S.Thilagavathi v. The Presiding Officer, Labour Court, Madurai & Ors.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 12.05.2009CORAM:THE HONOURABLE MR.JUSTICE P.JYOTHIMANIANDTHE HONOURABLE MRS.JUSTICE ARUNA JAGADEESANW.A.Nos.1375 & 1376/2007S.Thilagavathi ..Appellant in both appeals. 2nd Respondent Vs.1.The Presiding Officer, Labour Court, Madurai.2.Madurai Children's Aid Society, rep. By its Secretary No.164, Kamarajar Salai, Madurai 625 009. ..Respondents in both appeals 1st Respondent and PetitionerAppeal filed against the order passed by this Court dated22.11.2006 passed in W.P.Nos.12028/2000 and 58/2001 Writ Appealsfiled against the common order passed by this Court dated 22.11.2006passed in (i) W.P.no.12028/2000 praying for a Writ of Certioraricalling for the records of the 1st respondent in I.D.No.353/1991dated 12.05.1999, quash the same and (ii) W.P.No.58/2001 praying fora writ of Certiorari calling for the records of the 1st respondent inthe records of the 1st respondent in I.D.No.353/1991 dated12.05.1999, quash the same in so far as it has found the petitionerguilty of the charges.For Appellant : Mr.V.Prakash, Sr. Counselin both WAs. for P.Ganesh RamFor Respondent : Mr.N.Damodharan, for R-2 in both WAs. R1 - Labour CourtCOMMON JUDGMENTARUNA JAGADEESAN, J.These appeals are directed against the order of the learnedSingle Judge dated 22.11.2006 made in W.P.Nos.12028/2000 and 58/2001 https://hcservices.ecourts.gov.in/hcservices/ whereby and whereunder, the award of the Labour Court inI.D.No.353/1991 dated 12.05.1999 was set aside in W.P.No.12028/2000and also claim of the appellant was negatived in W.P.No.58/2001.2.The facts are briefly stated below :- The second Respondent Society by name Madurai Children AidSociety [for short, 'the Society'], represented by its Secretary, isregistered under the Societies Registration Act and the appellant wasworking as an Assistant Matron on a monthly salary of Rs.27/-. Inview of her misconduct and misbehaviour, the management terminatedher service by order dated 18.09.1990 and her accounts were settled.Aggrieved over the same, the appellant raised an Industrial Disputein I.D.No.353/1991 in which a preliminary issue was raised as towhether, the second Respondent is an 'Industry', wherein it was heldby the Labour Court that the Society was an industry, as againstwhich, the second Respondent filed Writ Petition in W.P.No.13691/1994and a learned Single Judge of this Court held that the secondRespondent was not an Industry within the meaning of IndustrialDisputes Act, hereinafter referred to as 'the Act'. Aggrieved overthe same, appellant filed W.A.No.38/ 2006 and a Division Bench ofthis Court allowed the appeal and directed the Labour Court to hearafresh and pass orders. The matter was taken up for adjudication bythe Labour Court once again and by award dated 12.05.1999, LabourCourt held that the second Respondent society is an Industry andgranted the relief of reinstatement of the appellant with continuityof service but without back-wages.3.The second Respondent challenged the said order inW.P.No.12028/2000 on the ground that it is not an industry andtherefore, the appellant is not entitled to the reliefs as granted bythe Labour Court. The appellant preferred W.P.No.58/2001 aggrievedagainst the portion of the Judgment disallowing back-wages. Both theWrit Petitions were heard together and a common order was passed bythe learned Single Judge holding that the second Respondent societyis not an industry within the meaning of the Industrial Disputes Actand set aside the award of the Labour Court. Incidentally, thelearned Single Judge dismissed the Writ Petition filed by theappellant in W.P.No.58/2001.4.The learned Single Judge observed that the activity of thesociety is essentially a governmental function and is in no way, evenremotely, analogous to trade or business and therefore, it cannotpossibly come within the ambit of ‘industry’. Further, as the work ofthe society has been done only to promote physical and mental stateof the children and not have any economic activity, the Societycannot be held to be an industry as it is doing neither trade norbusiness. Further, it held that the appellant was engaged asAssistant Matron for the purpose of taking care of the children and https://hcservices.ecourts.gov.in/hcservices/ she cannot come within the purview of definition of workman. Byholding so, the learned Single Judge held that it is not necessary togo into the factual aspects regarding evidence adduced for provingthe charges levelled against the appellant and thereby, set aside theaward.5.Mr.V.Prakash, learned Senior Counsel appearing for theappellant submitted that the Hon'ble Supreme Court in Bangalore WaterSupply & Sewerage Board and A.Rajappa and ors., 1978 (1) LLJ 349,reviewed the earlier dicta on the interpretation of the wide words"Industry" before proceeding to formulate positively and negatively,and decisive principles for identifying an industry under the Act,which is authoritative until overruled by a larger Bench orsuperseded by a legislative branch and referred to the relevantpassage in the said Judgment which laid down the following principlessaying that they are authoritative and they are not exhaustive. "’Industry’, as defined in Section 2(j) and explainedin Banerji's case has a wide import :-"I.