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Agricultural Produce Market Committee, Kadur, Chickmagalur District Vs. K.S. Nirvanappa and Another - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKarnataka High Court
Decided On
Case NumberWrit Petition Nos. 5046 of 1989; 27880 of 1994; 19106 of 1992 and 11674, 7245 and 27112 of 1996
Judge
Reported in1998(3)KarLJ195
Acts Industrial Disputes Act, 1947 - Sections 2, 10(1) and 25-F; Constitution of India - Articles 226 and 227; Code of Civil Procedure (CPC), 1908 - Order 9, Rule 13; Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 - Sections 6, 7 and 63
AppellantAgricultural Produce Market Committee, Kadur, Chickmagalur District
RespondentK.S. Nirvanappa and Another
Appellant Advocate Sri B.G. Sridharan, Adv.
Respondent Advocate Sri D.S. Lingappa, ;Sri M.S. Patil, ;Sri S.V. Shastry and ;Sri V.S. Naik, Advs.
Excerpt:
- income tax act,1961[c.a.no.43/1961] -- section 220 (2a): [k.l. manjunath & b.v. nagarathana, jj] interest on delayed payment of tax - assessee, seeking reduction or waiver of interest payable on the delayed payment of tax demand - order of commissioner of income tax rejecting prayer made by the appellant dismissal of writ petition - held, to claim reduction or waiver of the amount of interest paid or payable by an assessee, the assessee has to satisfy that payment of such amount would cause genuine hardship to the assessee and default in the payment of the amount on which interest was payable under the said sub-section was due to circumstances beyond the control of the assessee. on facts, held, the assessee had pleaded that on account of his ill health and financial problems and.....order1. since the same 'questions of law' is involved in all these petitions, all of them were heard together and disposed of by the common order.2. the petitioner in all these cases are agricultural produce marketing committees of different areas in the state of karnataka (hereinafter referred to as 'apmc' for brevity), has questioned the awards passed by jurisdictional labour court/industrial tribunal as the latter lacking jurisdiction to pass the impugned awards.3. writ petition no. 5046 of 1989 the agricultural produce market committee (for short 'the apmc'), kadur, by its secretary has filed this petition under articles 226 and 227 of the constitution of india for issuance of a writ of certiorari to quash the order/award of the labour court, mangalore, in reference no. id (lcm) no......
Judgment:
ORDER

1. Since the same 'questions of law' is involved in all these petitions, all of them were heard together and disposed of by the common order.

2. The petitioner in all these cases are Agricultural Produce Marketing Committees of different areas in the State of Karnataka (hereinafter referred to as 'APMC' for brevity), has questioned the awards passed by jurisdictional Labour Court/Industrial Tribunal as the latter lacking jurisdiction to pass the impugned awards.

3. Writ Petition No. 5046 of 1989

The Agricultural Produce Market Committee (for short 'the APMC'), Kadur, by its Secretary has filed this petition under Articles 226 and 227 of the Constitution of India for issuance of a writ of certiorari to quash the order/award of the Labour Court, Mangalore, in reference No. ID (LCM) No. 89 of 1978, dated 5-1-1987.

4. The first respondent to this petition was appointed on 18-3-1964 which was approved on 23-6-1969 by the petitioner. That on the ground that the first respondent was a regular absentee the petitioner issued a show cause notice calling upon him to show-cause as to why he should not be removed from service and since the first respondent did not submit his explanation to notice he was dismissed from service on 3-8-1971. On his application the State was pleased to make a reference under Section 10(1) of the Industrial Disputes Act (for short 'the Act') by its order dated 29-3-1972 in reference I.D.LON. No. 89 of 1978 (FCL 72 LLD 72) framed the following point for dispute.-

1. 'Are the management of the Agricultural Produce Market Committee, Kadur, justified in terminating the services of Sri K.S. Nirvanappa, former peon of the Committee with effect from 3-8-1971?'

