Agricultural
Produce Market Committee Vs. Shri Ashok Harikuni & ANR [2000] INSC 490 (22
September 2000)
A.P. Misra
& Y K Sabharwal Misra, J.
Leave
granted.
L.I.T.J
The question raised in this appeal is drawing attention of this Court since
very inception when Industrial Disputes Act, 1947 was enacted and even after
the passage of more than 50 years, issue remains in the fertile field of it
yielding fresh crops time and again because of wide vaporous definition of the
word "industry" under the said Act. We shall be referring about some
of these cases in the later part of our judgment. This wide definition has
given an opportunity to both employer and employee for raising issues, one
trying to pull out of this definition, to be out of the clutches of the said
Act, other bringing within it, to receive benefit under it. Because of width of
the periphery of the word "industry" there is tug of war repeatedly
between the two, in spite of various decisions of this Court. This situation
has led this Court, in Bangalore Water-Supply & Sewerage Board, Etc. vs. R.Rajappa
& Others (1978) 3 SCR 207 to record with anxiety and suggesting Legislature
for bringing a comprehensive Bill to clear the fog. It records :
"In
view of the difficulty experienced by all of us in defining the true denotation
of the term "industry" and divergence of opinion in regard thereto-as
has been the case with this bench also- we think, it is high time that the
Legislature steps in with a comprehensive bill to clear up the fog and remove
the doubts and set at rest once for all the controversy which crops up from
time to time in relation to the meaning of the aforesaid term rendering it
necessary for larger benches of this Court to be constituted which are driven
to the necessity of evolving a working formula to cover particular cases."
This led the Legislature to amend the definition of the word
"industry" in Section 2(j) of the aforesaid Act, through amending Act
in 1982 but left the said amendment to be given effect from the date to be
notified by the Government. Since thereafter with the passage of 18 years in
spite of observations of this Court in some cases during this inter magnum, the
said amendment has not seen the light of the day leaving the situation in doldrum
for the Courts to continue to give its shape. Inter-linked with it is also the
word "sovereign" which is equally fluid as the word
"industry". The word "sovereign" changes its complexion
with the type of sovereignty a country is structured also with the change of
political structure in view of changing socio-cultural heritage of any country.
So defining what is sovereign, the Courts not only of this country but other
countries as well have been battling to comprehend it since 19th century. This
has gained importance in the industrial law as what constitute to be a
sovereign function excludes within its ambit "industry" hence
industrial law would have no application over it.
The
question raised in this Appeal is : a) Whether the appellant, an Agricultural
Produce Market Committee (hereinafter referred to as "the Market
Committee"), established under the Karnataka Agricultural Produce
Marketing (Regulation) Act, 1966 (hereinafter referred to as "the State
Act") is an "industry" as contemplated under the Industrial
Disputes Act, 1947 (hereinafter referred to as "the Central Act") ?
If yes, Will not employee under the State Act would be governed by the Central
Act? b) Will not the State Act over-ride the Central Act for the reason, the
State Act received the assent of the President of India, hence the Central Act
would be inapplicable to the employees governed by the State Act? To properly
appreciate the controversy, it is necessary to give short essential matrix of
facts. The appellant is an Agricultural Produce Market Committee established
under the State Act. It regulates the marketing of agricultural produce for the
benefit of the agriculturist. This market committee is not intended to make any
profit and the whole object is only to regulate the agricultural produce both
for protecting the interest of agriculturist and interest of public at large.
The submission for the appellant is, this committee is not an
"industry" as contemplated under the Central Act. It exercises
sovereign function under the Act.
It is
a body corporate which has perpetual succession and a common seal. The
committee has no power either to appoint or regularise the services of its
employees which vests with the State Government. Its employees are civil
servants and provisions of the Karnataka Civil Service (Conduct Rules), 1966
and the Karnataka Civil Services (Classification, Control and Appeal) Rules,
1957 are applicable. This committee is established under Section 9 of the Act
and is subject to the restrictions imposed under it and is competent to
contract, to acquire, hold, lease, sell or otherwise transfer any property and
do all other things necessary for the purpose for which it is established.
Section
58 confers power to appoint Secretary and technical staff to the market
committee. It stipulates, every such committee shall have a Government servant
as the Secretary and also an Additional Secretary or Assistant Secretary who
will also be a Government servant. Under sub-section (1) of Section 59 the
officers and servants of market committee holding the classes of posts
specified in sub-sections (1), (2) and (3) of Section 58, on the date
immediately prior to the date of commencement of that Act, shall, with effect
from the date of such commencement become officers and servants of the State
Government. Sub-section (1-A) provides, notwithstanding anything contained in
this Act or in any other law for the time being in force, officers and servants
of the market committee holding such classes of posts on such dates as may be
specified by the State Government become officers and servants of the State
Government with effect from the date so notified.