(a)Where (i) systematic activity, (ii)organized bycooperation between employer and employee [the direct andsubstantial element is chimerical] (iii)for the productionand/or distribution of goods and services calculated tosatisfy human wants and wishes [not spiritual or religiousbut inclusive of material things or services geared tocelestial bliss e.g. making, on a large scale prasad orfood], prima facie, there is an ‘industry’ in thatenterprise.(b)Absence of profit motive or gainful objective isirrelevant, be the venture in the public, joint, private orother sector.(c)The true focus is functional and the decisive testis the nature of the activity with specific emphasis on theemployer-employee relations.(d)If the organization is trade or business it does notcease to be one because of philanthropy animating theundertaking.II. Although Section 2(j) uses words of the widestamplitude in its two limbs, their meaning cannot bemagnified to overreach itself. (a)‘Undertaking’ must suffer a contextual andassociational shrinkage as explained in Banerji [supra] andin this Judgment; so also, service, calling and the like. https://hcservices.ecourts.gov.in/hcservices/ This yields the inference that all organized activitypossessing the triple elements in I [supra], although nottrade or business, may still be ‘industry’ provided thenature of the activity, viz., the employer-employee 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 thecarrying on the trade or business’. All features, otherthan the methodology of carrying on the activity viz., inorganizing the cooperation between employer and employee,may be dissimilar. It does not matter, if on the employmentterms there is analogy.III.Application of these guidelines should not stopshort of their logical reach by invocation of creeds, cultsor inner sense of incongruity or outer sense of motivationfor or resultant of the economic operations. The ideologyof the Act being industrial peace, regulation andresolution of industrial disputes between employer andworkmen, the range of this statutory ideology must informthe reach of the statutory definition. Nothing less,nothing more.(a)The consequences are (i)professions, (ii)clubs,(iii)educational institutions, (iv)cooperatives, (v)research institutes (iv)charitable projects and (vii)otherkindred adventures, if they fulfil the triple tests listedin I [supra], cannot be exempted from the scope of Section2(j).(b)A restricted category of professions, clubs,cooperatives and even gurukulas and little research labs,may qualify for exemption if, in simple ventures,substantially and, going by the dominant nature criterion,substantively, no employees are entertained but in minimalmatters, marginal employees are hired without destroyingthe non-employee character of the unit.(c)If, in a pious or altruist mission many employthemselves, free or for small honoraria or like return,mainly drawn by sharing in the purpose or cause, suchlawyers volunteering to run a free legal services clinic ordoctors serving in their spare hours in a free medicalcentre or ashramites working at the bidding or theholiness, divinity or the like central personality, and theservices are supplied free or at nominal cost and those whoserve are not engaged for remuneration or on the basis ofmaster and servant relationship, then, the institution isnot an industry even if stray servants, manual or https://hcservices.ecourts.gov.in/hcservices/ technical, are hired. Such eleemosynary or likeundertakings alone are exempt – not other generosity,compassion, developmental passion or project.IV.The dominant nature test :(a)Where a complex of activities, some of which qualifyfor exemption, others not, involves employees on the totalundertaking, some of whom are not ‘workmen’ as in theUniversity of Delhi case [supra] or some departments arenot productive of goods and services if isolated, eventhen, the predominant nature of the services and theintegrated nature of the departments as explained in theCorporation of Nagpur [supra], will be the true test. Thewhole undertaking will be ‘industry’ although those who arenot ‘workmen’ by definition may not benefit by the status.(b)Notwithstanding the previous clauses, sovereignfunctions, strictly understood, (alone) qualify forexemption, not the welfare activities or economicadventures undertaken by the government or statutory bodies.