Andhra HC (Pre-Telangana)
R. Sreenivasa Rao vs Labour Court, Hyderabad And Anr. on 25 July, 1989
Equivalent citations: (1990)IILLJ577AP
Author: M. Jagannadha Rao
Bench: M. Jagannadha Rao
ORDER
1. The questions that arise in this batch of writ petitions are whether M/s. National Remote Sensing Agency, hereinafter described as 'NRSA' is an industry within the meaning of S. 2(j) of the Industrial Disputes Act and whether the reference made by the State Government can be said to be valid in view of the provisions of S. 2(a)(i) and (ii) of the said Act. The questions also arises whether in the event of 'NRSA' being held to be an 'industry' relief can be granted to the petitioners under S. 25(F) of the said Act without deciding whether the reference by the State Government through Labour Court before the Industrial Tribunal was valid. Sub. Cl(bb) of S. 2(oo) also falls for consideration. Each of the four writ petitions has been preferred against the awards of the Labour Court holding against the petitioner on two preliminary points. The first one related to the question whether 'NRSA' was an 'industry' and the second one was whether the State Government which made the reference was competent to make the reference. The Labour Court held on the first question that 'NRSA' was not an industry and on the second question it was not competent for the State Government to make the reference and that it was only the Central Government which should have made the reference. In view of those findings, the Court also held that the third point whether the termination of the petitioners amounting to Retrenchment did not survive and that therefore no relief can be granted under the fourth point. In other words, the matters were decided on the first two points which were preliminary in nature. Questioning these orders the workmen preferred these writ petitions.
2. In these writ petitions, the learned counsel for the petitioners. Sri Ashok Anand Kumar contended that the findings of the Labour Court on these two preliminary points are incorrect, and that, in any event, without deciding the question whether the reference is valid or not, this Court could give relief under S. 25(F) of the Industrial Disputes Act, provided the findings on the first question, namely whether the 'NRSA' is an industry to be given in favour of the petitioners. The learned Counsel for the petitioners placed strong reliance on the provisions of S. 25(F) read with provisions of S. 25(B)(2) of the said Act which contain provisions that notwithstanding the interruptions in the service the petitioners are entitled to reinstatement and are entitled for the benefits of S. 25(F) of the Act.
3. On the other hand, it has been contended by Sri M. Panduranga Rao, learned counsel for 'NSRA' that the findings of the Labour Court on the two preliminary points are correct and that no relief can be granted under S. 25(F) of the Act unless the petitioners prove that there was continuity in service and that in any event, in view of the provisions of Sub-Clause (bb) of S. 2(oo), the writ petitioners are not entitled to treat the nonrenewal of contract of employment as termination amounting to Retrenchment.
4. The four writ petitioners were employed by the 'NSRA' initially under orders of appointment for a period of three months. The periods so far as the petitioners in W.P. No. 13104/88 are concerned started from 18th July 1983 to 18th October 1983 under one order, then from 20th October 1983 to 20th January 1984 under another order and again from 23rd January 1984 to 23rd April 1984 under third order and from 25th April 1984 to 31st July 1984 under a fourth order and again from 3rd August 1984 on casual basis. From 3rd August 1984, they were continuously engaged as casual labourers on daily wages till the date of their termination on 19th December 1984. The petitioners were being paid consolidated salary of Rs. 500/- per month during the periods when they were employed for three months each time and one of the petitioners was paid Rs. 550/- p.m. Of course, from 3rd August 1984 they were on daily wages till the date of termination.
5. I shall first deal with the question whether the 'NRSA' can be said to be an 'industry' within the meaning of S. 2(j) of the Industrial Disputes Act.
6. Section 2(j) of the Industrial Disputes Act defines 'industry' while S. 2(g) defines the word 'employer' and S. 2(a) defines 'workman'.
