Karnataka High Court
Agricultural Produce Market ... vs Ashok Harakni And Another on 10 August, 1998
Equivalent citations: 1998(6)KARLJ511, (1999)ILLJ89KANT
Author: R.P. Sethi
Bench: R.P. Sethi, K.R. Prasada Rao
JUDGMENT R.P. Sethi, C.J.
1. Award of the Labour Court and the order of the learned Single Judge passed in writ petitions have been challenged by the appellant on the grounds:
(1) That the provisions of Industrial Disputes Act, 1947 (hereinafter called the 'Central Act') were not applicable in cases covered by the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 (hereinafter called the 'State Act').
(2) That the Agricultural Produce Market Committee (A.P.M.C.) was not an Industry within the meaning of Section 2(j) of the Central Act and (3) That even on merits the respondents-workmen were not entitled to the relief of being reinstated with back wages.
2. In order to appreciate the questions of law formulated hereinabove it is necessary to have a resume of the facts in these appeals.
The respondents-workmen herein were in the employment of the A.P.M.C. when their services were allegedly terminated. In some cases the industrial disputes raised by them were referred to the Labour Court in terms of Section 10(1)(c) of the Act and in some cases the workmen directly approached the Labour Court under Section 10(4-A) of the Central Act. The appellant in most of the cases did not file objections. In some of the cases where objections were filed it was submitted that as the A.P.M.C. was not an industry, the Labour Court did not have the jurisdiction to entertain the reference and adjudicate the same. It appears that in some of the cases the appellant herein had contested the reference and the claim of the workmen on merits without raising any legal plea. The Labour Court passed the awards setting aside the orders of termination and directing the reinstatement of the respondents-workmen herein with full back wages, continuity of service and other consequential benefits. The awards passed by the Labour Court/Industrial Tribunal were challenged on the ground of being without jurisdiction and that as the State Act was a special legislation, it would prevail upon the Central Act, with the result that the jurisdiction of the Labour Court/Industrial Tribunal be deemed excluded. The learned Single Judge negatived both the contentions raised on behaif of the appellant and dismissed the writ petitions vide the order impugned in these appeals.
Point No. 1;
3. In support of his argument that the State Act excluded the applicability of the Central Act, the learned Counsel referred to various provisions of the State Act with the object of impressing upon us that as sovereign powers were conferred upon the Market Committees and the authorities under it; they were to be equated with the State being local authority. It was further submitted that as the sovereign acts of the State cannot be made subject matter of adjudication under Central Act, the whole of the proceedings initiated and concluded by the Labour Court/Industrial Tribunal were without jurisdiction. The learned Counsel particularly referred to the preamble, Sections 9(3), 58, 59, 63, 65, 66, 67, 69, 72, 73 and 83 of the State Act.
The Preamble of the State Act indicates that the Act was enacted to provide for the better regulation of marketing of agricultural produce and the establishment and administration of markets for agricultural produce in the State. Section 9(3) provides that notwithstanding anything contained in any law for the time being in force, every Market Committee shall, for all purposes, be deemed to be a local authority. Section 58 deals with the appointment of Secretary and technical staff to the Market Committee and Section 59 for absorption of staff of Market Committees in Government service. Section 59(3) upon which much reliance has been placed reads:
"Notwithstanding anything contained in the Industrial Disputes Act, 1947 (Central Act 14 of 1947), or in any other law for the time being in force or in any contract the transfer of the services of any officer or servant of a Market Committee by virtue of sub-section (1) or sub-section (1-A) shall not entitle any such officer or servant to any compensation or payment under that Act or other law or contract, and no such claim shall be entertained by any Court, Tribunal or other authority".
Section 61 authorises the State Government or the officer authorised by it in that behalf to appoint officers and servants of a Market Committee. Section 63 deals with the powers and duties of the Market Committee. Section 65 authorises the Market Committee to levy market fee. Section 66 empowers any officer or servant of the State Government to require any person carrying on business in any kind of notified agricultural produce to produce before him the accounts and other documents and to furnish any information relating to the stocks of such agricultural produce, or purchases, sales and deliveries of such produce. If such officer suspects that any person is attempting to evade the payment of the market fee due from him, he may for reasons to be recorded in writing, seize such accounts, registers or documents and retain the same so long as may be necessary for examination thereof or for prosecution. Previsions of Section 100 of the Code of Criminal Procedure have been made applicable for the purpose of search to be conducted under sub-section (4) of Section 66. It further authorises the officer to seize the notified agricultural produce, if he has reason to suspect that any person was attempting to evade the payment of market fee. Section 67 authorises the officer or servant of the State Government to stop any vehicle, vessel or other conveyance, which is shown to be taking out of the Market Committee or moving in the Market Area for examining the contents in the vehicle, vessel or other conveyance. Section 69 confers the power upon the APMC to acquire the land and hold it. The Market Committee may on application by any person grant licence for regulation of trading under Section 72 and cancel or suspend the said licence in exercise of the powers under Section 73. Section 83 deals with the production of account books, etc., by the market functionaries.
