Bombay Telephone Canteen Employees'
Association, Prabhadevi Vs. Union of India & ANR  INSC 586 (9 July
RAMASWAMY, D. P. WADHWA
special leave petition has come up directly, from the award of the Central
Government Industrial Tribunal No.2, Bombay, made on August
9, 1996 in Reference No.CGIT-
admitted position is that the petitioner Association, representing five
dismissed employees, had sought reference under Section 10(1) of the Industrial
Disputes Act, 1947 (for short, the `Act') to the Tribunal.
dispute arose on account of termination by the respondent-Management of the
services of the said employe on April 28, 1989; It was alleged that the termination was without any notice
and payment of retrenchment compensation under Section 25-f. The reference came
to be made on April 19,
1991. The Tribunal has
held, that the telephone Nigam Limited, Bombay is not an 'industry'. It, therefore, has no jurisdiction to adjudicate
the dispute. Prabhadevi Exchange had a total strength of 3000 employees of the
Tele- communication Department, working in three shifts. As per the
Administrative Instructions issued by the Government, for the first shift there
should be a '3A' type canteen, for the second shift 'A' type canteen and for
the third shift there should be `C' type canteen. It was averred that for Type
`3A' canteen, there should be 57 employees, but only 24 employees were working
on April 27.4.1989. The claim of the petitioner is that the dismissed employees
had joined the service in 1987. They are claiming wages as per the directions
of this Court, i.e., as per the Fourth Pay Commission's recommendations. Since
they were insisting upon payment of the wages, it is alleged, the services of
five employees were terminated without giving any notice or giving any
retrenchment compensation as enjoined by Section 25-F of the Act. Therefore,
they sought reinstatement into service with full back wages and with continuity
respondents, on the other hand. contended that the employees working in the
canteen are not 'workmen' within the definition of Section 2(s) of the Act nor
is the respondent an `industry' under Section 2(j). They are "treated as
holding civil posts in the Central Government".
were paid monthly salaries devised by the Canteen Committee depending upon the
increases in the cost of living etc. The provisions of Chapter VI-B of the Act
are inapplicable to them. The Tribunal noted the findings as under:
Telephone Exchange employed about 4000 employees which is required under the
provisions of Administrative Instructions to have one departmental canteen. In
`A' type canteen, 19 employees are required per shift. It works from 5 a.m. to 12
midnight. In three shifts,
there at the relevant time are 24 employees including the concerned five
workmen. In view of a judgment of this Court, non-statutory canteen employees
are entitled to the benefits of the recommendations of Third and Fourth Pay
Director of Canteen accordingly directed the Department concerned to pay the
canteen employees wages as per the recommendations of the Pay Commission.
Departmental Canteen, it is contended by the management, is not an `industry'
as per the Memorandum dated January 12, 1982
of the Director (Welfare), Indian Posts and Telegraphs Department.
upon the judgment of this Court in Sub- Divisional Inspector of Posts Vaikkam
& Ors. vs. Theyyam Joseph [(1996) 2 SCC 293], the Tribunal has held that
departmental canteen is not an `industry'. However, on merits, it has held that
termination of the services of the five employees is bad in law. Calling the
decision in question, the above special leave petition has been directly filed
under Article 136, contending that the ratio in Theyyam Joseph's case contrary
to the judgment of this Court in Bangalore water-supply & Sewerage Board,
etc. vs. R.
& Ors. [(1978) 3 SCR 207]. The judgment, therefore, in Joseph's case is not
correct in law. When its correctness was questioned in another case, notice was
issued. It is, therefore, contended that the ratio of the Constitution Bench
judgment of seven Judges in Bangalore Water Supply Case applies to the facts
herein. The judgement in Josph's case, was rendered without reference to the
former and hence the matter needs fresh examination. The question is whether
the view taken is correct in law? This Court is aware of the decision in
Bangalore Water Supply case in which this Court had held the test to determine
whether an establishment is an `industry' within the meaning of the Act.