7. The definition of 'industry' has raised serious difficulties of interpretation. There have been several ups and downs in the matter of explaining this definition, but it is not necessary to go into the matter in detail and it is sufficient here to refer to cases relating purely to 'research' organisations. The earliest in this behalf is the one decided by the Supreme Court in Ahmedabad Textile Industry's Research Association v. State of Bombay, (1960-II-LLJ-720). In that case, it was noticed that the Association was established to carry on the research with respect to textile industry jointly for the benefits of its members, by discovery of processes of manufacture with a view to secure greater efficiency, rationalisation and reduction of cost. The activity was held to be an 'industry'. It was noticed that the said Association was founded with the object of establishing a textile research in and other purpose of carrying on research and other scientific work in connection with the textile trade or industry and other trades and industries allied therewith as accessory thereto. The administration of the association was vested in a council in which the majority consisted of the representatives of the textile industry. The research was carried on under the supervision of a director of research. The cost of maintaining the association was partly by members. And partly by grants from Government and other sources. On those facts, the Supreme Court posed the question whether it could be said that the undertaking was purely of "educational character" and therefore, covered by the Australian case in Federal State School Teachers' Association of Australia v. State of Victoria, (1928-29) 41 CLR 569. The Court then held after referring to the principles laid down in the decision in State of Bombay v. Hospital Mazdoor Sabha, (1960-I-LLJ-251) that the textile research body was an 'industry' within the meaning of S. 2(j).
8. Subsequently, in Management of Safdarjung Hospital v. Kuldip Singh Sethi, (1970-II-LLJ-266) it was observed that Kurji Holy Family Hospital was not an industry because it was a "non-profit" making body and its work was in the nature of training, research and treatment. Whatever be the view taken in this latter case, the question came to be finally decided by a larger Bench of seven judges in Bangalore Water Supply & Sewerage Board v. A. Rajappa, (1978-I-LLJ-349). In that case the leading judgment was delivered by Krishna Iyer, J. for himself, Bhagwati, J. (as he then was) and Desai, J and 'research' institutions were separately considered. Chandrachud, J (as he then was) and Beg. J. concurred but delivered separate opinions. Krishna Iyer, J. posed the question 'Does research involve collaboration between employer and employee ? ' After holding that it did, it was stated that the employer was the institution, the employees were the scientists, parascientists and other personnel. On the question whether 'the research was service', it was again held that it was, inasmuch as its discoveries were valuable contributions to the wealth of the nation. Such discoveries may be sold for a heavy price in the industrial or other markets. Technology has to be paid for an technological inventions and innovations may be patented and sold. In our scientific and technological age, nothing had more cash value, as intangible goods and invaluable services, than discoveries. Even though a research institute may be a separate entity disconnected from the many industries which founded the institute itself, it can be regarded as an organisation, propelled by systematic activity, modeled on co-operation between employer and employee and calculated to throw up discoveries, inventions and useful solutions which benefited individual industries and the nation in terms of goods and services and wealth. It followed that research institutes albeit run without profit motive were industries. The learned Judge then laid down five propositions of law for deciding the question, "whether an institution would be an industry or not ?" and included research institutions also as coming within the definition of 'industry'
9. Bearing the above principles in mind, I shall now deal with the nature of the "NRSA". Certain documents were filed in the lower Court particularly Ex. M-1, a book relating to the Introduction, Objects, Organisation facilities etc. of the NRSA. Before me, both parties considered in necessary that reference should be made to the Bye-laws of the NRSA which is registered as a "Society" under the Societies Registration Act. Accordingly, the said document in a book form has been filed. The Certificate of Registration is granted on 2nd September, 1974, and the Memorandum of Association mentions the objects, for which the NRSA has been established The objects are stated to be the following :- (a) to undertake, aid, promote, guide and co-ordinate research in the field of remote sensing; (b) to take over the present works and functions of the research flight facility of the Ministry of Defence of the Government of India with all their assets and liabilities and rights and obligations; (c) to provide consultancy services and airborne survey facilities to user agencies in the country; (d) to carry out surveys by using remote sensing technology for various natural resources like agriculture, hydrology, meteorology, fisheries, minerals, oils soils environmental monitoring, forestry, ocean resources, topography, land resources and crop disease surveillance; (e) to establish, maintain and manage data banks of acquisition, storage, retrieval, dissemination, evaluation, scrutiny and interpretation