1. Dr. S. Herbert was employed at the Christian Hospital, Jagadhri, Ambala district, Ambala. On 31st August, 1970, be served the following demand notice on the Chairman. Punjab Synod Medical Board, Francis Newton Hospital, Ferozepur, respondent No. 1:
Since I have not been taken on duty despite my personal protest and justified approaches it is, therefore, presumed that you have terminated my services without any notice and without assigning any reason.
I am, therefore, constrained to serve upon you with this demand notice that I should be immediately reinstated, otherwise the Board will be responsible for further legal action.
Five copies of this demand notice were also sent to the Labour and Conciliation Officer, Yamuna Nagar, who initiated conciliation proceedings which proved abortive. Consequently, the State of Haryana referred the following dispute for adjudication by the Presiding Officer of the Labour Court, Haryana at Rohtak:
Whether the termination of services of Dr. S. Herbert was justified and in order? If not, to what relief is he entitled?
The Labour Court sent a notice regarding this reference to respondent No. 1 on the address given in the order of reference. A controversy was raised before it that the said notice had not been sent on the proper address. The Court, however, rejected this contention and directed respondent No. 1 to file its rejoinder at a date not later than November 15, 1971, and to send a copy of the same to the workman. The case was ordered to be taken up on December 16, 1971, at the Canal Rest House, Yamuna Nagar. On that date, no one appeared on behalf of the management and the case was decided on the basis of ex parte evidence produced by the appellant. The facts contained in the affidavit filed by him were accepted and it was observed as under:
Dr. S. Herbert has filed an affidavit in which a number of facts and figures have been given to prove that the respondent-society is an industry and that he is a workman. He has alleged that the respondent hospital received absolutely no grant or charity and the expenses for running the hospital have to be met from its earning. He has stated that the N.L.Z.P. Mission which started and maintains this Hospital and a number of other activities gives only an annual block grant of Rs. 41.000.00 for the purpose of running the hospital and the nurses school and in his affidavit he has stated that the total annual expenditure for running the hospital normally comes to approximately one lakh and the annual earnings from fees, charges for food, bed and laboratory tests, etc . also come to approximately rupees one lakh. He has affirmed that the annual block grant of Rs. 41,000 which is received from the Mission is wholly utilised in running the nurses school and that the management of the nurses school is entirely separate and independent of management of the hospital. He has pointed out that out of total number of patients treated in the hospital only about 5% of the patients are treated free and the rest have to pay for their treatment as also for their food and lodging and that the medicines are sold to the patients at a profit of 50%. He also stated that if in any year the expenditure of the hospital exceeds the income then the deficit is made up from the earning of the following year. In view of these facts it has to be held that the respondent is not a charitable hospital but an industry because all that can be said is that the management have no profit motive as the income and expenditure approximately remains the same.
After coming to this conclusion the learned labour Court adverted to the observations made by their Lordships of the Supreme Court in Safdarjung Hospital, New Delhi v. Kuldip Singh Sethi 1970-II L.L.J. 266 and held that the hospital in which the appellant had been engaged was an industry. Instead of ordering the reinstatement of the appellant the Court considered it proper to award him compensation calculated on the basis of two years' salary admissible to him. His plea regarding compensation in lieu of unavailed earned leave was turned down. Respondent No. 1 challenged the award dated December 22, 1971, annexure 'U' given by the labour Court, by filing civil Writ No. 1195 of 1972 in this Court.
2. In the writ petition, detailed history of the management of the hospital in which the appellant was engaged was given, it was, inter alia, asserted that the said hospital was not an industry and nor was the appellant a workman within the meaning of Industrial Disputes Act, 1947 (hereinafter referred to as the Act), The learned Judge who heard this petition in Chambers referred to some of the observations made by their Lordships of the Supreme Court an the Safdarjung Hospital's case 1970-II L.L.J. 2661, and was of the view that it had to be found out whether the Christian Hospital, Jagadhri, was run as a business in a commercial way or was a charitable institution. In other words, it was assumed that a charitable institution could not be regarded as an industry. He relied upon the admission made by the appellant in a civil suit to the effect that the hospital, was a charitable institution and observed that the learned labour Court had given a decision without giving a finding whether the admission made by the appellant was a wrong admission or not. The learned Judge observed that the decision of their Lordships of the Supreme Court in Safdarjung Hospital's case 1970-II L.L.J. 266, fully applied to the case in hand and the Christian Hospital, Jagadhri, was not an industry. The writ petition was allowed on this preliminary ground and the other matters agitated therein were not decided. The workman. Dr. S. Herbert, has come up in appeal under Clause X of the Letters Patent.
3. Shri Bhagirath Dass, learned Counsel for the appellant, has referred to the definitions of the terms, 'industry', and 'industrial dispute', as given in Section 2 (j) and (k) of the Act, and submitted that on the basis of the findings arrived at by the Tribunal, the Christian Hospital, Jagadhri, should be regarded as an industry. According to him, the learned Judge in Chambers should have, while exercising the certiorari jurisdiction, confined to the findings arrived at by the learned labour Court--which was the final Court of fact--for determining whether its order suffered from lack of inherent jurisdiction.
