JUDGMENT
1. This writ petition at the instance of the petitioner Ratilal B. Ravji is directed against the award dated June 4, 1994 passed by the 7th Labour Court, Bombay in Reference (IDA) No. 95 of 1991 whereby the said Labour Court rejected the reference made at the instance of the Petitioner.
2. Tata Sports Club, the respondent No. 1 (for short ‘Club’) is the club governed by its own rules and regulations, its membership comprises of the directors, officers and all employees of the Tata Companies, details of which have been given in the rules and regulations and such other Tata and Associate Companies/organizations which the management committee may determine from time to time to be eligible for the membership of the Club. The Club is situated at Bombay House, Homi Mody Street, Fort, Bombay. The aims and objects of the Club are to organise, promote, and afford facilities for indoor and outdoor games, any form of athletics, sports, recreation (including library and reading room), sporting events, social meetings, entertainments, exhibitions or displays, and to organize meetings for the said purpose. The aims and objects of the Club as provided in the rules and regulations are :
“(a) To organise, promote and afford facilities for indoor and outdoor games, any form of athletics, sports, recreation (including library and reading room), sporting events, social meetings, entertainment, exhibition or displays, and to organise meetings for the above purpose.
(b) To provide for the above purposes, playing fields, grounds, buildings, pavilions and other facilities.
(c) To promote and hold either alone or jointly with any other Association, Club, or person, all kinds of sporting events or tournaments and any kind of entertainment, display or exhibition, and to give or contribute towards awards and distinctions and to support or assist any cause in the furtherance of sport as may be deemed desirable.
(d) To become a member of any other Association or Club whose objects are similar or in part@ similar to the objects of the Club.
(e) To purchase, take on lease or hire or otherwise acquire, any movable or immovable property or any rights or privileges necessary or convenient for the purposes of the Club, and to sell or grant rights over any property belonging to the Club.
(f) To invite and receive or, without such invitation, receive any voluntary contribution, gifts, or grants of money or property from any Company, person or association of persons whatsoever (including any Company) either by way of donation, endowment, capital, grant, annual or other subscription, legacy or otherwise for the support or benefit of the objects hereby constituted or any of them or for any specific trusts or purposes whatsoever, including specific charitable trusts and purposes and to hold all such grants in accordance with the terms, objects and purposes thereof.
(g) To invest money belonging to the club or entrusted to it in any one or more of the following securities or modes of investment with power from time to time to vary the investments and securities for others of the character hereby authorized;
(i) In deposits with Tata Sons Private Limited or any other Company.
(ii) In shares, debentures or securities of any of the Companies, or of their respective successors in business or assigns;
(iii) In stocks or securities, the interest of which shall be guaranteed by the Government of India or any State Government;
(iv) In immovable property of every description and kind (including leaseholds) or any interests therein;
(v) In any other securities or investments authorized by law;
(h) To open and maintain from time to time in accordance with the Bye-laws or Rules and Regulations framed thereunder, a banking account with any bank or banks as may from time to time be selected and at any time to pay or cause to be paid any money forming part of the assets of the Club or otherwise in its control or possession to the credit of any such account or accounts or place or, cause to be placed any money on deposit with any bank or banks;
(i) To borrow or raise money whether with or without security for any of the objects or purposes of the Club or in furtherance thereof;
(j) To appoint from time to time with or without remuneration as may be determined in accordance with the Rules and Regulations of the Club, Managers, Secretaries, Coaches, Clerks and other employees as may be deemed expedient for carrying out the objects and purposes of the Club;
(k) To make, vary or rescind any rules and regulations for the management and administration of the objects of the Club and the management control and maintenance of all properties, funds or money, documents and books of account pertaining to the Club and for the conduct of the business of the Club;
(l) To ensure that no part of the Club’s funds shall be distributed by way of profits or dividends amongst members;
(m) To do all such other things as are incidental or conducive to the attainment of the above objects or any of them.”