of information relating to remove sensing technology; (f) to establish, maintain and manage laboratories, workshops, stores and other units for carrying out scientific and technical work in the area of remote sensing; (g) to provide support of research centers for conducting investigations in specified areas of remote sensing technology and for undertaking design, development and construction of special remote sensing instrument; (h) to conduct field experiments connected with the activities of remote sensing; (i) to organise training facilities, lectures, seminars and symposiums for advanced study and research in remote sensing and for advancement of science and technology in general; (j) to co-operate and collaborate with other national and/or foreign institutions and international organisations in the filed of remote sensing and allied sciences; (k) to publish and disseminate information relating to results of research conducted in the field of remote sensing; (1) to acquire by gift, purchase, exchange, lease, hire or otherwise however any property, movable and/or immovable and to construct, improve, alter, demolish or repair buildings, works and constructions as may be necessary or convenient for carrying on the activities of the Society; (m) for the purposes of the Society to draw and accept and make and endorse, discount and negotiate Government of India and other promissory notes, bill, of exchange, cheque or other negotiable instruments; (n) to invest the funds of, or money entrusted to, the society upon such securities or in such manner as may from time to time be determined by the Governing Body and from time to time to sell or transpose such investments; the Governing Body is to be constituted under the rules and regulations of the Society and they are ten; that the Members of the Society contains of the Cabinet Minister for Science and Technology and the Minister for State for Science and Technology; the Secretary, Department of Science and Technology; one representative of the National Committee, Science and Technology; the Chairman of the Governing Body of NRSA; The Chairman of the I.S.R.O.; three eminent scientists in the field of R.S.T. nominated as members of the Governing Body of the N.R.S.A. by the Government of India; Vide Chief/Deputy Chief of Air Staff, Air Headquarters, Ministry of Defence; one representative of the Ministry of Defence; Financial Adviser, Department of Science and Technology; the Director, N.R.S.A.; such of the members of the Governing Body. The Cabinet Minister is to be the President of the Society and the Chairman of the Governing Body. The Governing Body is to be maintained and administered subject to rules, bye-laws and orders. Rules 31 to 38 mention the functions, and powers of the Governing Body, which include the submission of object, creation and abolition of posts; appointing various officers; entering into arrangements with Government of India on foreign agencies etc.
10. The question arises, whether the N.R.S.A. can be treated as 'industry' within the tests laid down by the Supreme Court in Bangalore Water Supply & Sewerage Board's case, (supra). In the majority judgment, under proposition No. 1 it is stated that the the institution will be an 'industry' if it is (i) systematic activity, (ii) organised by co-operation between employer and employee (the direct and substantive element is commercial), (iii) for the production and/or distribution of goods and services calculated to satisfy human wants and wishes (not spiritual or religious) but inclusive of material things or services geared to celestial bliss, i.e., making, on a large scale, prasad or (food). It has been pointed out that absence of profit motive or grainful objective is irrelevant, be the venture in the public, joint, private or other sector. The true focus is functional and the decisive test is the nature of the activity with special, emphasis on the employer-employee relations. Under proposition No. 2, it is stated that all organised activity possessing the triple elements although, not trade or business, may still be 'industry' provided the nature of the activity, viz., the employer-employee basis, bears resemblance to what we find in trade or business. This takes into the fold of 'industry' undertakings, callings and services adventures 'analogous to the carrying on trade or business'. Under proposal No. 3, it was stated that the consequence of the above definition was that research institutes were entirely different from 'industry'.
11. I am of the view, having regard to the objects and functions of the N.R.S.A., that it has a systematic activity or organization with co-operation, between it and its employees, for the production and distribution of material services calculated to satisfy the human wants and wishes. Of its functions, the more important ones to be noted are those relating to consultancy services or survey facilities, carrying out of surveys by using remote sensing technology for locating various natural resources, agriculture, hydrology, meteorology, fisheries, minerals, oil, soils, environmental monitoring, forestry, - ocean resources, topography, land sources and crop disease surveillance, and the distribution of the material to institutions and persons. I have, therefore, no hesitation to hold that the N.R.S.A. satisfies the tests laid down by the Supreme Court and that it is an industry under S. 2(j) of the Industrial Disputes Act.
12. The learned counsel for the respondents then argues that in case 'NRSA' could be said to be performing 'soverign functions', it could not still be brought within the definition of 'industry'.
