Rajasthan High Court - Jaipur
State Of Raj vs Suresh Chand Sharma & Anr on 27 March, 2012
Author: Arun Mishra
Bench: Arun Mishra
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR :: JUDGMENT :: D.B. CIVIL SPECIAL APPEAL (WRIT) NO.405/2003 State of Rajasthan Vs. Suresh Chand Sharma 27.03.2012 HON'BLE THE CHIEF JUSTICE MR. ARUN MISHRA HON'BLE MR. JUSTICE NARENDRA KUMAR JAIN-I Dr.M.S.Kachhawa, Addl.Govt.Counsel for appellant. Mr.Govind Gupta on behalf of Mr.M.F.Baig for the respondent.
The intra court appeal has been preferred as against order dated 10.1.2003 passed by Single Bench dismissing Civil Writ Petition No.158/2002.
Question raised is whether Forest Department is an industry or not.
Counsel appearing on behalf of the appellant has submitted that the Forest Department is not an industry and thus, the provisions of Section 25-F are not applicable to it.
The High Court Madhya Pradesh has considered various decisions of the Apex Court on the question involved in Centre of Indian Trade Union & Anr. Vs. State of Madhya Pradesh & Ors., 2002 (1) MPHT 179. Following is the relevant discussion :-
14. The foremost question for consideration is whether the Public Works Department and other departments of State of M.P. can be treated to be within the ken of "industry" as defined in Section2(j)of Industrial Disputes Act.
15. To understand concept of "industry" the decision in the case of Bangalore Water Supply (supra) is the last word and is a landmark decision which holds the field. Two Judges Bench of Hon'ble Supreme Court took a different view in Sub-Divisional Inspector of Posts, Vaikkam v. Theyyam Joseph: 1996 (8) SCC 489, and in Bombay Telephone Canteen Employees Association Prabhadevi Telephone Exchange v. Union of India and Anr.: AIR 1997 SC 2817. The Supreme Court in General Manager, Telecom v. S. Sriniwas Rao and Ors.1998 (1) SCSLJ 106:AIR 1998 SC 656, held that Telecommunication Department of Govt. of India is an "industry". Their Lordships further held that a Bench of lesser strength of the Supreme Court cannot take a contrary view to the decision in Bangalore Water Supply case (supra) recorded by the Bench comprising of seven Judges long back in 1978 and the decisions in Theyyam Joseph (supra) and Bombay Telephone Canteen Employees (supra) taking a contrary view that Government department cannot be treated to be an "industry" were overruled.
16. In Coir Board, Emakulam, Cochin and Anr. v. Indira Devi P.S. and Ors.: (1998) 3 SCC 259, two Judges Bench of the Hon'ble Supreme Court again doubted the correctness of the Bangalore Water Supply case (supra) and referred the matter to the Hon'ble Chief Justice for referring the point to a larger Bench of nine Judges. The Supreme Court in Coir Board Ernakulam, Kerala State and Anr. v. Indira Devi P.S. and Ors.: (2000) 1 SCC 224, declined to refer the matter to a larger Bench. The Hon'ble Chief Justice and two other Judges held that: "Bangalore Water Supply case (supra) does not in our opinion require reconsideration".
18. The definition of "industry" excludes any activity of the Government relatable to the sovereign functions of the Government. "Industry" means systematic activity carried on by co-operation between an employer and the employee for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes. It is immaterial any capital has been invested; profit motive is also immaterial. The Supreme Court in Bangalore Water Supply case (supra), held as under :--
"161. "Industry" as defined in Section2(j)and explained in Banerji : AIR 1953 SC 58 has a wide import :
(a) Where (i) systematic activity, (ii) organized by co-operation between employer and employee (the direct and substantial element is chimerical), (iii) for the production and/or distribution of goods and services calculated to satisfy human wants and wishes (not spiritual or religious but inclusive of material things or services geared to celestial bliss i.e., making, on a large scale prasad or food) prima fade, 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 organization is a trade or business it does not cease to be one because of philanthrophy animating the undertaking.
(II) Although Section2(j)uses words of the widest amplitude in its two limbs, their meaning cannot be magnified to overreach itself.
(a) "Undertaking" must suffer a contextual and associational shrinkage as explained in Banerji and in this judgment; so also, service, calling and the like. This yields the inference that all organized activity possessing the triple elements in I (supra), although not trade or business, may still be "industry" provided the nature of activity viz. the employer-employee 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 anamoly.
