V.P. Tyagi, J.
1. Two important questions of law are raised in this writ petition filed by the Rajasthan Khadi and Village Industries, Board, and they are: (1) Whether the Rajasthan Khadi Gramodyog Board, Jaipur is an industry within the meaning of Section 2(j) of the Industrial Disputes Act (hereinafter called the Act, and (2) whether the manager of the Gramodyog Training and Production Centre of the Board at Sanganer comes within the expression 'workmen' as defined in Section 2(s) of the Act
2. Respondent No. 4 Daulat Chand Gupta was appointed by the Rajasthan Khadi and Village Industries Board as Vyavasthapak (manager) of the Gramodyog Training and Production Centre at Sanganer The services of Daulat Chand Gupta were terminated by the Board after giving him one month's notice. The Rajasthan Khadi Gramodyog Board Karamchari Sangh (hereinafter called the union) raised an industrial dispute regarding the termination of Shri Gupta's services This dispute was referred by the State Government to the Labour Court, Rajasthan, Jaipur. The Labour Court by its award dated 18th of February, 1970, declared that the Board comes within the definition of 'industry' and that Shri Gupta also falls within the ambit of the expression 'workman' as defined in Section 2(s) of the Act and, therefore, the dispute raised by the union comes within the term 'industrial dispute.' After going into the merits of the case, the Labour Court gave its award in favour of Shri Gupta and held that the termination of his services was not in accordance with law and, therefore, directed the Board to reinstate Shri Daulat Chand Gupta, but as the dispute was raised after a considerable delay the court did not think it advisable to order the payment of the back wages to Shri Gupta.
3. This award has been impugned by the Board mainly on two grounds, namely, (1) that looking to the functions of the Board it cannot be termed as an industry, and (2) that the booking to the duties discharged by Shri Gupta as a Vyevasthapak of the Training and Production Centre at Sanganer organised by the Board he cannot come within the definition of 'workman' and hence the dispute was not maintainable.
4. Mr. Agarwal, appearing on behalf of the Board, has addressed this Court at length on these points of law. In support of his first contention that the Board is not an industry, he placed reliance on the following authorities:
The Secretary, Madras Gymkhana Club Employees' Union v. The Management of the Gyamkhana Club : (1967)IILLJ720SC . Rama Krishna Iyer Vaidyanathan v. Fifth Industrial Tribunal of West Bengal and Ors. : (1968)IILLJ597Cal Management of Assam Rastra Bhasha Prachar Samity v. Workmen of Assam Rashtra Bhasha Pracher Samity and Ors. AIR 1965 Assam 14. Pappammal Annachatram v. The Labour Court, Madurai and Ors. : (1964)ILLJ493Mad . The University of Delhi and Anr. v. Ram Nath and Ors. AIR 1903 S.C. 1872. Brahmo Samaj Educational Society and Ors. v. West Bengal College Employee Association and Ors. : AIR1964Cal48 . The Management of Safdarjung Hospital v. Kuldip Singh Sethi : (1960)IILLJ720SC Harihar Bahinipaty and Ors. v. State of Orissa.
5. I need not discuss all these rulings cited by learned Counsel for the parties as the Supreme Court in its latest decision in Federation of Indian Chambers of Commerce and Industry v. Their Workmen (1971) 40 F.J.R. 400 has reviewed the entire law on this point and after carefully going through its own observations in several previous judgments has laid down that the relationship of the employer and the employees must be viewed in the background whether the employer follows a trade, business, manufacture, undertaking or calling of employers in the production of material services and the employee following any calling, service, employment, handicraft or industrial occupation or avocation of workmen in said of the employers' enterprise. This criteria whether the employer is carrying on its avocation with a profit motive or not is immaterial. From the employers' point of view it is to be seen whether enterprise undertaken by the employer is analogous to trade or business in a commercial sense in order to bring it within the definition of 'industry' under the Act. It will be relevant to quote the words of their Lordships in this connection:
It appears to us that the tests for determining whether a dispute is an industrial dispute, or not have been enunciated and the principles crystallised as a result of the several decisions of this Court which is what are applicable to this case. There is therefore, no warrant to allow any other element to be added to the criteria laid down for determining what an industry is. In our view, the linchpin 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 cooperation 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.