5. On receipt of the dispute the Labour Court, Mangalore enquired into the same. The petitioner before the Labour Court contended among other things that it had no jurisdiction as he is not an 'Industry' within the meaning of the Act. Therefore the reference has to be rejected.

6. Before the Labour Court the petitioner remained absent and he was treated ex parte but the workman led evidence which were not challenged.

7. The Labour Court held that the first respondent was working continuously for 5 years and that without holding any domestic enquiry on the alleged charges the first respondent has been removed by the petitioner and set aside the order of termination of services and ordered reinstatement of workman with 50% of the backwages.

8. Aggrieved by the same the APMC has filed this petition.

9. Writ Petition No. 27880 of 1994

The petitioner the Agricultural Produce Market Committee, Yeshwanthpur (for short 'the APMC') has filed this petition under Articles 226 and 227 of the Constitution of India for issuance of a writ of certiorari to quash the Award passed by the Labour Court in I.D. No. 124 of 1988, dated 25-1-1990 and the order passed in the said reference case in M.A. No. 11 of 1990 in I.D. No. 124 of 1988, dated 25-7-1994.

10. That the first respondent was working as Maistry with the petitioner having joined the service by an order dated 22-12-1981 on daily wage basis. By an order dated 30-10-1986 the petitioner dismissed him from the service on the ground that he remained absent unauthorisedly from the work spot on 29-10-1986. The said order of dismissal was challenged by means of a writ petition in Writ Petition No. 21853 of 1983 before this Court. This Court by its order dated 12-10-1987 dismissed the petition on the ground that respondent-1 has an alternative remedy under the Industrial Disputes Act (for short 'the Act'). The first respondent thereafter filed an application before the State Government under Section 10(1)(c) of the Act, for referring the dispute for adjudication. Accordingly the State Government referred the dispute to the Labour Court. Before the Labour Court when the reference was taken up for enquiry petitioner entered its appearance but did not file any counter statement inspite of the matter being adjourned for several dates; that Labour Court placed the petitioner ex parte by its order dated 21-9-1989, thereafter directed the first respondent herein (the first par. to) before the Tribunal to file an affidavit on the basis of the said affidavit an award was passed directing the petitioner herein to reinstate the first respondent with full backwages with continuity of service and other consequential benefits. Subsequently an application was filed by the petitioner herein under Order 9, Rule 13 of the Code of Civil Procedure in M.A. 11 of 1990 for setting aside the ex parte order referred to earlier. The Labour Court dismissed the said application on the ground that the same was filed beyond 30 days after the publication of the award and therefore the Court has no jurisdiction to set aside the same. The APMC has challenged both the orders before this Court.

11. Writ Petition No. 19106 of 1992

The APMC has filed this petition under Articles 226 and 227 of the Constitution of India for issuance of a writ of certiorari to quash the award of the Labour Court passed in No. 161 of 1986, dated 2-11-1990.

12. That the first respondent was appointed as a Fee Collector by the petitioner on 27-4-1978 on a consolidated salary of Rs. 120/- p.m. That he was abruptly terminated from service with effect from 31-3-1982, which according to him amounted to retrenchment, this was bad as no retrenchment compensation was paid. Aggrieved by the order of termination the workman-respondent 1 moved the State Government by an application under Section 10(1)(c) of the Act for referring the dispute to the Industrial Tribunal which was accordingly done by the State Government. After receipt of the reference, the Industrial Tribunal enquired into the matter. During enquiry petitioner herein entered appearance and filed its objections contending that the workman-respondent was only employed for a period of 30 days and that he was not engaged after 30-3-1982 and therefore the order of terminating his services will not amount to retrenchment.