(c)Even in departments discharging sovereign functions,if there are units which are industries and they aresubstantially severable, then they can be considered tocome within Section 2(j).(d)Constitutional and competently enacted legislativeprovisions may well remove from the scope of the Actcategories which otherwise may be covered thereby.6.In the said case, the Hon'ble Supreme Court overruledSafdarjung Hospital case, AIR 1970 SC 1407, Solicitor’s case AIR 1962SC 1080, Gymkhana case AIR 1968 SC 564, Delhi University case AIR1963 SC 1873, Dhanrajgirji Hospital case AIR 1975 SC 2032 and otherrulings, whose ratio runs counter to the principles enunciated aboveand the Hospital Mazdoor Sabha case, AIR 1960 SC 610 wasrehabilitated. The learned Senior Counsel argued that by applying thesaid principles, the second Respondent would come within the purviewof "Industry" as defined under the Industrial Disputes Act,(hereinafter referred to as 'the Act').7.Per contra, the learned Counsel Mr.N.Damodharan, appearing forthe second Respondent supported the Judgment of the learned SingleJudge on all aspects.8.The evidence placed on record before the Labour Court disclosesthat the second Respondent society is being used as an observationhome for children and that the Government is providing aid to this https://hcservices.ecourts.gov.in/hcservices/ institution and that apart the expenses are met out by gettingdonations. The society is giving vocational training to the childrenfor self-help jobs and also in gardening and as per the bye-laws ofthe Management, properly allocated works are being carried out as perthe rules and regulations in accordance with the duty hours andfurther its accounts are being audited every year. It is evident fromthe above that there are systematic activities in the secondRespondent society and that there are joint efforts by the employerand employees and further, it is being carried out for humannecessities.9.In Bangalore Water Supply and Sewerage Board case, the Hon'bleSupreme Court held that Bombay Pinjrapoles in the said case was anindustry, justifying the conclusion with a different process ofreasoning, that Pinjrapoles are industries, not because they havecommercial motives, but because despite their compassionateobjectives, they share business like orientation and operation. 10.The Hon'ble Supreme Court further held that two categories ofcharitable institutions would fall within the definition of industryand they are :- (1)where the enterprises, like any other,yields profits but they are siphoned off foraltruistic objects.(ii)Where the institution makes no profit buthires the services of employees as in other likebusinesses but the goods and services, which arethe output, are made available, at low or no costto the indigent needy who are priced out of themarket. 11.The second one, as stated supra, could be applied to thepresent case, for the reason, the manner in which the activity inquestion is organized or even arranged in the second Respondentsociety is with the cooperation between the employer and the employeefor its success and the object is to render material service to thecommunity, and they are the tests which identifies the secondRespondent as an industry.12.It is pertinent to point that merely because the society isrun with the aid of the Government, it will not be exempted from thedefinition of industry and the said view gains credence from thedecision reported in Workmen of Indian Standards Institution vs.Management of Indian Standards Institution, 1976(1) LLJ 33. In thesaid case, the majority of the Three Judges Bench relied more uponthe Hospital Mazdoor Sabha case reported in 1960 (1) LLJ 251, than onthe Safdarjung Hospital's case and ultimately held that the Indian https://hcservices.ecourts.gov.in/hcservices/ Standards Institution which was run by the Government of India is anindustry. This was also pointed out in Bangalore Water Supply andSewerage case by the Hon'ble Supreme Court. By applying the saidprinciples stated supra, we have no difficulty to hold that thesecond Respondent society is an 'industry' within the meaning ofIndustrial Disputes Act.13.Admittedly, the appellant was working as an Assistant Matronin the second Respondent society and now the question that wouldarise is whether the appellant is a 'workman' as defined under theAct. After the changes brought out by the Amendment Act, 1956,depending upon the nature of work, the present definition has addedthe following two categories to the work viz., (i)Supervisory workand (ii)Technical work. Further, the definition has added the words"whether the terms of employment be express or implied" after thewords "hire or reward" and thus made the definition morecomprehensive. It has enlarged the scope of definition by using thewords "any such person who has been dismissed, discharged orretrenched has led to that dispute" as an industrial dispute.14.So, for an employee in an industry to be a workman, under thedefinition after its amendment, it is manifest that he must beemployed to do -(i)manual work;(ii)unskilled work;(iii)skilled work;(iv)technical work;(v)operational work;(vi)clerical work;(vii)supervisory work.So to determine whether an employee is a workman, as defined underSection 2(s) of the Act, the principal nature of duties and functionsare to be seen. A Three Judge Bench of the Hon'ble Supreme Court heldin Burma Shell Distribution Company of India Ltd. vs. Burma ShellStaff Association, 1970 (2) LLJ 594 that in order to bring anemployee within the ambit of the definition of workman, the nature ofwork performed by him must fall within one or the other of the aboveseven classifications.15.Now adverting to this case, some of the duties of theAssistant Matron, as disclosed by the list supplied by the learned https://hcservices.ecourts.gov.in/hcservices/ Counsel for the second Respondent, which are enumerated below has tobe looked into -(a)to help the matron in official duties;(b)to distribute food materials from the CooperativeSociety to the children, to record the same in the stockregister and to prepare a list of materials and hand it over tothe cook;(c)to supervise the work of the cook, to distribute uniformand medicines and maintain stock register for the same;(d)to supervise cleaning work;(e)to maintain various registers for different purposesrelating to the children who are kept in the observation home;and so on.16.The above said duties inter-alia carried out by the appellantcan certainly be termed as supervisory character and also clericalwork incidental thereto. A person doing work of a supervisory naturehas been added in the definition of workman by the Amendment Act,1956. But this clause excludes such a person who being employed insupervisory activity :- (i)draws wages exceeding Rs.1,600 p.m. or (ii)exercises, either by the nature of the duties attachedto the office or by reason of the powers vested in him,functions mostly of managerial nature.17.This has been clearly laid down in Burmah Shell's case (1970)2 LLJ 590. The appellant does not come under the above two clauses asher last drawn salary, as seen from the records is Rs.27/- per monthand she is not doing any duties of a managerial nature. Therefore, weare of the view that the appellant would very well come under thedefinition of workman, within the meaning of Sec.2(s) of the I.D. Actand therefore, we are not inclined to agree with the view of thelearned Single Judge on the above aspects.18.In the appeal, the appellant has challenged the findings ofthe Labour Court dated 12.05.1999 on the ground that disallowingback-wages is not sustainable especially when the Labour Court heldthat the punishment against her is disproportionate to the chargeslevelled against her. The facts culled out from the evidence wouldshow that she was making false complaint against her co-workers andthus her conduct and misbehaviour was such that it led to the framingof charges. After domestic enquiry, charges were held to be proved https://hcservices.ecourts.gov.in/hcservices/ and she was dismissed from service by order dated 18.09.1990 againstwhich, she raised an Industrial Dispute before the Labour Court,Madurai. After thorough analysis of evidence let on both sides, theLabour Court has held that the charges levelled against the appellantwas proved. However, the Tribunal held that the punishment awarded toher was on the higher side and disproportionate to the charges madeagainst her. On holding so, it directed the second Respondent toreinstate her with continuity in service but without back-wages, inorder to give her an opportunity to correct herself.19.We have heard the learned Counsel on either side on this pointand we are unable to find any impropriety or illegality in thefindings of the Labour Court. Therefore, it is not desirable to cometo the conclusion different from the one arrived at by the LabourCourt. Therefore, we confirm the findings of the Labour Court.20.In the result, (a)The order of the Tribunal directing reinstatement ofthe appellant with continuity of service but without back-wages is confirmed and the order of the learned SingleJudge is set aside and W.A.No.1375/2007 is allowed.(b)The order of the Tribunal finding the appellantguilty of charges and the consequential denial of back-wages, is sustained and W.A.No.1376/2007 stands dismissed.(c)There is no order as to costs. Sd/- Asst. Registrar. /true copy/ Sub Asst. Registrar.tarTo1.The Presiding Officer, Labour Court, Madurai.2.The Secretary, Madurai Children's Aid Society, No.164, Kamarajar Salai, Madurai 625 009. Judgment inW.A.Nos.1375 & 1376/2007DM (CO)GSK 04.06.2009.