AI Structured Summary
Not yet generated for this judgment
Judgment
Rule.
Heard learned counsel for the parties. These Petitions challenge awards passed by the Labour Court at Mumbai in favour of the first Respondents
in both petitions, in a reference made to it under Section 10 of the Industrial Disputes Act, 1947. The controversy in the petitions is in a narrow
compass. The petitioner is a coÂoperative housing society, who had engaged both first Respondents as sweepers. Their services were terminated
later. Being aggrieved, they raised an industrial dispute and upon failure of conciliation, the same was referred by the State Government to the Labour
Court for adjudication. It was contended by the petitionerÂsociety that the petitionerÂsociety was not an 'industry' as defined under Section 2(j) of the
Industrial Disputes Act. The Labour Court, however, rejected the petitioner's contention and held that it was an industry; primarily because the court
was of the view that it was duly proved before it that the petitionersociety had let out a part of its terrace for installation of telephone transmission
tower and was earning income from the licensee. The court held that since the petitioner had indulged in a commercial activity of letting out its
premises to outsiders for whom services had to be rendered by the Respondents such as parking of vehicles and other services, this activity made the
petitioner an 'industry' within the meaning of Section 2(j) of the Act.
What amounts to an industry is succinctly laid down by the Supreme Court in the case of Banglore Water Supply and Sewerage Board Vs. A.
Rajappa and ors1978(ii) SCC Â 213. The observations of the court on the subject are quoted below:
“140. 'Industry', as defined in Section 2(j) and explained in Banerji (supra), has a wide import. (a) Where (i) systematic activity, (ii) organized by
coÂoperation 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
e.g. 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 and other sector.
(c) The true focus is functional and the decisive testis the nature of the activity with special emphasis on the employerÂemployee relations.
(d) If the organization is a trade or business it doesnot cease to be one because of philanthropy animating the undertaking.â€
The expression “Undertaking†appearing in the definition of “Industry†under Section 2(j) was also explained by the Supreme Court in the
following words:Â
“(a) 'Undertaking' must suffer a contextual and associational shrinkage as explained in Banerji (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 employerÂemployee 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 the trade or business'. All features, other than the
methodology of carrying on the activity viz. in organizing the coÂoperation between employer and employee, may be dissimilar. It does not matter, if
on the employment terms there is analogy.â€
To decide whether, going by its activities, the undertaking would be an industry or not in case where there are complex activities carried out by it,
the Supreme Court in Banglore Water Supply and Sewerage Board case laid down the dominant nature test in the following words:Â
“143. The dominant nature test:
(a) Where a complex of activities, some of whichqualify for exemption, others not, involves employees on the total undertaking, some of whom are not
'workmen' as in the University of Delhi case (supra) 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 (supra), 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, sovereignfunctions, strictly understood, (alone) qualify for exemption, not the welfare activities or economic
adventures undertaken by government or statutory bodies.
(c) Even in a departments discharging sovereignfunctions, if there are units which are industries and they are substantially severable, then they can be
considered to come within Section 2(j).
(d) Constitutional and competently enactedlegislative provisions may well remove from the scope of the Act categories which otherwise may be
covered thereby.â€
These broad principles laid down by the Supreme Court in Banglore Water Supply case were applied by it to the particular case of a housing
society in Som Vihar Apartment Owners' Housing Maintenance Society Ltd. Vs. Workmen C/o Indian Engg. & Genl. Mazdoo2r 002(9)SCC Â 652.