(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 test listed in I (supra), cannot be exempted from the scope of Section2(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 of clause, 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 the which qualify for exemption, others not, involves employees on the total undertaking, some of whom are not "workmen" as in the University of Delhi case : AIR 1963 SC 1873 or some departments are not productive of goods and services if isolated even then, the pre-dominant nature of the services and the integrated nature of the departments as explained in the Corporation of Nagpur : AIR 1960 SC 675 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 scverable, then they can be considered to come within Section2(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 : AIR 1970 SC 1407, Solicitor's case Gymkhan : AIR 1968 SC 554, Delhi University : AIR 1963 SC 1873, Dhanrajgirji Hospital : AIR 1975 SC 2032 and other rulings whose ratio runs counter to the principles enunciated above, and Hospital Mazdoor Sabha : AIR 1960 SC 610 is hereby rehabilitated."
19. As per the decision of the Supreme Court in Bangalore Water Supply (supra) where there is a systematic activity organized by co-operation between the employer and employee for the production and/or distribution of goods and services calculated to satisfy human wants and wishes, prima facie there is an "industry" in that enterprise. The true focus is functional and the decisive test is the nature of the activity with special emphasis on the employer-employee relations. If the organisation is a trade or business, it does not cease to be one because of philanthrophy animating the undertaking. Although Section2(j)uses words of the widest amplitude in its two limbs, their meaning cannot be magnified to overreach itself. Application of guidelines should not stop short of their logical reach. Their Lordships held that professions, clubs, educational institutions, co-operatives, research institutes, charitable projects and other kinds of adventures, if they fulfil the triple tests cannot be exempted from the scope of Section2(j)of the Industrial Disputes Act. The definition was subsequently amended to carve out certain exceptions. The predominant nature of the services and the integrated nature of the departments as explained in the Corporation of Nagpur : AIR 1960 SC 675 will be the true test.
20. Sovereign function, strictly understood, (alone) qualify for exemption, not the welfare activities or economic adventures undertaken by Government or statutory bodies. Even in departments discharging sovereign functions, there may be industries. They are substantially severable and such units constitute industry within the meaning of Section2(j)of Industrial Disputes Act.
21. The decision in Bangalore Water Supply (supra) stands as most comprehensive case in law on the subject so far.
22. In All India Radio v. Smt. Santosh Kumar and Anr.AIR 1998 SC 941, All India Radio and Doordarshan are held to be an "industry" within the meaning of Section2(j)of Industrial Disputes Act. In Agriculture Produce Marketing Committee v. Shri Ashok Harikuni and Anr.2000 (2) SCSLJ 294:2000 (2) ATJ 682:: AIR 2000 SC 3116, the Supreme Court held that none of the activities of the Marketing Committee can be considered to be sovereign function in dominant nature and the pre-dominant object is regulation and control of trading of agricultural produce, hence it is an "industry" within the meaning of Section2(j)of Industrial Disputes Act. In Kamani Properties Ltd. v. State of West Bengal1990 (5) SLR 61, a company incorporated under the Companies Act owned several mansion houses known as Karnani Mansions and was providing several facilities to its tenants and employed persons like Sweepers, Plumbers, Malis, Liftman, Durwan, Pumpmen, Electric and other mistries, bill collectors and bearers for the purpose of providing various facilities. It was held to be an industry within the meaning of Section2(j)of Industrial Disputes Act.
23. In Chief Conservator of Forests v. Jagannath Maruit Kondhare,1996 (1) SLR (SC) 56, the question considered by the Supreme Court was whether the functions of a forest department of State for creation of a park under bio-aesthetic development for the benefit of the urban population could be called sovereign function. The Supreme Court held that functions whenever are inalienable can be called sovereign function. It intended to fulfil bio-aesthetic, recreational and educational aspirations of the people which will indirectly benefit producing enlightened generation of conservationists of the nation inclusive of forests and wild life for the future. The Supreme Court held that the same cannot be regarded as a part of inalienable or inescapable function of the State as such work could well be undertaken by an agency which is not required to be even an instrumentality of the State. These functions fall within the ambit of "industry" under Section2(j)of the Industrial Disputes Act. In Gurmail Singh v. State of Punjab,: (1991) 1 SCC 189, it was held that running Tubewells constitutes ''industry" whether it is by Government or Corporation. There is no incompatibility in applying some of the provisions of the Industrial Disputes Act to the persons in the service of Government. In Management of Dandkamnya Project Koreput v. Workman through Rehabilitation Employees Union and others: AIR 1997 SC 852, the project undertaken by the Govt. of India to rehabilitate refugees from Pakistan was held to be an "industry".