3. To carry out its activities in consonance with its aims and objects, the Club employs number of employees. According to the petitioner Ratilal B. Ravji (for short “Workman”) there are about 25-30 employees working in the Club while according to Club there are 11 employees working in the Club including clerical staff. The workman was appointed as Marker by the Club somewhere in the month of October 1983. It is the case of the workman that in the month of March 1988 he suffered injury in his right leg and was under treatment at Pathak Clinic. He intimated about the injuries suffered by him to the Club. In April 1988, the case of the workman is that he met with an accident by fall from a ladder and was immobilized. This information was also communicated to the Club. In the month of September 1988, the workman’s case is that he could not attend the work due to the pregnancy of his wife. In October 1988, the petitioner was under Medical treatment and he submitted medical certificate to that effect to the Club. The workman received a charge sheet on November 8, 1988 of the alleged misconduct of absence from duty on various days in the month of March, April, September and October 1988. The charge sheet was replied by him on November 8, 1988. According to the workman, his services were terminated illegally on May 12, 1989 on the alleged ground of grave misconduct and past record of service. An industrial dispute was raised by the workman demanding his reinstatement with continuity of service and full back wages which was referred for the adjudication to the 7th Labour Court. The workman filed statement of claim. In the statement of claim it was averred by the workman that his services were wrongfully and illegally terminated. The enquiry of the alleged misconduct was held in total violation of principles of natural justice and no opportunity was given to him for explaining his absence. He was also not provided with the findings of the Enquiry Officer. According to the workman, the Enquiry Officer was totally biased and prejudiced and was partial in the entire proceedings. He intended to favour the Club and, therefore, the enquiry proceedings were vitiated.
4. In the written statement, the Club denied the averments made in the statement of claim and also set up the plea that it was not an industry, and, therefore, the reference was bad in law. As regards the enquiry, the plea of the Club was that it was held properly and in case the Court failed that the enquiry was not fair and proper, then the Club may be given the chance to prove charges of misconduct before the Court. The workman examined himself. On behalf of the Club, its Honorary Secretary Shri Narendra Shankar Tamane was examined. The Conciliation Officer was also examined by the 7th Labour Court. The Labour Court after hearing the parties held that the Reference was not maintainable because the Club was not an ‘industry’ and workman is not entitled to the reliefs claimed by him.
5. Mr. Ganguli, the learned Counsel for the petitioners, strenuously urged that the findings recorded by the Labour Court that the Club was not an industry within the meaning of Section 2(j) of the Industrial Disputes Act, was unsustainable in law and without consideration of the real tests laid down by the Apex Court, in Bangalore Water Supply and Sewerage Board v. A. Rajappa and Ors. (1978-I-LLJ-349) and the facts which have come on record. According to Mr. Ganguli, the evidence clearly shows that the Club is engaged in systematic activity and it is organized by co-operation between the Club and its employees. The activities in the Club are intended to satisfy the human wants and thus the Club is an industry. Mr. Ganguli, submitted that the true focus is functional and decisive test is in the nature of activities with the special emphasis on employee and employer relations and all theses tests are clearly satisfied in the present case. It is also submitted by the learned Counsel for the petitioner that the Labour Court did not advert itself to the question at all whether the enquiry conducted by the Club was fair and proper and, therefore, the consideration of the case is on merits by the Labour Court is also faulty and not in accordance with the law laid down by the Apex Court from time to time.
6. Mr. Bukhari, the learned Counsel appearing for the Club on the other hand vehemently contended that the Club is able to carry out its activities de-hors all its employees and, therefore, it cannot be said that the Club is engaged in systematic activity. Mr. Bukhari further submitted that even if it is assumed for argument sake that the Club is engaged in systematic activity, such systematic activity has to be analogous to trade and commercial activity and since the activity being carried on by the Club is not at all trade and Commercial activity, the Club has rightly been held to be not industry by the Labour Court below. In support of his contentions, Mr. Bukhari relied on the decision of the Apex Court in Physical Research Laboratory v. K. G. Sharma (1997-II-LLJ-625).
