Ex and Non-Ex-Servicemen Truck Operators Union vs State of Himachal Pradesh & Ors.

Tarlok Singh Chauhan, J.

This Court on 06.08.2018 passed the following orders:-

“Arguments heard on question “whether group of truck operators so called association/union can be registered under the provisions of Trade

Unions Act, 1926â€​.

In order to adjudicate this question, the records of the petitioner-union was requisitioned from the Registrar of Trade Unions.

It is evident from the records that initially the petitioner-union was registered only as ‘Ex-servicemen Truck Operators Union’ pursuant to

application moved by seven ex-servicemen. However, later on, the non-ex-servicemen also joined this union and pursuant to such amalgamation, the

petitioner came to be registered as the ‘Ex and Non-Ex-servicemen Truck Operators Union’ as is evident from the certificate of the registration

of Trade Unions dated 29.01.2008. As per the rules and byelaws of the union, the object of the union is contained in Clause-2 thereof which reads

thus:-

“The object of the union is to provide transport facility to the people of the area of Tehsil Jaswan and to industries at Sansarpur Terrace.â€​

As regards membership, Clause-11 thereof provides as under:-

“The members shall be appointed initially on formation i.e. 5 Managing body plus 6 Executive, followed by election within two years.â€​

However, who can be enrolled as member of the union has not been specified in the rules and byelaws. In terms of the Trade Unions Act, 1926

(for short ‘the Act’), ‘Trade Union’ has been defined under Section 2(h) of the Act and reads thus:-

“Trade Union†means any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between

workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the

conduct of any trade or business, and includes any federation of two or more Trade Unions:

Provided that this Act shall not affect-

(i) any agreement between partners as to their own business;

(ii) any agreement between an employer and those employed by him as to such employment; or

(iii) any agreement in consideration of the sale of the goodwill of a business or of instruction in any profession, trade or handicraft.â€​

Under Chapter 2, Section 3, the appropriate Government has been vested with the power to appoint a person to be a Registrar of the Trade Unions

(for each State). Under Section 4, the mode of registration is provided and reads thus:-

“4. Mode of registration.-5[(1)] Any seven or more members of a Trade Union may, by subscribing their names to the rules of the Trade Union

and by otherwise complying with the provisions of this Act with respect to registration, apply for registration of the Trade Union under this Act:

1[ Provided that no Trade Union of workmen shall be registered unless at least ten per cent. or one hundred of the workmen, whichever is less,

engaged or employed in the establishment or industry with which it is connected are the members of such Trade Union on the date of making of

application for registration:

Provided further that no Trade Union of workmen shall be registered unless it has on the date of making application not less than seven persons as its

members, who are workmen engaged or employed in the establishment or industry with which it is connected.]

2[(2) Where an application has been made under sub-section (1) for the registration of a Trade Union, such application shall not be deemed to have

become invalid merely by reason of the fact that, at any time after the date of the application, but before the registration of the Trade Union, some of

the applicants, but not exceeding half of the total member of persons who made the application, have ceased to be members of the Trade Union or

have given notice in writing to the Registrar dissociating themselves from the applications.]

Section 5 provides for the manner in which the application for registration is to be made, whereas, Section 6 relates to the provisions as contained in

the rules of a Trade Union. Registration is dealt with under Section 8 and reads thus:-

“8. Registration.- The Registrar, on being satisfied that the Trade Union has complied with all the requirements of this Act in regard to registration,

shall register the Trade Union by entering in a register, to be maintained in such form as may be prescribed, the particulars relating to the Trade Union

contained in the statement accompanying the application for registration.â€​

The minimum requirement about membership of a Trade Union has been prescribed in Section 9A and the same reads thus:-

“1[9A. Minimum requirement about membership of a Trade Union.- A registered Trade Union of workmen shall at all times continue to have not

less than ten per cent. or one hundred of the workmen, whichever is less, subject to a minimum of seven, engaged or employed in an establishment or

industry with which it is connected, as its members.]â€​

Chapter III deals with the rights and liabilities of registered Trade Unions. Chapter IV provides for power of the appropriate Government to make

regulations, whereas, Chapter V deals with penalties and procedure.

