{"id":202394,"date":"1997-04-08T00:00:00","date_gmt":"1997-04-07T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/physical-research-laboratory-vs-k-g-sharma-on-8-april-1997"},"modified":"2016-05-29T10:10:28","modified_gmt":"2016-05-29T04:40:28","slug":"physical-research-laboratory-vs-k-g-sharma-on-8-april-1997","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/physical-research-laboratory-vs-k-g-sharma-on-8-april-1997","title":{"rendered":"Physical Research Laboratory vs K.G. Sharma on 8 April, 1997"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Physical Research Laboratory vs K.G. Sharma on 8 April, 1997<\/div>\n
Author: Nanavati.<\/div>\n
Bench: K. Ramaswamy, G.T. Nanavati<\/div>\n
           PETITIONER:\nPHYSICAL RESEARCH LABORATORY\n\n\tVs.\n\nRESPONDENT:\nK.G. SHARMA\n\nDATE OF JUDGMENT:\t08\/04\/1997\n\nBENCH:\nK. RAMASWAMY, G.T. NANAVATI\n\n\n\n\nACT:\n\n\n\nHEADNOTE:\n\n\n\nJUDGMENT:\n<\/pre>\n
\t\t      J U D G M E N T
\nNANAVATI. J.\n<\/p>\n
     Leave granted.\n<\/p>\n
     The question  that arises\tfor  consideration  in\tthis
\nappeal is  whether physical  Research Laboratory  (for short
\n‘PRL’), the  appellant, is  an ‘industry’ within the meaning
\nof section 2(j) of the Industrial Disputes Act.\n<\/p>\n
     The facts\tand circumstances  which gave  rise to\tthis
\nquestion are as follows. The respondent was appointed by PRl
\nas Scientific Glass Blower on 25.10.48. He continued to word
\nas such\t till 11.5.76 when he was transferred to photography
\nDocumentation services on a post which was non-technical and
\nadministrative. On 31.12.78 he attained the age of 58 years.
\nHe was,\t therefore. retired  from service  with effect\tform
\n1.1.79. Feeling aggrieved by his retirement at the age of 58
\nyears and  not at  60 he  filed a  writ petition in the High
\ncourt of  Gujarat by it was with   He then filed a complaint
\nbefore the  Labour commissioner\t who, on  the basis thereof,
\nmade a reference to the Labour court at Ahmedabad.\n<\/p>\n
     The  Labour   Court  rejected  the\t contention  of\t the
\nappellant that\tit was\tnot an ‘industry’ within the meaning
\nof Section  2(j) of  the I.D.  Act.  Though  it\t recorded  a
\nfinding that  PRL is  purely a\tresearch institute  and\t the
\nresearch work  carried\ton  by\tit  is\tnot  connected\twith
\nproduction supply or distribution of goos or services yet it
\ntook the aforesaid view following the decision of this court
\nin Bangalore  Water Supply  & Sewerage\tBoard Vs. A. Rajappa
\n1978 (2)  SCC 213  as it  further found that PRL is carrying
\non, in\tan organised  and systematic manner, the activity of
\nresearch in  its laboratory  by active\tco-operation between
\nitself and  its employees  and the discoveries and invention
\nmade would be eligible for sale. in taking the view that PRL
\nis an  ‘industry’ it  also  followed  the  decision  of\t the
\nGujarat High court in physical Research Laboratory Employees
\nUnion vs.  A.N. Ram<\/a>  (special civil  Application No. 1082 of
\n1979), a  case under  the Trade\t  Unions Act, wherein it was
\nobserved that  “In view of the decision of the supreme Court
\nin Bangalore Water Supply & Sewerage Board v. A. Rajappa and
\nothers A.I.R.<\/a>  1978 S.C.  548, it  is not open to doubt that
\nthe employees  working with the physical Research Laboratory
\nAhmedabad, would  come within  the definition  of ” workmen”
\nunder  the   Industrial\t Disputes   Act\t and  other  similar
\nlegislation in\tthe field of relations between employers and
\nemployees.” on\tmerits, it  held that  the respondent having
\nworked for  a long  period from\t 1948 to 1976 on a technical
\npost  could not have been treated as a person working on the
\nadministrative side  merely because  towards the fag end  of
\nhis  career   he  was\ttransferred  to\t  a  post   on\t the
\nadministrative side  and at the time of attaining the age of
\n58 years  he was  working on  such a  post. The Labour Court
\nheld that the respondent was entitled to continue in service