4. A perusal of the aforesaid powers conferred upon the Market Committee would indicate that the Legislature had not intended to confer absolute sovereign powers in the A.P.M.C. Assuming such conferment, it cannot be said that the Market Committee was intended to be excluded from the purview of the applicability of the Central Act. The discharge of sovereign functions by itself would not exempt an undertaking to be an industry. Even departments of the Government discharging sovereign functions have been held to be industry, if they are proved to be substantially dealing with trade and business.
5. The definition of Industry has been admitted to be in two parts, the first referring to business, trade, undertaking, manufacture or calling of employees and the second referring to calling, service, employment, handicraft or industrial occupation or avocation of workmen. First part refers to occupation of the employers in respect of certain activities specified therein and second with the nature of the activity carried on by the industry. What is important, is the activities carried on by the business, trade, undertaking, manufacturing and calling irrespective of who the employer is. It is also not important as to whether or not any capital has been invested for the purposes of carrying on the activities contemplated by the clause or such activity is carried on with a motive of profit and gain. The exclusion of the activities otherwise covered by Section 2(j) is specifically detailed in the section itself providing that the activity being carried on for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes. Though generally an establishment, trade or business be an industry, yet it shall not include:
(1) any agricultural operation except where such agricultural operation is carried on in an integrated manner with any other activity (being any such activity as is referred to in the foregoing provisions of this clause) and such other activity is the predominant one.
Explanation.--For the purposes of this sub-clause, "agricultural operation" does not include any activity carried on in a plantation as defined in clause (f) of Section 2 of the Plantations Labour Act, 1951; or (2) hospitals or dispensaries; or (3) educational, scientific, research to training institutions; or (4) institutions owned or managed by organisations wholly or substantially engaged in any charitable, social or philanthropic service; or (5) khadi or village industries; or (6) any activity of the Government relatable to the sovereign functions of the Government including all the activities carried on by the departments of the Central Government dealing with defence research, atomic energy and space; or (7) any domestic service; or (8) any activity, being a profession practised by an individual or body of individuals, if the number of persons employed by the individuals or body of individuals in relation to such profession is less than ten; or (9) any activity, being an activity carried on by a co-operative society or a club or any other like body of individuals, if the number of persons empioyed by the co-operative society, club or other like body of individuals in relation to such activity is less than ten.
6. The argument that the State Act conferred sovereignty upon the authorities under the said Act is also misconceived inasmuch as the exercise of sovereign power contemplates the conferment of authority to enact laws subject to limitations of the Constitution. Such power is plenary and inherent in every sovereign State to do all things which promote the health, peace, morals, education and good order for the people. It is the supreme power which governs the body politic of society which constitutes the State and the powers of sovereignty are dependent upon the form of the Government. The sovereignty has been held to be a bundle of rights and not a specific right. Conferment of some powers for the purposes of the State Act would not make the authority under the Act sovereign and their action attributes of sovereignty as alleged.
In Management of the Safdarjung Hospital, New Delhi v Kuldip Singh Sethi, the Court held that the definition of 'industry' reads as a whole denoted a collective enterprise in which employers and employees were associated. It did not exist either by employers alone or by the employees aione. It existed only when there is a relationship between the employers and employees, the former engaged in business, trade, undertaking, manufacture or calling of employers and latter engaged in any calling, service, employment, handicraft or industrial occupation or avocation.
The Supreme Court in D.N. Banerji v P.R. Mukherjee and Others, held that the activities of a Municipal Corporation would fall within the ambit of the definition despite the fact that the Municipality in the strict sense of the term could not be truly regarded as carrying on any business or trade. It was held that the Municipality would fall within the scope of the expression 'undertaking'.