As noticed above, the appropriate Government has been conferred power to make regulations under Section 29 of the Act. In terms thereof, the

Central Trade Union Regulations, 1938, has been prescribed wherein regulation No.3 deals with an application for registration of a Trade Union which

is prescribed in Form A, attached with this form -Schedule I- List of Officers, Schedule II-Reference to Rules and Schedule III- Statement of

Liabilities and Assets along with List of Securities. The other provisions of the regulations are really not necessary for the adjudication of this petition

and thus are not being referred to.

Adverting to the definition of the ‘Trade Union’, it would mean- any combination, whether temporary or permanent, formed primarily for the

purpose of regulating the relations between workmen and employers or between workmen and workmen, or between employers and employers, or for

imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more Trade Unions.

As observed earlier, there is nothing in the byelaws to indicate as to who all can become members of the union. That apart, as per section (supra),

an union can be registered when it is formed primarily for regulating the relations between workmen and employers or between workmen and

workmen.

Admittedly, the members of the union are not employers or even workmen and are rather owners of the truck, who load them on hire. In some

cases, the truck drivers may also be the owners of the trucks. So, there is no question of employer and employee relationship. As a matter of fact, in

most of the cases, the truck owners, who are members of the union, have formed a syndicate or cartel in order to restrict the supply of trucks in the

area of operation of the society, so that they can charge fare at their own rates and restrict the union members to play in the hands of the local

businessmen. It is common knowledge that they do not allow the outsiders to ply the trucks and take load without paying some sort of money through

receipt which in common parlance is termed as ‘parchi’.

The principals of this union are not employers by way of commanding workmen and running any industrial unit. The so-called union has been

formed with the sole purpose of regulating freight charges to be paid to them by the residents of Tehsil Jaswan and to industries at Sansarpur Terrace

for transporting goods outside and for protecting the interests of the truck operators operating in such area. Therefore, this arrangement cannot also be

said to be regulating trade relations between workmen and employer or between workmen and workmen.

In the true sense of the term the truck owners are not employers. Even if it is conceded that it is an association of employers, even then this

association has not been formed to regulate the relations between employers and employers and thus does not fall within the definition of ‘Trade

Union’.

Even otherwise, it is common knowledge that in most of the cases where the Trade Unions are there, the other trucks cannot ply or engage except

on ‘parchi’ payment which is mandatory. Therefore, by indulging in this activity, it cannot also be held that the petitioner is an union formed for

imposing restrictive conditions on the conduct of any trade or business.

That apart, now under the garb of this clause, it is frequently noticed in umpteen number of cases that have come up before this Court wherein

there are not only repeated claims by Hydel Projects, but also by industrialists that the truck unions are charging ‘gunda tax’. Reference in this

regard can be conveniently made to the judgment rendered by a Division Bench of this Court in M/s Met Trade India Ltd. Versus State of Himachal

Pradesh and others , 2013 (3) HLR 1730. The petitioner therein had approached the Court with a grievance that respondent No.7, a Cooperative

Society, was obstructing the business activities of the petitioner and forcing it to engage the vehicles belonging to the Cooperative Society alone and

not to any other person of their choice and this Court while allowing the writ petition observed as under:-

“4. It is not in dispute that the petitioner is doing business of manufacturing of aluminum sheets and other allied products at Damtal, District

Kangra, Himachal Pradesh. In connection with the said business, the petitioner is required to import material and export the finished items from

Damtal to other destinations outside Damtal. Respondent No.7 Society is registered under the provisions of the Himachal Pradesh Cooperative

Societies Act. The area of operation of respondent No.7 Society covers the revenue jurisdiction of development block Indora (except villages