13. The Labour Court on the basis of the evidence adduced before it relying on the decision of the Supreme Court in Punjab Land Development and Reclamation Corporation Limited, Chandigarh v Presiding Officer, Labour Court, Chandigrah andOthers and that of the Madras High Court reported in 1979-I-LLJ-41, held that the termination of services amounted to retrenchment within the meaning of Section 2(oo) of the Act and consequentially allowed the reference. Petitioner herein was directed to reinstate the first respondent together with full backwages and other consequential benefits. Aggrieved by the same petitioner has filed this petition.

14. Writ Petition No. 11674 of 1996

This petition is filed under Articles 226 and 227 of the Constitution of India against the award of the Additional Labour Court Hubli Dharwad passed in No. K.I.D. 965 of 1993, dated 27-10-1995.

15. The first respondent was appointed as a supervisor with effect from 25-5-1984 and while he was in continuous service on 18-5-1989 without assigning any reasons his services were abruptly terminated. Later he was reinstated in service on request on 26-6-1989. From 26-6-1989 his services were continued till 29-12-1989 on which date his services were again terminated by an order dated 29-12-1989 passed by the petitioner.

Aggrieved by the same he raised a dispute under Section 10 of the Act. The Labour Court, Hubli enquired into the matter. Before the Labour Court the petitioner herein contended that the first respondent was appointed only for a limited purpose namely for supervising the developmental construction work undertaken by the APMC and for a limited period. After the completion of the work the services of the workman was terminated without notice as per the terms and conditions of his appointment order, and thus justified the order of termination of services. The said contentions were rejected and the Labour Court allowed the reference setting aside the termination order. It also directed the petitioner to reinstate the first respondent with full backwages, continuity of service and other consequential benefits. This order is challenged in this Court.

16. Writ Petition No. 7245 of 1996

The petitioner has filed this petition for issuance of a writ of certiorari to quash the award No. K.I.D. 1118 of 1993, dated 28-10-1995 vide Annexure-F.

17. The contention of the first respondent before the Labour Court was that he was appointed as an Assistant Engineer with effect from 3-3-1987, on daily wage basis for the purpose of looking after the construction work. He worked continuously as such till 10-9-1989. His services were terminated with effect from 16-5-1989. He contented that this act of removing him from service amounted to retrenchment without paying the retrenchment compensation and issuing any notice, the order of termination was bad under Section 25F of the Act. Since he was not reinstated he raised a dispute under Section 10(4)(A) of the Act. The Tribunal on the basis of the evidence adduced before it held that the act of the petitioner herein, in terminating the services of the first respondent without complying with the mandatory requirement under Section 25F of the Act is null and void and it amounts to retrenchment. Since the procedure prescribed under the Act for retrenchment was not followed it set aside the order of termination of service directed the first respondent to be reinstated with full back wages, continuity of service and other consequential benefits. Aggrieved by the same this petition is filed by the petitioner.

18. Writ Petition No. 27112 of 1996

The petitioner has filed this petition under Articles 226 and 227 of the Constitution of India for issuance of a writ of certiorari to quash the award No. K.I.D 236 of 1993, dated 10-1-1996.

19. That the first respondent claimed to have been appointed as 'Works Inspector' on daily wage basis in APMC, Sirsi by an Appointment Order, dated 28-12-1984. He reported for duty on the same day. However his services were terminated with effect from 3-4-1987 without assigning any reasons and paying retrenchment compensation. Aggrieved by the order of termination he raised an Industrial Dispute before the Conciliation Officer, Karwar which ended in failure. The Conciliation Officer submitted a report to the Government and the Government was pleased to refer the matter to the Labour Court under Section 10(1)(c) of the Act. The Labour Court on receipt of the reference enquired into the matter. The parties adduced evidence before it. The Labour Court on the basis of the evidence found that the act of terminating the services of the first respondent workman amounted to retrenchment within the meaning of Section 2(oo) of the Industrial Disputes Act and theprocedure for the same was being not followed, the same is liable to be set aside. Accordingly, the Labour Court set aside the order and ordered the petitioner herein to reinstate the first respondent in service, with full backwages from 27-7-1993 together with continuity of service and consequential benefits.

