Rajendrasinhji Institute vs Maharashtra Labour Union And Ors.
2002 Latest Caselaw 1263 Bom

JUDGMENT

Nishita Mhatre, J.

1. This petition challenges the orders of the labour Court in Reference (ULP) No. 4 of 1993 and of the Industrial Court in Revision Application No. 74 of 1993. The main contention involved in the present writ petition is whether the petitioner is an 'Industry' as defined under Section 2(j) of the Industrial Disputes Act and whether the appropriate government is the State Government or the Central Government.

2. The controversy in this petition arose since the services of one A. R. Radhakrishna were terminated on 23-4-1993 by the Petitioner (hereinafter called as 'the RSI'). The members of Respondent No. 1 Union remained absent from duty on the next day. The RSI locked out the civilian employees who were represented by the Respondent-Union. The respondent-union, therefore, filed Reference (ULP) No. 4 of 1993 under Section 25 of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (hereinafter referred to as 'MRTU and PULP Act') on 7-5-1993 for a declaration that the lock-out imposed by the RSI was illegal.

3. In their reply filed on 22-7-1993, the RSI raised two preliminary contentions, namely, that the RSI was not an 'industry' and that the appropriate government being the Central Government and not the State Government, the MRTU and PULP Act was not applicable to the RSI. These preliminary issues were decided by the Labour Court by its order dated 10-9-1993. The Labour Court held that the activities of the RSI fell within the definition of 'Industry' as defined under Section 2(j) of the Industrial Disputes Act (hereinafter referred to as 'ID Act') and the appropriate government was the State Government and, therefore, the MRTU and PULP Act was applicable and the Reference was maintainable.

4. Aggrieved by this decision, the RSI filed a Revision Application under Section 44 of the MRTU and PULP Act. The Industrial Court dismissed the application and confirmed the order of the Labour Court. The RSI then filed the present Writ Petition. This Court while expediting the hearing of the petition,

directed the Labour Court to proceed with the hearing of the Reference. It appears that this Reference has been disposed of by the Labour Court against which a writ petition was preferred before this Court. Consent terms were filed by the parties in the petition and it has been disposed of accordingly. Now, the only two issues agitated by the RSI are (i) that the impugned order would affect all other Army Messes around the country if the RSI is considered to be an Industry within the definition of 2(j) of the ID Act and (ii) that the appropriate government is the Central Government since the activity of the RSI is conducted under the authority of Central Government this being a chore establishment of the Army.

5. Mr. Bhanage, learned Advocate for the RSI, submitted that notwithstanding the judgment of the Apex Court in the case of Bangalore Water Supply and Sewerage Board v. A. Rajappa and Ors. reported in 7975 / LLJ 349 the RSI should not be considered to be an Industry. He submits that this establishment is a "Mess" and not a "Club". According to him, both these terms are not synonymous. He submits that the Mess is a part of the defence establishment and is controlled by the Ministry of Defence. It is an integral part of the Army and is a chore establishment. He further submits that the Army Mess is performing a function supportive to the Army which performs a sovereign function and, therefore, the question of RSI being an Industry does not arise.

6. The learned Advocate sought to distinguish the judgment in the case of Bangalore Water Supply (supra) by submitting that the entire line of reasoning of the Apex Court reflected that the case before the Apex Court governed those establishments which provide goods and services on a commercial basis, and therefore, according to the learned advocate only such establishments would be covered by the term 'Industry' as defined under Section 2(j) of the ID Act. He further submitted that the Army Mess being an establishment performing a chore function, could not be considered as a defence establishment and, therefore, was not covered by the judgment. He took exception to the inferences drawn by the Labour Court which he urged were contrary to the evidence of record. Mr. Bhanage urged that the mere fact that some civilians were employed in order to maintain the cleanliness of the establishment could not determine the character of the RSI.

7. Mr. Kulkarni on the other hand submitted that the Rules and bye-laws of the RSI amply demonstrate that the RSI is not on establishment performing any sovereign function. He contended that the definition of industry if properly interpreted applied to the RSI. He submitted that the judgment in the Bangalore Water Supply (supra) left no manner of doubt that the RSI is an industry. Moreover, according to the learned Advocate analysis of the evidence before the Labour Court led to the inference that the RSI was being run no differently from other clubs. Merely because it catered primarily to the needs of defence personnel it would not, in his submission, be excluded from the ambit and scope of the term "industry". He, therefore, submitted that no interference was called for under the writ jurisdiction of this Court.