In Baroda Borough Municipality V Its Workmen, the Supreme Court held that for an activity to be an industry, it is not necessary that it must be carried on by private enterprise or must be commercial or result in profit. It is sufficient that the activity is an 'undertaking' analogous to the carrying on of a trade or business involving co-operation between employers and employees. The test applied was whether the undertaking was carrying on an economic activity involving investment of capital for production or sale of goods by the employment of labour. In case of the undertaking run by a Government, the test applied is "can such activity be carried on by a private individual or group of individuals?" If the reply to the question is in the affirmative it can be held that the activity carried on would be an industry notwithstanding by whom it is managed or carried on. For determining as to whether any particular activity is industry or not, the relevance of who the employer was or who was conducting the activity have been considered to be irrelevant considerations.
7. Relying upon sub-section (3) of Section 59 of the State Act, the learned Counsel for the appellant vehemently argued that the exclusion of the Central Act being specific, no workman could invoke the jurisdiction of the Labour Court/Industrial Tribunal under the said Act and any action taken by the Labour Court or Board or Tribunal under the said Act was void ab initio. The argument is devoid of any substance. Section 59 forms part of Chapter V of the State Act dealing with "Staff of the Market Committees". Sub-section (3) has excluded the applicability of the Central Act only for a limited purpose depriving the persons transferred to the Committee to have the benefits otherwise conferred upon such transferred employee under the Central Act. Section 25FF of the Central Act provides for compensation to workmen in case of transfer of undertakings and such benefit under Section 59(3) of the State Act would not be available to the workmen of an undertaking if such undertaking is transferred to the Market Committee under the State Act. The effort of appellant to read between the lines for seeking exclusion of the applicability of the Central Act to the workmen employed in the A.P.M.C. being without substance or having any legal foundation to stand is absolutely futile, hence rejected.
8. Relying upon Article 254 of the Constitution, the learned Counsel for the appellant has argued that as there existed an inconsistency between the laws made by the Parliament and the laws made by the Legislature of a State, which has received the assent of the President, the State Act would prevail. Such a contention has to be noted only to reject. The question of inconsistency or repugnancy arises only in connection with the subjects enumerated in the Concurrent List subject to a further condition that the alleged conflict related to the same subject as enumerated in the Concurrent List. In determining the repugnancy or inconsistency, the doctrine of 'pith and substance' has to be applied. The onus of showing the repugnancy and the extent thereof is always on the party who challenges the validity of one of the laws alleged to be inconsistent or repugnant. It is not disputed that the Central Act is covered by Entry 22 and the State Act by Entry 33 in the Concurrent List of the Seventh Schedule of the Constitution. Entry 22 specifically deals with laws relating to industrial and labour disputes and Entry 33 with trade and commerce in, and the production, supply and distribution of the products of any industry; foodstuffs including edible oilseeds and oils; cattle fodder; raw cotton and raw jute. The Central Act has been enacted mainly to ensure speedier resolution of industrial disputes by removing procedural delays by making provision for the investigation and settlement of industrial disputes and other matters relating to the persons involved in the industry. The State Act, as noted earlier, has been enacted only for the purpose of providing for the better regulation of marketing of agricultural produce and the establishment and administration of markets for agricultural produce in the State of Karnataka. The fields of law covered by the aforesaid two enactments are apparently distinct and distinguished. There does not appear to be any inconsistency or repugnancy. It is true that the legislative subject as detailed in the Lists of the Seventh Schedule cannot be divided into watertight compartment and sometimes overlapping as inevitable. But, it is equally true that in case of the overlapping, the Entry and the subject covered by it has to be interpreted by keeping in mind the purpose of the enactments made in exercise of the powers vesting in the Union or the State Legislature. Hypertechnicai approach is alien to the constitutional provisions. The constitutional scheme reflects the aspirations of the people and the resolution of the State to achieve the goals set forth in the Preamble, Chapters III and IV of the Constitution. The argument advanced on behalf of the appellant is nothing but an effort to wriggle out of the statutory liabilities imposed upon the appellants under the authority of law.
All the submissions made by the appellant in this behalf are without any substance, hence rejected.
Point No. 2;
9. The scope and the meaning of the 'Industry' as defined under Section 2(j) of the Central Act was thoroughly considered and exhaustively dealt with by the Supreme Court in Bangalore Water Supply and Sewerage Board v A. Rajappa and Others , wherein after referring to various provisions of the Act and its earlier pronouncements, the Supreme Court concluded:
'Industry', as defined in Section 2(j) and explained in the case of D.N. Banerji, supra, has a wide import.
(a) Where (i) systematic activity, (ii) organised by co-operation between employer and employee (the direct and substantial element is chimerical) (iij) 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) prima facie, there is an industry' in that enterprise.
(b) Absence of profit motive or gainful objective is irrelevant, be the venture in the public, joint, private or other sector.
(c) The true focus is functional and the decisive test is the nature of the activity with special emphasis on the employer-employee relations.