7. The term “industry” is defined in the Industrial Disputes Act under Section 2(j) which reads thus;
“(j) “Industry” means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen;”
8. The said definition has been subject matter of consideration by the Apex Court from time to time. Earliest in point of time the matter which came up before the Apex Court was D. N. Banerji v. P. R. Mukherjee, and the question therein was whether the Municipal Corporation would fall within the definition of “industry”. Banerji’s case was considered by the Apex Court in Baroda Borough Municipality v. Its Workmen (1957-I-LLJ-8). The ratio of these two decisions is 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 and involves co-operation between employers and employees. Thereafter the matter pertaining to the activities of Municipal Corporation of Nagpur came up for consideration before the Apex Court in Corporation of the City of Nagpur v. Its Employees (1960-I-LLJ-523). Next case which attracted the attention of the Apex Court was State of Bombay v. Hospital Mazdoor Sabha (1960-I-LLJ-251). In that case the Apex Court noted that the first part of the definition contains the statutory meaning and the second part means an enlargement of it by including other items of industry. The Supreme Court posed the question, can the hospital fall within the definition of expression “industry” and the Apex Court held that hospital was an industry even if it is run by the Government without profit motive and with public funds. The Apex Court held that for determining the question whether a particular activity was industry or not the question as to who conducts the activity or whether it is for profit were irrelevant. It was emphasized that an undertaking to be industry must be analogous to trade or business but a line must be drawn to exclude some callings, services and undertakings from the ambit of the definition of industry. The next case before the Apex Court was Ahemdabad Textile Industry’s Research Association v. State of Bombay, (1960-II-LLJ-820) and the question was whether an association for research maintained by the textile industry and employing technical and other staff was industry. Hospital Mazdoor Sabha tests were applied and the Apex Court held that the activity of Ahemdabad Textile Industry’s Research Association was an industry because it was providing material services to a part of community and was carried on with the help of employees. National Union of Commercial Employees v. Meher (1962-I-LLJ-241) was the next case before the Supreme Court. Similar question came up before the Apex Court in Harinagar Cane Farm v. State of Bihar (1963-I-LLJ-692). In University of Delhi v. Ramnath, (1963-II-LLJ-335) the Apex Court was seized with the question whether the bus drivers employed by the Delhi University were workmen ? Obviously, the answer to this question depended on the question whether Delhi University was an industry under Section 2(j) of the Industrial Disputes Act. In that case, the Apex Court held that the educational institutions could not fall within the meaning of ‘industry’ because their aim was education and the teacher’s profession was not to be assimilated to industrial workers. The Apex Court however reiterated that this must not be understood to be a general proposition laid down by it. In Madras Gymkhana Club Enployees Union v. Gymkhana Club, (1967-II-LLJ-720), the Apex Court reviewed the entire stream of cases earlier considered by it and held that Madras Gymkhana Club which was the members club was not an industry. The Apex Court held that though the activity of the club may be falling in the second part of the defamation in as much as the work of the club is conducted with the aid of the employees who follow a ‘calling’; or an avocation’, it cannot be described as ‘trade’, ‘business’, ‘manufacture’, or ‘calling’ of the members of the Managing Committees of the Club. It was also held that the activity of the club is also not an ‘undertaking’, analogous to trade or business, as the said element was completely missing in a member’s club. The test applied in Madras Gymkhana Club was applied in Cricket Club of India v. Bombay Labour Union (1969-I-LLJ-775) and it was held that the Club in fact was members’ club and all services provided in the club for the members had to be treated as the activities of a self-serving institution. The next case which came up before the Apex Court was Management of Safdarjung Hospital v. Kuldip Singh Sethi (1970-II-LLJ-266) and it was held by the Apex Court that there must be first established a relationship of employers and employees associating together, the former following a trade, business, manufacture, undertaking or calling of employers in the production of material goods and material services and the latter following any calling, service, employment handicraft, or industrial occupation or avocation of workmen in aid of employer’s enterprise. Thereafter in Bombay Pinjrapol v. The Workmen (1971-II-LLJ-393), Management of the Federation of Indian Chambers of Commerce & Industry v. R. K. Mittal, (1971-II-LLJ-630) again the Supreme Court was seized with the question of industry with regard to such employers. In view of direct conflict of the dicta in Madras Gymkhana and Safdarjung Hospital, the question of interpretation of the definition of “industry” was referred to seven-judge Bench in Bangalore Water Supply and Sewerage Board v. A. Rajappa, (supra). In this case, the Apex Court considered the definition of “Industry” threadbare and the legal position was summarized in paragraph 161 of the report which reads thus :
“161. ‘Industry’ as defined in See. 2(j) and explained in Banerji (supra) 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 facie, there is an ‘industry’ in the 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 activities with the 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 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 over reach itself.
(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 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 the trade or business. All features, other than the methodology of carrying on the activity viz. in organizing the cooperation between the employer and the employee, may be dissimilar. It does not matter, if on the employment terms there is analogy.
III Application to 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 on the Dominant nature criterion, sub-stantively, 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 employees themselves, free or for small honoraria or like return, mainly drawn by sharing in the purpose or cause, such as lawyers volunteering to run free legal services, clinics 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 undertaking alone or 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 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 the ‘industry’ although those who are not ‘workmen’ by definition may not benefit by the status.
