Gopal. Vs. The Administrative Officer,
Madhya Pradesh Khadi and Village  INSC 179 (19 August 1985)
KHALID, V. (J) KHALID, V. (J) ERADI, V.
CITATION: 1986 AIR 504 1985 SCR Supl. (2) 641
1985 SCC (4) 138 1985 SCALE (2)324
Labour and Service Industrial Disputes Act,
1947 M.P. Industrial Relations Act, 1960 S. 2 (19) and (33) M.P. Khadi and
Village Industries Act, 1959 S. 14 Khadi and Village Industries Board Whether
"Industry" and "Undertaking"Applicability of Notification
No. 9952 XVI dt. 31st December, 1960.
The appellant was appointed as Store
Keeper-cumAccountant in one of the branches of the Madhya Pradesh Khadi and
Village Industries Board, a body corporate constituted under the M.P. Khadi and
Village Industries Act, 1959. His services were terminated by an Order dated
23.9.1964 after giving one month's notice.
The termination Was challenged before the
Labour Court as amounting to retrenchment because it hat been passed without
complying with provisions of the M.P. Industrial Relations Act, 1960, the
charge sheet that was given to him on 27.4.1964 was based on false and baseless
grounds and no enquiry was held prior to removal. The appellant claimed
reinstatement with full wages. The Respondent Board contested the application
contending that the Board was not an industry and that neither the M.P.
Industrial Relations Act, 1960 nor the Industrial Disputes Act, 1947 applied to
The Labour Court held that the termination of
the services of the appellant amounted to retrenchment, set aside the Order of
termination and directed reinstatement with half salary from the date of the
Order till reinstatement.
The Board preferred a revision. The
Industrial Court affirmed the order of the Labour Court and dismissed the
642 The Board filed a petition under Art. 225
and 227. The High Court allowed the writ petition, quashed the order of the
Industrial Court and remitted the case to it to decide the facts afresh. The
Industrial Court after taking fresh evidence, again held in favour of the
appellant, reaffirming its previous decision to reinstate the appellant.
The Board again moved the High Court, which
set aside the orders of the Industrial Court and the Labour Court on the ground
that they acted without jurisdiction. The appellant appealed to this Court by
certificate which was resisted by the Board on two grounds: (i) that it is not
an industry within the meaning of the Act and (ii) that it does not employ more
than 100 persons.
Allowing the appeal of the
HELD: 1. The order passed by the High Court
is set aside and that of the Labour Court and the Industrial Court are
restored. [651 B-C]
2. The M.P. Industrial Relations Act, 1960 is
a separate Act in the State of Madhya Pradesh to regulate the relations of
employees in certain matters and makes provisions for settlement of Industrial
disputes. Any concern, to become an industry, has to satisfy the definitions of
"industry" and "undertaking" as contained in ss. 2(19) and
2(33) thereof. Such concerns have to satisfy yet another condition to attract
the provisions of the said Act which relates to the number of the employees the
concern employs. Notification No. 9952 XVI dated 31st December, 1960 issued
under sub 8. (3) of 8. 1 of the Act, makes the provisions of the Act applicable
only to an undertaking in the industries specified in the Schedule wherein the
number of the employees on any date during Twelve months preceeding or on the
date of the notification or any day thereafter was or is more than one hundred.
In the instant case, the evidence on record admits of no doubt that the Board
employed more than 100 persons. [645 A-H; 646 A-4; 647 C]
3. One of the functions of the Board under 8.
14 of the M.P. Khadi and Village Industries Act 1959 is "to support,
encourage, assist and carry on Khadi and Village Industries and in the matters
incidental to such trade or business".
The evidence shows that the Board supplies
raw wool to Cooperative Societies, so 643 that the Societies can engage
themselves in useful work. The Society after weaving raw wool, convert them
into spun blankets and supply them to the Board. The blankets so spun are not
the properties of the Societies. They have to be given back to the Board. The
blankets so supplied from various centres to the Board, have necessarily to be
sold in the open market. This act of sale would clearly come within the
definition of the word 'trade' or 'business' as contemplated in Section 2(19)
of the Act. m e conclusion is, therefore, irresistible that the Board engages
itself in the business of selling blankets. It has, therefore, to be held that
the Board is an 'industry' within the meaning of the Act. [650 B-D; 651 A-B]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 617
(NL) of 1975.
From the Judgment and Order dated 4.12.1973
of the Madhya Pradesh High Court in Misc. Petition No. 713 of 1971.
M.K. Ramamurthy, Vineet Kumar and N.D.V. Raju
for the Appellant.
G.B. Pai, S.K. Gambhir, Ashok Mahajan and Ms.