Therein, the employees of the appellant Board were fined for misconduct and the
fine was recovered from them.
filed an application under Section 33 C(2) of the Act? The question was whether
the Tribunal has jurisdiction under Section 33-C(2) of the Act? The High Court
had held it to be an industry and, therefore, the application was maintainable.
On appeal, this Court laid down the tests as under:
term "analogous to the trade of business" could not cut down the
scope of the term "industry". The said words can reasonably mean only
activity which results in goods made and manufactured or service rendered which
are capable of being converted into saleable ones. They must be capable of
entering the word of "res commercium", although they may be kept out
of the market for some reason. It is not the motive of an activity in making
goods or running a service but the possibility of making them marketable if one
who makes goods or renders service so desires, that should determine whether
the activity lies within the domain or circle of industry. But even this may
not be always a satisfactory test. By this test the type of services which are
rendered purely for the satisfaction of spiritual or psychological urges of
persons rendering those services would be excluded. Whenever an industrial
dispute would arise between either employers and their workmen or between
workmen and workmen, it should be considered an area within the sphere of
"industry' but not otherwise. In other words, the nature of the activity
will be determined by the conditions which give rise to the livelihood of the
occurrence of such disputes and their actual occurrence in the sphere.
term "sovereign should be reserved technically and more correctly for the
sphere of ultimate decisions. Sovereignty operates on a sovereign place of its
own. Only those services which are governed by separate rules and
constitutional provisions such as Articles 310 and 311 should, strictly
speaking be excluded from the sphere of industry by a necessary implication.
special excludes the applicability of the general.
public utility services which are carried out by governmental agencies or
Corporations are treated by the Act itself as within the sphere of industry. If
express rules under other enactments govern the relationship between the State
as an employer and its servants as employees, it may be contended on the
strength of such provisions that a particular set of employees are outside the scope
of the Industrial Disputes Act.
State today increasingly undertakes commercial functions and economic
activities and services as part of its duties in a welfare state. Hence to
artificially exclude state-run industry from the sphere of the Act, unless the
statutory provisions expressly or by necessary implication have that effect,
would not be correct.
2(j) of the Industrial Disputes Act (1947) which defines "industry"
contains words of wide import, as wide as the Legislature could have possibly
made them. The problem of what limitations could and should be reasonably read
in interpreting the wide words used in Section 2(j) is far too policy oriented
to be satisfactorily settled by judicial decisions. The Parliament must step in
the legislate in a manner which will leave no doubt as to its intention.
alone can afford a satisfactory solution to the question which has agitated and
perplexed the judiciary at all levels.
Mazdoor Sabha was correctly decided in so far as it held that the JJ Group of
hospitals was an industry but the same cannot be said in regard to the view of
the Court that certain activities ought to be treated as falling outside the
is no justification for excepting the categories of public utility activities
undertaken by the Government in the exercise of its inalienable functions under
the constitution, call it regal or sovereign or by any other name, from the
definition of "industry".
be true hat one must have regard to the nature of the activity and not to who
engages in it, it is beside the point to enquire whether the activity is
undertaken by the State, and further, if so, whether it is undertaken in fulfilment
of the State's constitutional obligations or in discharge of its constitutional
functions. In fact, to concede the benefit of an exception to the State's
activities which are in the nature of sovereign functions is really to have
regard not s much to the nature of the activity as to the consideration who
engages in that activity: for, sovereign function can only be discharged by the
State and not by a private person. If the State's inalienable functions are excepted
from the sweep of the definition contained in section 2(j), one shall, have
unwittingly rejected the fundamental test that it is the nature of the activity
which ought to determine whether the activity is an industry.