Sub-section
(2) confers right on the officers and servants of the market committee after
becoming servants of the State Government under sub- section (1) or sub-section
(1-A) to have the same tenure, the same remuneration, same terms and conditions
of service, with the same rights and privileges as to pension, gratuity,
provident fund etc. as they would have received the same under the market
committee concerned and shall continue to receive so until their remuneration,
terms and conditions of service including the privileges are altered by rules
or other provisions made under Article 309 of the Constitution. Sub-section (3)
starts with non obstante clause, notwithstanding anything contained in the
Industrial Disputes Act, 1947 or in any other law for the time being in force
or in any contract, in case of transfer of any officer or servant of a market
committee by virtue of sub-section (1) and (1-A) shall not entitle any such
officer or such servant to any compensation or payment under that Act or other
law or contract. Learned counsel for the appellant strongly relies on this
sub-section to interpret that the Central Act is excluded from the purview of
employees under the State Act.
Section
59 of the State Act is reproduced below:
"Absorption
of staff of market committees in Government service - (1) Officers and servants
of market committees (by whatever came called) holding the classes of posts
specified in sub- sections (1), (2) and (3) of Section 58 on the date
immediately prior to the date of commencement of that Act, shall, with effect
from the date of such commencement become officers and servants of the State
Government.
Explanation
- The State Government shall determine the designations of the officers and
servants of the market committees who shall become officers and servants of the
State Government under this sub-section.
[(1-A)
Notwithstanding anything contained in this Act or in any other law for the time
being in force, officers and servants of market committees holding such classes
of posts on such dates as may be specified by the State Government shall, with
effect from such date become officers and servants of the State Government and
they shall draw their salary and allowances from the Consolidated Fund of the
State.
(2)
The officers and servants of market committees who become officers and servants
of the State Government under sub-section (1) [or sub-section (1-A)] shall hold
their office by the same tenure, at the same remuneration and upon the same
terms and conditions of service and with the same rights and privileges as to
pension, gratuity, provident fund and such matters as they would have held the
same under the market committee concerned and shall continue to do so until
their remuneration, terms and conditions of service including the privileges as
to pension, provident fund and gratuity are altered by rules or other
provisions made [under the Karnataka State Civil Services Act, 1978], and any
such alteration shall have effect, notwithstanding anything contained in any
contract or law for the time being in force.
(3)
Notwithstanding anything contained in the Industrial Disputes Act, 1947
(Central Act 14 of 1947), or in any other law for the time being in force or in
any contract the transfer of the services of any officer or servant of a market
committee by virtue of sub-section (1) [or sub-section (1-A)] shall not entitle
any such officer or servant to any compensation or payment under that Act or
other law or contract, and no such claim shall be entertained by any Court,
tribunal or other authority." Section 61 refers to the appointment of
other staff, other than those who falls under Section 58. Section 62 refers to
the Karnataka State Marketing Service. The State Government is empowered to
constitute any class of officers or servants to bring it into marketing service
to be designated as the Karnataka State Marketing Service through issue of
notification. Under its proviso, the State Government could carve out and
constitute the officers and servants falling under sub-section (1-A) of Section
59 into a separate service for the State to be designated as Karnataka State
Market Committee Services. Under sub-section (2) the State Government could
amalgamate both the Karnataka State Marketing Service and the Karnataka State
Market Committee Services into one single service.
The
submission for the appellant is that market committee is not conferred with the
power of appointment, though under Section 61(3) it could create temporary
posts and appoint temporary employees for not more than 180 days with the prior
approval of the Director of Agricultural Marketing. Learned counsel for the
appellant, Mr.Chandrasekhar has taken us to the various provisions of the Act,
namely, Sections 9 (3), 58,59,63,65,66,67,69,72,73 and 83 of the State Act to
show that the scheme of the Act is to provide for the better regulation of
marketing of agricultural produce and establishment and control of market for
agricultural produce within the State. He emphasised, these provisions
indicates that the function of the market committee is sovereign in nature
hence it could not constitute to be an industry to make its employees as
workmen under the Central Act. Section 9(3) confers status on every market
committee to be a local authority. Section 61 deals with appointments from
among the officers and servants of the Karnataka State Market Committee Service
or Karnataka State Market Service other officers, servants of a market
committee. Section 63 deals with the powers and duties of the market committee.
Section 65 authorises the market committee to levy market fees. Section 66
empowers any officers or servant of the State Government to require any person
carrying on business of agricultural produce to produce before him the
accounts, other documents, furnish any information relating to the stock of
such agricultural produce, or purchases, sales, deliveries of such produce and
is also empowered to seize the accounts, register or documents. Section 67 authorises
such authorities to stop any vehicle, vessel or other conveyance which is shown
to be taking out of the market committee or moving in the market area for
examining the contents in the vehicle, vessel or other conveyance. Section 69
confers power to acquire the land and hold it. Section 71 confers right on the
market committee to issue licence for the regulation of trading under Section
72 and Section 73 confers right of such authority to cancel or suspend such licence.