That was a case where the appellant before the court was an entity which was said to be an association of apartment owners, rendering services to
the latter. It was contended before the Court that the employees were not rendering personal services to the apartment owners directly but through
the society; that they received salary and emoluments from the society; that they worked under the direct control and supervision of the society; and
therefore, the society's activities must be characterized as activities of an industry. It would, accordingly, constitute an industry as understood by the
Supreme Court in Banglore Water Supply case. The Supreme Court noticed the distinction between such classes of workmen as domestic servants
who render personal service to their masters and those covered under the definition under Section 2(j) of the Industrial Disputes Act, 1947 as
considered in Banglore Water Supply case. The court noticed that services rendered by domestic servants purely in a personal or domestic matter or
in a casual way would fall outside the definition. The whole purpose of the Industrial Disputes Act is to focus on resolution of industrial disputes and
such resolution is not meant to meddle with every carpenter or blacksmith or cobbler or cycle repairer who comes outside the idea of industry and
industrial dispute. The court noticed that this rationale, which applied all along the line to small professions like that of domestic servants, would also
apply to those who were engaged by a group of flat owners for rendering services, even if that group was not amorphous but crystallized into an
association or a society. The court held that when personal services are rendered to members of a society and the society is constituted only for the
purposes of those members so as to engage employees for such services, its activities should not be treated as industry nor are the employees to be
termed as workmen. The court, in the premises, held that the apartment owners' housing society, who was the appellant before it, was not an industry.
This law should have ordinarily put an end to any speculation whether or not a coÂoperative housing society like the one we are concerned with in
the present petition is an industry. A housing society, after all, is a society formed by and for individual flat owners, who in real terms own the property
and who form themselves into a society so that services for maintenance and upkeep of the property, etc. could be availed of by them in a more
systematic manner. Such society, in an ordinary case, can never be termed as an industry. Even in the present case, learned counsel for the
Respondent does not dispute this position. It is, however, submitted, and that is what has found favour with the Labour Court, is that this society does
not merely exist for rendering services to its members, but infact carries on a commercial activity by hiring out a part of its terrace to an outside
agency and earns income by way of licence fees or charges from this outside agency and to the extent that it does so, it must be treated as an
industry. The submission has no force. What one has to consider in a case like this, that is to say, where there is a complex of activities, some of
which may qualify the undertaking as an industry and some would not, what one has to consider is the predominant nature of services or activities. If
the predominant nature is to render services to its own members and the other activities are merely an adjunct, by the true test laid down in Banglore
Water Supply, the undertaking is not an industry. It cannot even possibly be suggested in the present case that the predominant nature of services
rendered by the petitionerÂsociety here is hiring out of its terrace for the purposes of erection of a telephone tower. It is but a minor part of its entire
activity, a mere adjunct to its predominant activity, which is to enable the members to organize themselves better for availing personal services. The
organized activity in its case does not possess the triple elements mentioned in the Bangalore Water Supply case. Considering the overall purpose of
existence of the society and the nature of services rendered by it, by applying the dominant nature test succinctly laid down by the Supreme Court in
Banglore Water Supply, it is but a foregone conclusion that the society is not an industry in any true sense of the word as applied under Section 2(j) of
the Act.
The impugned order of the Labour Court, accordingly, contains a fundamental error of jurisdiction and cannot be sustained.
Whereas the conclusion in a matter like this is writ large and does not admit of any more debate, this court would still like the petitioner society to
consider sympathetically the case of the respondents who have put in a number of years of dedicated service to the petitioner and make a monetary
concession only by grace for the respondents. Mr.Vaidya, learned counsel appearing for the petitioner graciously leaves this aspect to the court. The
petitionerÂsociety has deposited sums of Rs.1,00,000/Â and Rs.1,50,000/Â in Writ Petition Nos.360 of 2007 and 361 of 2007, respectively, as and by
way of a condition of interim relief. The amounts have been invested by the Prothonotary and Senior Master in fixed deposits. This court is of the
view that the amounts, alongwith accrued interest, may go to the respective first respondents in these petitions as and by way of exÂgratia payments
in overall interest of justice, though the complaints of these respondents essentially fail on a matter of law.
Accordingly, Rule is made absolute and both petitions are allowed. The Prothonotary shall, however, allow the first respondents in both petitions to
withdraw the respective amounts deposited by the petitioner in these petitions together with accrued interest.