(d) If the organisation is a trade or business it does not cease to be one because of philanthropy animating the undertaking.
II. Although Section 2(j) uses words of the widest amplitude in its two limbs, their meaning cannot be magnified to overreach itself.
(a) 'Undertaking' must suffer a contextual and associational shrinkage as explained in Banerji's case, supra 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-employees basis, bears resemblance to what we find in trade or business. This takes into the fold 'industry' undertakings, callings and services, adventures 'analogous to the carrying on of trade or business'. All features, other than the methodology of carrying on the activity viz. in organizing the co-operation between employer and employee, may be dissimilar. It does not matter, if on the employment terms there is analogy.
III. Application of these guidelines should not stop short of their logical reach by invocation of creeds, cults or inner sense of incongruity or outer sense of motivation for or resultant of the economic operations. The ideology of the Act being industrial peace, regulation and resolution of industrial disputes between employer and workmen, the range of this statutory ideology must inform the reach of the statutory definition. Nothing less, nothing more.
(a) The consequences are (i) professions, (ii) clubs, (iii) educational institutions, (iv) co-operatives, (v) research institutes, (vi) charitable projects and (vii) other kindred adventures, if they fulfil the triple tests listed in I, supra, cannot be exempted from the scope of Section 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, no employees are entertained but in minimal matters, marginal employees are hired without destroying the non-employee character of the unit.
(c) If, in a pious or altruistic mission many employ themselves, free or for small honoraria or like return mainly drawn by sharing in the purpose or cause, such as lawyers volunteering to run a free legal services clinic or doctors serving in their spare hours in a free medical centre 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's 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's case , will be the true test. The whole undertaking will be 'industry' although those who are not 'workmen' by definition may not benefit by the status.
(b) Notwithstanding the previous clauses, sovereign functions, strictly understood (alone) qualify for exemption, not the welfare activities 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 sever-able, 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.
V. We overrule Safdarjung case, supra, Solicitors case , Gymkhana's case, Delhi University, supra, Dhanrajgirji Hospital's case5 and other rulings whose ratio runs counter to the principles enunciated above, and Hospital Mazdoor Sabha's case , is hereby rehabilitated.
The law laid down in Bangalore Water Supply and Sewerage Board's case, supra has consistently been followed by all the Courts in the Country till date.
10. Relying upon the aforesaid judgment and various other pronouncements of the Supreme Court, the Irrigation Department of the Government was held to be an Industry in Des Raj and Others v State of Punjab and Others.
In Dhari Gram Panchayat v Saurashtra Mazdoor Mahajan Sangh and Another, the Apex Court held Octroi Department of the Municipal Council to be an Industry. Council for Scientific and Industrial Research was hold to be an, Industry in Manganese Ore (India) Limited v Chandi Lal Sadu and Others. Similarly, Bihar State Food and Civil Supplies Corporation; Public Healtb Engineering Department of State; Haryana State Agricultural Marketing Board and Market Committee; Educational Institution; Khadi Gramadyog; Bihar Relief Committee; Companies engaged in Real Estate Business; Indian Red Cross Society; Anti-Locust Department of Government of India; Central Ordnance Depot; District Family Planning-cum-Health Office working under the Public Health and Family Planning Department of State Government; Tourism Department of the Government, Life Insurance Corporation, Banks, etc. have been held by various pronouncements of the constitutional Courts in the Country to be Industry.
11. Lured by the observations of two-Judges Bench of the Supreme Court in Coir Board, Ernakulam, Cochin and Another v P.S. Indira Devi and Others, the learned Counsel for the appellant has tried to persuade us to hold that the law laid down in Bangalore Water Supply and Sewerage Board's case, supra, requires reconsideration and in the light of the aforesaid observations made by the Two Judges Bench, the A.P.M.C. be held not to be an Industry. With great regard to the Hon'ble Judges constituting the Division Bench, we are still of the opinion that the law laid down in Bangalore Water Supply and Sewerage Board's case, supra, is the correct exposition of the provisions of law prevalent and applicable in the Country and no other view can be taken by this Court on the basis of the observations relied upon regarding which we too are having our own reservations.
12. After relying upon the various pronouncements of the Apex Court and referring to the provisions of both the Acts, the learned Single Judge rightly concluded that A.P.M.C. is an Industry within the meaning of Section 2(j) and that the provisions of the Central Act were applicable in the case.