Section 83 deals with the production of account books etc. The question raised
is that these functions are sovereign in nature.
Seven
persons serving under the market committee raised dispute, following
termination of their services before the Labour Court. First is Shri A.G.Harakuni, who was appointed as an
Assistant Engineer on 3rd
March, 1987 on daily
wage for looking after the construction work and he worked as such till 16th May, 1989 when his services were terminated.
Next
is Shri G.Nagaraj, who was appointed on 27th April, 1978 as a market fee collector on
temporary basis and his services were terminated on 31st March, 1982. Third is Shri Shivakumar, who was appointed as maistry on 25th November, 1981 on daily wages though he was paid
salary once in a month and his services were terminated on 31st October, 1986. Next is Shri Nirvanappa. He was
appointed as a peon on 18th
March, 1964 whose
appointment was approved on 26th March, 1969.
His service was terminated on 3rd August, 1971.
Next is Umesh Hegde. He was appointed as work inspector on daily wages vide
appointment order dated 28th
December, 1984 and his
service was terminated on 3rd April, 1987.
Next is Siddappa Rudrappa Chickamani who was appointed as watchman on 8th April, 1982 and his service was terminated on 13th September, 1989 and finally Shri M.M.Satyannavar.
He was appointed as an Assistant Engineer on 25th May, 1984 on daily wage basis for looking after development work and
his service was terminated on 15th May, 1989.
Each of these seven persons are respondents in this case. The Labour Court allowed their applications by
setting aside their order of termination and directed their reinstatement. The
appellant aggrieved filed writ petition challenging these orders, among other
grounds, one is challenge to the jurisdiction of the Labour Courts to try the
cases of these seven respondents as the appellant is not an
"industry" within the meaning of the Central Act, hence the Labour
Courts have no jurisdiction to try their claims.
Learned
single Judge of the High Court dismissed the writ petition, holding that the
appellant-market committee is an "industry" and hence Labour Courts,
have the jurisdiction to decide their cases. Feeling aggrieved the appellants
preferred writ appeal and the Division Bench similarly dismissed the same
upholding that appellant-committee is an "industry" within the
meaning of the Central Act.
Learned
counsel for the appellant challenges these concurrent findings by submitting
that functions of the appellant committee being sovereign in nature and
inalienable in character cannot be construed an "industry".
The
power of appointment of the various employees under the Act is only with the
State Government, only limited power vests on the appellate-committee, to
appoint person temporarily for a period not exceeding 180 days. Under Section
61(3) such person cannot get any lien over any post.
He has
no right to seek regularisation. Once a person is appointed under the State Act
his services would not be governed by the Central Act. The claimants being
appointed under the State Act which received assent of the President of India
on 19th August, 1966 it will prevail over the Central
Act. The functions of market committee are for the regulation of trade in
notified agricultural produces in order to safeguard the interest of the
agriculturist and public at large. This was to ensure legitimate price of the
agricultural produce to be sold in the market area. This committee is not
constituted for making any profit but only to serve the cause of the
agriculturist so that they may receive fair price of their produce. The
submission is, persons appointed to work under this market committee are
government servants, and they are appointed in accordance with the cadre and their
wages are paid out of the consolidated fund. The temporary employees appointed
by the market committee are paid salaries out of the fund known as market fund.
Hence there is no relationship of employer and employee of those serving under
it. It may be stated here, in the present case the subject matter relates only
of those employees who were temporarily appointed and have yet not become
government servant. Another submission is that the High Court erred in not
bringing the market committee within the exception clause referred in the
decision of Bangalore Water-Supply case (supra). On the other hand, learned counsel
Shri Ravindra Bhat appearing on behalf of the respondents, submits that in view
of the decisions of this Court, especially with reference to Bangalore
Water-Supply case (supra), the market committee is an "industry"
within the meaning of the Central Act. The submission is, only strictly
"sovereign functions" as held in Bangalore Water-Supply case (supra)
which is explained in Chief Kondhare & Ors., 1996 (2) SCC 293, could be
exempted from the provisions of the Central Act. Hence, neither all
governmental functions could be construed to be sovereign nor all statutory
services could either be termed as sovereign or to exclude it from the purview
of the Central Act.
The
main thrust of submission for either side is, one trying to bring the functions
of the appellant-committee within sovereign functions and the other stretching
it out of it. The submission for the appellant is the power of the government
and functions of the committee, namely, notifying the intention of the
government to regulate the marketing of specified agricultural produce within
specified area under Section 3, declaration of market area under Section 4,
establishment of market under Section 7, payment of Secretary and technical
staff under Section 58, absorption of staff of market c*ommittee in government
services under Section 59, appointment of other staff under Section 61, levy of
market fees under Section 65, grant of license under Section 72,
de-notification of market area under Section 143, and amalgamation of market
committees under Section 144 are all sovereign in nature and hence it could not
be construed to be an industry. On the other hand, learned counsel for the
respondent submits sovereign functions are restricted to legislative,
maintenance of law and order, administration of law and legal system. Hence,
other functions, to which the appellant case falls, cannot be construed to be a
sovereign function.