20. The learned Counsel for the petitioner submitted that the awards are liable to be set aside as in all the cases the Labour Court/Industrial Tribunal lacked jurisdiction to entertain and dispose of the references; as the Committees known as APMC constituted under Karnataka APMC Act, is not an 'Industry' within the meaning of Industrial Disputes Act.

21. Secondly that the Karnataka APMC Act being a special legislation it prevails over Industrial Disputes Act, and therefore the application of the provisions of Industrial Disputes Act by necessary implication gets excluded in respect of activities of APMC.

22. While elaborating the submission that APMC is not an Industry it was submitted that A.P.M.C.'s are creatures of statute, created under the Karnataka A.P.M.C. Act, 1966 who have the power to legislate and the functions discharged by them cannot be entrusted or carried on by private agency, and its administration is carried on by the Officers appointed by State Government, and their salary is charged to consolidated fund. Therefore they are performing and discharging 'sovereign' and 'regal' functions and no function of a sovereign body can be an 'Industrial Activity'. In support of the said contentions, he relied on the decision of the Supreme Court in Physical Research Laboratory v K.G. Sharma, the Full Bench decision of the Gujarat High Court in H.K. Makhwana v State of Gujarat and Others, the Kerala High Court decision in T. Rajan v State of Kerala and Others and the Orissa High Court decision in Executive Engineer, National Highways Division v Presiding Officer, Industrial Tribunal, Bhubaneswar.

23. In answer to the above said contentions, Counsel for the respondents submitted as follows:

(I) The dichotomy of sovereign and non-sovereign functions in the scheme of Constitutional Government does not exist, except in cases of Defence, External Affairs, as stated by the Supreme Court in the case of Chief Conservator of Forests and Another v Jagannath Maruthi Kondhare and Others.

(II) That the nature and functions exercised by the APMC is such that it can also be done by a private agency; it was also submitted that the nature of functions of the APMC are comparable to the functions of a local authority like Municipal Bodies and in a similar case, where the Municipality regulated the market the Supreme Court in Corporation of the City of Nagpur v Its Employees, has held that such an activity is an industry: Hence prayed for dismissal of writ petitions'.

24. In view of the rival contentions, question that falls for consideration in these cases is:

'Whether APMC is an industry within the meaning of the Industrial Disputes Act'.

'Whether the Industrial Tribunal Labour Court had jurisdiction to decide the references made to it under Section 10 of the Industrial Disputes Act'.

25. In order to appreciate the rival contentions and to answer the questions formulated above, it is necessary to briefly set-out the purpose for which the APMC Act was enacted and the functions of the Committees constituted under the said Act.

26. The Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 was enacted by Act 27 of 1966, the preamble of the Act reads as under:

'An Act to provide for the Better Regulation of (Marketing) of Agricultural Produce and the Establishment and Administration of Markets for Agricultural Produce in the State of Karnataka'.

27. It is clear from a reading of the preamble that the Act is passed to regulate the trade of agricultural produces by establishment and administration of markets; the purpose issought to be accomplished, first by giving power to the State Government to notify the items of agricultural produces to be covered by the provisions of the Act, then the Market Areas, Market Yards are located, established and notified under Sections 6 and 7 of the Act where the activity of buying and selling of the notified agricultural produces is sought to be regulated through a licencing system.