\nup to  the age\tof 60  Years. Therefore, the order, retiring
\nhim earlier, was declared as bad and it was held that he was
\nentitled to  reinstatement with\t full  back  wages.  As\t the
\nrespondent had already completed the age of 60 years by then
\nno order of reinstatement was passed but only back wages for
\nthose two years were ordered to be paid.\n<\/p>\n
     The  appellant   has  approached  this  court  directly
\nagainst the  award of  the Labour court as the Gujarat\tHigh
\ncourt has  already taken the views that PRL is an ‘industry’
\nand  different\tHigh  court  and  Tribunals  have  expressed
\nconflicting  views   on\t the   question\t  whether   research
\ninstitutes  run\t  by  the  Government  can  be\tsaid  to  be
\n‘industry’ as  defined by  section 2(j)\t of the I.D. Act. on
\n1.2.93, when  special Leave  petition,\tout  of\t which\tthis
\nappeal arises,\twas listed  for hearing a statement was made
\nby the\tlearned counsel\t for the appellant that irrespective
\nof the\tdecision on  merits this court should decide whether
\nresearch institute  of the  type of  PRL can  be said  to be
\n‘industry’. This  court passed\tan order  for issuing notice
\nindicating that\t the matter  will be  finally disposed of at
\nthe notice stage itself.\n<\/p>\n
     Our attention  was first  drawn by the learned Attorney
\nGeneral who  appeared for  the appellant  to the facts which
\nare not\t in dispute.  PRL is a public trust registered under
\nthe Bombay  public  Trust  Act.,  1950.\t It  is\t a  research
\ninstitute and  was established\tbu Dr.\tVikram Sarabhai\t for
\nresearch in  space and allied science. It is financed mainly
\nby the central Government by making provision in that behalf
\nin the\tUnion Budget  and nominally  by\t the  Government  of
\nGujarat, Karmakshetra  Education  Foundation  and  Ahmedabad
\nEduction society. it is virtually an institute falling under
\nGovernment of  India’s Department of space. Its object is to
\nconduct and  is, therefore,  engaged in\t conducting  advance
\nresearch in  (1) astronomy  and Astrophysics,  (2) planetary
\natmosphere and aeronomy , (3) earth science and solar system
\nstudies and  (4) theoretical  physics. It is the case of the
\nappellant that the research work is done in the institute by
\neminent\t scientists   who  engage  themselves  in  resolving
\nproblems of  fundamental sciences  on their  own. It  is not
\ndirectly of indirectly carrying on any trade or business and
\nits activities do not result into production or distribution
\nof goods  or services  calculated to satisfy human wants and
\nwishes. The  knowledge acquired\t as a result of the research
\ncarried on by it is not sold but is utilised for the benefit
\nof the\tgovernment. it\twas,  therefore,  submitted  by\t the
\nlearned Attorney  General that\tPRL being  a purely research
\ninstitute of  the central  Government engaged in carrying on
\nfundamental research  regarding the  origin and evolution of
\nthe Universe  and the  atmosphere of  the earth\t is  not  an
\n‘industry’ as  defined by section 2(j). He further submitted
\nthat the  activity of  research is  carried on mainly by the
\nscientists engaged  for that  purpose and  incidentally with
\nthe help  of a\tfew other employees. He also submit that the
\nresearch work carried on by the PRL is more in the nature of
\nventure and,  therefore, also  it would\t not fall within the
\npurview of section 2(j) of the I.D. Act. The question : what
\nis an  ‘industry’ under\t the Industrial\t Disputes Act  ? has
\nbeen answered  by this\tcourt in Bangalore Water Supply case
\n(supra) as under :\n<\/p>\n
     “I\n<\/p><\/blockquote>\n
     140.  ‘Industry’,\t as  defined  in
\n     Section  2(j)   and  explained   in
\n     Banerji  (supra)\t,  has\t a  wide
\n     import.\n<\/p><\/blockquote>\n
      (a) Where (i) systematic activity,\n<\/p><\/blockquote>\n
     (ii)  organized   by   co-operation
\n     between employer  and employee (the