8. In order to appreciate the rival contentions it would be necessary to consider the purpose for which the RSI was established as also its Rules and bye-laws. The RSI or the Rajendrasinhji Institute is an establishment meant to provide social, recreational and sports facilities to serving and retired officers of the defence services and their families posted or residing at Pune and cantonments in areas close by. The Rules and Bye-laws governing this establishment have been framed in 1991. The Bye-Laws framed indicate in the introduction that the RSI has the status of combined Officers' Mess and not a Club as is understood in the conventional sense. The objectives of RSI have been enumerated, namely, to provide members and their families social, recreational and sports facilities. The RSI caters primarily to the needs of those living in Pune and other satellite cantonments in keeping with their social status and also provides combined officers' mess facilities to a limited extent.

9. Membership of the RSI is on a voluntary basis and open to permanent, station, temporary, honorary and block members. The membership is given to regular officers of defence services holding a permanent regular commission, serving MNS officers of the defence services, all retired officers of the defence services and MNS officers drawing pension, officers of the defence services invalided out of service with pension, retired civilian officers subject to their being paid from defence grants and being members of officers' mess and officers who have been granted station membership. Widows of service officers who are residing in Pune or satellite stations are also eligible to be permanent members on paying subscription. Temporary membership is offered by the RSI to serving officers and those who are otherwise qualified or eligible to become members but are not posted in Pune. This temporary membership is also extended to retired officers who have applied for permanent membership provided they pay three times the temporary membership. Honorary membership is extended to civilian dignitaries or persons of eminence and those Central Government officials with whom the armed forces interact. Block membership is extended to defence services establishments.

10. The general body of the RSI consists of Permanent Members and Station Members in accordance with Rule 13-A. The Managing Committee is appointed from amongst the Permanent and Station Members. The Chief patron of RSI is the General Officer Commanding - in - Chief, Southern Command. The staff required to man the RSI is to be appointed as far as practically possible from the ex-servicemen. The accounts which are to be maintained by the RSI are to be prepared by the Accounts Officer, who is the account holder of the Institute. These accounts under the Bye-Laws are to be audited by the Regimental Audit Body and once in a year by an approved firm of Chartered Accountants recommended by the Managing Committee.

11. In his Examination-in-Chief, one Arvind Krushnarao Prabhudesai, who was working as Manager with the RSI attempted to establish the fact that the RSI is an adjunct of the Army Mess, the Army Mess being an establishment under Regulation 1256 of the Defence Services Regulations and, therefore, the ID Act was not applicable. He further stated that the civilian employees were employed only for cleaning the internal area of the premises of the RSI and their work was of a peripheral nature. The witness has admitted in the cross examination that the Southern Command Officers' Mess is distinct from the RSI and that the expenses of the Mess are not included with the RSI. Only 77 Officers benefited from the Southern Command Mess. This witness has also admitted that he has nothing to do with the Southern Officers Command Mess, as it is the Managing Committee of the RSI which appoints him. The balance sheets of the two establishments were also maintained separately. The 46 employees who were locked out include clerks, Waiters, Malis, Safaiwallahs, etc. The witness has further deposed that these 46 employees were paid in accordance with the scales fixed by the Managing Committee of the RSI and not according to the pay scales available to the Central Government employees.

12. Mr. Bhanage has taken me through the judgment of the Apex Court in the case of Bangalore Water Supply (supra) extensively as this judgment deals with the interpretation of the definition of the word 'industry' in Section 2(j) of the ID Act. On a detailed reading of this judgment, I am of the view that the RSI is unable to escape from the purview of the ID Act and consequently, the MRTU and PULP Act. Mr. Bhanage submitted that the philosophy of this judgment is clear and unambiguous. According to him, if the activity is patterned on a commercial basis, then, it would be considered an industry especially if this trade or business or analogous activity had an eye on competitive efficiency by hiring employees, systematizing processes, producing goods and services needed by the community and obtaining money's worth of work from employees. He submitted that these 46 employees were employees earning meager wages for certain work undertaken by them and that could not by itself characterise the RSI as an industry.