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 of fire fighting
. establishments run by a Municipality can be industries, so ought to be the
manufacture 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 as 'very significant, at lease show that, conceivably, a Defence
Establishment, 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.
systematic activity which is organised or arranged in a manner in which the
trade or business is generally organised or arranged would be an industry
despite the fact that it proceeds from charitable motives. It is in the nature
of the activity that one has o consider and it is upon the application of that
test that the State's inalienable functions fall within the definition of
very same principles must yield the result that just as the consideration as to
who conducts the activity, is irrelevant for determining whether the activity
is an industry so is the fact that the activity is charitable in nature or is
undertaken with a charitable motive. The status or capacity corporate or
constitutional, of the employer would have, if at all, closer nexus, than his
motive on the question whether the activity is an industry. The motive which
propels the activity is yet another step removed and ex hypothesis can have no
relevant on the question as to what is the nature of the activity. It is never
true to say that the nature of the activities is charitable. The subjective
motive force of an activity can be charity but for the purpose of deciding whether
an activity is an industry one has to look at the process involved in the
activity, objectively. The jural foundation of any attempt to except charitable
enterprises from the scope of the definition can only be that such enterprises
are not undertaken for profit. out then, that clearly, is to introduce the
profit concept by a side wind, a concept which has been rejected consistently
over the years. If any principle can be said to be settled law in this vexed
field it is this ; the twin consideration of profit motive and capital
investment it irrelevant for determining whether an activity is an industry.
Therefore activities which are dominated by charitable motives either in the
sense that the profit, which they yield are diverted to charitable purposes are
not beyond the ; pale of the definition of section 2(j).
much beside the point to inquire who is the employer as it to inquire, why is
the activity undertaken and what the employer does with the profits, if any, By
this test a Solicitor's establishment would be an industry.
Solicitor is undoubtedly does not carry on a trade or business when he acts for
his client or advises him or pleads for him, If and when pleading is
permissible to him. He pursues a profession which is variously and justifiably
described as learned, liberal or noble. But it is difficult to infer from the
language of the definition in section 2(j) that the Legislature could not have
intended to bring in a liberal profession like that of an Attorney within the
ambit of the definition of 'industry '.
Hospital Mazdoor Sabha the Court while evolving a working principle stated that
an industrial activity.
involved, inter alia, the cooperation of the employer and the employees, That
the production of goods or the rendering of material services to the community
must be the direct and + proximate result of such cooperation is a further
extension of that principle and it is broadly, by the application thereof that
a Solicitors establishment is held not to attract the definition clause.
refinements are, with respect not warranted by the words of the definition,
apart from the consideration that in practice they make the application of the
definition to Concrete Case;
upon a factual assessment so highly subjective as to, lead to confusion and
uncertainty in the understanding of the true legal position. Granting that the
language of the definition is so wide that some limitation ought to be read
into it, one must stop at a point beyond which the definition will skid into a
domain too rarefied to be realistic. Whether the cooperation between the
employer and the employee is the proximate cause of the ultimate product and
bears direct with it is a test which is almost impossible of application with
any degree of assurance or certitude. It will be as much true to say that the
solicitor's Assistant, Managing Clerk, Librarian and the Typist do not directly
contribute to the intellectual and product which is a creation of his personal
professional skill, as that, without their active assistance and cooperation it
will be impossible for him to function effectively.
unhappy state of affairs in which the law is marooned will continue to baffle
the skilled professional and his employees alike as also the Judge who has to
perform the unenviable task of sitting in judgment over the directness of the
cooperation between the employer and the employee, until such time as the
legislature decides to manifest its intention by the use of clear and indubious
language. Beside the fact that this Court has so held in National Union of
Commercial Employees the legislature will find a plausible case for exempting
the learned and liberal professions of Lawyers, Solicitors, Doctors, Engineers,
Chartered Accountants and the like from the operation of industrial laws. But
until that happens, in the present state of the law it difficult by judicial
interpretation to create exemptions in favour of any particular class.
case of the clubs on the present definition is weaker still. The definition
squarely covers them and there is no justification for amending the law so as
to exclude them from the operation of the industrial laws.
fact that the running of clubs is not a calling of the club or its managing
committee, that the club has no existence apart from its members that it exists
for its members though occasionally strangers take the benefit of its services
and that even after the admission of guests, the club remains a members'
self-serving institution does not touch the core of the problem.