We now
proceed to consider as to what would be the test to find an enterprise to be an
"industry". As we have said, the matter has been under consideration
by various courts in various parts of this country, including this Court. Some
of which we are proceeding to refer hereunder. In The Corporation of the city
of Nagpur vs. Its Employees, 1960 (2) SCR 942, the question raised was, whether
and to what extent the municipal activities of the Corporation of Nagpur City
fell within the term "industry" as defined by Section 2 (14) of the
C.P. & Berar Industrial Disputes Settlement Act, 1947. Applying the
decision of this Court in D.N.
Banerji
vs. P.R. Mukherjee & Ors., 1953 SCR 302, this Court held: "It is not
necessary that an activity of the Corporation must share the common characteristics
of an industry before it can come within the section. The words of s. 2(14) of
the Act are clear and unambiguous and the maxim noscitur a socii can have no
application. The history of industrial disputes and the legislation, however, recognises
the basic concept that the activity must be an organised one and not one that
pertains to private or personal employment." With reference to State of
Bombay & Ors. vs. The Hospital Mazdoor Sabha & Ors. 1960 (2) SCR 866,
this Court held:
"But
the definition, however, wide, cannot include the regal primary and inalienable
functions of the State, though statutory delegated to a Corporation and the
ambit of such functions cannot be extended so as to include the activities of a
modern State and must be confined to legislative power, administration of law
and judicial power." This case further records:
"Before
considering the positive aspects of the definition, what is not an industry may
be considered.
However,
wide the definition of "industry" may be, it cannot include the regal
or sovereign functions of State. This is the agreed basis of the arguments at
the Bar, though the learned counsel differed on the ambit of such functions.
While
the learned counsel for the Corporation would like to enlarge the scope of
these functions so as to comprehend all the welfare activities of a modern
State, the learned counsel for the respondents would seek to confine them to
what are aptly termed "the primary and inalienable functions of a
constitutional government ....Lord Watson, in Coomber v. Justices of Berks,
describes the functions such as administration of justice, maintenance of order
and repression of crime, as among the primary and inalienable functions of a
constitutional Government. Isaacs, J. in his dissenting judgment in The
Federated State School Teachers' Association of Australia v. The State of Victoria, concisely states thus at p. 585:
"Regal
functions are inescapable and inalienable. Such are the legislative power, the
administration of laws, the exercise of the judicial power. Non-regal functions
may be assumed by means of the legislative power. But when they are assumed the
State acts simply as a huge corporation, with its legislation as the charter.
Its action under the legislation, so far as it is not regal execution of the
law is merely analogous to what of a private company similarly authorised.
Supreme
Court of America in Verisimo Vasquez Vilas v.
City
of Manila expounded the dual character of a
municipal corporation thus:
"They
exercise powers which are governmental and powers which are of a private or
business character. In the one character a municipal corporation is a
governmental sub- division, and for that purpose exercises by delegation a part
of the sovereignty of the State. In the other character it is a mere legal
entity or juristic person. In the latter character it stands for the community
in the administration of local affairs wholly beyond the sphere of the public
purposes for which its governmental powers are conferred.
Isaacs
and Rich, JJ., in The Federated Municipal and Shire Council Employees' Union of
Australia v. Melbourne Corporation in the context of the dual functions of
State say much to the same effect at p. 530:
"Here
we have the discrimen of Crown exemption. If a municipality either (1) is
legally empowered to perform and does perform any function whatever for the
Crown, or (2) is lawfully empowered to perform and does perform any function
which constitutionally is inalienable a Crown function - as, for instance, the
administration of justice - the municipality is in law presumed to represent
the Crown, and the exemption applies. Otherwise, it is outside that exemption,
and, if impliedly exempted at all, some other principle must be resorted to.
The making and maintenance of streets in the municipality is not within either
proposition." A corporation may, therefore, discharge a dual function:
it may
be statutorily entrusted with regal functions strictly so-called, such as
making of laws, disposal of certain cases judicially etc., and also with other
welfare activities. The former, being delegated regal functions, must be
excluded from the ambit of the definition of "industry" Finally the
definition of "industry" is summarised:
"The
result of the discussion may be summarised thus :
(1)
The definition of "industry" in the Act is very comprehensive. It is
in two parts: one part defines it from the standpoint of the employer and the
other from the standpoint of the employee. If an activity falls under either
part of the definition, it will be an industry within the meaning of the Act.