13. While considering the status of clubs, the Apex Court has observed thus in the Bangalore Water Supply (supra) case :

"107. ......The question is whether in a club situation or of a co-operative or even a non-astery situation; for that matter - a dispute potential of the nature suggested exists. If it does, it is an industry, since the basic elements are satisfied. If productive co-operation between employer and employee is necessary, conflict between them is on the cards, be it a social club, mutual benefit society, pinjarapole, public service or professional office. Tested on this touchstone, most clubs will fail to qualify for exemption. For clubs - gentlemen's clubs proprietary clubs, service clubs, investment clubs, sports clubs, art clubs, military clubs or other brands of recreational associations when x-rayed from the industrial angle, project a picture on the screen typical of employers hiring employees for wages for rendering services and/or supplying goods on a systematic basis at specified hours. There is a co-operation, the club management providing the capital, the raw material, the appliances and auxiliaries and the cooks, waiters, bell boys, pickers, bar maids or other servants making available enjoyable eats, pleasures and other permissible services for price paid by way of subscriptions or bills charged. The club life, the warm company, the enrichment of the spirits and freshening of the mind are there. But these blessings do not contradict the co-existence of an "industry" in the technical sense. Even tea-tasters, hired for high wages, or commercial art troupes or games teams remunerated fantastically, enjoy company, taste, travel and games; but, elementally, they are workmen with employers above and together constitute not merely entertainment groups but industries under the Act. The protean hues of human organisation project delightfully different designs depending upon the legal prism and the filtering process used. No one can deny the cultural value of club life; neither can anyone blink at the legal result of the organisation."

14. Mr. Bhanage tried to extricate the RSI from the coils of the term "industry" by urging that the RSI was a self serving club as the managing Committee consisted of members of the Army and, therefore, according to him, this was enough proof that it was a self serving club. However, the Apex Court has considered the activities of a self-service club in para 110 of its judgment in the same case, which reads thus:

"110. Even these people's organs cannot be non-industries unless one strict condition is fulfilled. They should be and usually are self-serving. They are poor men's clubs without the wherewithal of a Gymkhana or C.C.I. which reacted this Court for adjudication. Indeed, they rarely reach a Court being easily priced out of our expensive judicial market. These self-service clubs do not have hired employees to cook or serve, to pick or chase balls, to tie up nets or arrange the cards tale, the billiards tale, the bar and the bath or do those elaborate business management chores of the well-run city or country clubs. The members come and arrange things for themselves. The secretary, an elected member, keeps the key. Those interested in particular pursuits organise those terms themselves. Even the small accounts or clerical items are maintained by one member or other. On special evenings all contribute efforts to make a good show, excursion, joy picnic or anniversary celebration. The dynamic aspect is self-service. In such an institution, a part-time sweeper or scavenger or multi-purpose attendant may sometimes exist, he may be an employee. This marginal element does not transform a little association into an industry. We have projected an imprecise profile and there may be an minor variations. The central thrust of our proposition is that if a club or other like collectivity has a basic and dominant self-service mechanism, a modicum of employees at the periphery will not metamorphose it into a conventional club whose verve and virtue are taken care of by paid staff and the members' role is to enjoy. The small man's Nehru Club, Gandhi Granthasala, Anna Manram, Netaji Youth Centre, Brother Music Club, Muslim Sports Club and Like organs often named after natural or provincial heroes and manned by members themselves as contrasted with the upper bracket's Gymkhana Club, Cosmopolitan Club, Cricket Club of India, National Sports Club of India whose badge is pleasure paid for and provided through, skilled or semiskilled catering staff. We do not deal with hundred per cent social service clubs which meet once in a way, hire a whole evening in some hotel, have no regular staff and devote their energies and resources also to social service projects. There are many brands and we need not deal with everyone. Only if they answer the test laid down affirmatively qualify."

Therefore, on considering the evidence led before the Labour Court, it would be difficult to construe the activities of the RSI as self-service activities. It hired 46 employees as clerks, waiters, malis and sweepers or cleaners (safaiwallahs). These are not the activities which any of the members undertake on their own for the RSI to be considered as self-service club. The catering for the RSI is arranged from catering contractors to be appointed by the Managing Committee.

15. The activities of the, RSI include providing sports facilities for both indoor and outdoor games. These activities, according to the RSI, are conducted by the members themselves and this would make the RSI as self serving club. However, the evidence on record indicates that even for these sports activities, persons were recruited by the Managing Committee of the RSI and were paid on the pay scales decided by the Managing Committee. Therefore, to suggest that the RSI is a self-service club would be a travesty of justice. The RSI involves cooperation of the Managing Committee and the employees appointed by it and its activities are calculated to supply pleasurable utilities to members and others. Therefore, the submission of Mr. Bhanage that this is not an industry is of no avail. In the concurrent judgment of Chandrachud, J. (as he then was) reported in 1978 LLJ 73 it has been considered whether an activity could be considered a sovereign function of the State merely because it is undertaken by the State. It has been held that the nature of the activity is the factor which determines whether an establishment falls within the ambit of Section 2(j) and the character of the activity does not change according to who undertakes it. Therefore, if Mr. Bhanage's submission that the RSI is an establishment set up by the government is correct, it would still be an industry, having regard to its activities.