`Industry' as defined in Sec.
and explained in Banerji's case has a wide import.
Where (i) systematic activity, (ii) organised by cooperation between employer
and employee (the direct and substantial element is chimerical);
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 e.g. making on a large
scale prasad or food), prima facie there is an `industry' in that enterprise.
Absence of profit motive or gainful objective is irrelevant, be the venture in
the public, joint, private or other sector.
The true focus is functional and the decisive test is the nature of the
activity with special emphasis on the employer-employee relations.
the organisation is a trade or business it does not cease to be one because of
philanthropy animating the undertaking.
Although section 2(j) uses words of the widest amplitude in its two limbs,
their meaning cannot be magnified to overreach itself.
`Undertaking' must suffer a contextual and associational shrinkage as explained
in Banerji and in this judgment; so also , service, calling and the like. This
yields the interference that all organised 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 take into the fold of
'industry' undertakings, calling and services, adventures' analogous to the
carrying on of trade or business'.
features, other than the methodology of carrying on the activity viz. in
organizing the cooperation between employer and ;
may be dissimilar. It does not, matter, if on the employment terms there is
Application of 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.
The consequences are (i) professions, (ii) clubs (iii) educational institutions
(iv) cooperatives, (v) research institutes (vi) charitable projects and (vii)
other kindred adventures, if they fulfil the triple tests listed in (supra),
cannot be exempted from the scope of section 2(j) (b) A restricted category of
professions, clubs, cooperatives and even gurukulas an 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
minimal matters, marginal employees are hired without destroying the non
employee character of the unit.
If, in a pious or altruistic mission, many employ themselves, free or for small
honoraria or like return, mainly drawn by sharing in the purpose or cause, such
as lawyers volunteering to run a free legal services clinic or doctors serving
in their spare hours in a free medical centre on asramites 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
eleemosynary or like undertakings alone are exempt-not other generosity,
compassion, developmental passion or project.
The dominant nature test:
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 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,
will be the true test. The whole undertaking will be 'industry' although ;
those who are not 'workmen' by definition may not benefit by the status.
Notwithstanding the previous clauses sovereign functions, strictly understood,
(alone), qualify for exemption, not the welfare activities of economic
adventures undertaken by Government or statutory bodies.
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 sec. 2(j).
Constitutionally and competently enacted legislative provisions may well remove
from the scope of the Act categories which otherwise may be covered
thereby." It is not necessary to refer to the dissenting judgments Beg,
C.J in his concurring judgment, at page 221, placitum E to G, has held thus:
would also like to make a few observations about the so called "sovereign"
functions which have been placed outside the field of industry. I do not feel
happy about the use of the term "sovereign" here. I think that the
term `sovereign' should be reserved, technically and more correctly, for the
sphere of ultimate decisions.
operates on a sovereign plane of its own as I suggested in Keshavananda Bharati's
case supported by a quotation from Ernest Barker's "Social and Political
Theory". Again the term a "Regal", from which the term
"sovereign" functions appears to be derived, seems to be a misfit in
a Republic where the citizen shares the political sovereignty in which he has
even a legal share, however small in as much as he exercises the right to vote.
What is meant by the use of the term "sovereign", in relation to the
activities of the State, is more accurately brought out by using the term
"governmental" functions although there are difficulties here also in
as much as the Government has entered largely now fields of industry.