(2) The history of industrial disputes and the legislation recognizes the basic
concept that the activity shall be an organized one and not that which pertains
to private or personal employment. (3) The regal functions described as primary
and inalienable functions of State though statutorily delegated to a
corporation are necessarily excluded from the purview of the definition. Such
regal functions shall be confined to legislative power, administration of law and
judicial power.
(4) If
a service rendered by an individual or a private person would be an industry,
it would equally be an industry in the hands of a corporation. (5) If a service
rendered by a corporation is an industry, the employees in the departments
connected with that service, whether financial, administrative or executive,
would be entitled to the benefits of the Act. (6) If a department of a
municipality discharges many functions, some pertaining to industry as defined
in the Act and other non-industrial activities, the predominant functions of
the department shall be the criterion for the purposes of the Act.
Within
this premises this Court considered various departments of the corporation as
to whether employees of such department would be covered by the Central Act.
This Court holds various departments of the corporation including tax
department, assessment department, marketing department to be an
"industry".
This
Court in Bangalore Water-Supply & Sewerage Board
etc. vs. R. Rajappa & Ors. 1978 (3) SCR 207 (Constitution Bench),
considered the definition of "industry" as defined under Section 2(j)
of the Central Act.
This
Court held:
"Although
we are not concerned in this case with those categories of employees who
particularly come under departments charged with the responsibility for
essential constitutional functions of government, it is appropriate to state
that if there are industrial units severable from the essential functions and
possess an entity of their own it may be plausible to hold that the employees
of those units are workmen and those undertakings are industries. A blanket
exclusion of every one of the host of employees engaged by government in
departments falling under general rubrics like, justice, defence, taxation,
legislature, may not necessarily be thrown out of the umbrella of the Act.
We say
no more except to observe that closer exploration, not summary rejection, is
necessary." This decision also records Corporation of Nagpur City case
(supra) as to how in that case various departments of the corporation were held
to be an "industry". This Court considered the submission, as in the
present case that functions of the various department are only out of statutory
sanction and no private individual can discharge those statutory functions.
Corporation of Nagpur City case (supra) considered this aspect and records to the
following effect:
"It
is said that the functions of this department are statutory and no private
individual can discharge those statutory functions. The question is not whether
the discharge of certain functions by Corporation have statutory backing, but
whether those functions can equally be performed by private individuals."
Strong reliance is placed by learned counsel for the appellant to the following
observations of this Court in Bangalore Water-Supply case (supra) which is an
exception which excludes it from the operation of the Central Act:
"In
any case, it is open to Parliament to make law which governs the State's
relations with its employees. Articles 309 to 311 of the Constitution of India,
the enactments dealing with the Defence Forces and other legislation dealing
with the employment under statutory bodies may, expressly or by necessary
implication, exclude the operation of the Industrial Disputes Act, 1947."
The submission is, this observation excludes implicitly services under the
statutory bodies from the operation of the Industrial Disputes Act. This
submission is misconceived. This observation merely records what Parliament can
make law in relation to the employees of statutory bodies etc. In other words,
if it so desires may exclude the employees of any statutory bodies expressly or
by necessary implication from the purview of Industrial Disputes Act. This
decision does not carve out any exception to exclude employees of all the
statutory bodies.
It
merely indicates power of the Parliament, to place any class of employees
outside the purview of the Central Act.
The
question is, whether there is any such provision under the State Act or the
Central Act, which excludes these employees from the operation of the Central
Act. In fact, Section 2(a) of the Central Act itself reveals large number of
statutory corporations falling within the rubric of "industry".
In
relation to what are "sovereign" and what are "non-sovereign"
functions, this Court in Chief Conservator of Forests and Anr. vs. Jagannath Maruti
Kondhare and Ors., 1996 (2) SCC 293, holds:
"We
may not go by the lebels. Let us reach the hub.
And
the same is that the dichotomy of sovereign and non-sovereign functions does
not really exist - it would all depend on the nature of the power and manner of
its exercise, as observed in para 23 of Nagendra Rao case. As per the decision
in this case, one of the tests to determine whether the executive function is
sovereign in nature is to find out whether the State is answerable for such
action in courts of law. It was stated by Sahai, J. that acts like defence of
the country, raising armed forces and maintaining it, making peace or war,
foreign affairs, power to acquire and retain territory, are functions which are
indicative of external sovereignty and are political in nature. They are,
therefore, not amenable to the jurisdiction of ordinary civil court inasmuch as
the State is immune from being sued in such matters. But then, according to
this decision the immunity ends there. It was then observed that in a welfare
State, functions of the State are not only the defence of the country or
administration of justice or maintaining law and order but extends to regulating
and controlling the activities of people in almost every sphere, educational,
commercial, social, economic, political and even martial.
Because
of this the demarcating line between sovereign and non-sovereign powers has
largely disappeared.