6. It is in this background that I have to scrutinise the functions of the Board to find out whether it falls within term 'industry' or not. The Board was constituted under the enactment known as the Rajasthan Khadi and Village Industries Board Act, 1955. The functions of the Board have been enumerated in Chapter III of that Act. Section 18 deals with these functions of the Board and it reads as follows:
Section 18, Functions of Board: The Board shall perform the following functions:
(1) to start, encourage, assist and run Khadi and village industries;
(2) to help the people by providing them with work in their homes and to give them monetary accommodation;
(3) to organise co-operative societies for Khadi and village industries;
(4) to conduct training centres and to train people at these centres out side the State in Khadi and village industries;
(5) to arrange for the supply of raw materials, tools and implements for Khadi and village industries and for sale of the finished products;
(6) to arrange for publicity and popularising of Khadi and goods manufactured in village industries by opening stores, shops, exhibitions and the like;
(7) to endeavour, to educate public opinion and to cultivate in the public a liking and bias for Khadi and village industries and for the utilization of products of such industries;
(8) to seek and obtain advice and guidance in the subjects mentioned above by inviting experts;
(9) to undertake and encourage research in Khadi and village industries;
(10) to carry on such activities as are incidental and conducive to the objects of this Act; and
(11) such other functions as may be prescribed.
7. The main function of this Board appears to be to encourage, assist and run Khadi and Village Industries in the State, but in order to achieve this end the Board besides other works has to arrange the supply of raw material, tools and implements for Khadi and Village Industries and also it organises the sale of the finished products. It also runs the training and production centres and the products of such centres are sold systematically by the Board in the market It is immaterial for the purpose of deciding this question to find out as to how the profits earned by the Board by these activities are utilised.
8. Daulat Chand Gupta in para 25 of his affidavit has mentioned that the Board has organised various training-cum-production centres and the products of these centres are sold systematically in the market through the stores organised by the Board at Jaipur and Bikaner which are known as Khadi Bhavan, Jaipur and Khadi Bhavan, Bikaner. In these stores all the materials produced by the Board are systematically sold. At Sanganer Centre it is averred, the following work is done by the Board:
1. Ghani and extraction of oil from it 2. Furniture; 3. Soap; 4. Bricks; 5. Earthen pots; 6. Flower pots; 7. Toys; 8, Hand-made paper; 9. Bone fertilizer; 10. Match box. etc., and people are also trained at these centres for the manufacture of these commodities. This averment of Shri Gupta has not been contradicted by the Board.
9. One Shri Bhartian Chandra has filed an affidavit on behalf of the Board wherein it has been stated that the Board does not carry on any business but it simply finances the various institutions which manufacture Khadi and other products of village industries and it gets money from the State budget and it advances money to such institutions. From these affidavits and from the functions enumerated by the Act itself, it becomes clear that the Board has directly and systematically under taken the work of producing material goods at various centres which encourages the growth of village industries and it also systematically organises the sale of such products. At the centres where the production of goods is organised the Board also imparts training to the trainees admitted by it. Sub-section (5) of Section 18 of the Rajasthan Khadi and Village Industries Board Act, 1955, specifically enjoins a duty on the Board for the supply of raw materials, tools and implements for Khadi and Village Industries and for sale of the finished products. According to Shri Gupta's affidavit, the sale of these products has been organised by opening two big stores which are known as Khadi Bhavans at Jaipur and Bikaner. This is a systematic activity of the Board which partakes the character of a trade or business. It is true that the motive behind these activities may not be profit making but that alone is not sufficient to take out this incident from the definition of 'industry' as given in the Act.
