months he shall be deemed to be in continuous service under an employer (a) for period of one year if the workman during a period of twelve calendar months pre- ceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than two hundred and forty days was comprehended.
Reference in this connection may be made to Mohan Lal v. Management of Bharat Electoronks Ltd. 1981 Lab I I.C. 806, and in Sarjug Prasad v State of Bihar and Ors. 1984 Lab I.C. 1264.
30. The decision of a learned Single Judge of Punjab and Haryana Hieh Court reported in 1986 (52) FLR 441 strongly relied upon by Mr. Debi Prasld is of no assistance to the petitioner. In that case, itself, the Court explained its earlier decision in Kapurthala Central Co-operative Bank Ltd. v. Labour Court Jullandhar reported in (1984) 65 FJR 95 and held:
Plain language of the section raises a fiction which starts from ascertaining the date from which it is raisable. The relevant date is the date of termination or service, which is complained of by the workman as retrenchment. When once a date is ascertained then one has to move backwards to a period of 12 months preceding the date of retrenchment and then ascertain whether within the period of 12 months, the workman has rendered service for a period of 240 days. If these three facts are affirmatively answered in favour of the workman pursuant to the deeming fiction, it will have to be assumed that the workman is in continuous service for a period of one year and he will satisfy the eligibility qualification enacted in Section 25-F. Those 240 days need not be continuous; they may have breaks, but in the preceding 12 months from relevant date total service period should be 240 days actually worked by a workman. In the aforesaid case, the fact that this Court took into account that the breaks in service were national was onlv to highlight that national breaks were kept in order to break continuity of service and that despite those breaks when the actual period of service turned out to be 230 days, it was an unfair labour practice not to deliberately allow the workman to 240 days' service, which would entitled him to the benefit of of Section 25-F of the Act and other benefits.
Evidently, therefore, if the workman had worked for a period of a period of 240 days or more in one year despite break of few days, namely from 2-8-1980 to 7-8-1980, they would be deemed to have been in continuous service within the meaning of Section 25-B of the Act.
31. Section 25-F of the Industrial Disputes Act, 1947 confers a statutory right upon a workman to continue in employment until cessation thereof by his employer validly and in compliance of the provisions of Section 25-F of the Act. The termination of the services of an employee in violation of Section 25-F of the Act would render the same void and of no effect.
32. In such a situation, the question as to whether the services of the concerned workmen were approved by the State of Bihar or not, is wholly irrelevant.
33. Ref.: Question No. 3:
In this case, it appears that respondent No. 1 did not at all take into consideration the evidence on record. As indicated herein before, the case of the petitioner before respondent No. 1 was that the services of the concerned workmen had to be terminated for more than one reason, namely:
1. Their services were not approved by the State of Bihar;
2. M/s. TISCO stopped providing financial assistance;
3. The scheme itself was abolished.
The respondent No. 1 in his impugned, award held:
It is submitted by the learned counsel for the Management that the cattle squad is no longer operating and that Department was closed over for ever and as such these workmen cannot be reinstated. It is contended on behalf of the workmen that the cattle squad Is still operating at Jamshedpur. There is no reliable evidence on either side on this point. Even assuming that the cattle squad had been closed for ever the fact remains that admittedly the employer namely the Jamshedpur Notified Area Committee is still in existence and it can very well reinstate these workmen for work.
34. M.W. 1 in his deposition which is contained in Annexure-9 to the writ application categorically stated that the scheme had to be abolished as the State Government did not approve the services of the concerned workmen and M/s. TISCO at whose instance the aforementioned scheme was initiated for a particular purpose, namely, eradication of encyphelitis has stopped reimbursing the wages paid to the concerned respondents. This evidence of M.W. 1 is positive in nature. Respondent No. 1, therefore, was bound to take into consideration the said fact.
35. It is now well-known that by various decisions of the Supreme Court that an award of reinstatement with full back wages may not be passed in a case where there would be no job for the concerned workmen.
36. Mr. N.K. Prasad has rightly drawn my attention to the fact that by terms of Section 389, the State Government may by a notification apply or adopt to a notified area or any part of the notified area any provision of the Act which may apply to any Municipality or any rule or bye-law in force or which can be made applicable in any Municipality under the said Act for the purpose of showing that there is nothing on record to show that the State Government had made Section 37 of the said Act applicable in the case of the petitioner-Notified Area Committee.
37. It is true that in terms of the provisions of Bihar and Orissa Municipal Act, the Notified Area Committee may be required to obtain a prior approval of the State of Bihar, if the same is applicable. It may also be true that the State of Bihar has not approved the services of the concerned workmen but does that mean that the concerned workmen are not entitled to any relief at all?
38. It is true that when the termination of the services of a workman is brought about without complying with the provisions of Section 25-F of the Act, normal rule is to direct rein statement with full back wages. But there exists several exception to the said rule; one of them being where the industry itself has been closed and/or where there is no job for the concerned workmen and, thus, thrusting of a workman upon an employer in such a situation would be unduly harsh. Normally in such a situation, the Labour Court or the Industrial Tribunal as the case may be, may grant suitable monetary compensation in favour of the workmen.
39. Section 11-A vests upon the adjudicating authority the discretionary jurisdiction to give compensation of the worker in lieu of discharge or dismissal as the circumstances of the case may require, where for some valid reason, it considers that reinstatement in that circumstances will not be fair and proper. Before awarding compensation, the Tribunal has taken into consideration the scope of the order of reference and the pleading of the parties.
40. In considering the matter of grant of relief to the concerned workmen, thus, the respondent No. 1 will have to take into consideration all aspects of the matter including the facts as to whether an order of reinstatement should be granted taking into consideration the facts and circumstances of this case and upon due consideration the evidence brought on record. Respondent No. 1 may, for such purpose, also jive an opportunity to the parties to bring on records such other or further material or materials including the facts as to whether Section 37 of the Bihar and Orissa Municipal Act has been applied in the case of the petitioner-Notified Area Committee by the State of Bihar or not.
41. For the reasons aforementioned, this application is allowed. The impugned award as contained in Annexure 10 is set aside and the respondent No. 1 is directed to reconsider the matter to the extent mentioned hereinbefore. In the facts and circumstances of the case, there will be no order as to costs.