Therefore, only those services which are governed by separate rules and
constitutional provisions, such as Article 310 and 311 should, strictly
speaking, be excluded from the sphere of industry by necessary
implication." In State of Bombay &
ors, vs. The Hospital Mazdoor sabha & ors. [(1960) 2 SCR 866], this Court
had given wider interpretation to the word "industry", with a view to
achieve the scope and object of the Act, so as to make the remedy available to
the workmen. Similarly, in The Corporation of the city of Nagpur vs. Its Employees [(1960) 2 SCR
942] this Court had pointed out that the definition of the word `industry' is
very comprehensive. It is in two parts. It is not necessary that an activity of
the Corporation must share the common characteristics of an industry before it
can come within the statutory definition. The words of Section 2(14) of the
City of Nagpur
Corporation Act which
is equivalent to Section 2(j) of the Act, are clear and unambiguous. The wide
definition, however, cannot include the regal, primary and inalienable
functions of the State, though statutorily delegated to a Corporation and the
ambit of such functions cannot be extended so as to include the welfare
activities of a modern State, and must be confined to legislative power,
administration of law and judicial power. "The real test as to whether a
service undertaken by a Corporation is an industry must be whether that
service, if performed by an individual or a private person, would be an
consideration cannot be an essential characteristic of an industry in a modern
State. It was, therefore, incorrect to say that only such activities as were
analogous to trade or business could come within Section 2(14) of the
Act". "When a service rendered by a Corporation as an industry, the
employees of the departments connected with the service, whether financial,
administrative or executive, would be entitled to the benefits of the
1960's and 1970's, there was parallel stream of thinking being developed by
this Court to engulf the service conditions of the employees of a Corporation
either registered under the Companies Act or under the Societies Act or under a
statute, vis-a-vis the Government employees.
Heavy Engineering Mazdoor Union vs. The State of Bihar & Ors. [(1969) 3 SCR
995], this Court held that the Government Company is distinct from Government.
In Praga vs. Tools Corporation vs. C.V. Imanual [(1969) 3 SCR 773], the
employees were held not entitled to availed the remedy under Article 226 of the
Constitution. In Sukhdev Singh & Ors. vs.
Sardar Singh Raghuvanshi & Anr. [(1975) 3 SCR 619], a break-through was
effected by a Constitution Bench in considering whether the Oil and Natural
Commission, the Industrial Financial Corporation or the Life Insurance
Corporation is an `authority' within the meaning of Article 12 of the
Constitution and whether the employees working in the Corporation are entitled
to the protection of judicial review under Article 14. It was answered it favour
of the employees. In separate but concurrent judgment, Mathew, J.
the foundation demolishing the autonomous status and non-amenability to
judicial review of the actions of corporate sector and held that when a
Corporation was created by a statute, its rules or instructions partake the
statutory character like a subordinate legislation.
they are to act consistently with the Rules or Regulations made under the Act
or by the statutory authority.
power of statutory authority is controlled and restricted by the statute which
created r them and the rules and regulations framed thereunder. Any action of
such bodies in excess of their power or in violation of restrictions placed on
that power is ultra vires. Thus, the corporate veil given in Praga Tools case
was torn apart and their actions were made amenable to judicial review. In Ajay
Hasia etc. vs. Khalid Mujib Sehravardi & Ors. etc. [(1981) 2 SCR 79],
another Constitution Bench had held that having regard to the Memorandum of
Association and the Rules of the Society, the respondent-College was a State
within the meaning of Article 12. The composition of the Society is dominated
by the representatives appointed by the Central Government and the Governments
of Jammu and Kashmir, Punjab, Rajasthan and Uttar Pradesh with the approval of
the Central Government. Accordingly, it was held to be an instrumentality of
the State. In R.D. Shetty vs. The International Airport Authority of India
& Ors. [(1979) 1 SCR 1042] and U.P. Warehousing Corporation & Anr. vs. Narain
Vajpayee [(1980) 3 SCC 459] this Court laid the test to determine as to when a
Corporation can be said to be instrumentality or agency of the Government. The
test of deep and permissive control was laid down thereunder. It was held that
the statutory authorities are amenable to writ jurisdiction being an
instrumentality or an authority under the State within the meaning or Article
12 of the Constitution. It was further held that the Corporation may be an
authority and, therefore, a State within the meaning of Article 12. Yet, it may
not be elevated to the position of State for the purpose of Articles 309, 310
and 311 which find place in Part XIV. For the purpose of Part III it has
separate jurisdictional entity, though it would not be so for the purpose of
Part XIV or another provisions of the Constitution. In U.P. Warehousing
corporation case, the respondent, on the basis of the complaints after
preliminary enquiry, was charged with certain allegations and his explanation
was sought and to indicate his evidence, if any.