The 'Market Committee'' called as Agricultural Produce Market Committee established under Chapter III of the Act is entrusted with the powers and function stated in Chapter VI. Section 63 in particular elaborately states the said powers and duties. The relevant clauses of Section 63 for purpose of this case is extracted herein below:

Section 63. Powers and duties of Market Committee.-

(1) Subject to the provisions of this Act, it shall be the duty of a Market Committee.-

(i) to implement the provisions of this Act, the rules and bye-laws made thereunder in the market area;

(ii) to provide such facilities for (transport and marketing) of agricultural produce therein as the State Government may from time to time direct;

(iii) to do such other acts as may be required in relation to the Superintendence, direction and control of markets or for regulating marketing of agricultural produce in any place in the market area, and for purposes connected with the matters aforesaid,

and for that purpose may exercise such powers and discharge such functions as may be provided by or under this Act.

xxx xxx xxx; (iv) supervise the conduct of the market functionaries;

xxx xxx xxx; (v) regulate the opening, closing and suspending of trading in the yards;

xxx xxx xxx; (viii) provide for the settlement of all disputes between the seller and the buyer arising out of any kind of transaction connected with the marketing of notified agricultural produce and all matters ancillary thereto;

xxx xxx xxx; (x) take all possible steps to prevent adulteration of goods and promote grading and standardization of the notified agricultural produce;

(xi) take measures for maintenance of market stability by prevention of over-trading and thus decreasing the local risk attendant upon the business of selling and buying notified agricultural produce;

(2)(b) a Market Committee may.-

(i) regulate the entry of persons and vehicular traffic into the yard (vesting in the Market Committee);

(ii) prosecute persons for violating the provisions of this Act, the rules and the bye-laws and compound such offences;

(iii) acquire, hold and dispose of any movable or immovable property for the purpose of efficiently carrying out its duties;

xxx xxx xxx. (vii) provide facilities for processing and packaging;

(x) provide such short term advances as may be prescribed to producer, seller in the market area on pledge of notified agricultural produce in favour of the Market Committee;

(xi) with the prior approval of the State Government donate funds to any Agricultural University to impart instructions in Agricultural Engineering and Research.

(2) Without prejudice to the generality of the foregoing provision.-

(a) a Market Committee shall.-

(i) maintain and manage the yards (vesting in the Market Committee) and regulate the manner of letting out the premises in the market yard including those belonging to market functionaries in the yard;

(ia) provide either independently or along with some other authority necessary facilities for the transport of notified agricultural produce in and to the yard;

(ii) provide the necessary facilities for the (transport) marketing of agricultural produce in the yards and outside the markets and sub-markets in the market area;'

Thus from a reading of the above, it is clear that the 'Act' is mainly intended to help the growers or producers of 'Agricultural Produces' to find a market for their produces. They are provided with the facilities in the (Market Area, Market Yard) like space, buildings, storage accommodation, whereunder the seller and the buyer are made to come in contact face to face, by the elimination of middlemen in the matter of trading of the produces. Correct weighment is ensured by licensed weighmen. To enure the best price, the price fixation procedure is prescribed. All disputes regarding the trade of buying and selling is resolved to arbitration. It is the obligation, duty and function of the 'Committees' to ensure the effective implementation and performance of the above. This activity of the Market Committees i.e., APMC is in my view a 'service' rendered to provide satisfactory conditions for the growers of agricultural produces. This is a material service rendered to the community of agricultural producers which helps in producing or growing the agricultural produces or goods. The Committee renders the said material service with the help of its employees and also the Officers nominated or appointed by the State Government. In other words, the activities of the APMC is carried on with the co-operation of the APMC and its employees for providing the material services to the community(Agricultural Producers) and therefore it is an undertaking providing material services to the community.

Whether such providing of 'Material Services' can be held to be an industry. Industry has been defined under Section 2(j) of the I.D. Act.

28. Section 2(j) 'Industry' means any business, trade, undertaking, manufacture or calling of employers and includes any calling service, employment, handicraft or industrial occupation or avocation of workmen'.

The Supreme Court has laid down many tests for determining whether a particular activity is an industry or not. In Bangalore Water Supply and Sewerage Board v A. Rajappa and Others, it has been held as follows:

'1. Section 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 and legislate in a manner which will leave no doubt as to its intention. That alone can afford a satisfactory solution to the question which has agitated and perplexed the judiciary at all levels.