\n     direct and\t substantial element  is
\n     chimerical) (ii) for the production
\n     and\/or distribution  of  goods  and
\n     services  calculated   to\t satisfy
\n     human   wants   and   wishes   (not
\n     spiritual\t  or\treligious    but
\n     inclusive\tof  material  things  or
\n     services geared  to celestial bliss
\n     e.g.  making,   on\t a  large  scale
\n     prasad or\tfood) ,\t prima\tfacie  ,
\n     there  is\tan  ‘industry’\tin  that
\n     enterprise.\n<\/p><\/blockquote>\n
     (b) absence  of  profit  motive  or
\n     gainful objective is irrelevant, be
\n     the venture  in the  public, joint,
\n     private or other sector.\n<\/p><\/blockquote>\n
     (c) The  true focus  is  functional
\n     and the decisive test is the nature
\n     of\t the   activity\t  with\t speical
\n     emphasis on  the  employer-employee
\n     relations.<\/p><\/blockquote>\n
     (d) If  the organization is a trade
\n     or business  it does not case to be
\n     one   because    of    philanthropy
\n     animating the undertaking.
\nII\n<\/p><\/blockquote>\n
     141.  Although  section  2(j)  uses
\n     words of  the widest  amplitude  in
\n     its two limbs, their meaning cannot
\n     be magnified to overreach itself.<\/p><\/blockquote>\n
     (a)  ‘Undertaking’\t must  suffer  a
\n     contextual\t   and\t   associational
\n     shrinkage a  explained  in\t Banerji
\n     (supra) and  in this  judgment;  so
\n     also, service calling and the like.
\n     This yields  the inference that all
\n     organized in  I (supra)  , although
\n     not trade or business, may still be
\n     ‘industry’ provided  the nature  of
\n     the activity,  viz.  the  employer-
\n     employee basis,  bears  resemblance
\n     to\t what\twe  find   in  trade  or
\n     business. This  takes into the fold
\n     of\t ‘industry’   analogous\t to  the
\n     carrying on the trade or business’.
\n     All  features,   other   than   the
\n     methodology  of   carrying\t on  the
\n     activity viz. in organizing the co-
\n     operation between\temployee, may be
\n     dissimilar. It  does not matter, if
\n     on the  employment terms  there  is
\n     analogy.\n<\/p><\/blockquote>\n
III\n<\/p>\n
     142.    Application     of\t   these
\n     guidelines should not stop short of
\n     their logical  reach by  invocation
\n     of creeds,\t cults or inner sense of
\n     incongruity  or   outer  sense   of
\n     motivation for  or resultant of the
\n     economic operations.  The\tideology
\n     of the  Act being industrial pease,
\n     regulation and  workmen, the  range
\n     of this  statutory must inform  the
\n     reach of  the statutory definition.<\/p>\n
     Nothing less, nothing more\n<\/p>\n
     (a)  The\tconsequences  are    (i)
\n     professions,  (ii)\t  clubs,   (iii)
\n     educational instituions,  (vi)  co-\n<\/p>\n
     operative (v)  research institutes,\n<\/p>\n
     (vi) charitable  projects and (vii)
\n     other kindred  adventures, if  they
\n     fulfil the\t triple tests  listed in
\n     I(supra), cannot  be exempted  from
\n     the scope of section 2(j).\n<\/p>\n
     (b)  A   restricted   category   of
\n     professions clubs, co-operative and
\n     even gurukulas  and little research
\n     labs, may\tsubstantially and, going
\n     by the  dominant nature criterion ,
\n     substantively,  no\t  employees  are
\n     entertained but in minimal matters.\n<\/p>\n
     marginal\temployees    are   hired
\n     without destroying\t the non-employe
\n     character of the unit.\n<\/p>\n
     (c) If  in a  pious  or  altruistic
\n     mission  many   employ  themselves,
\n     free or for small honoraria or like
\n     return, drawn  by\tsharing\t in  the
\n     purpose or\t cause, such  as lawyers
\n     volunteering to  run a  free  legal
\n     services clinic  or doctors serving
\n     in\t their\t spare\thours\tin  free
\n     medical   centre\t or   ashramites
\n     working  at   the\tbidding\t of  the