24. Octroi department of Municipal Corporation was held to be an "industry" by the Supreme Court in(1988) 1 SCWR 66. Council of Industrial Research and Systematic Activity was also held to be an "industry" in Manganese Ore (India) Ltd. v. Chandi Lal Sadu and Ors.,1991 (1) UJSC 1, as it fulfil the triple test laid down in Bangalore Water Supply case (supra). In Gopal v. Administrative Officer, M.P. Khadi and Village Industries Board and Ors.: AIR 1986 SC 504, the Supreme Court held that Khadi & Village Industries Board was an "industry". General Administration Department of the Municipal Board was also held to be an "industry" by the Supreme Court in Samishta Dube v. City Board, Etwah and Anr.: AIR 1999 SC 1056.
25. The decision of Full Bench of the Punjab & Haryana High Court1983 (1) LLJ 309, relied on by the learned arbitrator was overruled by the Supreme Court in Des Raj v. State of Punjab and Ors.: AIR 1988 SC 1182. Irrigation department was held to be an "industry"; the Supreme Court held that :--
In Dinesh Sharma v. State of Bihar1983 BLJR 207:(1982 LabIC 125),a Division Bench of the Patna High Court was considering if the Public Health Engineering Department of the State of Bihar was an industry. In Paragraph 8 of the judgment reliance was placed on the Bangalore Water Supply case (supra) and the Nagpur Corporation case (supra) and it was held that the said department of the State Government of Bihar was an industry. In Chief Engineer, Irrigation, Orissa v. Harihar Patra1977 Lab IC 1033, a Division Bench of the Orissa High Court was considering whether the Salandi Irrigation Project in the State was an industry. The High Court relied upon the earlier Full Bench decisions of this Court which we have referred to above, and came to hold that the irrigation project was an industry.
The Administrative report of the facts found by the High Court in the instant case have attempted to draw out certain special features. The legal position has been indicated in the earlier part of our judgment. On the tests, as already laid down in the judgments, we do not think these facts found in this case can take out the Irrigation Department outside the purview of the definition of "industry". 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. We have not been able to gather as to why even six years after the amendment has been brought to the definition of industry in Section2(j)of the Act the same has not been brought into force. This Court on more than one occasion has indicated that the position should be clarified by an appropriate amendment and when keeping in view the opinion of this Court, the law was sought to be amended, it is appropriate that the same should be brought into force as such or with such further alterations as may be considered necessary, and the legislative view of the matter is made known and the confusion in the field is cleared up."
26. The main function as per Deshraj (supra) of the irrigation department when subjected to dominant test clearly come within the ambit of "industry".
27. A Full Bench of Rajasthan High Court in 1994 Labour & Industrial Cases 345, held that department of Panchayat Samiti engaged in the work of construction of roads, buildings and tanks and employing staff in this regard is an industry. Public Health Wing of the Public Health Engineering Department under the State Government was held to be an "industry" by the Kerala, Bombay and Rajasthan High Court respectively in1979 Lab IC 255(Ker),1991 Lab IC 1385(1392) (Bom) and 1983 Rajasthan Law Reporter 938. A Division Bench of this Court also in G.M,, Bank Note Press v. Chhattar Singh and Ors.1991 MPLJ 615, held that nature of activity is the determining factor. Only because State conducts an activity, it cannot become a sovereign function.
28. To come to the conclusion that PWD and other departments of the State are not "industry" the main plank of the arbitration award is Full Bench decision of Punjab & Haryana High Court in State of Punjab v. Kuldeep Singh (supra) which was specifically overruled by the decision of the Supreme Court in Deshraj v. State of Punjab (supra).
29. The learned arbitrator further relied on the decision of State of Tamil Nadu v. Presiding Officer, Principal Labour Court, (supra) which is also absolutely of no avail as in the abovesaid decision the Full Bench decision of State of Punjab v. Kuldeep Singh (supra) was followed which stood specifically overruled by Supreme Court in Deshraj' case (supra). The respondents have heavily relied upon in the return the decision of State of Tamil Nadu v. Principal Labour Court (supra) which stands expressly contrary to the decision of Supreme Court in Deshraj's case and Madras High Court has also likewise arbitrator followed the overruled decision of Full Bench of Punjab & Haryana High Court which stood overruled way back in the year 1988. Thus, the decision of Madras High Court has absolutely no force as precedent. The decision of State of Tamil Nadu v. Principal Labour Court (supra) does not lay down the correct law in view of the decision of the Supreme Court in Deshraj's case (supra).