expressed his intention to cross-examine certain witnesses as also to examine
some others in defence. Without taking any action on the respondent's request,
the appellant passed an order dismissing him from service w.e.f. the date of
his suspension. In the writ petition filed by him the High Court quashed the
order and directed his reinstatement with full back-wages. This Court, on these
facts, had held that "in cases where there is an element of public
employment and service or support by statute or something in the nature of an
office or a status, which is capable of protection, then irrespective of the
terminology used, and even though in some inter parties aspects the
relationship may be called that of master and servant, there may be essential
procedural requirement to be observed on grounds of natural justice". The
Warehousing Corporation was held to be an authority and the dismissal, without
conducting an enquiry and without an opportunity to lead evidences for the
proposed punishment given to the respondent, was bad in law.
the appeal was dismissed and the judgment of the High Court was upheld. Chinappa
Reddy, J. in his concurring judgment had held that there is hardly any
distinction, on the principle, between a person directly under the employment of
the Government and a person under the.
of an agency or instrumentality of the Government or a Corporation set up under
a statute or incorporated but wholly owned by the Government. Therefore, there
is no good reason, why, if Government is bound to observe the equality clauses
of the Constitution in the matter of employment and in its dealings with the
employees, the Corporations should not be equally bound. Some elements of
public employment is all that is necessary. to take the employee beyond the
reach of the rule which denies him access to a court to enforce a contract of
employment and denies him the protection of Articles 14 and 16 of the
Constitution. Rajasthan State Electricity Jaipur vs. Mohan Lal & Ors.
[(1967) 3 SCR 377] is also a case of the Rajasthan State Electricity Board
questioning whether it is an authority under Article 12 of the Constitution. It
was held by a Constitution Bench that it is an authority under Article 12 or
instrumentality of the State. In D.T.C. vs. D.T.C. Mazdoor Congress & Ors.
Supp.(l) 600], the question arose whether D.T.C. is an instrumentality under
the State and whether it is entitled to dismiss the employee by issuing one
month notice or pay in lieu thereof in terms of Regulation 9 of the Regulations.
Constitution Bench, per majority had held that it is a State within the meaning
of article 12 of the Constitution.
no power to dismiss an employee with one month's notice or salary in lieu
thereof, In Moti Ram Deka vs. General Manager, NEF [(1964) 5 SCC 683], another
Constitution Bench had held that the service of an employee of the Railway
establishment cannot be dispensed with except in accordance with the procedures
established and unless the essential steps of procedural fairness are adhered
to. Central Inland Water Transport Corporation Ltd, & Anr. vs. Brojonath Ganguli
& Anr. [(1986) 3 SCR 156], a Bench of two Judges of this Court reiterated
the same view giving extended interpretation and making available the
constitutional remedy under Article 226 of the Constitution.
India Statutory Corporation etc. vs. United Labour Union & Ors. etc.[1996
(9) SCALE 70], the Air India statutory Corporation, on abolition of the
contract labour, had not absorbed employees working on contract labour basis
after contract labour system was abolished. They filed the writ petition in the
High Court. The High Court gave the directions to absorb them on regular basis.
On appeal, this Court considered the entire case law and laid down the
following principles in para 26 thus:
The constitution of the Corporation or instrumentality or agency or Corporation
aggregate or Corporation sole is not of sole material relevance to decide
whether it is by or under the control of the appropriate Government under the Act.
it is a statutory Corporation, it is an instrumentality or agency of the State.
If it is a company owned wholly or partially by a share capital. floated from
public exchequer, it gives indicia that it is controlled by or under the
authority of the appropriate Government.
commercial activities carried on by a Corporation established by or under the
control of the appropriate Government having protection under Articles 14 and
19(2), it is an instrumentality or agency of the State.
The State is a service Corporation. It acts through its instrumentalities,
agencies or persons - natural or judicial.