\n     holiness, divinity\t or like central
\n     personality, and  the services  are
\n     supplied free  or at  nominal  cost
\n     and those who serve are not engaged
\n     for remuneration or on the basis of
\n     master and\t servants  relationship,
\n     then, the\tinstitution  is\t not  an
\n     industry even  if\tstray  servants,
\n     manual  or\t technical,  are  hired.\n<\/p>\n
     Such    eleemosynary     or    like\n     undertakings alone\t are exempt    -\n<\/pre>\n
     not other\tgenerosity,  compassion,
\n     developmental passion or project
\n IV\n<\/p>\n
     143. The dominant nature test :<\/p>\n
     (a) Where\ta complex  of activities
\n     some   of\t  which\t  qualify    for
\n     exemption,\t others\t  not,\tinvolves
\n     employees\t   on\t   the\t   total
\n     undertakings, some\t of whom are not
\n     ‘workmen’\tas   the  University  of
\n     Delhi   case    (supra)   or   some
\n     departments are  not productive  of
\n     goods  and\t services  if  isolated,
\n     even then,\t the predominant  nature
\n     of the  services and the integrated
\n     nature  of\t  the\tdepartments   as
\n     explained in  the\tcorporation  for
\n     Nagpur (supra), will be, ‘industry’
\n     although those are not ‘workmen’ by
\n     definition may  not benefit  by the
\n     status.\n<\/p>\n
     (b)  Notwithstanding  the\tprevious
\n     clauses,\t sovereign     function,
\n     strictly\t understood,\t (alone)
\n     qualify  for   exemption,\tnot  the
\n     welfare  activities    or\teconomic
\n     adventures\t     undertaking      by
\n     government or statutory bodies.\n<\/p>\n
     (c) Even in departments discharging
\n     sovereign function,  if  there  are
\n     units which are industries and they
\n     are substantially\tseverable,  then
\n     they  can\tbe  considered\tto  come
\n     within section 2(j)\n<\/p>\n
     (d) Constitutional\t and competently
\n     enacted legislative  provisions may
\n     well remove  from the  scope of the
\n     Act. categories which otherwise may
\n     be covered thereby.”\n<\/p>\n
     Therefore, the  question whether  PRL is  an ‘industry’
\nunder the  I.D. Act  will have to be decided by applying the
\nabove principles;  but ,  at the same time it has to be kept
\nin mind\t that these principles were formulated as this court
\nfound the  definition of  the word  ‘industry’ as  vague and
\n“rather clumsy,\t vapourous and\ttall-and-dwarf”.  Therefore,
\nwhile  interpreting  the  words\t ‘undertaking’\tcalling\t and
\n‘service’ which\t are of\t much wider import, the principle of
\n‘noscitur a  sociis’ was  applied and  it was held that they
\nwould be  ‘industry’ only  if they are found to be analogous
\nto trade  of business. Furthermore an activity undertaken by
\nthe Government\tcannot be  regarded as\t‘industry’ if  it is
\ndone in discharge of its sovereign function. one more aspect
\nto be  kept in mind is that the aforesaid principles are not
\nexhaustive  either  as\tregards\t what  can  be\tsaid  to  be
\nsovereign function  or as  regards the\tother aspects  dealt
\nwith by the court.\n<\/p>\n
     In this  context, it  is useful to chief Conservator of
\nForests and  another\tvs.  Jagannath\tMaruthi\t Kondhare  ,
\n1969(2) SCC  293 wherein  this court,  while  rejecting\t the
\ncontention that\t as sovereignty\t vests\tin  the\t people\t the
\nconcept of  sovereign functions\t would include\tall  welfare
\nactivities on  the ground  that talking of such a view would
\nerode the  ratio in  Bangalore water  supply, case. Observed
\nthat “the  dichotomy of sovereign and non-sovereign function
\ndoes not  really exit – it would all depend on the nature or
\nthe power and manner of its exercise” After referring to the
\nthree  traditional  sovereign  function\t namely\t legislative
\npower the  administration of  laws and\tthe exercise  of the
\njudicial power\tand also the decision of the exercise of the
\njudicial power\tand also  the decision\tof the\tGujarat High