10. In the Ahmedabad Textile Industry's Research Association v. The State of Bombay and Ors. : (1960)IILLJ720SC the appellant association had established a research institute to carry out research in order to advance the textile industries and the members of that association used to take advantage of the research work carried out in that association. The question that arose in that case before the Supreme Court was whether the association was founded the main object of which was to promote the textile industry through research work, could come within the definition of 'industry' or not. In that connection, their Lordships of the Supreme Court observed:
These provisions make it clear that though the appellant association has been established for purposes of research, the main object of the research is the benefit of the members of the association. The cost of maintaining the association is met partly by members and partly by grants from government and other sources. It will thus be clear that in effect the association has been established to carry on research with respect to textile industry jointly for the benefit of its members; but for this, each member-mill might have had to establish its own research department, which would be a part of its activity. Can it be said under these circumstances that this is an under taking which is purely of educational character and therefore covered by the Australian case mentioned above. We are of opinion, considering the objects and the Rules and Regulations of the appellant association, that it answers the tests laid down in the Hospital case : (1960)ILLJ251SC and must be held to be an undertaking within the meaning of Section 2(j). It is an activity systematically under taken; its object is to render material services to a part of the community (namely, member-mills) the material services being the discovery of processes of manufacture etc. With a view to secure greater efficiency, rationalisation and reduction of costs of the member-mills; it is being carried on with the help of employees (namely, technical personnel) who have no rights in the results of the research carried on by them as employees of the association; it is organised or arranged in a manner in which a trade or business is generally organised; it postulates co-operation between employers (namely, the association) and the employees (namely, the technical personnel and Ors.) which is necessary for its success, for the employers provide monies for carrying on the activities of the association and its object clearly is to render material services to a part of the community by discovery of processes of manufacture etc. with a view to secure greater efficiency, rationalisation and reduction of costs.
11. The activities carried on by the Board within the ambit of the functions enumerated in the 1955 Act are the activities in the nature of trade or business and the co-operation of the employees of the Board result in the production of material services and material goods. It is no doubt true that the objects with which these activities are carried on are not profit making but in order to test whether the particular activity of the organisation comes within the definition of 'industry' or not, it is not necessary to see whether the activity is being carried on to make profit out of it. It is immaterial whether the object is charitable or that it is not profit making as the object has no bearing on this question whether the activity comes within the definition of 'industry' or not. Looking to the activities of the Board which partakes the character of organised business or trade, the Board falls within the term 'industry' and, therefore, this point is decided against the Board.
12. The next question raised by Mr. Agarwal is that looking to the nature of the duties assigned to Mr. Gupta as manager of the Training-cum-Production Centre, Sanganer, he cannot fall within the term ''workman' as defined in the Act. 'Workman' has been defined in Clause (s) of Section 2 of the Act as follows:
(a) 'workman' means any person (including an apprentice) employed in any industry to do any skilled or unskilled manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be expressed or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person-
(i) who is subject to the Army Act, 1950, or the Air Force Act, 1050, or the Navy (Discipline) Act 1934; or
(ii) who is employed in the police service or as an officer or other employee of a prison; or
(iii) who is employed mainly to a managerial or administrative capacity; or
(iv) who, being employed in a supervisory capacity, draws wages exceeding five hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.
13. The argument of Mr. Agarwal, is that Mr. Gupta was employed mainly in a managerial or administrative capacity and, therefore, he does not fall within the category of 'workman' to raise an industrial dispute.
14. Mr. Gupta in para 21 of his affidavit has enumerated certain functions which he had to discharge as a manager of the Training-cum-Production Centre, Sanganer. He stated that as an incharge of the Sanganer Centre he used to supervise the work of the Centre and used to keep the accounts, used to sell the products and purchase goods for the Centre, but he further states that he could neither appoint nor dismiss any employee and that he had to discharge his duties in accordance with the instructions issued by the Secretary of the Board. He has also stated that Be could not even grant leave to the employees working in the Centre and that the leave was granted by the Secretary of the Board.