30. The respondents have relied upon decision of Physical Research Laboratory v. K.G. Sharma: AIR 1997 SC 1855. In the said decision essential element of carrying the activity of research for benefit or use of others was missing. The activity was not carried for benefit or use of others nor it was engaged in commercial activity. The decision of Physical Research Laboratory runs on its own facts and has no relevance to the instant case as the activity of the PWD and irrigation department is for the benefit and use of others; is for human benefit and is not inalienable. The respondents have relied on decision of Executive Engineer (State of Karnataka) v. K. Somasetly and Ors.,: (1997) 5 SCC 434, their Lordships held that the irrigation department and telecommunication department are not "industry". The decision was rendered by two Judges Bench of the Hon'ble Supreme Court and it took similar view as was taken in Theyyam Joseph (supra) and Bombay Telephone Canteen Employees (supra). The matter was reconsidered by the Hon'ble Supreme Court in General Manager, Telephone v. S. Sriniwas Rao, AIR 1998 SC 656, and the decision of Theyyam Joseph (supra) and Bombay Telephone Canteen Employees Association v. Union of India and Anr. (supra) were overruled. The Supreme Court in General Manager, Telecom v. S. Sriniwas Rao (supra) held as under :--
A two-Judge Bench of this Court in Theyyam Joseph's case (supra) held that the functions of the Postal Department are part of the sovereign functions of the State and it is, therefore, not an "industry" within the definition of Section2(j)of the Industrial Disputes Act, 1947. Incidentally, this decision was rendered without any reference to the seven-Judge Bench decision in Bangalore Water Supply (supra). In a later two-Judge Bench decision in Bombay Telephone Canteen Employees' Association case (supra), this decision was followed for taking the view that the Telephone Nigam is not an "industry". Reliance was placed in Theyyam Joseph's case (supra), for that view. However, in Bombay Telephone Canteen Employees' Association' case (i.e. the latter decision), we find a reference to the Bangalore Water Supply case. After referring to the decision in Bangalore Water Supply, it was observed that if the doctrine enunciated in Bangalore Water Supply is strictly applied, the consequences is "catastrophic". With respect, we are unable to subscribe to this view for the obvious reason that it is in direct conflict with the seven-Judge Bench decision in Bangalore Water Supply case (supra) by which we are bound. It is needless to add that it is not permissible for us, or for that matter any Bench of lesser strength, to take a view contrary to that in Bangalore Water Supply (supra) or to by-pass that decision so long as it holds the field. Moreover, that decision was rendered long back nearly two decades earlier and we find no reason to think otherwise. Judicial discipline requires us to follow the decision in Bangalore Water Supply case (supra). We must, therefore, add that the decision in Theyyam Joseph (supra) and Bombay Telephone Canteen Employees'Association (supra), cannot be treated as laying down the correct law. This being the only point for decision in this appeal, it must fail."
31. In view of above quoted observation of the Supreme Court, decision in a case of Somasetty to that extent cannot hold the field. In case of Himanshu Kumar Vidyarthi and Ors. v. State of Bihar and Ors.: (1997) 4 SCC 391, the question for consideration was the exclusion of application of Industrial Disputes Act to the extent appointments are regulated by statutory rules in a Government Department. It was held that each and every department of Government cannot be treated as an "industry"; the appointments in that case were covered by the statutory rules. No rules have been framed for recruitment of daily wage employees. Subsequent decision of the Supreme Court in General Manager, Telecom v. S. Sriniwas Rao has overruled the previous decisions. The Supreme Court has held in Coir Board's case (supra) that Bangalore Water Supply decision still holds the field and it does not require reconsideration by nine Judges Bench.
32. In subsequent decision in Municipal Corporation of Delhi v. Female Workers (Muster Roll) and Anr.: AIR 2000 SC 1274, the Municipal Corporation undertaking construction work of laying and repairing roads, etc. is held to be an "industry" which is akin to function of Public Works Department of State Government. In Agriculture Produce Market Committee v. Ashok Harikuni and Anr. (supra), the Supreme Court held Agriculture Produce Market Committee carries activity within the definition of "industry". The Supreme Court further held that sovereign functions are primarily inalienable function which the State could exercise. Welfare activity of the State cannot be said to be sovereign function. Absence of profit motive or fact that there is State monopoly does not make such enterprise sovereign. The Supreme Court further held that :--
"It is true various functionaries under this Act are creature of statute. But creation as such, by itself, cannot confer it the status of performing inalienable functions of the State. The main controlling functions and power is conferred on the market committee whose constitution itself reveals, except one or two rests are all are elected members representing some or other class from the public. In fact, all Governmental functions cannot be construed either primary or inalienable sovereign function. Hence even if some of the functionaries under the State Act could be said to be performing sovereign functions of the State Government that by itself would not make the dominant object to be sovereign in nature or take the aforesaid Act out of the purview of the Central Act.