13. This question has also been decided by several decisions. Lord Wetson in Richard Coomber v. Justices of the Country of Banks, (1883-84) 9 AC 61 held that the regal power of the State has acquired a definite connotation and it means the functions relating to administration of justice, maintenance of order and repression of crime and that these functions are of the constitutional Government. In Federated State School Teachers' Association of Australia v. State of Victoria, (supra) Issacs, J. in his dissenting judgment held that the regal functions are inescapable and inalienable, and such are the legislative powers, the administration of laws, the exercise of the judicial powers. The Supreme Court applied the abovesaid observations in its judgment in Nagpur Corporation v. Its Employees, (1960-I-LLJ-523) and observed that 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 should be confined to legislative power, administration of law and judicial power. In Bangalore Water Supply & Sewerage Board v. A. Rajappa, (supra) Krishna Iyer, J. under proposition IV, at the end of the judgment, held that sovereign functions, strictly understood, qualify for exemption, not the welfare activities or economic adventures undertaken by Government or statutory bodies. Even in departments discharging sovereign functions, if there are units which are industries and they are substantially several, then they can be considered to come under the definition of 'industry' Chandrachud, J. (as he then was) also had occasion to consider 'whether an economic activity of the govt. which is not in pursuance to Sovereign functions' of the State would amount to 'industry', and held that the sovereign or regal functions of the State are to be confined to the inalienable functions of the State i.e., exercise of legislative power, administration of justice and maintenance of law and order.
14. Therefore inasmuch as the sovereign functions are to be restricted to 'administration' of Justice and maintenance of order and prevention of crime or otherwise legislative powers, administration of the laws and the exercise of judicial power and inasmuch as the activities of the NRSA do not come under these categories, it must be held that the NRSA is an 'industry' falling under S. 2(j).
15. No doubt, the next question should be whether a reference to the Labour Court could have been validly made by the State Govt. But in my view, and in fact, it is not disputed that, if the case can be brought under S. 25F as argued for by the petitioner's counsel, relief can be granted under Art. 226 of the Constitution of India as held by the Supreme Court in D. G. Panchayat v. S. M. M. Sangh, (1988-I-LLJ-468). It is, therefore, not necessary to consider whether the reference could have been made by the State Government. Under S. 25F read with S. 2 5b, the petitioners will be entitled to relief if they have been in continuous service for less than one year under the employer and if they have been retrenched without compliance with the conditions in sub-cls. (a) and (b) of the Act. In this case there is no dispute that the Cls. (a) and (b) have not been complied with by the respondent when the petitioners' services were terminated in December, 1984. It is true there were interruptions in the service but it is not disputed that even though there may be interruptions or gaps in the service earlier, the service could still be treated as 'continuous' This is clear from the judgments of the Supreme Court in State Bank of India v. N. Sundara Money, (1976-I-LLJ-478) and S. K. Varma v. Industrial Tribunal, (1981-I-LLJ-386) and of the Division Bench of this Court in Narender v. Central Bank, 1978(2) Andh LT 48. See also Digwadih Colliery v. Their Workmen, (1965-II-LLJ-118)
16. The next question is whether the petitioners' termination amounts to 'retrenchment' and whether the respondent can bring it under sub clause (bb) of S. 2(oo), the Industrial Disputes Act. It is argued that even if by December, 1984, the petitioners were being continuously engaged as casual labour on daily wages, still the daily wages engagement is an employment on contract basis for each day, right from 3rd April 1984 and when the services of the petitioners were terminated in December 1984 it was only a case of non-renewal of a contract of service and hence not a Retrenchment under sub-clause (bb) of S. 2(00).
17. Section 2(oo) of the Industrial Disputes Act which defines 'retrenchment' as amended by Act 49/84 way of adding clause (bb), reads thus :
"Section 2(oo) : 'retrenchment' means the termination by the employer of the service of a workman for any reason what-so-ever, otherwise than as a punishment inflicted by was of disciplinary action, but does not include
(a) voluntary retirement of the workman :
(b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains stipulation in that behalf;
(bb) termination of the service of the workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein; or
(c) termination of the service of a workman on the ground of continued ill-health."
It is true that for applicability of S. 25(F) of the Act, there must be 'retrenchment' as defined in S. 2(oo).