(b) Notwithstanding the various clauses, sovereign functions, strictly understood (alone) qualify for exemption, not the welfare activities or the 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 severable, then they can be considered to come within Section 2(j).
(d) Constitutional and completely enacted legislative provisions may well remove from the scope of the Act categories which otherwise may be covered thereby.
(v) The overrule Safdarjung (supra), Solicitor’s case , Gymkhana (supra) Dhanrajgirji Hospital and other rulings whose ratio runs counter to the principles enunciated above, and Hospital Mazdoor Sabha (supra) is hereby rehabilitated.
9. Thus, the Apex Court overruled Safdarjung Hospital, Madras Gymkhana, Delhi University (supra) and other rulings whose principles were inconsistent with the principles laid down in Bangalore Water Supply (supra). The principles laid down in Hospital Mazdoor Sabha (supra) were restored and rehabilitated.
10. Prima facie the enterprise or an employer is an industry where it is engaged in
(i) systematic activity,
(ii) organized by co-operation between employer and employee and
(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 thin services geared to celestial bliss i.e. making, on a large scale prasad or food).
Whether the enterprise is in public, joint, private or other sectors is immaterial so also absence of profit making or gainful objective. The Apex Court emphasized that proper focus is functional and the decisive test is the nature of the activity with special emphasis on the employer – employee relations.
11. Applying the aforesaid tests in the facts of the present case, it would be seen that the Club is run by its own rules and regulations. The members of the Club are members, officers, and employees of the Tata Group of concerns. Its aims and objects are to organize, promote and afford facilities for indoor and outdoor games, any form of athletics, sports, recreation (including library and reading room), sporting events, social meetings, entertainments, exhibitions or displays, and to organize meetings for the said purpose. The Club provides for playing fields, grounds, buildings, pavilions and other facilities for the said purpose amongst others. Its further aims and objects reveal that the Club may purchase, take on lease or hire or otherwise acquire, any movable or immovable property or any rights or privileges necessary or convenient for the purposes of the Club, and to sell or grant rights over the property belonging to the Club. Amongst others, the aim and the objects of the Club are to invest money belonging to the Club, or entrusted to it in any one or more of the securities or modes of investments as specified in the aims and objects. The aforesaid activities of the Club apparently show that it is engaged in a systematic activity, the witness produced by the Club Shri Narendra Tamane in his evidence in chief has not stated anything about the activities of the Club. However, in the cross examination he admitted that the Club is run in accordance with rules and regulations framed by the Club, and members of the Club are members, officers and the employees of Tata Group of Concerns based in Bombay. According to this witness, there are 11 employees working in Tata Sports Club including clerical staff. There are 5 clerks in the Club. The Club keeps leave register and attendance register of the employees. They also keep wage register. The members have to pay amount for billiards, badminton and tennis per quarter. The witness supervises the employees. The evidence of this witness and the rules and regulations of the Club which have been placed on record lead to irresistible conclusion that the Club is engaged in systematic activity and it is organized by co-operation between the Club and its employees. The Club provides these services calculated to satisfy human wants and wishes as is clear from the aforesaid evidence. There is no merit in the contention of Mr. Bhukhari that the Club is able to carry out the activities dehors employees. The evidence which has come on record leaves no manner of doubt that the Club falls within the definition of “industry” under Section 2(j) of the Industrial Disputes Act in the light of principles laid down by the Apex Court in Bangalore Water Supply Case (supra).
12. Mr. Bukhari, the learned Counsel appearing for the Club placed much reliance on Physical Research Laboratory (supra) in support of his contention that systematic activity must be analogous to trade and commercial activity and in this connection refers to paragraphs 8, 12 and 13 of the said report. Paragraphs 8, 12 and 13 of the said report read thus at pp 628-630 :
“8. Therefore, the question whether PRL is an ‘industry’ under the I.D. Act will have to be decided by applying the above principles; but, at the same time it has to be kept in mind that these principles were formulated as this Court found the definition of the word ‘industry’ vague and ‘rather clumsy, vaporous and tall-and-dwarf’. Therefore, while interpreting the words “undertaking” “calling” and “service” which are of much wider ‘import, the principles of “noscitur a sociis” was applied and it was held that they would be “industry” only if they are found to be analogous to trade or business. Furthermore an activity , undertaken by the Government cannot be regarded as “industry” if it is done in discharge of its sovereign functions. One more aspect to be kept in mind is that the aforesaid principles are not exhaustive either as regards what can be said to be sovereign functions or as regards the other aspects dealt with by the Court.