3. There 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 definitions of 'Industry'. If it be true that one must have regard to the nature of the activity and not to who engages in it, it is besides the point to enquiry 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 ofan exception to the State's activities which are in the nature of the activity as to the consideration who engages in the activity; for sovereign functions can only bedischarged 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. Indeed, in this respect, it should make no difference whether on the one hand, an activity is undertaken by a corporate body in the discharge of its statutory functions, or, on the other, by the State itself in the exercise of its inalienable functions. If the water supply and sewerage schemes or fire fighting establishments run by a Municipality can be industries, so ought to be the manufacture of coins and currency, arms and ammunition and the mining 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 are described in Hospital Mazdoor Sabha as 'very significant' at lease show that, conceivably, a Defence Establishment, a Mint or a Security Press can be an industry even though these activities are, ought to be and can only be undertaken by the State in the discharge of its constitutional obligations or functions. The State does not trade when it prints a currency note or strikes a coin. And yet, considering the nature of the activity, it is engaged in an industry when it does so.

A systematic activity which is organised or arranged in a manner, in which the trade of business is generally organised or arranged would be an industry, despite the fact that it proceeds from charitable motives. It is the nature of the activity that one has to consider and it is upon the application of that test that the State's inalienable functions fall within the definition of industry. The very same principles must yield the result that just as the consideration as to who conducts the activity, isirrelevant for determining whether the activity is an industry so is the fact that the activity is 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 exhypothesi can have no relevance 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. But 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 considerations of profit motive and capital investment is irrelevant for determining whether an activity is an industry. Therefore, activities which are dominated by charitable motives either in the sense that they involve the rendering of free or near free services or in the sense that the profits which they yield are diverted to charitable purposes, are not beyond the pale of the definition of Section 2(j). It is as much beside the point to inquire who is the employer as it is to inquire, why the activity undertaken and what the employer does with the profits, if any'.

'(a) Where a complex of activities, some of which qualify for exemption, other 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.

(b) 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.

(c) Even in departments discharging sovereign functions if there are units which are industries and they are substantially severable, then can be considered to some within Section 2(j).

(d) Constitutionally and competently enacted legislative provisions may well remove from the scope of the Act categories which otherwise may be covered thereby'.

The expression 'Material Service' occurring in Section 2(j) of the I.D. Act has been illustrated by the Supreme Court in Management of Safdarjung Hospital, New Delhi v Kuldip Singh Sethi, as an activity carried on through the co-operation between the employers and the employees to provide the community with the use of something. Similarly in the case of Management of the Federation of Indian Chambers of Commerce and Industry v R.K. Mittal, the activities of the Indian Chambers of Commerce was held to be an industry adopting the above tests.

29. I have already held with reference to the provisions of the APMC Act that the activities of Market Committees constituted under the provisions of the Act are basically service oriented with a view to help the producers of agricultural produce to sell their goods in a 'Located Place' where the buyers come in contact with sellers without the intervention of middlemen, and the whole activity is regulated by licencing system which is done with the co-operation of its employees. Hence applying the tests laid down by the Supreme Court in the cases referred to by me supra, I hold that APMC is an industry for purpose of Industrial Disputes Act.

30. The contention of the petitioner that the Committees i.e., the APMC in the State are discharging the sovereign and Regal functions and therefore the said activity being a sovereign activity, will not come within the meaning or definition of industry. This submission in my view cannot be accepted.