\ncourt in  J.J. Shrimali\t vs.  District\tDevelopment  Officer
\n1989(1) GLR  396, wherein  famine and  drought relier  works
\nundertaken by  the state  Government were  held not  to\t and
\n‘industry’ this\t court observed\t that “what  really  follows
\nfrom this  judgment is\tthat apart  from the aforesaid three
\nfunctions there\t may be some others functions also regarding
\nwhich a view could be taken that the same too is a sovereign
\nfunction”.\n<\/p>\n
     In sub-Divisional\tInspector of Post, Vaikam and others
\nvs. Theyyam  Joseph and others<\/a>, 1996 (8) SCC 489, this court
\nhad to\tsub-Divisional Inspector  of post  at Vaikam  is  an
\n‘industry’. Therein this court has observed that “India as a
\nsovereign, socialist,  secular, democratic  republic has  to
\nestablish an egalitarian social order under rule of law. The
\nwelfare\t measures   partake  the   character  of   sovereign
\nfunction and  the traditional duty to maintain law and order
\nis no  longer the concept of the state. Directive principles
\nof state  policy enjoin\t on the\t state diverse\tduties under
\npart IV\t of the\t constitution and  the\tperformance  of\t the
\nduties are  constitutional functions.  One of  the duties of
\nthe state  is to  provide telecommunication  service to\t the
\ngeneral public and an amenity and so is an essential part of
\nthe sovereign  functions of the state as a welfare state. It
\nis not\t, therefore,  an industry”  . While taking this view
\nthis court  was also influenced by the fact that, the method
\nof recruitment,\t the conditions\t of  the  Extra-Departmental
\nAgents employed\t said establishment  are   governed  by\t the
\nstatutory rules and regulations and that those employees are
\ncivil servants\tTherefore, while  applying  the\t traditional
\ntest, approved\tby this court in Bangalore water supply case
\nto determine what can be  regarded as sovereign function the
\nchange\tin   the  concept   of\tsovereign   function  of   a
\nconstitutional government  has to  be kept  in mind. Relying
\nupon these two in chief conservator of Forests vs. Jagannath
\nMaruthi Kondhare  (supra )  and sub-Divisional\tInspector of
\npost vs. Theyyam Joseph and others (supra), it was contended
\nby the\tlearned work carried on by PRL should be regarded as
\na sovereign or governmental function.\n<\/p>\n
     With respect  to  research\t institutes  this  court  in
\nBangalore water supply has observed as\tunder :\n<\/p>\n
     ”\t   Does\t    research\t involve
\n     collaboration between  employer and
\n     employee ? It does. The employer is
\n     the institution  the  employee  are
\n     the scientists,  para –  scientists
\n     and other\tpersonnel. Is scientific
\n     research service  ? Undoubtedly. It
\n     is. Its  discoveries  are\tvaluable
\n     contributions to  the wealth of the
\n     nations, such  discoveries\t may  be
\n     sold  for\ta  heavy  price\t in  the
\n     industrial\t  of\tother\tmarkets.<\/p>\n
     Technology has  to be  paid for any
\n     technological    inventions     and
\n     innovations  may  be  patented  and
\n     sold.   In\t  our\tscientific   and
\n     technological age\tnothing has more
\n     case value, as intangible goods and
\n     invaluable\t     services\t    than
\n     discoveries . it has been said that
\n     his  brain\t had  the  highest  cash
\n     value in  history for  he made  the
\n     word vibrate  with\t the  miraculous
\n     discovery of recorded sound. unlike
\n     most inventors  he did  not have he
\n     received it  munificently\ton  this
\n     gratified and grateful earth thanks
\n     to conversion  of\t  his inventions
\n     into   money    aplenty.\tResearch
\n     benefits  industry\t even  though  a
\n     research\tinstitute   may\t  be   a
\n     separate entity  disconnected  from
\n     the many  industries  which  funded
\n     the institute  may be  a\tseparate
\n     entity disconnected  from\tthe many