In Queen v. Commissioner for Special Purposes of the Income-tax (1888) 21 K.B.D. 313, it was observed by Lord Esher, M.R.:
When an inferior Court or Tribunal or body, which has to exercise the power of deciding facts, is first established by Act of Parliament, the Legislature has to consider what powers it will give that Tribunal or body. It may in effect say that, if a certain state of facts exists and is shown to such Tribunal or body before it proceeds to do certain things, shall have jurisdiction to do such things, but not otherwise. There it is not for them conclusively to decide whether that state of facts exists and if they exercise the jurisdiction without its existence, what they do may be Questioned and it will be held that they have acted without jurisdiction. But there is another state of things which may exist. The Legislature may entrust the Tribunal or body with a jurisdiction, which includes the jurisdiction to determine whether the preliminary state of facts exists as well as the jurisdiction, on finding that it does exist, to propped further or do something more, When the Legislature are establishing such a tribunal or body with limited jurisdiction, they also have to consider, whatever jurisdiction' they give them, whether there shall be any appeal from their decision, for otherwise there will be now In the second of the two cases I have mentioned it is an erroneous application of the formula to say that the Tribunal cannot give themselves jurisdiction by wrongly deciding certain facts to exist, because the Legislature save them jurisdiction to determine all the facts, including the existence of the preliminary facts on which the further exercise of their jurisdication depends; and if they were given jurisdiction so to decide, without any appeal being given, there is no appeal from such exercise of their jurisdiction.
Now, the labour Court has been given the jurisdiction to determine Whether a given institution comes within the definition of 'industry' or not. The finding of tact arrived at by such a Court cannot be lightly interfered with because this Court in the exercise of jurisdiction under Article 226 of the Constitution does not act as a Court of appeal for determining the correctness of the finding of fact entered by the subordinate Courts and the tribunals. It is, however, a different matter if the finding recorded by a subordinate Court or a Tribunal is based on no evidence or is such which has been arrived at in utter disregard of material evidence on record. In the instant case, the respondent chose not to appear before the subordinate Court and the latter was driven to record a finding of fact on the basis of evidence produced before it. This finding regarding the nature of the hospital in dispute can only be disturbed if this Court comes to the conclusion that on the basis of the facts found by the learned labour Court, the hospital could not be regarded as an 'industry'.
4. The facts found by the learned labour Court:
(1) the hospital receives no grant or charity and the expenses for running the hospital have to be met from its earnings;
(2) the total expenditure for running the hospital normally comes to approximately Rs. one lakh and the annual earnings from the fees charged for food, beds and laboratory tests, etc., also come approximately to the same amount;.
(3) the annual grant of Rs. 41,000 which is received from the Mission is wholly utilised for runnnig the nurses school and the management of the nurses school is entirely separate and independent of the management of the hospital;
(4) out of total number of patients treated in the hospital only about 5 per cent, are treated, free and the rest have to pay for the treatment as also for their food and lodging, etc.;
(5) the medicines are sold to the patients at a profit of 50 per cent.; and
(6) if during any year the expenditure of the hospital exceeds the income, the deficit is made up from the earnings of the following year.
5. The aforementioned conclusions were drawn by the learned labour Court while accepting the affidavit sworn by the appellant. Consequently, it cannot be said that the conclusions arrived at by the learned Court are based on no evidence. The only thing which remains to be seen is whether on the basis of these findings, the hospital in dispute can be regarded as an industry or not.
6. Section 2 (j) and (k) which defines 'industry' and 'industrial dispute', reads as under:
(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;
(k) 'industrial dispute' means any dispute or difference between employers and employers or between employers and workmen, or between workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person;
The definition of the word, 'industry' is in. two parts, in its first part, it means, any business, trade, undertaking, manufacture or profession or the employer, The second part of the definition enlarges the scope of the meaning of the word, ' industry ', by including in it any calling; service, or industrial occupation of the workman. In the Madras Gymkhana Club Employees' Union v. Gymkhana Club (1967) 33 F.J.R. 151, it was held as under (at page 167):.If the activity can be described as an industry with reference to the occupation of the employers, the ambit of the industry, under the force of the second part, takes in the different kinds of activity of the employees mentioned in the second part. But the second part standing alone cannot define 'industry'. An industry is not to be found in every case of employment or service. An individual who; employs a cook gets service from his employee whose avocation is to serve as a cook, but as the activity of the individual is neither business, nor trade, nor an undertaking, nor manufacture, nor calling of an employer, there is no industry. By the inclusive part of the definition the labour force employed in an industry is made an integral part of the industry for purposes of industrial disputes although industry is ordinarily something which employers create or undertake.