S. Kirpalani for the Respondents.
The Judgment of the Court was delivered by
KHALID, J. This is an appeal by certificate, issued by the High Court of Madhya
Pradesh under Article 133(1) of the Constitution of India against the Judgment
of a Division Bench of that Court setting aside the Order passed by the Labour
Court, Ujjain, confirmed in revision by the Industrial Court, Madhya Pradesh,
allowing an application filed by the appellant under Section 31 of the Madhya
Pradesh Industrial Relations Act, 1960 (hereinafter referred to as the Act) in
which he had challenged his termination which challenge was accepted and his
reinstatement was ordered. The facts in brief, necessary for disposal of this
appeal are as follows:
2. The appellant was appointed as Store
Keeper Cum Accountant on 14.2.1957, in the Madhya Pradesh Khadi and Village
Industries Board, Budhwara, Bhopal. This Board is a body corporate constituted
under the M.P. Khadi and Village Industries Act 1959 and is engaged among
others, in activities of encouraging production of Khadi and helping other
village industries. It has 644 different branches in the State of Madhya Pradesh.
One such centre was established at Berdi in Chhindwara district. The Board
supplied raw wool to the Co-optative Societies and after getting them woven by
the societies into blankets, received back blankets as finished goods. m e
services of the appellant were terminated as per Order dated 23.9.1964, after
giving one month's notice. He challenged this Order of termination as one
amounting to retrenchment, and having been passed without complying with the
provisions of the Act that govern his relationship with the Board. He stated
that a charge sheet was given to him on 27.4.1964, based on false and baseless
grounds and that there was no enquiry held into the said charges before his
removal. The appellant thereupon moved the Labour Court at Ujjain on 7.6.1975,
for his reinstatement with full wages.
The Board contested the application
contending inter alia that the Board was not an industry and that neither the
M.P. Industrial Relations Act, 1960 nor the Industrial Disputes Act, 1947
applied to it. The Labour Court, Ujjain framed necessary issues on the rival
contentions and after recording evidence, held that the termination of the
appellant amounted to retrenchment, set aside the Order of termination and
directed the Board to reinstate him with half salary front the date of the
Order till reinstatement.
4. Aggrieved by this Order the Board
preferred a revision before the Industrial Court in Madhya Pradesh, Indore,
repeating the contentions raised before the Labour Court. m e Industrial Court
by its order dated 3.2.1967, affirmed the order of the Labour Court and
dismissed the revision petition.
5. The Board pursued the matter further by
moving the Madhya Pradesh High Court by a petition under Article 226 and 227 of
the Constitution of India. The High Court by its order dated 19.12.1969,
allowed the Writ Petition, quashed the order of the Industrial Court and
remitted the case to it to decide the facts afresh with due regard to the
relevant provisions of the M.P. Industrial Relations Act, 1960. After remand,
the Industrial Court proceeded to decide the question itself after taking fresh
evidence and again held in favour of the appellant and against the Board,
reaffirming its previous decision to reinstate the appellant. The matter was
taken to the High Court again by the Board by means of a Writ Petition. The
High Court set aside the orders of the Industrial Court and the Labour Court,
on the ground that they acted without jurisdiction.
However, since the 645 High Court felt that
the matter was not free from doubt and was debatable, granted certificate to
the appellant to appeal to this Court. It is thus that the matter is before us.
6. In the State of Madhya Pradesh there is a
separate Act to regulate the relations of employees in certain matters and to
make provisions for settlement of industrial disputes and other connected
matters. mis Act is called the Madhya Pradesh Industrial Relations Act, 1960.
Section 2 (19) defines Industry as under:
Industry means (a) any business, trade,
manufacture, undertaking or calling of employers;
(b) any calling, service, employment,
handicraft or industrial occupation or a vocation of employees; and Includes
(i) agriculture and agricultural operations;
(ii) any branch of any industry or group of
industries which the State Government may, by notification, declare to be an
industry for the purposes of this Act.
Section 2 (33) defines undertaking as
"Undertaking means a concern in any
Thus, any concern, to become an industry, has
to satisfy the above definitions to attract the Provisions of the Act. Such
concerns have to satisfy another condition to attract the provisions of the Act
and that is about the number of employees the concern employs. This is provided
in a Notification issued under the Act which reads as follows:
No. 9952 XVI, dated 31st December, 1960.
