PETITIONER:
GOPAL.
Vs.
RESPONDENT:
THE ADMINISTRATIVE OFFICER, MADHYA PRADESH KHADI AND VILLAGE
DATE OF JUDGMENT19/08/1985
BENCH:
KHALID, V. (J)
BENCH:
KHALID, V. (J)
ERADI, V. BALAKRISHNA (J)
CITATION:
1986 AIR 504 1985 SCR Supl. (2) 641
1985 SCC (4) 138 1985 SCALE (2)324
ACT:
Labour and Service - Industrial Disputes Act, 1947 -
M.P. Industrial Relations Act, 1960 - S. 2 (19) and (33) -
M.P. Khadi and Village Industries Act, 1959 - S. 14 - Khadi
and Village Industries Board - Whether "Industry" and
"Undertaking"- Applicability of Notification No. 9952 - XVI
dt. 31st December, 1960.
HEADNOTE:
The appellant was appointed as Store Keeper-cum-
Accountant in one of the branches of the Madhya Pradesh
Khadi and Village Industries Board, a body corporate
constituted under the M.P. Khadi and Village Industries Act,
1959. His services were terminated by an Order dated
23.9.1964 after giving one month's notice.
The termination Was challenged before the Labour Court
as amounting to retrenchment because it hat been passed
without complying with provisions of the M.P. Industrial
Relations Act, 1960, the charge sheet that was given to him
on 27.4.1964 was based on false and baseless grounds and no
enquiry was held prior to removal. The appellant claimed
reinstatement with full wages. The Respondent Board
contested the application contending that the Board was not
an industry and that neither the M.P. Industrial Relations
Act, 1960 nor the Industrial Disputes Act, 1947 applied to
it.
The Labour Court held that the termination of the
services of the appellant amounted to retrenchment, set
aside the Order of termination and directed reinstatement
with half salary from the date of the Order till
reinstatement.
The Board preferred a revision. The Industrial Court
affirm- ed the order of the Labour Court and dismissed the
revision petition.
642
The Board filed a petition under Art. 225 and 227. The
High Court allowed the writ petition, quashed the order of
the Industrial Court and remitted the case to it to decide
the facts afresh. The Industrial Court after taking fresh
evidence, again held in favour of the appellant, reaffirming
its previous decision to reinstate the appellant.
The Board again moved the High Court, which set aside
the orders of the Industrial Court and the Labour Court on
the ground that they acted without jurisdiction. The
appellant appealed to this Court by certificate which was
resisted by the Board on two grounds: (i) that it is not an
industry within the meaning of the Act and (ii) that it does
not employ more than 100 persons.
Allowing the appeal of the appellant-employee,
^
HELD: 1. The order passed by the High Court is set
aside and that of the Labour Court and the Industrial Court
are restored. [651 B-C]
2. The M.P. Industrial Relations Act, 1960 is a
separate Act in the State of Madhya Pradesh to regulate the
relations of employees in certain matters and makes
provisions for settlement of Industrial disputes. Any
concern, to become an industry, has to satisfy the
definitions of "industry" and "undertaking" as contained in
ss. 2(19) and 2(33) thereof. Such concerns have to satisfy
yet another condition to attract the provisions of the said
Act which relates to the number of the employees the concern
employs. Notification No. 9952 XVI dated 31st December,
1960 issued under sub 8. (3) of 8. 1 of the Act, makes the
provisions of the Act applicable only to an undertaking in
the industries specified in the Schedule wherein the number
of the employees on any date during Twelve months preceeding
or on the date of the notification or any day thereafter was
or is more than one hundred. In the instant case, the
evidence on record admits of no doubt that the Board
employed more than 100 persons. [645 A-H; 646 A-4; 647 C]
3. One of the functions of the Board under 8. 14 of the
M.P. Khadi and Village Industries Act 1959 is "to support,
encourage, assist and carry on Khadi and Village Industries
and in the matters incidental to such trade or business".
The evidence shows that the Board supplies raw wool to Co-
operative Societies, so
643
that the Societies can engage themselves in useful work. The
Society after weaving raw wool, convert them into spun
blankets and supply them to the Board. The blankets so spun
are not the properties of the Societies. They have to be
given back to the Board. The blankets so supplied from
various centres to the Board, have necessarily to be sold in
the open market. This act of sale would clearly come within
the definition of the word 'trade' or 'business' as
contemplated in Section 2(19) of the Act. m e conclusion is,
therefore, irresistible that the Board engages itself in the
business of selling blankets. It has, therefore, to be held
that the Board is an 'industry' within the meaning of the
Act. [650 B-D; 651 A-B]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 617 (NL)
of 1975.
From the Judgment and Order dated 4.12.1973 of the
Madhya Pradesh High Court in Misc. Petition No. 713 of 1971.