18. The interpretation of sub-clause (bb) of S. 2(oo) raises important questions. Sub-Clause 2(bb) is in two parts. The Supreme Court had occasion to refer to the second part of sub-Clause 2(bb) in S. Govindarajulu v. K. S. R. T. C. (1986-II-LLJ-351). There the Karnataka High Court had held that since the workman's contract contained a stipulation that his services could be terminated 'at any time' the termination did not amount to retrenchment in view of sub-clause (bb) newly added in S. 2(oo). The Supreme Court while leaving the question open and deciding the case on another point, made the following significant observations (Para 5) :
"The validity of S. 2(oo)(bb) was not challenged before us. The learned counsel for the appellant urged that if the view of the High Court is accepted, it would enable unscrupulous employers to provide a stipulation in the contract of service for terminating the employment of the employees to escape the rigors of S. 25F of the Act. This would further confer arbitrary powers on the employers which would be destructive of the protection granted by the Act to the employees. We do not consider it necessary to express any opinion on this question as in our opinion, the appellant is entitled to succeed on another short question i.e., termination order being violative of principles of natural justice."
On the facts it was found that the order passed attached a stigma to the petitioner and was bad as no notice was given.
19. The second part of sub-clause (bb) of S. 2(oo) again came up for consideration before Jeevan Reddi, J. in Chennaiah v. Divisional Engineer, A.P.S.R. Corporation, 1987 LIC 1259 (Andh Pra). The learned Judge took a view contrary to the view that the Karnataka High Court took in the last mentioned case and held that a stipulation in a contract of service that the services of the workman could be terminated 'at any time and without assigning any reasons therefor' was not the kind of stipulation contemplated by the second part of sub-clause (bb). According to the learned Judge, the second part of sub-cl(bb) of S. 2(oo) contemplated "a contract which expressly provides for certain circumstances or situation (or situations) in which the contract can be terminated." The second part of the sub-clause 'does not take in the unilateral right reserved by the employer to terminate at any any time that too without any notice and without any reason.' According to the learned Judge (at p.1261) :
"Giving effect to the said contention would practically render the protection sought to be extended by the Act to workmen nugatory and it would make it easy for an employer to insert or introduce such a clause in the contract of employment and on that basis defeat the rights of workman conferred by the statute. A literal or liberal interpretation of Cl.(bb) may well result in depriving the workman of the protection provided by the Act. The said clause has to be read and understood having regard to and in the light of the scheme and object of the Act."
The learned Judge also pointed out that the objects and reasons appended to the Bill also "do not disclose that the said clause was intended to provide for or save such unilateral clauses imposed by the employer" and held that in the present day realities, such a clause cannot be given too great a sanctity.
20. In the present case before me, it is the first part of sub-cl.(bb) of S. 2(oo) that falls for consideration. The argument for the respondent employer is that discontinuance of the engagement as casual labour on daily wages basis falls within the first part of sub-cl.(bb) and that it amounts to 'non-renewal of the contract of employment between the employer and the workman concerned on its expiry.'
21. The interpretation of the first part of sub-clause (bb) of S. 2(oo) is, in my opinion, to be based bearing in mind the same principles which have been applied by Jeevan Reddi, J. to the second part of the sub-section. In fact, the Supreme Court of India has indicated the principles to be applied while construing the provisions of Ss. 25F and 25B of the Industrial Disputes Act, in Workmen A. E. I. B. Corpn. v. Management, (1985-II-LLJ-539). That case refers to the counting of Sundays (and other paid holidays) for purpose of the said sections. The Supreme Court quoted the observations of Lord Wilberforce in Prenn v. Simmonds 1971(3) All ER 237 : and stated that words occurring in such social welfare legislations and those relating to Human Rights cannot be put in "procrustean beds or shrunk to Lilliputian dimensions. In construing these legislations, the imposture of literal construction must be avoided." The law is not left behind as stated by Lord Wilberforce, in some island of literal interpretation.
