M.U. Isaac, J.
1. A dispute arose between the management of the Indian Naval Canteen Service, Willingdon Island, Cochin (hereinafter referred to as 'the Canteen Service') and its workmen. Ten issues were referred for adjudication to the first respondent, the Industrial Tribunal, Calicut. That was I.D. No. 63 of 1965. During the pendency of this case, the management terminated the service of two of its workmen, one Pavithran and another Gangadharan. They complained before the Industrial Tribunal against the action of the management under Section 33-A of the Industrial Disputes Act, 1947. These complaints were registered as I.D. Nos. 89 and 99 of 1965.
2. The employer contended that the Canteen Service is not an industry, and that the Industrial Tribunal was not competent to entertain any of the cases. In I.D. 63, the employer contended that the workmen were not entitled to any of the demands raised by them. In the other two cases, the workmen complained that the termination of their services was a mala fide act of victimisation, while the employer contended that it was done in accordance with service rules on the basis of confidential reports received from the Commodore-in-charge of the Cochin Naval Base that these two workers were indulging in subversive and prejudicial activities which was a threat to the security of the Naval Base in view of the emergency then prevailing on account of the Chinese aggression. The Industrial Tribunal disposed of all the three cases by a common order, Ext. P-1 dated 8-9-1967.
3. By this order, it held that the Canteen Service is an industry as defined in the Act. Regarding the demands raised by the workmen, the issues were either found against or not pressed by them, except in the case of issue No. IX, which was conceded by the management subject to some qualification. The decision of the Tribunal on these matters is not relevant now. On the issue relating to the validity of the termination of the two workmen, the employer made available for the scrutiny of the Tribunal the confidential reports on their subversive activities, which were said to be endangering the security of the Naval Base establishment during those days of Chinese aggression with a request that the contents of the reports could not be disclosed to the opposite party. The Tribunal refused to look into them on the ground that they would not constitute legal evidence as long as they were not made available to the opposite party for meeting the same. Then the Tribunal found that, on the admitted facts, the termination of the services of these workmen was for misconduct and that it, therefore, offended Section 33(2)(b) of the Act. The employer could not obviously establish before the Tribunal that the termination was justified as it acted solely on the basis of the aforesaid confidential reports, which the Tribunal declined to act on for the reason already stated. Then considering the fact that there were grave allegations of misconduct against these workmen involving the security of our nation, the Tribunal held that they cannot be reinstated in service; and in lieu of that, he awarded a compensation of Rs. 2,500/- to one of the workmen and Rs. 1,500/- to the other. This writ petition has been filed to quash the above awards in I. D. Nos. 89 and 99 of 1965.
4. I shall first deal with the petitioner's contention that the termination of the services of the two workmen was in accordance with the service rules, and such a termination does not offend Section 33(2)(b) of the Act. The relevant rule is Rule No. 0607(b) of the I.N.C.S. Rules. It reads:-
The employees' services may be terminated at any time on one month's notice on either side. In the case of those who have completed three years of service, the period of notice will be three months on either side. If the employee is, in the opinion of the Board or any other authority empowered in this behalf by the Board, guilty of insubordination, misconduct etc. he shall be liable to be dismissed without notice. Pay in lieu of notice may be given in special circumstances at the discretion of the general manager.
The rule applies to a case of termination simpliciter and also to a case of termination for misconduct. The orders of termination of the services of the workmen are in the same terms. The order relating to workman Gangadharan reads:--
It has been decided by the Indian Naval Canteen Control Board that your services be terminated with effect from 23rd November, 1965, by giving you three months' pay in lieu of notice, vide Rule No. 0607(b) of the I.N.C.S. Rules.
It is clear from the above order that the termination of services of both the workmen was in terms of the relevant service rules. Then the question is whether Section 33(2)(b) of the Act is attracted to the case. Section 33(2) reads:--
33. Conditions of service, etc., to remain unchanged under certain circumstances during pendency of proceedings.
(2) During the pendency of any such proceeding in respect of an industrial dispute, the employer may, in accordance with the standing orders applicable to a workman concerned in such dispute or where there are no such standing orders, in accordance with the terms of the contract, whether express or implied, between him and the workman,
(a) alter, in regard to any matter not connected with the dispute, the conditions of service applicable to that workman immediately before the commencement of such proceeding; or
(b) for any misconduct not connected with the dispute, discharge or punish,whether by dismissal or otherwise,that workman:
Provided that no such workman shall be discharged, or dismissed, unless he has been paid wages for one month and an application has been made by the employer to the authority before which the proceeding is pending for approval of the action taken by the employer.