M.K. Ramamurthy, Vineet Kumar and N.D.V. Raju for the
Appellant.
G.B. Pai, S.K. Gambhir, Ashok Mahajan and Ms. S.
Kirpalani for the Respondents.
The Judgment of the Court was delivered by
KHALID, J. This is an appeal by certificate, issued by
the High Court of Madhya Pradesh under Article 133(1) of the
Constitution of India against the Judgment of a Division
Bench of that Court setting aside the Order passed by the
Labour Court, Ujjain, confirmed in revision by the
Industrial Court, Madhya Pradesh, allowing an application
filed by the appellant under Section 31 of the Madhya
Pradesh Industrial Relations Act, 1960 (hereinafter referred
to as the Act) in which he had challenged his termination
which challenge was accepted and his reinstatement was
ordered. The facts in brief, necessary for disposal of this
appeal are as follows:
2. The appellant was appointed as Store Keeper Cum
Accountant on 14.2.1957, in the Madhya Pradesh Khadi and
Village Industries Board, Budhwara, Bhopal. This Board is a
body corporate constituted under the M.P. Khadi and Village
Industries Act 1959 and is engaged among others, in
activities of encouraging production of Khadi and helping
other village industries. It has
644
different branches in the State of Madhya Pradesh. One such
centre was established at Berdi in Chhindwara district. The
Board supplied raw wool to the Co-optative Societies and
after getting them woven by the societies into blankets,
received back blankets as finished goods. m e services of
the appellant were terminated as per Order dated 23.9.1964,
after giving one month’s notice. He challenged this Order of
termination as one amounting to retrenchment, and having
been passed without complying with the provisions of the Act
that govern his relationship with the Board. He stated that
a charge sheet was given to him on 27.4.1964, based on false
and baseless grounds and that there was no enquiry held into
the said charges before his removal. The appellant thereupon
moved the Labour Court at Ujjain on 7.6.1975, for his
reinstatement with full wages.
The Board contested the application contending inter
alia that the Board was not an industry and that neither the
M.P. Industrial Relations Act, 1960 nor the Industrial
Disputes Act, 1947 applied to it. The Labour Court, Ujjain
framed necessary issues on the rival contentions and after
recording evidence, held that the termination of the
appellant amounted to retrenchment, set aside the Order of
termination and directed the Board to reinstate him with
half salary front the date of the Order till reinstatement.
4. Aggrieved by this Order the Board preferred a
revision before the Industrial Court in Madhya Pradesh,
Indore, repeating the contentions raised before the Labour
Court. m e Industrial Court by its order dated 3.2.1967,
affirmed the order of the Labour Court and dismissed the
revision petition.
5. The Board pursued the matter further by moving the
Madhya Pradesh High Court by a petition under Article 226
and 227 of the Constitution of India. The High Court by its
order dated 19.12.1969, allowed the Writ Petition, quashed
the order of the Industrial Court and remitted the case to
it to decide the facts afresh with due regard to the
relevant provisions of the M.P. Industrial Relations Act,
1960. After remand, the Industrial Court proceeded to decide
the question itself after taking fresh evidence and again
held in favour of the appellant and against the Board,
reaffirming its previous decision to reinstate the
appellant. The matter was taken to the High Court again by
the Board by means of a Writ Petition. The High Court set
aside the orders of the Industrial Court and the Labour
Court, on the ground that they acted without jurisdiction.
However, since the
645
High Court felt that the matter was not free from doubt and
was debatable, granted certificate to the appellant to
appeal to this Court. It is thus that the matter is before
us.
6. In the State of Madhya Pradesh there is a separate
Act to regulate the relations of employees in certain
matters and to make provisions for settlement of industrial
disputes and other connected matters. mis Act is called the
Madhya Pradesh Industrial Relations Act, 1960. Section 2
(19) defines Industry as under:
Industry means
(a) any business, trade, manufacture, undertaking
or calling of employers;
(b) any calling, service, employment, handicraft
or industrial occupation or a vocation of
employees; and Includes
(i) agriculture and agricultural operations;
(ii) any branch of any industry or group of
industries which the State Government may, by
notification, declare to be an industry for the
purposes of this Act.
Section 2 (33) defines undertaking as follows:
“Undertaking means a concern in any industry .
Thus, any concern, to become an industry, has to
satisfy the above definitions to attract the Provisions of
the Act. Such concerns have to satisfy another condition to
attract the provisions of the Act and that is about the
number of employees the concern employs. This is provided in
a Notification issued under the Act which reads as follows:
No. 9952 – XVI, dated 31st December, 1960.