\n     industries\t  which\t   funded    the
\n     institute itself it can be regarded
\n     as\t an  organisation  propelled  by
\n     systematic activity modelled on co-\n<\/p>\n
     operation\tbetween\t  employer   and
\n     employee and  inventions and useful
\n     solutions which  benefit individual
\n     industries and  the nation in terms
\n     of goods  and services  and wealth.\n<\/p>\n
     It\t   follows     that\tresearch
\n     institutes,  albeit   run\t without
\n     profit-motive, are industries.”\n<\/p>\n
     PRL is  an institution  under the Government of India`s
\nDepartment of  Space. It is engaged in pure research work is
\nalready stated\tearlier. The  purpose of the research  is to
\nacquire knowledge  about the  formation and evolution of the
\nuniverse but the knowledge thus acquired is not intended for
\nsale. The  Labour Court\t has recorded  a categorical finding
\nthat the  research work\t carried on  by PRL is not connected
\nwith production\t supply or distribution of material goods or
\nservices. The  material on record further discloses that PRL
\nis conducting research not for the benefit or use of others.
\nThough the  results of\tthe research  work done\t by  it\t are
\noccasionally published\tthey have  never been sold. There is
\nno material to show that the knowledge so acquired by PRL is
\nmarketable or  has any\tcommercial value.  IT has  not\tbeen
\npointed out how the knowledge acquired by PRL or the results
\nof the\tresearch occasionally published by it will be useful
\nto persons  other than\tdiscloses that\tthe object  type  of
\nstudy. The material discloses that the object with which the
\nresearch  activity   is\t undertaken  by\t PRL  is  to  obtain
\nknowledge for  the benefit  of the  Department of Space. Its
\nobject is  not to  render services  to others nor in fact it
\ndoes so expect in an indirect manner.\n<\/p>\n
     It is nobody`s that PRL is engaged in an activity which
\ncan be\tcalled business\t trade or  manufacture. Neither from
\nthe nature  of its  organisation nor  from  the\t nature\t and
\ncharacter of  the activity  carried on by it, it can be said
\nto be an `undertaking’ analogous to business or trade. It is
\nnot engaged  in a  commercial  industrial  activity  and  it
\ncannot be  described as\t an economic venture or a commercial
\nenterprise as it is not its object to produce and distribute
\nservices which would satisfy wants and needs of the consumer
\ncommunity.   It\t  is   more   an   institution\t discharging
\nGovernmental functions\tand a  domestic\t enterprise  than  a
\ncommercial enterprise.\tWe are,\t therefore, of\tthe  opinion
\nthat PRL  is not  an industry  even though it is carrying on
\nthe activity  of research  in a\t systematic manner  with the
\nhelp of\t its employees\tas it lacks that element which would
\nmake it an organisation carrying on an activity which can be
\nsaid to\t be analogous  to the  carrying on  of\ta  trade  or
\nbusiness  because  it  is  not\tproducing  and\tdistributing
\nservices which\tare intended  or meant\tfor satisfying human
\nwants and needs, as ordinarily understood.\n<\/p>\n
     We, therefore,  allow this\t appeal and  set  aside\t the
\naward passed  by the  Labour Court at Ahmedabad in Reference
\nNo. LCA\t 105 of\t 1982. However,\t in view  of the  facts\t and
\ncircumstances of  the case  there shall\t be no\torder as  to
\ncosts.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Physical Research Laboratory vs K.G. Sharma on 8 April, 1997 Author: Nanavati. Bench: K. Ramaswamy, G.T. Nanavati PETITIONER: PHYSICAL RESEARCH LABORATORY Vs. RESPONDENT: K.G. SHARMA DATE OF JUDGMENT: 08\/04\/1997 BENCH: K. RAMASWAMY, G.T. NANAVATI ACT: HEADNOTE: JUDGMENT: J U D G M E N T NANAVATI. J. Leave granted. The question […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-202394","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nPhysical Research Laboratory vs K.G. 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