The governing power, wherever located, must be subject to the fundamental
constitutional limitations and abide by the principles laid in the Directive
The framework of service regulations made in the appropriate rules of
regulations should be consistent with and subject to the same public law
principles and limitations.
Though the instrumentality, agency or person conducts commercial activities
according to business principles and are separately accountable under their
appropriate bye-laws or Memorandum of Association, they become the arm of the
The existence of deep and pervasive State control depends upon the facts and
circumstances in a given situation and circumstances in a given situation and
in the altered situation it is not the sole criterion to decide whether the
agency or instrumentality or persons is, by or under the control of the
Functions of an instrumentality, agency or persons are of public importance
following public interest element.
The instrumentality, agency or person must have an element of authority or
ability to effect the relations with its employees or public by virtue of power
vested in it by law, memorandum of association or bye-laws or articles of
The instrumentality, agency or person renders an element of public service and
is accountable to health and strength of the workers, men and women, adequate
means of livelihood, the security for payment of living wages, reasonable
conditions of work, decent standard of life and opportunity to enjoy full
leisure and social and cultural activities to the workmen.
Every action of the public authority, agency or instrumentality or the person
acting in public interest or any act that gives rise to public element should
be guided by public interest in exercise of public power or action hedged with
public element and is open to challenge.
meet the test of reasonableness, fairness and justness.
If the exercise of the power is arbitrary, unjust and unfair, the public
authority, instrumentality, agency or the person acting in public interest,
though in the field of private law, is not free to prescribe any
unconstitutional conditions or limitations in their actions.
directed that since the workman were employed by the contractor, on abolition
of the contract labour system, the appellant-Corporation being an
instrumentality even in the private field of contract, was bound by the
essential principles justice, equity and fair procedure and equality.
Bangalore Water Supply Board case, the Board was held to be an `industry and
the action was amenable to adjudication under the Contract Labour (Regulation
& Abolition) Act.
therefore clear that there have been two streams of thinking simultaneously in
the process of development to give protection to the employees of the
Corporation. Its actions are controlled as an instrumentality of the State and
the rules are made amenable to judicial review. Where there exists no statutory
or analogous rules/instructions, the provisions of the Act get attracted. The
employees are entitle to avail constitutional remedy under Article 226 or 32 or
136, as the case may be. The remedy of judicial review to every citizen or
every person has expressly been provided in the Constitution. It is a
fundamental right of every citizen. In the absence of statutory/administrative
instruction in operation, the remedy of reference under Section 10 of the Act
is available. Therefore, two streams, namely, remedy under the Act by way of
reference and remedy of judicial redressal by way of proceedings under Article
226 or a petition filed before the Administrative Tribunal to the aggrieved
persons are co-existing. If the doctrine laid in Bangalore Water Supply Board
case is strictly applied, the consequence is catastrophic and would give a
carte blanche power with laissez fair legitimacy which was burried fathom deep
under the lethal blow of Article 14 of the Constitution which assures to every
person just, fair and reasonable procedure before terminating the service of an
employee. Instead, it gives the management/employer the power to dismiss the
employee/workman with one month's notice or pay in lieu thereof, and/or payment
of retrenchment compensation under the Act. The security of tenure would be in
great jeopardy. The employee would be at the beck and call of the employer
always keeping his order of employment in a grave uncertainty and in a fluid
state like demorcus's sword hangs over the neck. On the other hand if the
interpretation of providing efficacious remedy under Article 226 gives
protection to the workmen/employee the speedy remedy under Article 226/Section
19 of the Administrative Tribunal Act. They would protect the employee/workman
from arbitrary action of the employer subserving the constitutional scheme and
Court would, therefore, strike a balance between the competing rights of the
individual and the state/agency or instrumentality and decide the validity of
action taken by the Management. Necessarily, if the service conditions stand
attracted, all the conditions laid therein would become applicable to the
employees with a fixity of tenure and guarantee of service, subject to
disciplinary action. His removal should be in accordance with the just and fair
procedure envisaged under the Rules or application of the principles of natural
justice, as the case may be, in which event the security of the tenure of the
employee is assured and the whim and fancy and vagory of the employer would be detered
and if unfair and unjust action is found established it would be declared as an
arbitrary, unjust or unfair procedure. On the other hand, if the finding is
that there exist no statutory rules or certified standing orders exist or they
are not either made or are inapplicable, the remedy of reference under section
10 of the Act would always be available and availed of as it is an industry and
indicia laid in Bangalore Water Supply Board case gets attracted.