In other words, we have firstly to see the nature of the activity of the employer, If it is in the nature of a business, it would have to be regarded as an industry. An industrial dispute comes into being when the operation undertaken rests upon the co-operation between the employers and the employees with a view to produce and distribute material goods or material services.
7. Whether a hospital run by the State for giving medical relief to the citizens was an industry or not came up for consideration before their Lordships of the Supreme Court in State of Bombay v. Hospital Mazdoor Sabha (1960) 17 F.J.R. 423 : A.I.R. I960 S.C. 610. In that case, it was held that by an inclusive definition of the word, ' industry', the Legislature had enlarged the scope of the term. The test employed was that if a hospital is run by citizens for profit it would be an undertaking very much like trade or business in their conventional sense and it would make no difference if the hospital was being run by Government.
8. In the Safdarjung Hospital's case 1970-II L.L.J. 266, the Court considered the view expressed in Hospital Mazdoor Sabha's case : (1960)ILLJ251SC and observed that the first and the second parts of the definition are not to be read m isolation as if they were different industries. They were two counterparts in one industry. The Court observed as under (at page 257):.Holding that a hospital could be run as a business proposition and for profit, it was held that a hospital run by Government without profit must bear the same character. With respect, we do not consider this to be the right test. That test was employed to distinguish between the administrative functions of Government and local authorities and their functions analogous to business, but it cannot be used in this context. When it was emphasised in the same case that the activity must be analogous to business and trade and that it must be productive of goods or their distribution or for producing material services to the community at large or part of it, there was no room for the other proposition that privately run hospitals may in certain circumstances be regarded as industries.
This case is, however, not an authority for the proposition that a hospital under no circumstances could be regarded as an industry. The Safdarjung Hospital case 1970-II L.L.J. 266, was taken out of the purview of this word because it was being run by the Government and did not embark on an economic activity which could be said to be analogous to trade or business. The Court further observed (at page 260):
There is no evidence that it is more than a place where persons can get treated. This is a part of the functions of Government and the hospital is run as a department of Government. It cannot, therefore, be said to be an industry.
9. The Tuberculosis Hospital was not held to be an industry on the grounds, inter alia, that the hospital was wholly charitable, a research institute and because the dominant purpose of the hospital was research and training. Similarly, Kurj Holy Family Hospital was held to be not an industry because it carried on work of training, research and treatment. Its income was mostly from donations and distribution of surplus, as profit was prohibited.
10. These cases were referred to in Federation of Indian Chambers of Commerce and Industry v. R.K. Mittal 1971-II L.L.J. 630. With regard to the Safdarjung Hospital case 1970-II L.L.J. 266, it was observed as under (at page 417):
The criteria that in the two latter hospitals the object was charitable does not appear to have been the sole test for concluding that they were not industries. In one case the dominant activity was research and training which necessarily involved treatment also. In the other case though the activity it carried on was training, research and treatment, the distribution of surplus as profit was prohibited. The cumulative effect of these activities and the nature of such activities determined the question whether these institutions were an industry or not, not that because their respective objects were charitable, that alone was considered to be the criteria for not considering it as an industry.
The Court further held (at page 421):.In our view, the linch-pin of the definition of industry is to ascertain the systematic activity which the organisation is discharging, namely, whether it partakes the nature of a business or trade, or is an undertaking or manufacture or calling of employers. If it is that and there is co-operation of the employer and the employees resulting in the production of material services, it is an industry notwithstanding that its objects are charitable or that it does not make profit or even where profits are made, they are not distributed among the members.
In view of the above authoritative pronouncement it cannot be said that a hospital could not be regarded as an industry solely because it is being run on charitable grounds. What is to be seen is whether a particular hospital is being run on business lines or not. Further, it has to be seen whether an activity is casual or for the benefit of the founders alone. Now, the facts found by the Tribunal are that the hospital receives no grant or charity. It sells medicines at a profit of 50% and offers free treatment only to about 5% of the patients. If during any year the expenditure exceeds the income the losses are not made up by receiving donations. The deficit is made up from the earnings of the following year. These are the attributes of a normal business activity and in my considered opinion the Christian Hospital, Jagadhri, was an 'industry' as defined by Section 2(j) of the Act. In fairness to the learned single Judge in chambers, it may be observed that the Federation of Indian Chambers of Commerce and Industry's case 1971-II L.L.J. 630, was not cited before him.
11. As a result of the foregoing discussion, I allow this appeal, set aside the judgment rendered by the learned single Judge and remand this case to him for decision on the remaining issues.
12. Since the case has been decided against the respondent on the basis of ex parte evidence, I would like to make clear that in the event of the case being further remanded to the learned labour Court for fresh decision after allowing the parties an opportunity of leading evidence, nothing said hereinbefore would stand in the way of the labour Court in entering a finding that the hospital in dispute was not an industry. In the circumstances of the case, there shall be no order as to costs.
R.S. Narula, C.J.
13. I agree and have nothing to add.