22. The main part of S. 2(oo) treats as 'retrenchment' a termination 'for any reason whatsoever' and the exclusionary clues have necessarily to be strictly construed having regard to the benefits given by the Act in S. 25F for those sought to be retrenched. If sub-cl.(bb) is to be literally construed and a meaning other than the one given by Jeevan Reddy, J. is to be given for the latter part of the sub-clause and if the meaning contended for by the respondents is to be given to the first part of the sub-clause, then the main part of S. 2(oo) will be practically rendered nugatory. It will not only cut down the wide amplitude of the plain words of the main part of S. 2(oo) - an amplitude which presumably is to be preserved and maintained by the courts, - but will indeed reduce the main part to such a narrow or Lilliputian state that, having regard to today's widespread practice of contract-labour on daily wages in public sector, private sector and Government departments falling under the definition of 'industry', the very purpose of S. 25F and of other beneficial provisions of the Act will become otiose. In my view, therefore, Parliament, per se, did not intend to include casual-labour on daily-wages within the first part of sub-clause 2(bb) of S. 2(oo).
23. If, therefore, casual labour on daily wages is per se outside sub-cl.2(oo), it is not necessary for me to consider whether even cases of non-renewal of contracts of employment could fall within the first part of sub-cl.2(bb) where there may be evidence of a "global" or 'umbrella' contract in favour of a workman successively employed in a series of periodical contracts of employment. Such contracts have been held under the English Employment Protection (Consolidation) Act, 1978, to be 'global' or 'umbrella' contracts giving rise to cases of 'dismissal' for redundancy under S. 83(2) of that Act.
24. The law in our country does not yet appear to have noticed these new principles which have been assimilated into the industrial law in England. But if causal labour on daily wages is per se outside sub-sec.2(bb), it is not necessary to go into the last question.
25. That casual labour on daily wages fall within the definition of 'workman' under S. 2(s) admits of no doubt and is settled by several rulings of this and other high courts. Again casual labour on daily wages in continuous of the service required number of working days certainly come under S. 25F. The computation of the service is to be made in accordance with the provisions of S. 25B. There is nothing in the statement of Objects and Reasons of the Amending Act of 1984 intending to exclude termination of such dailywage casual labour from the purview of 'retrenchment' in S. 2(oo). The main part of S. 2(oo) speaks of termination 'for any reason' as amounting to retrenchment. In the absence of clear intention, the first part of sub-cl.(bb) cannot be interpreted to take in the termination of the services of the casual labour on daily wages. In my view, per se termination of casual labour on daily wages is clearly outside the first part of sub clause (bb) of S. 2(oo) and was never intended to be excluded from the definition of 'retrenchment'. The 'contract of employment' contemplated therein is, in view, referable to contracts other than engagement as casual labour on daily wages. Any other view would reduce the content of the main part of S. 2(oo) to such a state of shrinkage which, in my opinion, the legislature would never have contemplated. Which in common parlance, 'retrenchment' given as impression of termination for want of work, the Act has given a very wide definition of retrenchment by including terminations "for any reason whatsoever", (except the limited categories falling under sub-cls. (a), (b) which are not attributable to acts of the employer). But if the sub-cl.(bb) is not restricted as stated by me in this case or by Jeevan Reddy, J. in D. Chennaiah's case (supra), there will be little scope for preserving and maintaining a substantial part of the width of the main part of S. 2(oo).
26. I am, therefore, of the view that the discontinuance of the petitioners who were casual labour on daily wages from 3rd August 1984 till December, 1984 amounts to 'retrenchment' under S. 2(oo). As there is no dispute that they have the required number of days of service continuous as defined in S. 25B, and that the provisions of S. 25F are not complied with, the petitioners will be entitled to reinstatement. Such a relief can be granted under Art. 226 of the Constitution of India when there is violation of statue, even though the matter has come from the Labour Court, - in view of the decision of the Supreme Court in D. G. Panchayat v. S. M. M. Sangh, referred to above. That was also a case arising out of proceedings of the Labour Court and without going into the findings given by the Labour Court, relief of reinstatement was granted on independent grounds under Art. 226 of the Constitution of India. In that case the backwages were restricted to the period after 1st September 1987 inasmuch as the reference was of 1967 and there was evidence of the parties being otherwise gainfully employed. But in this case, the reference is not that far and it is not the respondents case that petitioners were otherwise gainfully employed. Further, it is because of the technical preliminary objections raised by the respondent that the Labour Court did not into other points in detail and there has been delay. I am, therefore, awarding backwages only from date of reference.
27. In the result, the writ petitions allowed and the petitions will be reinstated with back wages from the date of the respective reference There will be no order as to costs.