In exercise of the powers conferred by `SubSection
(3) of Section 1 of the Madhya Pradesh Industrial Relations Act 1960 (No. 27 of
1960), the State Government hereby directs that all the provisions of the said
Act other than section 1 and 112 thereof shall be into 646 force on 31st
December, 1960, in respect of undertaking in the industries specified in the
schedule below wherein the number of employees on any date during twelve months
preceding or on the date of this notification or any day thereafter was or is
more than one hundred :
1. Textile including cotton, silk, artificial
silk staple fibre, jute and carpet.
This notification, thus, makes the provisions of the Act applicable only to
undertaking in the industries specified in the schedule, where the number of
employees, on the date mentioned therein was or is more than 100. We are
concerned here only with item No. 1 in the schedule and therefore, have left
out the other items.
7. Before considering the rival contentions
raised before us, we may extract the relevant sections of the Act under which
the Board was constituted, to understand the functions and duties of the Board.
For our purpose it is enough to quote Sections 14 (1) & 14 (2) (a) alone,
Clause (b) to (m) are not necessary for the resolution of the dispute involved
in this case and hence are omitted.
"14. Functions of Board.
(1) It shall be the duty of the Board to
organise, develop and regulate Khadi and Village Industries and perform such
functions as the State Government may prescribe.
(2) Without prejudice to the generality of
the provisions of the sub section (1) the Board shall also in particular
discharge and perform all or any of the following duties and functions namely;
(a) To start, encourage, assist and carry on
Khadi and Village Industries and in the matters incidental to such trade or
business." 647 With this background we will advert to the facts of the
8.The Board resisted the appellant's case on
two grounds (i) that it is not an industry within the meaning of the Act and
(ii) that it does not employ more than 100 persons. It is necessary to note at
this stage that the Board had not originally urged any plea that it did not
employ sufficient employees to attract the Act. It was during the course of
argument that this plea about the number of appointees was urged by the Board.
However, both the Labour Court and the Industrial Court considered the two
jurisdictional questions as to whether the Board was an industry and as to
whether it had employed more than 100 persons.
9. We have gone through the orders passed by
the labour Court and the Industrial Court, carefully. According to us a close
examination of the evidence adduced in the case and the discussions bearing on
them by the Labour Court in particular and the Industrial Court, admits of no
doubt that the Board employed more than 100 persons. For this purpose, we
content ourselves by extracting the following paragraph from the order of the
Labour Court while considering the first point namely whether the provisions of
the Act are applicable to the Board.
"Thus the applicant's contention that
the Parishad's cloth weaving centres were in existence till 2 years before and
his contention in respect of the number of workers engaged at Mandsaur,
Gwalior, Anjad entries etc. have not been refuted by the nor applicant. It is
therefore concluded them at (sic) 60, 40, 4 & 3 workers were working at
Parishad's centres situated at Mandsaur, Gwalior, Anjad and Parsinga. Besides
this there were officials working at Chanderi & Maneshwar weaving centres.
The non applicant who is in possession of the records of appointment and who is
also not disclosing the exact figures (of the workers), therefore the
conclusions go against the non applicant.
10. This finding on the appreciation of the
evidence given by the witnesses concludes the parties according to us,
regarding the number of the employees employed by the Board. Even so, when the
matter went before the High Court, the High Court felt that the jurisdictional
question was not properly considered by the Labour Court. Therefore, in the
first round the matter was remanded by the High Court, and the High Court made
the following observations:
648 "The relevant notification applied
the provisions of the Act to undertaking in the industries specified in the
schedule wherein the number of employees, was or is more than one hundred.
Evidently, it had no application to smaller
establishments of notified industries that employed less than 100 persons. That
being so, it is plain enough that the Courts below misdirected themselves by
taking into account the total number of the employees of the Board without
regard to the consideration whether they were employed or not in the
establishment relating to textiles and the findings recorded by them on the
jurisdictional facts do not bear examination and cannot be sustained. Since the
facts bearing on the question have not been properly ascertained it would be
right to set aside the order of the Industrial Court and leave it to that Court
to decide these facts afresh with due regard to all the relevant provisions of
the M.P. Industrial Relations Act, 1960 and then to dispose of the claim made
by the respondent 3 on merits.
11. We may, even at this stage, point out
that the High Court could have set aside the order of the Labour Court and the
Industrial Court, on the ground that the Board did not, according to it,
satisfy the definition of industry without remanding the case to the Industrial
Court to determine the number of employees. We are making this statement in
view of an objection taken by the appellant's counsel before us that the
respondent cannot, in this appeal, reagitate that question, he having been
concluded by the remand order which was restricted only to the number of
employees in the Board.