Section2(a)of the Central Act defines "Appropriate Government" in relation to any industrial disputes concerning any industry carried on by or under the authority of Central Government, or railway company etc. and refers to larger number of corporations and corporate bodies which falls in the category of "industry". This indicates even Legislature's intends a very large arms of "industry", to include large number of enterprises to be industry to confer benefit to the employees working under it. In fact several corporations conferred with statutory powers also curtails individual rights like, through levy of demurrages, detention charges in the warehousing corporation under the Warehouse Corporation Act; Regulation of entry into airport, ATC, levy and regulation of taxes and fees by the international airport authority. Assessment and levy of damages as well as penalties by authorities under the Employees State Insurance Act and Employees Provident Fund Act. Though, each of the aforesaid corporations and statutory bodies are "industry". So one of the feeble submission that curtailment of right of an individual could only be by the exercise of sovereign power has also no merit."
The Supreme Court, thus, held aforementioned various corporations to be "industry" in view of the nature of duties and also the nature of sovereign functions.
33. In Corporation of the City of Nagpur v. Its Employees (supra), the following departments of the Corporation were declared to be "industry" :--
(i) Tax Department,
(ii) Public Conveyance Department,
(iii)Fire Brigade Department,
(iv) Lighting Department,
(v) Water Works Department,
(vi) Enforcement (Encroachment Department),
(vii)Sewage Department,
(viii)Health Department,
(ix) Market Department,
(x) Public Gardens' Department,
(xi) Public Works Department,
(xii)Assessment Department,
(xiii)Estate Department,
(xiv)Education Department,
(xv)Printing Press Department, (xvi)Building Department, and (xvii)General Administration Department.
34. Considering the aforesaid test in City of Nagpur (supra) and the nature of large number of similar departments, which have been held to be an "industry" by the Supreme Court in various decisions, the decision of the learned arbitrator, thus, cannot be said to be in accordance with law. It was probably not pointed out that decision of Full Bench of Punjab & Haryana High Court in Kuldeep Singh's case (supra) taking a view that Public Works Department is not "industry" was overruled by Supreme Court in Deshraj's case (supra) way back in the year 1988. Thus, error has crept in the award so passed. The decision of Madras High Court in State of Tamil Nadu v. Principal Labour Court (supra) relied on by arbitrator suffers with the same fallacy of following an overruled decision of Kuldeep Singh (supra). It also does not appear that the arbitrator considered what are the sovereign functions and what are the functions of the various departments and whether they were inalienable. The main discussion made by learned arbitrator was about the public works department only and function of which has to be held to be within the meaning of "industry" as defined under Section2(j)of the Industrial Disputes Act, 1947. The function is not alienable and the function which is performed by various wings of public works department cannot be said to be sovereign. The activities of PWD; constructions of the houses, roads and various other similar functions can be carried out by independent agency. Thus, learned arbitrator erred in law in coming to the conclusion that Government departments like PWD and other departments are not "industry" within the purview of definition of "industry" under Section2(j)of Industrial Disputes Act. Only sovereign functions are excluded from "industry" not each and every function carried out by the various departments of State. Thus, the award passed by the arbitrator cannot withstand the test of judicial scrutiny and the provisions of Industrial Disputes Act, 1947 are clearly applicable to the daily wage employees working in such departments. The learned arbitrators has erred in holding otherwise.
In view of the aforesaid discussion based upon decisions of the Apex Court, Forest Department has to be held an industry. Thus, we find the submission of counsel for the appellant to be baseless and the same is liable to be rejected.
Resultantly, the appeal is dismissed. Civil Misc.Stay Application No.1579/2003 is also dismissed.
(NARENDRA KUMAR JAIN-I),J. (ARUN MISHRA),C.J.
Skant/-
All the corrections made in the judgment/order have been incorporated in the judgment/order being emailed.
Shashi Kant Gaur, P