The
aforesaid shows that if we were to extend the concept of sovereign function to
include all welfare activities as contended on behalf of the appellants, the
ratio in Bangalore Water Supply case would get eroded, and substantially. We
would demur to do so on the face of what was stated in the aforesaid case
according to which except the strictly understood sovereign function, welfare
activities of the State would come within the purview of the definition of
industry; and, not only this, even within the wider circle of sovereign
function, there may be an inner circle encompassing some units which could be
considered as industry if substantially severable." In other words, it all
depends on the nature of power and the manner of its exercise. What is approved
to be "Sovereign" is defence of the country, raising armed forces,
making peace or war, foreign affairs, power to acquire and retain territory.
These are not amenable to the jurisdiction of ordinary civil courts. The other
functions of the State including welfare activity of State could not be
construed as "sovereign" exercise of power. Hence, every governmental
function need not be "sovereign". State activities are multifarious.
From the primal sovereign power, which exclusively inalienably could be
exercised by the Sovereign alone, which is not subject to challenge in any
civil court to all the welfare activities, which would be undertaken by any
private person. So merely one is employee of statutory bodies would not take it
outside the Central Act. If that be then Section 2 (a) of the Central Act read
with Schedule I gives large number of statutory bodies should have been
excluded, which is not. Even if a statute confers on any statutory body, any
function which could be construed to be "sovereign" in nature would not
mean every other functions under the same statute to be also sovereign. The
court should examine the statute to severe one from the other by
comprehensively examining various provisions of that statute. In interpreting
any statute to find it is "industry' or not we have to find its pith and
substance. The Central Act is enacted to maintain harmony between employer and
employee which brings peace and amity in its functioning. This peace and amity
should be the objective in the functioning of all enterprises. This is to the
benefit of both, employer and employee. Misuse of rights and obligations by
either or stretching it beyond permissible limits have to be dealt with within
the frame work of the law but endeavor should not be in all circumstances to
exclude any enterprise from its ambit.
That
is why courts have been defining "industry" in the widest permissible
limits and "sovereign" functioning within its limited orbit.
In N. Negendra
Rao & Co. vs. State of A.P. 1994 (6) SCC 205, the question raised was about
the liability of the State to pay compensation for the negligence or
misfeasance on the part of its officers in discharge of their public duties
under a statute, which are incidental or ancillary and not primary or
inalienable function of the State. This decision holds that the State is immuned
only in cases where its officers perform primary or inalienable functions such
as defence of the country, administration of justice, maintenance of law and
order. This Court held:
"A
search or seizure effected under such law could be taken to be an exercise of
power which may be in domain of inalienable function. Whether the authority to whom
this power is delegated is liable for negligence in discharge of duties while
performing such functions is a different matter. But when similar powers are
conferred under other statute as incidental or ancillary power to carry out the
purpose and objective of the Act, then it being an exercise of such State
function which is not primary or inalienable, an officer acting negligently is
liable personally and the State vicariously.
In the
modern sense the distinction between sovereign or non-sovereign power thus does
not exist. It all depends on the nature of power and manner of its
exercise.....One of the tests to determine if the legislative or executive
function is sovereign in nature is whether the State is answerable for such
actions in courts of law. For instance, acts such as defence of the country,
raising armed forces and maintaining it, making peace or war, foreign affairs,
power to acquire and retain territory, are functions which are indicative of
external sovereignty and are political in nature. Therefore, they are not
amenable to jurisdiction of ordinary civil court." With reference to
irrigation department of the State of Punjab this Court considered the question whether it is an
"industry" within the meaning of Section 2(j) of the Central Act. The
function of this department is for the development of agriculture. It
undertakes harness of the surface and ground water resources of the State, the
equitable distribution. It involves construction of major, medium and minor
irrigation projects, maintenance of network of channels, regulation of canal
supplies, enforcement of water laws etc. It is also responsible to provide
protection to the valuable irrigated lands and public property from flooding,
river action and waterlogging. This requires construction of flood protection,
river training, drainage and anti- waterlogging works and their maintenance.
Its functions includes plan for irrigation development in the State. Each of
these functions overall are inherently of the State. With reference to this
irrigation department in Des Raj and Ors. vs. State of Punjab & Ors. 1988
(2) SCC 537 this Court held:- "With regard to the activities of the
irrigation department and as also the tests laid down in various decisions of
this Court particularly applying the Dominant Nature test in Bangalore Water
Supply and Sewerage Board case (Supra), it was held to be an
"industry"." In this background we may proceed to examine the
present State Act. The preamble of this Act records:
"An
Act to provide for the better regulation of marketing and agricultural produce
and the establishment and administration of markets for agricultural produce in
the State of Karnataka".