15. On the strength of this averment. Mr. Mridul appearing on behalf of Shri Gupta has argued that the Supreme Court has discussed the nature of the duties of a manager in Prem Sagar v. Standard Vacuum Oil Company, Madras, and Ors. 1964 (1) LLJ 47 and their Lordships have observed:
That takes us to the question as to whether the appellant is an employee whose case falls under the category of exempted cases provided for by Section 4(1)(a). Section 4(1)(a) refers to persons employed in any establishment in a position of management, and so, the question is when can a person be said to have been employed by the respondent in a position of management. It is difficult to lay down exhaustively all the tests which can be reasonably applied in deciding this question as several considerations would naturally be relevant in dealing with this problem. It may be enquired whether the person had a power to operate on the bank account or could he make payments to third parties and enter into agreements with them on behalf of the employer, was he entitled to represent the employer to the world at large in regard to the dealings of the employer with strangers, did he have authority to supervise the work of the clerks employed in the establishment, did he have control and charge of the correspondence; could he make commitments on behalf of the employer, could he grant leave to the members of the staff & hold disciplinary proceedings against then, has he power to appoint members of the staff or punish them; these and similar other tests may be usefully applied in determining the question about the status of an employee, in relation to the requirements of Section 4(1)(a)
16. The case came up before their Lordships of the Supreme Court in connection with the proceedings under the Madras Shops and Establishment Act where the expression 'employer' and a person in the position of management' came up for interpretation before the Court to apply the provisions of the said Act and it was in that connection that their Lordships of the Supreme Court laid down certain tests to find out whether a person working under an employment could be said to be holding a position of management in that employment. In my opinion, the tests that have been laid down by their Lordships of the Supreme Court were entirely in different context which have no bearing on the circumstances of the present case where the Court is required to find out whether Shri Gupta was employed mainly in a managerial or administrative capacity.
17. Shri Bhartish Chandra who has filed an affidavit on behalf of the Board in para 4 thereof has stated that Shri Gupta was appointed in the Centre as 'Vyavasthapak' and as such the entire responsibility to manage the affairs of the Centre rested on him. He has not stated whether Shri Gupta was empowered to grant leave to his subordinates, or whether he had the power to make appointments of certain categories of the staff in the Centre or not. Mr. Agarwal, however, has drawn my attention to the Rajasthan Khadi and Village Industries Board (Purchase of Stores and Stocks) Rules 1961, where in Rule 4, the powers for purchases have been given by these Rules to certain authorities in the institutions run by the Board. Para 6 deals with the powers of the Manager, Training-cum-Production Centre, Sanganer, and against the manager it has been mentioned in the Rules that he could make purchases for the institution to the extent of Rs. 1000/- at a time but not exceeding Rs 25,000/- in a financial year for trading account. It is, however, admitted by Shri Gupta that he had a power to make purchases for the Centre. From this power Mr. Agarwal wants this Court to infer that he was having considerable control on the running of the Centre and in doing so he could purchase within a financial year goods worth about Rs. 25,000/-.
18. From the designation which was given to Shri Gupta while holding the charge of the Centre it is clear that he was appointed to manage the Centre. It may be that under the Rules of the Board the appointment of the subordinate staff may not fall within the ambit of his powers or looking to the proximity of the Centre with the Head Office which was located at Jaipur, it may be that the leave to the subordinate staff may have been granted by the head office, but these factors would not in any manner take away the managerial powers of the Vyavasthapak of the centre. The appointment of Shri Gupta in the Training-cum-Production Centre was to manage that Centre where various activities were taken up by the Board and where Shri Gupta was empowered by the Rules themselves to make purchases for the Centre without the interference of the higher authorities. In these circumstances, it is difficult for me to hold that Shri Gupta comes within the definition of 'workman' as given in the Act. As such no industrial dispute could be raised under the Act for the termination of his services. In this view of the matter, the State Government was not competent to refer the dispute raised by Shri Gupta to the Labour Court. The Labour Court had no jurisdiction to adjudicate the dispute and, therefore, the award given by the Labour Court is without jurisdiction.
19. The writ petition is allowed and the award given by the Labour Court, Rajasthan, Jaipur, on 18th February, 1970, is hereby set aside. Looking to the matters involved, I pass no order as to costs.