this perspective, this Court had approached the problem in T. Joseph's case. T
Joseph's case was a case relating to the departmental employee whose services
was dispensed with. Considering the rules in operation in that behalf, it was
held that the telephone department is not an industry. The appointment orders
were given under the rules.
that behalf, it was held that India is a Sovereign, Socialist, Secular
Democratic Republic. It has to establish an egalitarian social order under the
rule of law. The welfare measures partake the character of sovereign functions
and the traditional duty to maintain law and order is no longer the concept of
the State, Directive Principles of the State Policy enjoin the State to
undertake diverse duties envisaged under Part IV of the Constitution. One of
the duties of the State is to provide tale-communication services to the
general public an amenity; so, it is an essential part of the sovereign
functions of the State as a welfare States In Physical Research Laboratory vs.
K.G. Sharma [CA No. 2663/97] decided on April 8, 1997, the question was whether
the appellant who conducted research in a scientific laboratory was a 'workman'
and the institution an `industry', Since the service conditions regulate
conditions of employment, the Tribunal was devoid of jurisdiction to entertain
the application under the Act for deciding the dispute. following the judgment
in T. Joseph's case and distinguishing a judgment of three Judge bench, it was
held that research institute was a State within the meaning of Article 12. It
is not an industry attracting the provisions of the Act. So, in Chief
Conservator of Forests & Anr. vs. Jagannath Maruti Kandhara [(1996) 2 SCC
293], this Court referred with approval the Bangalore Water Supply Board case.
In K.G. Sharma's case, the industrial Tribunal had observed that the Physical
Research Laboratory is an industry but this Court reversed lt. The
Telecommunication Department is not an industry and the Rules governing the
conditions of service of the employees stand attracted and there by the remedy
under Article 226 would be available. To that area, the Act does not stand
attracted. The respondents admit that the dismissed workmen who were holding
civil post, by necessary implication, were excluded as workmen under Section
2(s). Even though the activities of the Corporation partake the character of a
private enterprise, since the workmen engage themselves in rendering services, It
is not an industry. If there exists no statutory rules binding standing orders,
necessarily, the reference under Section 10(1) would be valid and the Tribunal
has jurisdiction to go into or the employee may avail of judicial review or
common law review.
overall view, we hold that the employees working in the statutory canteen, in
view of the admission made in the counter-affidavit that they are holding civil
posts and are being paid monthly salary and are employees, the necessary
conclusion would be that the Tribunal has no jurisdiction to adjudicate the
dispute on a reference under Section 10(1) of the Act. On the other hand, the
remedy to approach the constitutional court under Article 226 is available.
Equally, the remedy under Section 19 of the Administrative Tribunal Act is
available. But, generally, the practice which has grown is to direct the
citizen to avail, in the first instance, the remedy under Article 226 or under
Section 19 of the Administrative Tribunal Act and then avail the right under
Article 136 of the Constitution by special leave to this court etc. Thus, in
view of the admission made by the respondents in their counter-affidavit that
the workmen of the appellant-Association are holding civil posts and are being
paid monthly wages and benefits and are considered to be employees, the
jurisdiction of the Industrial Tribunal stands excluded. It is open to the
aggrieved party to approach appropriate authority in accordance with law. In
that view, the finding of the Tribunal in the impugned judgment is legal and
warrants no interference. It is open to the respondents to avail of such remedy
as is available to a regular employee including the right to approach the
Central Administrative Tribunal or the High Court or this Court thereafter for redressal
of legal injury.
Special Leave Petition is accordingly dismissed.