We may
also usefully produce the Statement of Objects and Reasons of the State Act :
"STATEMENT
OF OBJECTS AND REASONS:
Among
other things, provision is made in this Bill for - (i) defining `agricultural
produce' to include all produce of agriculture, animal husbandry, apiculture,
horticulture, forest produce and any other produce, live-stock and poultry;
(ii) notifying
the intention of Government to regulate the purchase and sale of agricultural
produce in specified area and declaration of market area and of market yard;
(iii)
Establishment of market committees for trading in specified kinds of
agricultural produce and also separate market committees within the same market
area for trading in any particular kind of agricultural produce;
(iv)
representation on the market committee to purchasers of agricultural produce,
representatives of the purchasers' co- operative societies, representatives of
co- operative marketing and processing societies, municipalities, taluk boards
and the Central Warehousing Corporation or State Warehousing Corporation;
(v) levy
and collection of market fees by the market committee;
(vi) constitution
of market committee funds and Central Market Fund;
(vii) conferring
borrowing powers on market committee;
(viii)
appointment of Government servants as Secretaries, Assistant Secretaries,
Technical Accounts and Audit Staff of market committees to ensure efficient
administration and control of markets;
(ix) inquiry
or inspection by the Chief Marketing Officer;
(x) supersession
of market committee for failure to perform duties." The aforesaid preamble
and Statement of Objects and Reasons clearly disclose the sphere of this Act to
be for the regulation of marketing of agricultural produce, establishment of
market committee for controlling, trading in specified kind of agricultural
produce. It provides for levying of market fees by the market committee. It
confers power on the market committee to borrow money. The appointment of
Government servants as Secretaries, Assistant Secretaries, Technical Accounts
and Audit Staff is to ensure efficient administration and control of markets.
In order to strengthen the said objectives Chapter II deals with the
establishment of markets, Chapter III with constitution of market committees
including provisions for election of its members. The constitution of the
committee under Section 11 consists of 11 members out of which one has to be a
woman, two persons belonging to Scheduled Castes and Scheduled Tribes elected
by the agriculturists in the market area, one member to be person other than
retail traders, one member to be a representative of co-operative marketing
society carrying on business in notified agricultural produce, one member to be
representative of agricultural cooperative processing society, one to be an
officer not below the rank of Secretary of the concerned market committee
nominated by the Director of Agricultural Marketing who has no right to vote
and three members to be nominated by the State Government who have right to
vote. Chapter IV deals with conduct of business of the market committee,
Chapter V refers to staff of the market committee, Chapter VI deals with the
powers and duties of market committee. It indicates it is for regulating the
trading of agriculture produce within the market area, Chapter VII directly
deals with regulation of trading which includes grant of licences, power to
cancel and suspend it, Chapter VIII pertains to market fund, Chapter IX refers
to special commodities market, Chapter X deals with Mandal Pachayats as agents
of market committee, Chapter XI deals with establishment of independent markets
and market committees for special commodities. Chapter XII is about penalties,
Chapter XIII controls the functioning of the various officers and members
including that of market committee and Chapter XIV is miscellaneous which
includes provisions for recovering of sums due to the market committee or board
etc. After scanning the whole Act and perusing the preamble and Statement of
Objects and Reasons of the Act, it reveals that this Act deals with various
facets of regulating activities within the market area with respect to the
trading in agricultural produce. It includes establishment of various
committees including charging of fees for service rendered to the traders of
agricultural producers. Any enactment, scheme or project which sponsors helps
in the trading activity is one of the State's essential functions towards
welfare activities for the benefit of its subject. Such activities can be
undertaken even by any non-governmental organisation or a private person,
corporate or company. In fact, prior to the abolition of Zamindari, the Hats
and Bazars (Markets) held on Zamindar's (Landowner) land, the Zamindar used to
charge fees for rendering service for holding such market, by providing land
and facilities to the participants of such market. By this it helped producers,
sellers and public at large through such trading. This is similar, in a nature
and form to what is being done now under the State Act through statutory
functionaries. Thus none of these functions could be construed to be sovereign
in nature or inalienable in character.
It is
true various functionaries under this Act are creature of statute. But creation
as such, by itself, cannot confer it the status of performing inalienable
functions of the State. The main controlling functions and power is conferred
on the market committee whose constitution itself reveals, except one or two
rests are all are elected members representing some on other class from the
public. In fact, all governmental functions cannot be construed either primary
or inalienable sovereign function.
Hence
even if some of the functionaries under the State Act could be said to be
performing sovereign functions of the State Government that by itself would not
make the dominant object to be sovereign in nature or take the aforesaid Act
out of the purview of the Central Act.
Thus
merely an enterprise being statutory corporation, creature under a statute,
would not take it outside the ambit of "industry" as defined under
the Central Act. We do not find the present case falling under any exception
laid down in the Bangalore Sewerage Board case (Supra). The mere fact that some
employees of the appellant are government servants would make no difference as
the true test to find - has to be gathered from the dominant object for which
functionaries are working. It cannot be doubted that the appellant is an
undertaking performing its duties in a systematic and organised manner,
regulating the marketing and trading of agricultural produce, rendering
services to the community. In the present case, as we have recorded earlier, we
are concerned only with those employees who are not government servants.