12. PRL is an institution under the Government of India’s Department of Space. It is engaged in pure research in space science. What is the nature of its research work is already stated earlier. The purpose of the research is to acquire knowledge about the formation and evolution of the universe but the knowledge thus acquired is not intended for sale. The Labour Court has recorded a categorical finding that the research work carried on by PRL is not connected with production, supply or distribution of material goods or services. The material on record further discloses that PRL is conducting research not for the benefit or use of others. Though the results of the research work done by it are occasionally published they have never been sold. There is no material to show that the knowledge so acquired by PRL is marketable or has any commercial value. It has not been pointed out how knowledge acquired by PRL or the results of the research occasionally published by it will be useful to persons other than those engaged in such type of study. The material discloses that the object with which the research activity is undertaken by PRL is to obtain knowledge for the benefit of the Department of Space. Its object is not to render services to others nor in fact it does so except in an indirect manner.
13. It is nobody’s case that PRL is engaged in an activity which can be called business trade or manufacture. Neither from the nature of its organization nor from the nature and character of the activity carried on by it, can it be said to be an “undertaking” analogous to business or trade. It is not engaged in a commercial industrial activity and it cannot be described as an economic venture or a commercial enterprise as it is not its object to produce and distribute services which would satisfy wants and needs of the consumer community. It is more an institution discharging governmental functions and a domestic enterprise than a commercial enterprise. We are, therefore, of the opinion that PRL is not an industry even though it is carrying on the activity of research in a systematic manner with the help of its employees as it lacks that element which would make it an organization carrying on an activity which can be said to be analogous to the carrying on of a trade or business because it is not producing and distributing services of a trade or business because it is not producing and distributing services which are intended or meant for satisfying human wants and needs, as ordinarily understood.”
13. It would be pertinent to note that Physical Research Laboratory, the case in which the aforesaid observations were made by the Supreme Court is an institution under the Government of India, Department of Space. It is engaged in pure research in space science. The purpose of research is to acquire knowledge about the formation and evolution of the universe but the knowledge thus acquired is not intended for sale. The Apex Court found that the material further disclosed that Physical Research Laboratory was conducting research not for the benefit or use of others. Its objective was not to render service to others nor in fact it does so except in an indirect manner, looking to the facts aforesaid and the nature of its organization. In that context the Apex Court observed that neither from nature of its organization nor from the nature and character of activity carried on by it, can the Physical Research Laboratory be said to be an “undertaking” analogous to the business or trade. The Apex Court emphasized that it was more an institution discharging governmental functions, and therefore, held that it is not an industry even though it is carrying on the activity with a systematic manner with the help of its employees as it lacks the element which would make it an organization carrying on an activity which could be said to be analogous to the carrying on of a trade or business because it is not producing, distributing services which are intended or meant to satisfy human wants and needs as ordinarily understood. Physical Research Laboratory’s case (supra) therefore, has no application in the facts and circumstances of the present case.
14. Having held that the respondent Club is an industry, the next question that arises is whether the award can be sustained. I find that the workman has categorically raised the plea in the statement of claim that enquiry was not fair and proper and the Enquiry Officer was partial and favouring the club throughout the enquiry proceedings. He has also set up the plea that the enquiry was conducted in total violation of the principles of natural justice and no opportunity was given to him to explain his position. I find from the impugned order that the Labour Court has not at all gone into this question whether the enquiry conducted by the employer against the workmen was fair and proper or not. In this view of the matter, the impugned award cannot be sustained and the only course available is to send the matter back to the concerned Labour Court for fresh adjudication of reference in accordance with the law in the light of the observations hereinabove.
15. The writ petition is accordingly partly allowed. The award dated June 4, 1994 passed by the 7th Labour Court, Bombay, is quashed and set aside and the said Court is directed to hear and adjudicate Reference (IDA) No. 95 of 1991 afresh in accordance with law in the light of the observations made hereinabove. Since the reference is quite old, the concerned Labour Court is expected to hear and decide the Reference as expeditiously as possible. The parties are directed to appear before the 7th Labour Court, Bombay on August 11, 1997.
16. Rule is made absolute in aforesaid terms. No costs.
17. Certified copy expedited.