In exercise of the powers conferred by `Sub-
Section (3) of Section 1 of the Madhya Pradesh
Industrial Relations Act 1960 (No. 27 of 1960),
the State Government hereby directs that all the
provisions of the said Act other than section 1
and 112 thereof shall be into
646
force on 31st December, 1960, in respect of
undertaking in the industries specified in the
schedule below wherein the number of employees on
any date during twelve months preceding or on the
date of this notification or any day thereafter
was or is more than one hundred :
SCHEDULE
1. Textile including cotton, silk, artificial
silk staple fibre, jute and carpet.
2. …………………………………
…………………………………
………………………………..”
This notification, thus, makes the provisions of the
Act applicable only to undertaking in the industries
specified in the schedule, where the number of employees, on
the date mentioned therein was or is more than 100. We are
concerned here only with item No. 1 in the schedule and
therefore, have left out the other items.
7. Before considering the rival contentions raised
before us, we may extract the relevant sections of the Act
under which the Board was constituted, to understand the
functions and duties of the Board. For our purpose it is
enough to quote Sections 14 (1) & 14 (2) (a) alone, Clause
(b) to (m) are not necessary for the resolution of the
dispute involved in this case and hence are omitted.
“14. Functions of Board.
(1) It shall be the duty of the Board to organise,
develop and regulate Khadi and Village Industries
and perform such functions as the State
Government may prescribe.
(2) Without prejudice to the generality of the
provisions of the sub section (1) the Board shall
also in particular discharge and perform all or
any of the following duties and functions namely;
(a) To start, encourage, assist and carry on Khadi
and Village Industries and in the matters
incidental to such trade or business.”
647
With this background we will advert to the facts of the
case.
8.The Board resisted the appellant’s case on two
grounds (i) that it is not an industry within the meaning of
the Act and (ii) that it does not employ more than 100
persons. It is necessary to note at this stage that the
Board had not originally urged any plea that it did not
employ sufficient employees to attract the Act. It was
during the course of argument that this plea about the
number of appointees was urged by the Board. However, both
the Labour Court and the Industrial Court considered the two
jurisdictional questions as to whether the Board was an
industry and as to whether it had employed more than 100
persons.
9. We have gone through the orders passed by the labour
Court and the Industrial Court, carefully. According to us a
close examination of the evidence adduced in the case and
the discussions bearing on them by the Labour Court in
particular and the Industrial Court, admits of no doubt that
the Board employed more than 100 persons. For this purpose,
we content ourselves by extracting the following paragraph
from the order of the Labour Court while considering the
first point namely whether the provisions of the Act are
applicable to the Board.
“Thus the applicant’s contention that the
Parishad’s cloth weaving centres were in existence
till 2 years before and his contention in respect
of the number of workers engaged at Mandsaur,
Gwalior, Anjad entries etc. have not been refuted
by the nor applicant. It is therefore concluded
them at (sic) 60, 40, 4 & 3 workers were working
at Parishad’s centres situated at Mandsaur,
Gwalior, Anjad and Parsinga. Besides this there
were officials working at Chanderi & Maneshwar
weaving centres. The non applicant who is in
possession of the records of appointment and who
is also not disclosing the exact figures (of the
workers), therefore the conclusions go against the
non applicant.
10. This finding on the appreciation of the evidence
given by the witnesses concludes the parties according to
us, regarding the number of the employees employed by the
Board. Even so, when the matter went before the High Court,
the High Court felt that the jurisdictional question was not
properly considered by the Labour Court. Therefore, in the
first round the matter was remanded by the High Court, and
the High Court made the following observations:
648
“The relevant notification applied the provisions
of the Act to undertaking in the industries
specified in – the schedule wherein the number of
employees, was or is more than one hundred.
Evidently, it had no application to smaller
establishments of notified industries that
employed less than 100 persons. That being so, it
is plain enough that the Courts below misdirected
themselves by taking into account the total number
of the employees of the Board without regard to
the consideration whether they were employed or
not in the establishment relating to textiles and
the findings recorded by them on the
jurisdictional facts do not bear examination and
cannot be sustained. Since the facts bearing on
the question have not been properly ascertained it
would be right to set aside the order of the
Industrial Court and leave it to that Court to
decide these facts afresh with due regard to all
the relevant provisions of the M.P. Industrial
Relations Act, 1960 and then to dispose of the
claim made by the respondent 3 on merits.
11. We may, even at this stage, point out that the High
Court could have set aside the order of the Labour Court and
the Industrial Court, on the ground that the Board did not,
according to it, satisfy the definition of industry without
remanding the case to the Industrial Court to determine the
number of employees. We are making this statement in view of
an objection taken by the appellant’s counsel before us that
the respondent cannot, in this appeal, reagitate that
question, he having been concluded by the remand order which
was restricted only to the number of employees in the Board.