Kandwal, Lodhwan, Rapar and Gangath) and Development Block Fatehpur in Kangra District of Himachal Pradesh and such other areas as may be

inducted lawfully at any time or from time to time as is mentioned in the approved bye-laws of the Society, in particular Clause 3 thereof. The objects

for which the Society has been registered are mentioned in Clause 5, amongst others, to manage, govern, control, regularize the conduct of truck

operating business within the area of operation and to undertake such other measures to spread knowledge of cooperative principles and practices and

to undertake other activities as are incidental and conducive to the attainment of the other objects mentioned in clause 5. The fact that respondent

No.7 Society is a registered Society and has the area of operation which is overlapping with the activities of the petitioner does not mean that

respondent No.7 Society can impose restrictions on the petitioner in relation to their business activities including regarding the movement of trucks

engaged by the petitioner.

The perception of respondent No.7 Society that it can regulate the movement of the trucks to be engaged by the petitioner is completely ill-advised

and mis-informed. The terms specified in bye-laws can only bind the members of the Society and cannot be the basis to govern the activities of third

party who does not have any dealing with the Society in any manner.

Reliance placed by respondent No.7 Society on their bye-laws, therefore, is inapposite and cannot be the basis to interdict the business activities of

the petitioner and including to obstruct the movements of the trucks employed by the petitioner from third parties who are not the members of

respondent No.7 Society. Respondent No.7 is not the repository of authority, which vests in the State. Respondent No.7 Society in that sense is not an

instrumentality of the State authorized and empowered or delegated with the authority to regulate the movements of the trucks in its area of operation.

This is complete mis -information and mis-interpretation of the provisions of the bye-laws. The bye-laws, as aforesaid, would bind only the Society and

the members inter se and not the third parties or their activities.

A priori, if respondent No.7 Society continues to obstruct the activities of the petitioner, respondent No.3 must take immediate action in the matter,

in accordance with law. Failure to comply with that obligation will not only be abdication of power of respondent No.3 but also will be viewed as

committing contempt of this Court in terms of this order. Similarly, respondents No.4&5 must take immediate action against all the erring Societies, if

they are forcing some third parties or obstructing third parties from engaging in their business activities in any manner. If such grievance is brought

before the said authorities, the State authorities must immediately take action in accordance with law.

We place on record the statement made by the counsel for the State that respondent No.7 Society has been directed by the Registrar to refrain

from acting upon bye law 5(iv) or to resort to the said bye-law for creating obstruction to the petitioner and similarly placed persons who are not

members of respondent No.7 Society. If that direction is not complied by respondent No.7, we have no manner of doubt that respondent Nos.4&5

may take appropriate measures against respondent No.7 Society in accordance with law.

The counsel for respondent No.7 was at pains to point out that the practice followed by respondent No.7 is being adopted even at other places

across the State. By imposing restriction on respondent No.7, it would lead to an anomalous situation. We are not concerned with any other society. In

the present petition, as aforesaid, respondent No.7 Society cannot rely on its bye-laws and arrogate to itself authority to regulate the transport business

in the entire area even in respect of persons who are not its members. That cannot be countenanced.

Counsel for respondent No.7 has also contended that the petitioner Industry has been permitted to start the business activities in the stated area by

the State Government on condition that they will employ 70% of the locals in all its manufacturing and transport activities. That cannot be a ground to

usurp the power which vests in the State Government. It is for the State Government to consider whether engagement of trucks of third parties by the

petitioner results in breach of that condition. It will be open to the State Government to proceed against the petitioner on that basis if so advised in

accordance with law.