12. After remand, the Industrial Court
considered the question again. The Industrial Court understood the remand order
and, according to us, rightly, as follows:
"After the remand the parties have
adduced evidence which is common in both cases. The exact question I am called
upon to answer is, the number of employees employed by the parishad in its
textiles activity and not all other activities such as Oil, Paper Carpentry,
Gur Tannery, Pottery etc. me best evidence will be the record kept with the
parishad. The oral evidence will not be of much help, though it may have some
13. After discussing the evidence in detail,
the Industrial Court came to the conclusion thus:
"For all these reasons, I hold that in
the textile activity of the Board (parishad) the number of employees is or has
been over and more than 100 from 1.12.59 to 31.12.60, vide Ex-D/1 and,
therefore the employees had a right to file the application under the Act.
14. The Industrial Court again held in favour
of the appellant The matter went to the High Court again in the Second round,
at the instance of the Board. On the question of number of employees in the
Board, in paragraphs 10 & 11 of the Judgment, the High Court observed thus:
"....Thus from the statement of this
witness, there can be no doubt that there were more than 100 persons in all at
the wool weaving centres in the State and at some of the centres the number was
more than 100. The witness further stated that there are 16 industries under
the Board, such as Paper Industry, Soap Industry, Khadi Industry, Wool Industry
and so on.
Similarly, in the connected case, namely M.P.
713 of 1971, in pursuance of the remand order,
the statement of Gunadeo Patil (Petitioner's AnnexureF) and the other witness,
Sadashiv Patil (Petitioner's Annexure-f/1) were recorded. The statements of
these two witnesses were similar to the statements in the main case.
(The High Court was dealing with the case of
two employees in Misc. Petition No. 712/1971 and 713/1971 and that is why
mention is MADE about the connected case.)
15. After holding thus, the High Court spent
considerable part of the Judgment for considering the kindred question whether
the board was an industry or not.
The appellant's counsel raised an objection
that it was not open to raise this question as it was covered by the remand
order (which was confined only to the number of employees).
In our view, this objection is well founded
and has to be upheld. According to us, the appellant is entitled to succeed on
this ground alone. However, we would like to answer 650 the other question also
for the purpose of completion of this Judgment and to set at rest possible
future controversies on the subject .
16. The definition clause in the Act is far
from satisfactory. The definition of word 'industry' in Section 2(19) and the
word 'undertaking' in Section 2(33) does not make happy reading but this
unhappy phraseology need not vex us. If from the evidence available, we can
say, that the Board carries on trade or business, it would straightaway become
an industry under the Act. We have already seen that one of the functions of
the Board is to support, encourage, assist and carry on Khadi and Village
Industries and in the matters incidental to such trade or BUSINESS. What the
Board does is to supply raw wool to Cooperative Societies, so that the
Societies can engage themselves in useful work. The Societies after weaving raw
wool, convert them into spun blankets and supply them to the Board. The
blankets so spun are not the properties of the Societies. They have to be given
back to the Board. The blankets so supplied from various centres to the Board,
have necessarily to be sold in the open market. This act of sale would clearly
come within the definition of the word trade or business as contemplated in
Section 2 (19) of the Act. This finding of ours is supported by the evidence in
the case also. The appellant in his evidence stated that at the centre where he
was posted, weaving of woolen blankets was done by the Societies and other
centres constituted at various places and the woven blankets were supplied back
to the Board. Three witnesses were examined on behalf of the Board. Sh. Choudhary,
the first witness and Sh. Patil the next witness, admitted that the spinning
and weaving work of cotton and woolen cloth was got done by the Board through
various Societies. These two said witnesses admitted that the looms belonged to
the Board and the Board supplied wool and other materials and implements and
sold manufactured goods after obtaining them from the Societies. They also made
an important admission that the Society could not sell the goods prepared out
of the wool supplied by the Board to anybody else. The third witness also
supported this case though differed from the second witness and stated that the
Board extended marketing facilities to the Societies.
17. We thought it necessary to refer to the
evidence in the case to disabuse an impression attempted to be created that the
Board did not sell the blankets it got from the various societies spun out of
the wool supplied to them.
There is a clear admission by one witness
that the Societies cannot sell the blankets 651 prepared out of the wool
supplied by the Board to any one else. No argument is necessary to hold that
the blankets received by the Board from various centres have only to be sold
and not used by the Board for its own purpose. Or. this evidence the conclusion
is irresistible that the Board engages itself in the business of selling
blankets. It has therefore to be held that the Board is an industry within the
meaning of the Act.
18. The appellant is entitled to succeed on
both the grounds. We set aside the order passed by the High Court and restore
the orders passed by the labour Court and the Industrial Court. The appellant
will get his cost from the first Respondent quantified at Rs. 2,500.
A.P.J. Appeal allowed.