On the admitted facts, the real reason for terminating the services of the two workmen was gross misconduct, namely, subversive activities endangering the safety of the nation during the Chinese aggression. This misconduct was not connected with the dispute pending adjudication. So the case falls under Section 33(2)(b); and the dismissal of the workmen without the approval of the Industrial Tribunal for the said action was violative of the proviso to Section 33(2)(b) of the Act. It is well-established by the decisions of the Supreme Court in Murugan Mills Ltd. v. Industrial Tribunal, Madras 1965--I L.L.J. 422 and Tata Oil Mills Co. Ltd. v. Their Workmen 1966--II L.LJ. 602, that the form of the order by which the employee's services are terminated is not decisive, and that the Industrial Tribunal is entitled to examine the real ground for the action taken against the employee and decide whether the termination is a discharge simpliciter or a dismissal for misconduct of the employee or a mala fide act of victimisation. It has not been argued that if the dismissal was wrong the award of compensation by the Industrial Tribunal was not justified.
5. The main contention urged by counsel for the petitioners is that the Canteen Service is not an industry, and that the reference made to the Industrial Tribunal and' the awards made by it are without jurisdiction. The word 'industry' is defined in Section 2(j) of the Act as follows:--
'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 definition is in very wide terms; and the question whether an undertaking is an industry or not depends on the character of its activities. It is not possible to lay down any hard and fast rules or tests to decide this question. Various principles have been laid down by the Supreme Court in a number of cases which arose before it. The question whether the Canteen Service is an industry or not has to be decided in the light of those principles. Reference was made at the Bar to the Supreme Court decision in State of Bombay v. Hospital Mazdoor Sabha 1960--I L.L.J. 251 wherein a Government hospital was held to be an industry, University of Delhi v. Ramanath 1963--II L.L.J. 335, wherein the Delhi University was held not an industry, Madras Gymkhana Club Employees' Union v. Gymkhana Club 1967--II L.L.J. 720 wherein it was held that Gymkhana Club was not an industry, and also Management of Safdarjung Hospital v. Kuldip Singh Sethi 1970--II L.L.J. 266 wherein the Safdarjung Hospital was held not an industry. Reference was made to some more decisions of the Supreme Court as well as of the Indian High Courts. I do not think that it is either necessary or useful to go into all these decisions and discuss how far the principles laid down in these decisions are consistent, or they can be distinguished from one another. I shall rest myself content by relying on the decision in the Safdarjung Hospital case, which is the latest of the decisions of the Supreme Court brought to my notice. In this case, it has discussed its previous decisions, and affirmed the principles laid down in the Gymkhana Club case. Reference may be made to the following passage appearing in the decision in the Safdarjung Hospital case:
Therefore an industry is to be found when the employers are carrying on any business, trade, undertaking, manufacture or calling of employers. If they are not, there is no industry as such. What is meant by these expressions was discussed in a large number of cases which have been considered elaborately in the Gymkhana Club case (supra). The conclusion in that case may be stated:'Primarily, therefore, industrial disputes occur when the operation undertaken rests upon co-operation between employers and employees with a view to production and distribution of material goods, in other words, wealth, but they may arise also in cases where the co-operation is to produce material services. The normal cases are those in which the production or distribution is of material goods or wealth and they will fall within the expressions trade, business and manufacture.'
I shall now examine the character of the constitution and the activities of the Canteen Service. It is an establishment set up by the Government of India with the object to provide recreational facilities and amenities and to promote comforts and well-being of the members of the Naval Service and Defence Service Personnel. It is managed by a Board with headquarters at New Delhi known as the Indian Naval Canteen Central Board with the Chief of Staff, Indian Navy, as its Chairman. The Staff Officer (Canteens) is its Secretary. It has no profit earning motive; and profits, if any, earned out of its activities are utilised for the welfare of the Naval Personnel. The petitioners state as follows regarding the nature of the activities of the Canteen Service:--
The activities of the Indian Naval Canteen Service do not bring together capital and labour with a view to earn any profit. The Indian Naval Canteen Service was running a Dry Canteen and a Wet Canteen till September 1964. From October 1964 only the Dry Canteen is being run. In the Dry Canteen cigarettes, liquor, tinned provisions and grocery items like tooth paste, tooth brush, powder, soap etc. are distributed. In the Wet Canteen tea, coffee and snacks were being prepared and served. Rum was also issued to sailors on days specified by the Naval Authorities. In the Dry Canteen they (Indian Naval Canteen Service) get the necessary stores for running the canteen from the Canteen Stores Department (India) Bangalore which is a Government of India Organisation under the Ministry of Defence. Stores are distributed to the members of Naval Service and Defence Service Personnel at the prices fixed from time to time by the Canteen Stores Department of India. Members of the public have no right to purchase stores from the canteen. No sales tax is charged for the stores distributed. Similarly for the refreshments which were served in the Wet Canteen no sales tax is charged. The above activities of the Indian Naval Canteen Service are only meant for the pleasure, social entertainment and amenities of the service personnel. The work done by the employees is only incidental to the primary object for which the Indian Naval Canteen Service has been constituted.
The above averments are not disputed. This is, therefore, a clear case falling within the principles laid down in the statement which I have quoted from the decision of the Supreme Court in the Safdarjung Hospital case.
6. In the result, I uphold the contention of the petitioners that the Canteen Service is not an 'industry' as defined in the Industrial Disputes Act, 1947, and quash the awards of the first respondent in I.D. Nos. 89 and 99 of 1965. This writ petition is accordingly allowed. The parties will bear their own costs.