31. What are and what are not sovereign functions whereunder an immunity can be claimed has been stated by the Supreme Court in N. Nagendra Rao and Company v State of Andhra Pradesh, while dealing with a case where the owner whose goods were confiscated under the Essential Commodities Act sought to recover its value when the same had lost most of its value during its custody with the officers, state as a defence raised sovereign immunity. While repelling the defence of immunity it has been stated as under:

'In the modern sense the distinction between sovereign or non-sovereign power does not exist. It all depends on the nature of power and manner of its exercise. Legislative supremacy under the Constitution arises out of constitutional provisions. The legislature is free to legislate on topics and subjects carved out for it. Similarly, the executive is free to implement and administer the law. A law made by a Legislature may be bad or may be ultra vires, but since it is an exercise of legislative power, a person affected by it may challenge its validity but he cannot approach a Court of law for negligence in making the law. Nor can the Government in exercise of its executive action be sued for its decision on political or policy matters. It is in public interest that for acts performed by the State either in its legislative or executive capacity it should not be answerable in torts. That would be illogical and impractical. It would be in conflict with even modern notions of sovereignty. 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. No suit under Civil Procedure Code would He in respect of it. The State is immune from being sued, as the jurisdiction of the Court in such matter is impliedly barred.

But there the immunity ends. No civilised system can permit an executive to play with the people of its country and claim that it is entitled to act in any manner as it is sovereign. The concept of public interest has changed with structural change in the society. No legal or political system today can place the State above law as it is unjust and unfair for a citizen to be deprived of his property illegally by negligent act of Officers of the State without any remedy. From sincerity, efficiency and dignity of State as a juristic person, propounded in Nineteenth century as sound sociological basis for State immunity the circle has gone round and the emphasis now is more on liberty, equality and the rule of law. The modern social thinking of progressive societies and the judicial approach is to do away with archaic State protection and place the State or the Government at par with any other juristic legal entity. Any watertight compertment alisation of the functions of the State as 'sovereign and non-sovereign' or 'governmental and non-governmental' is not sound. It is contrary to modern jurisprudential thinking. The need of the State to have extraordinary powers cannot be doubted. But with the conceptual change of statutory power being statutory duty for sake of society and the people the claim of a common man or ordinary citizen cannot be thrown out merely because it was done by an Officer of the State even though it was against law and negligently. Needs of the State, duty of its officials and right of the citizens are required to be reconciled so that the rule of law in a welfare State is not shaken. Even in America where this doctrine of sovereignty found its place either because of the financial instability of the infant American State rather than to the stability of the doctrine theoretical foundation, or because of 'logical and practical ground', or that 'there could be no legal right as against the State which made the law' gradually gave way to the movement from, 'State irresponsibility to State responsibility'. In welfare State, functions of the State are not only defence of the country or administration of justice or maintaining law and order but it extends to regulating and controlling the activities of people in almost every sphere, educational, commercial, social, economic, political and even marital. The demarcating line between sovereign and non-sovereignpowers for which no rational basis survives has largely disappeared.

Therefore, barring functions such as administration of justice, maintenance of law and order and repression of crime etc., which are among the primary and inalienable functions of a constitutional Government, the State cannot claim any immunity. The determination of vicarious liability of the State being linked with negligence of its Officers, if they can be sued personally for which there is no dearth of authority and the law of misfeasance in discharge of public duty having marched ahead, there is no rationale for the proposition that even if the officer is liable the State cannot be sued. The liability of the Officers personally was not doubted even in Viscount Canterbury v Attorney General. But the Crown was held immune on doctrine of sovereign immunity. Since the doctrine has become outdated and sovereignty now vests in the people, the State cannot claim any immunity and if a suit is maintainable against the Officer personally, then there is no reason to hold that it would not be maintainable against the State'.

Applying the above said tests, in the case of Chief Conservator of Forests, the Supreme Court while holding the 'Forest Department' is not an industry, has stated as under:

'As to which function could be, and should be taken asregal or sovereign function has been recently examined bya Bench of this Court, to which one of us (Hansaria, J.) wasa party. This was in Nagendra Rao's case, supra, in whichcase Sahai, J., speaking for the Bench, examined this question in detail in the background of the stand of the respondent State pleading absence of vicarious liability because ofthe doctrine of sovereign immunity. This aspect has beendealt with in paras 21 to 24. Para 21 opens by saying thatthe old and archaic concept of sovereignty does not surviveas sovereignty now sets in the people. It is because of thisin the case of Federated State School Teachers' Associationof Australia v State of Victoria, the distinction between sovereign and non-sovereign functions were categorised asregal and non-regal. In some cases, the expression used is State function, whereas in some Governmental functions.