Point No. 3:
13. Relying upon some observations made by the Apex Court in Madhyamik Siksha Parishad, Uttar Pradesh v Anil Kumar Mishra and Others , learned Counsel has submitted that merely by having been in the employment of the A.P.M.C. for 240 days, the respondents-workmen could not be directed to be either reinstated or paid the full back wages. The reliance of the appellant is misconceived. In that case the Supreme Court was dealing with the cases where the employees therein had been engaged for the work of preparing certificates to be issued by the appellant to the successful candidates at the examination conducted by it. The employees were paid at the rate of Rs. 12/- for 100 certificates, which was subsequently raised to Rs. 20/-. The services of the employees had been availed in view of the backlog of certificates to be cleared. After the backlog had been cleared, the services availed were discontinued. The employees challenged the discontinuance of their services by way of writ petitions submitting that as they were casual workmen, who had completed 240 days of work, they were liable to be retained in service and discontinuance of their services amounted to removal. The High Court directed the appellant to take the services of the employees as casual workers. Aggrieved by the order of the High Court, the employer-Parishad approached the Supreme Court and the Apex Court disposed of the appeals holding:
"We are unable to uphold the order of the High Court. There were 110 sanctioned posts in existence to which they could be said to have been appointed. The assignment was an ad hoc one which anticipatedly spent itself out. It is difficult to envisage for them, the status of workmen on the analogy of the provisions of Industrial Disputes Act, 1947, importing the incidents of completion of 240 days' work. The legal consequences that flow from work for that duration under the Industrial Disputes Act, 1947 are entirely different from what, by way of implication, is attributed to the present situation by way of analogy. The completion of 240 days' work does not, under that law import the right to regularisation. It merely imposes certain obligations on the employer at the time of termination of the service. It is not appropriate to import and apply that analogy, in an extended or enlarged form here".
It may further be noticed that even before the Supreme Court, the appellant-Parishad had offered to consider the case of the employees for purposes of their recruitment to the post of Lower Division Clerks as and when the vacancies arose. It has to be noticed that the employees therein had not approached the Labour Court for the enforcement of their rights under the Central Act. The law enacted by way of Central Act cannot be equated with the Service Rules, which were taken note of by the Supreme Court in the aforesaid case.
14. Section 25F of the Central Act provides that no workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched without applying the procedure prescribed by way of clauses (a), (b) and (c). The period of one year's continuous service has been defined under Section 25B of the said Act, which includes the workman in service of an employer for 240 days.
Retrenchment has been defined under Section 2(oo) of the Central Act to mean:
"retrenchment" means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as punishment inflicted by way of disciplinary action, but does not include:--
(a) voluntary retirement of the workman; or
(b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or
(c) 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
(d) termination of the service of a workman on the ground of continued ill-health.
The concept, object and the meanings assigned to the continuous service, length of service and its benefits under the Industrial Law are totally distinct and different. Principles of the service laws in the form of Rules and Regulations cannot be pressed into service for the purposes of resisting the claim of the workman, who is otherwise found to be governed by the provisions of the Central Act.
15. The Labour Court/Industrial Tribunal, in the instant cases had rightly found on facts that the termination of the services of the respondents amounted to retrenchment, which was liable to be set aside. Upon setting aside the order of termination, the Labour Court/Industrial Tribunal were justified in directing the reinstatement of the workmen. Upon their reinstatement, the workmen were entitled to the grant of full back wages on the basis of the law settled in this behalf.
16. After noticing the various pronouncements of the Apex Court, this Court in Management of Kolar District Co-operative Central Bank Limited, Kolar v Rama Rao and Others, held:
"Keeping in view the aim and object of the Act, the social purpose which is intended to be achieved by it, various pronouncements of the Apex Court and the scheme of the Act it can safely be held that:
(1) Upon reinstatement the workman would generally be entitled to the grant of full backwages. Withholding of full backwages would be an exception.
(2) Grant of such backwages can be directed normally from the date of service of the demand notice till the date of reinstatement of the workman.
(3) Grant of backwages can be withheld or denied upon proof of the fact that during the period of termination the workman had been gainfully employed. The burden of proving the gainful employment or the period of such employment shall always be upon the employer.
(4) The grant of backwages is however subject to the provisions of Section 11A of the Act. Under the peculiar circumstances of any case the Court may appropriately mould the relief with respect to the grant of backwages.
(5) Payment of backwages shall be directed to be determined in accordance with the service conditions of the workmen and the rules applicable thereto presuming the absence of the order of termination of the workmen".
17. There is no substance in any of the submissions made on behalf of the appellant. The appeals which are totally misconceived are hereby dismissed with costs assessed at Rs. 2,000/- in each of the appeal.