In the circumstances this petition ought to succeed and is disposed of on the above basis.â€​

Notably, the aforesaid was the case that pertained to a Cooperative Society. However, example of Trade Union obstructing business activities is

also not wanting and in this regard, I may conveniently refer to a number of writ petitions that were filed in this Court, for example, CWP Nos.11911

of 2011, titled as ‘Rakesh Kumar and others versus State of H.P. and others’, 10826 of 2011 titled as Hussain Mohd. & others versus State of

H.P. and others, 4901 of 2013 titled as M/s Koyla Industries versus State of H.P. & others, 3307 of 2010 titled as M/s Addinath Rubbers Pvt. Limited

versus State of H.P. and others, 2259 of 2010 titled as Shivani Alhuwalia versus State of H.P. and others, 2213 of 2010 titled as Ashish Kumar Gupta

versus State of H.P. and others, 1494 of 2009 titled as Mohan Goel versus State of H.P. and others, 1481 of 2009 titled as Subhash Chandar Agarwal

versus State of H.P. & others, 1257 of 2009 titled as Rajesh Kumar Khanna versus State of H.P. and others, and 1101 of 2012 titled as Ravi

Mahandru versus State of H.P. and others.

This Court on 09.05.2013, in majority of the writ petitions, as mentioned above, had passed the following orders:-

“The case made out in these petitions, is that, the Vehicle Operator Unions across the State have indulged in unauthorizedly collecting staggering

amount from their members as well as non members. It appears that most of the Unions are registered unions under the provisions of Trade Union

Act and/or under the provisions of H.P.State Co-operative Societies Act. The Unions represented through their respective counsel before this Court,

have disputed the claim in these petitions. According to them, they collected the amount from their members, which was a voluntary contribution by

the members, in accordance with the resolution passed by the general body. The Mangal Trucks Operator Union has also taken the same stand, but

nevertheless, has deposited the amount so collected by it in this Court. Rest of the unions, have not done that so far. In this background, we deem it

appropriate that the Registrar under the provisions of Trade Union Act or for that matter Co-operative Societies Act, must forthwith initiate action

against the remaining unions to call upon them as to why their registration under the respective enactment should not be revoked and cancelled for the

acts of commission and omission. This would be the minimum action that can be proceeded against the erring unions forthwith. In those proceedings, it

will be upon for the unions to offer explanation as may be available to them, which will have to be considered by the Registrar appropriately and in

accordance with law. The concerned Registrar shall issue notices to the respective unions in this regard, within two weeks from today, calling upon

the notices to submit their explanation within two weeks from the date of the notice. The explanation so submitted by the concerned unions be

considered and appropriate decision be taken by the Registrar before the next date of hearing of these petitions and compliance report in that behalf

be submitted to this Court in respect of each of those unions.

We may also add that if during the enquiry by the Registrar, it is noticed that the collection done by the concerned unions was not in accordance

with law, it may give rise to initiation of appropriate proceedings against the office bearers of the concerned unions, including the criminal prosecution

for appropriate penal offences under the relevant enactments. That would be the second stage after Registrar considers the case of the concerned

unions for deregistration, cancelling or revoking the registration granted to the concerned unions.

In case, some of the unions are not registered under any of these enactments, the Sub-Divisional Magistrate of the concerned areas must

immediately take appropriate action as may be necessary against the office bearers of the said unions for bringing back the amount already collected

by them by misrepresentation and without authority of law. The concerned Sub-Divisional Magistrates shall submit compliance report in that regard

before the next date of hearing.

We make it clear that the proposed action should not be limited to the unions, who are parties to the present proceedings but also to proceed against

other unions, who are not parties by name in the present proceedings-as these petitions have been treated as public interest litigation. We also direct

the Commissioner of Police/ Superintendent of Police of the respective areas in the State to issue direction to the local police officials to furnish

information about such unauthorized activities undertaken by the unions in their respective areas and that information should be shared with the

Registrar and/or Sub-Divisional Magistrate of the concerned areas within two weeks from today.