16. In fact, the learned Judges of the Apex Court in the concurrent judgment have held thus:

"9. ....Indeed, in this respect, it should make no difference whether, on the one hand, an activity is undertaken by a corporate body in the discharge of its statutory functions or, on the other, by the State itself in the exercise of its inalienable functions. If the water supply and sewerage schemes or fire fighting establishments run by a Municipality can be industries, so ought to be the manufacturer of coins and currency, arms and ammunition and the winning of oil and uranium. The fact that these latter kinds of activities are, or can only be, undertaken by the State does not furnish any answer to the question whether these activities are industries. When undertaken by a private individual they are industries. Therefore, when undertaken by the State, they are industries. The nature of the activity is the determining factor and that does not change according to who undertakes it. Items 8, 11, 12, 17 and 18 of the first Schedule read with Section 2(n)(vi) of the Industrial Disputes Act render support to this view. These provisions which were described in Hospital Mazdoor Sabha (supra) as "very significant" at least show that, conceivably, a Defence Establishment, a Mint or a Security Press can be an industry even though these activities are, ought to be and can only be undertaken by the State in the discharge of its constitutional obligations or functions. The State does not trade when it prints a currency note or strikes a coin. And yet, considering the nature of the activity, it is engaged in an industry when it does so."

The submission that the RSI is a chore establishment and run by the State in discharge of its sovereign functions and, therefore, not an industry cannot be accepted. If this plea is to be accepted, there was no need for the RSI to be set up at all as a separate establishment from that of the officers other than Southern Command Officers' Mess. Mr. Bhanage urged that the RSI was merely an adjunct or extension of the Southern Command Officers' Mess and, therefore, a chore army establishment. To buttress this argument, he placed reliance on Regulation 1256 of the Defence Service Regulations and submitted that the RSI was established in its present location on government land with government funds and, therefore, not an industry.

17. Now, if these submissions were correct, there was no need to have separate Bye-Laws for the RSI itself as the Regulations applicable to Officers messes are extensive and do not speak of setting up of a separate institute. Membership of the Southern Command Officers' Mess is compulsory under Regulation 1256 of the Rules whereas membership of the RSI is entirely voluntary. The Dress Code stipulated in both the establishments is different. Furthermore, the subscription charged in the Mess is different from the subscription for the RSI. If it was merely an adjunct of the Mess or an extension because the Southern Command Mess had become inadequate for the number of persons posted in Pune, there was no need for any separate rules for the RSI or separate membership. Therefore, this argument of Mr. Bhanage cannot be countenanced. Both the Labour Court and Industrial Court have rightly concluded that the RSI is an industry and, therefore, the provisions of the ID Act and the MRTU and PULP Act are applicable to it.

18. The question whether the RSI is carried out by or under the authority of the Central Government will be determined by the fact that the RSI has been set up as a separate body altogether from the Southern Command Officers' mess albeit with the assistance of the funds of the Central Government. The activities of the RSI do not indicate that it was being conducted by the Central Government or under the authority of the Central Government. The Central Government, in my view, has no role to play in the functioning of the RSI except to subsidise some of the activities. The accounts of the RSI were maintained separately and are audited by the firm of Chartered Accountants to be appointed by the Managing Committee of the RSI. All the members of the RSI are not serving Army personnel, but a number of retired officers or widows of commissioned officers are members. Therefore, there is nothing on record to show that the RSI is either run by or under the control of the Central Government or only for serving army personnel which may require such control. Therefore, the Central Government is not the "appropriate government" for the RSI.

19. Mr. Bhanage tried to place reliance on certain correspondence, which is annexed to the petition. However, from the evidence of the petitioner, it is not clear as to whether these documents have been exhibited. Some of these documents pertain to rationalisation of servant quarters, Southern Command officers' Mess. According to Mr. Bhanage, this would indicate that the RSI is set

up by the Central Government and is run under the Central Government. However, it appears that the documents are merely sent to the RSI for information and do not in any way show that the appropriate government of the RSI is the Central Government and not the State Government.

20. Taking an overall view of the matter, the Labour Court and the Industrial Court have evaluated the evidence before them and have rightly come to the conclusion that the RSI is an 'industry' and the appropriate government is the State Government. Therefore, no interference is called for under Article 227 of the Constitution of India.

21. In the result, the Writ Petition is dismissed. Rule stands discharged. No order as to costs.