We may not go by the labels. 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 power and manner of its exercise, as observed in para 23 of Nagendra Rao's 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 jurisdiction of ordinary Civil Court in as much 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 it extends to regulating and controlling the activities of people in almost every sphere, educational, commercial, social, economic, political and even marital. Because of this, the demarcating line between sovereign and non-sovereign powers has 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 of Bangalore Water Supply's case, supra, 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'.

32. It cannot be said that the functions of APMC are such in nature that its actions are not answerable in Courts of law, nor are they such as to come within the stated 'sovereign functions' in the above cases. Another limb of the argument of the learnedCounsel is that this activity has to be held as a sovereign activity as the nature of functions of the APMC is such that it cannot be entrusted to a private agency, is also not tenable; I have narrated above in detail after referring to the preamble and various provisions of the Act that the main function of the act is to provide a network of markets in the State of Karnataka to help the growers of agricultural produces to sell such produces in the located market. All activity of the Committee is only towards this end.

33. In a similar situation when a question came-up before the Supreme Court as to whether the functions of a Municipal Corporation can be said to be a Regal function, in the case of Corporation of the City of Nagpur, supra, Court after referring to various decisions and summarised as under:

'(i) The definition of 'industry' in the Act is very comprehensive. It is in two parts; one part defines it from the stand-point of the employer and the other from the stand point of the employee. If an activity falls into either part, it will be an industry within the meaning of the Act.

(ii) The history of Industrial Disputes and the legislation recognises the basic concept that the activity shall be an organised one and not that which pertains to private or personal employment.

(iii) 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.

(iv) 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.

(v) 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.

(vi) 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 criterion for the purposesof the Act'.

Applying the above tests, the Court considered whether the Market Department of a Corporation can be done by a private individual has held as under:

'The function of the Market Department is to issue licenses, collect ground-rent and registration fee and to detect short weights and measures. Rents are collected for permitting persons to enter the Corporation land and transact business thereon. Detection of short weights and measures is a service to the people to prevent their being cheated in the market. The setting apart of market places supervision of weights and measures are services rendered to the public and the fees collected are remuneration for the services so rendered. These services can equally be done by any private individual. This department also satisfies the tests laid down by us. We therefore, hold that this department is an industry within the meaning of the Act'.

At the cost of repetition, it has to be stated that the activity of the APMC is similar in nature.

34. The other submission of the petitioner's Counsel that since the salary for the Officers is being paid by the consolidated fund, it has to be held that APMC is not industry. This argument does not derive support from the provisions of the Act. The Act only states that so far as Officers appointed by the State Government, they shall be treated as State Government Officials. But so far as the employees employed by the Market Committee is concerned, their salary has to be paid by the Market Committee subject to the approval of the budget, besides that cannot be a test to be applied to find out whether the said activity is a sovereign or a regal activity.

35. In so far as the second contention that provisions of APMC Act prevails over I.D. Act and the operation of its provisions of the I.D. Act gets excluded by necessary implication is concerned, the learned Counsel has not been able to substantiate the same. In my opinion no provision of the APMC Act either expressly or by necessary implication excludes the application of I.D. Act.

36. In the light of discussions made by me above I answer the point formulated for consideration in the affirmative and holdthat the APMC is an 'Industry' within the meaning of I.D. Act and in that view the 'Reference' to the Labour Court/I.D. Tribunal were maintainable and the Labour Court had jurisdiction to pass the awards in question.

37. The awards impugned were not assailed on any other grounds.

38. For the reasons stated above these writ petitions are dismissed. No costs.


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