List on 24th June, 2013. CWP No.2259 of 2012. Not on the Board. List this petition along with CWP No.11911 of 2011 and connected matters on

24th June, 2013. Copy dasti.â€​

The lead case being CWP No.11911 of 2011 was ultimately disposed of by this Court vide order dated 16.09.2013 which reads thus:-

“In view of the corrective measures taken by the State Authorities in consonance with the directions issued by this Court from time to time,

coupled with the fact that respondent No.5 has deposited the amount unauthorizedly collected by it, in this Court, nothing survives for consideration in

this petition. The only question is about the apportionment of the amount, which has been deposited by respondent No.5, which, we are inclined to

direct, as submitted by the learned Advocate General, to transfer it to the Chief Minister’s Relief Fund as it can be used for common general

public purpose. The Registry is directed to take necessary steps in this behalf forthwith. Needless to observe that respondent No.5 shall not venture to

collect such unauthorized amounts in the name of ‘Goonda Tax’ or otherwise in future.

Although, we are disposing of this petition, we hope that the State Authorities as and when informed about similar unauthorized activities being

carried out by any other person or Union/Society, shall take necessary steps not only to restrain the said entity from indulging in such activity but also

to recover the amount so collected by the concerned entity and transfer that amount to the Chief Minister’s Relief Fund in terms of this order, as

has been done in the case of respondent No.5.

The petition is disposed of accordingly, so also the pending application(s), if any.â€​

Unfortunately, this practice of collecting ‘gunda tax’, despite the orders passed by this Court, has not stopped and is still continuing, as would

be evident from a recent case in Civil Writ Petition No.7538 of 2014, wherein as recent as on 12.03.2018, it was brought to the notice of this Court

that the Trade Unions were still collecting ‘gunda tax’, as is evident from the orders passed on the said date, which reads as under:-

“On instructions learned Counsel representing the petitioners submits that respondent No. 9 is still collecting the Gunda Tax occasionally. Such

submissions, however, have been refuted by Mr. B.C. Negi, learned Senior Advocate representing the said respondent being wrong. Anyhow he

seeks time to have instructions in this regard. Allowed. We leave it open to consider this aspect of the matter at the time of further hearing in this

matter. List for the purpose on 24.4.2018, as prayed.â€​

Notably, the menace of ‘gunda tax’ is not only confined to the State but is rampant throughout the Country. A Division Bench of the

Allahabad High Court in Sushil Kumar Srivastava, Advocate versus State of U.P. and others, 1999 (1) AWC 821, while dealing with a similar issue

held that this kind of forcible extortion of money is wholly illegal and has to be stopped forthwith as this is hindering the progress of business and

commerce in the State. It was further held that the situation can no longer be tolerated and, therefore, directions were issued to the State Government,

in particular, the Chief Secretary, the Home Secretary and the Director General of Police to deal with the law and order problem and take stern action

against this kind of hooliganism and illegal realization of money throughout the State. In turn, the District Magistrates and Senior Superintendents of

Police, in all the Districts of the State, were directed to take stern action in the matter.

Adverting to the facts, it is not that the groups of truck operators so called association/union perse are not entitled to be registered as Trade

Unions, but then before being registered, they are required to qualify as ‘Trade Unions’, as contemplated under Section 2(h) of the Act.

Apart from what has been observed above with regard to the majority of Trade Unions not fulfilling or qualifying for even being termed as Trade

Unions, one of the functional and fundamental test to decide this question qua the existing Trade Unions would be whether such unions have been held

entitled to exemption under Section 10(24) of the Income Tax Act. As noticed above, the State and its authority have virtually not bothered to ensure

and satisfy themselves both subjectively and objectively before and at the time of registering a Trade Union.

Therefore, in the given facts and circumstances, the question as posed is answered by concluding that even though there perse is no bar for the

group of truck operators association/union to be registered as Trade Union under the Trade Unions Act, but that, shall, however, be subject to its

proving and establishing the conditions as contemplated under Section 2(h) of the Act. The question is accordingly answered. As observed above,

since the Registrar of Trade Unions has not undertaken the aforesaid exercise, therefore, he is directed to look into the registration of all the Truck

Operators Unions in the State and continue with their registration only if they are found to be eligible to be registered as such under Section 2(h) of the

Act. Such exercise be completed as expeditiously as possible and in no event later than 31st December, 2018.