12. After remand, the Industrial Court considered the
question again. The Industrial Court understood the remand
order and, according to us, rightly, as follows:
“After the remand the parties have adduced
evidence which is common in both cases. The exact
question I am called upon to answer is, the number
of employees employed by the parishad in its
textiles activity and not all other activities
such as Oil, Paper Carpentry, Gur Tannery, Pottery
etc. me best evidence will be the record kept with
the parishad. The oral evidence will not be of
much help, though it may have some additional
value.
649
13. After discussing the evidence in detail, the
Industrial Court came to the conclusion thus:
“For all these reasons, I hold that in the textile
activity of the Board (parishad) the number of
employees is or has been over and more than 100
from 1.12.59 to 31.12.60, vide Ex-D/1 and,
therefore the employees had a right to file the
application under the Act.
14. The Industrial Court again held in favour of the
appellant The matter went to the High Court again in the
Second round, at the instance of the Board. On the question
of number of employees in the Board, in paragraphs 10 & 11
of the Judgment, the High Court observed thus:
“….Thus from the statement of this witness,
there can be no doubt that there were more than
100 persons in all at the wool weaving centres in
the State and at some of the centres the number
was more than 100. The witness further stated that
there are 16 industries under the Board, such as
Paper Industry, Soap Industry, Khadi Industry,
Wool Industry and so on.
Similarly, in the connected case, namely M.P. No.
713 of 1971, in pursuance of the remand order, the
statement of Gunadeo Patil (Petitioner’s Annexure-
F) and the other witness, Sadashiv Patil
(Petitioner’s Annexure-f/1) were recorded. The
statements of these two witnesses were similar to
the statements in the main case.
(The High Court was dealing with the case of two employees
in Misc. Petition No. 712/1971 and 713/1971 and that is why
mention is MADE about the connected case.)
15. After holding thus, the High Court spent
considerable part of the Judgment for considering the
kindred question whether the board was an industry or not.
The appellant’s counsel raised an objection that it was not
open to raise this question as it was covered by the remand
order (which was confined only to the number of employees).
In our view, this objection is well founded and has to be
upheld. According to us, the appellant is entitled to
succeed on this ground alone. However, we would like to
answer
650
the other question also for the purpose of completion of
this Judgment and to set at rest possible future
controversies on the subject .
16. The definition clause in the Act is far from
satisfactory. The definition of word ‘industry’ in Section
2(19) and the word ‘undertaking’ in Section 2(33) does not
make happy reading but this unhappy phraseology need not vex
us. If from the evidence available, we can say, that the
Board carries on trade or business, it would straightaway
become an industry under the Act. We have already seen that
one of the functions of the Board is to support, encourage,
assist and carry on Khadi and Village Industries and in the
matters incidental to such trade or BUSINESS. What the Board
does is to supply raw wool to Cooperative Societies, so that
the Societies can engage themselves in useful work. The
Societies after weaving raw wool, convert them into spun
blankets and supply them to the Board. The blankets so spun
are not the properties of the Societies. They have to be
given back to the Board. The blankets so supplied from
various centres to the Board, have necessarily to be sold in
the open market. This act of sale would clearly come within
the definition of the word trade or business as contemplated
in Section 2 (19) of the Act. This finding of ours is
supported by the evidence in the case also. The appellant in
his evidence stated that at the centre where he was posted,
weaving of woolen blankets was done by the Societies and
other centres constituted at various places and the woven
blankets were supplied back to the Board. Three witnesses
were examined on behalf of the Board. Sh. Choudhary, the
first witness and Sh. Patil the next witness, admitted that
the spinning and weaving work of cotton and woolen cloth was
got done by the Board through various Societies. These two
said witnesses admitted that the looms belonged to the Board
and the Board supplied wool and other materials and
implements and sold manufactured goods after obtaining them
from the Societies. They also made an important admission
that the Society could not sell the goods prepared out of
the wool supplied by the Board to anybody else. The third
witness also supported this case though differed from the
second witness and stated that the Board extended marketing
facilities to the Societies.
17. We thought it necessary to refer to the evidence in
the case to disabuse an impression attempted to be created
that the Board did not sell the blankets it got from the
various societies spun out of the wool supplied to them.
There is a clear admission by one witness that the Societies
cannot sell the blankets
651
prepared out of the wool supplied by the Board to any one
else. No argument is necessary to hold that the blankets
received by the Board from various centres have only to be
sold and not used by the Board for its own purpose. Or. this
evidence the conclusion is irresistible that the Board
engages itself in the business of selling blankets. It has
therefore to be held that the Board is an industry within
the meaning of the Act.
18. The appellant is entitled to succeed on both the
grounds. We set aside the order passed by the High Court and
restore the orders passed by the labour Court and the
Industrial Court. The appellant will get his cost from the
first Respondent quantified at Rs. 2,500.
A.P.J. Appeal allowed.
652