Testing the dominant object as laid down in Bangalore Sewerage Board case
(Supra), we reach to inescapable conclusion that none of the activities of the
Agriculture Produce Market Committee could be construed to be sovereign in
nature. Hence we have no hesitation to hold that this corporation falls within
the definition of "industry" under Section 2(j) of the Central Act.
Section
2(a) of the Central Act defines `Appropriate Government' in relation to any
industrial disputes concerning any industry carried on by or under the
authority of Central Government, or railway company etc. and refers to large
number of corporations and corporate bodies which falls in the category of
"industry". This indicates even Legislature's intends a very large
arms of "industry", to include large number of enterprises to be
industry to confer benefit to the employees working under it. In fact, several
corporations conferred with statutory powers also curtails individual rights
like, through levy of demurrages, detention charges in the warehousing
corporation under the Warehouse Corporation Act; Regulation of entry into
airport, ATC, levy and regulation of taxes and fees by the international
airport authority. Assessment and levy of damages as well as penalties by
authorities under the Employees State Insurance Act and Employees Provident
Fund Act. Though each of the aforesaid corporations and statutory bodies are
"industry". So one of the feeble submission that curtailment of right
of an individual could only be by the exercise of sovereign power has also no
merit.
From
the aforesaid catena of authorities, inalienability is one of the basic character
of sovereignty. The Encyclopedia of the American Constitution with reference to
"sovereignty" attempts to define sovereignty. It records:
"Within
the American regime the ultimate power and authority to alter or a abolish the
constitutions of government of state and Union
resides only and inalienably with the people. If it be necessary or useful to
use the term "sovereignty" in the sense of ultimate political power,
then there is no sovereign in America but
the people.
DENNIS
J. MAHONEY" Words and Phrases, Permanent Edition, Volume 39A with
reference to "sovereign power" records:
"The
"sovereign powers" of a government include all the powers necessary
to accomplish its legitimate ends and purposes. Such powers must exist in all
practical governments. They are the incidents of sovereignty, of which a state
cannot devest itself. Boggs v. Meree Min.
Co., 14 Cal. 279, 309.....In all governments of constitutional
limitations "sovereign power" manifests itself in but three ways. By
exercising the right of taxation; by the right of eminent domain; and through
its police power. United States v. Douglas-Willan Sartoris Co., 22 p. 92, 96, 3
Wyo. 287." So, sovereign function in the new sense may have very wide
ramification but essentially sovereign functions are primary inalienable
functions which only State could exercise. Thus, various functions of the State,
may be ramifications of `sovereignty' but they all cannot be construed as
primary inalienable functions. Broadly it is taxation, eminent domain and
police power which covers its field. It may cover its legislative functions,
administration of law, eminent domain, maintenance of law and order, internal
and external security, grant of pardon.
So,
the dichotomy between sovereign and non-sovereign function could be found by
finding which of the functions of the State could be undertaken by any private
person or body.
The
one which could be undertaken cannot be sovereign function. In a given case
even in subject on which the State has the monopoly may also be non-sovereign
in nature.
Mere
dealing in subject of monopoly of the State would not make any such enterprise
sovereign in nature. Absence of profit making or mere quid pro would also not
make such enterprise to be outside the ambit of "industry" as also in
State of Bombay & Ors. case (Supra).
The
last submission for the appellant is with reference to sub-section (3) of
Section 59 of the said Act. The submission is, this excludes the application of
the Central Act to the employees under the State Act. The reliance is placed on
the following opening words of this sub-section (3) namely:
"Notwithstanding
anything contained in the Industrial Disputes Act, 1947."
On the contrary this indicates that exclusion of the Central Act is limited to
the sphere as specified under this sub-section, namely, payment of compensation
to the officers or servants of the transferred employees. Thus by necessary
implication, other field under the Central Act is made applicable. Hence this
submission has no merit.
In
view of the aforesaid settled legal principle the width of "industry"
being of widest amplitude and testing it in the present case, in view of the
preamble, Objects and Reasons and the scheme of the Act, the pre-dominant
object clearly being regulation and control of trading of agricultural produce,
thus appellant-committee including its functionaries cannot be said to be
performing functions which are sovereign in character. Most of its functions
could be undertaken even by private persons. Thus the appellant would fall
within the definition of "industry" under Section 2(j) of the Central
Act. In view of this, we uphold that respondent employees are `workman' under
the Central Act as held by the Labour Court
and confirmed by the High Court. The Labour Court has dealt with each
individual cases and came to the conclusion in favour of respondent-employees
which has also been confirmed by learned Single Judge and Division Bench of the
High Court, which does not call for any interference. Accordingly, the present
appeals have no merit and are dismissed. Costs on the parties.
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