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Workmen of Madras Flying Club Ltd. Vs. Additional Labour Court and anr. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtChennai High Court
Decided On
Judge
Reported in(1976)IILLJ428Mad
AppellantWorkmen of Madras Flying Club Ltd.
RespondentAdditional Labour Court and anr.
Cases ReferredDhanrajgirji Hospital v. Their Workmen
Excerpt:
.....definition was disapproved by a larger bench of this court in management of safdarjung hospital v. material services involve an activity carried on through co-operation between employers and employees to provide the community with the use of something such as electric power, water, transportation, mail delivery, telephones and the like. it is somewhat interesting to note that the two decisions relating to workmen of madras pinjrapole v. 18. having regard to this evidence, i am of the view that the second and third tests adumbrated in the madras gymkhana club case (supra) and the cricket club of india case, (supra) (which have been extracted above) are satisfied in the instant case. 19. turning to clause 3 of the memorandum of association of the club, on which reliance is placed by the..........that may be, on the admitted facts, there is no difficulty in holding that the second respondent-club is an industry. the club was started in the year 1930 and was registered under the companies act. it is maintaining a workshop, where 25 to 30 workmen are regularly employed. the factories act is made applicable. the provident fund and gratuity schemes are in force. there are standing orders. flying facilities are provided for non-members. the club undertakes overhauling. joy rides are provided as seen from wl, w2, w3 and w5. the evidence of w.w. 1 discloses the various material services rendered by the club.10. mr. m.a. sadanand, learned counsel for the second respondent, would refer to the memorandum of association of the club and submit that the true object of the formation of the.....
Judgment:

Mohan, J.

1. An interesting question, which defies exactness, viz., as to the definition of 'industry' under the Industrial Disputes Act, 1947, arises for consideration in this writ petition. The short facts are as follows:

2. By G.O.R. No. 2887 (Labour) dated 30th December, 1968, the Government of Tamil Nadu referred to the Additional Labour Court, Madras, the industrial dispute which arose between the workmen (the writ petitioner) and the management of the Madras Flying Club Limited, for adjudication.

3. It was contended on behalf of the writ petitioner that there are about 39 employees in the organisation, that there was a prior gratuity scheme in force from 1948 to 1952, which was discontinued later, and hence, a gratuity scheme should be introduced.

4. The management of the Madras Flying Club Limited (the second respondent in the writ petition) in an elaborate counter contended that though there was a gratuity scheme in force earlier, still, as per the directions of the Director-General of Civil Aviation, it had to be discontinued. The club owed its existence to the subsidies, subventions, loan of air craft, building and hanger, exemption from payment of land and housing charges, etc., given by the Central Government and the present financial position of the club would not permit the introduction of the gratuity scheme. In an additional counter, it was also contended that the Madras Flying Club was not an industry as defined in Section 2(j) of the Industrial Disputes Act, 1947 (hereinafter referred to as the Act), and, therefore, a reference for adjudication under Section 10(1)(e) of the Act was not maintainable, more so, in view of the decision of the Supreme Court in Cricket Club of India v. Bombay Labour Union : (1969)ILLJ775SC . It was further stated that the Director-General of Civil Aviation was subsidising the club and without his assistance, the operation of the club will come to a stand-still, and the club had also been informed that having regard to its activities, it could not be termed an 'industry' within the meaning of Rule 2(13) of the Payment of Bonus Act. The definition of 'industry' in the Industrial Disputes Act and the Payment of Bonus Act, being the same, the club is not an 'industry'.

5. In reply to these contentions, submission was made on behalf of the workmen that the club was rendering service to non-members. Even since its incorporation, it was assisting the Tata & Sons Ltd. in connection with the air-mail service, that it was maintaining the aircrafts belonging to Tatas, that the club was charging fees for undertaking the work of advertising and the distribution of hand-bills, and that the club was also providing joy rides for non-members, charging fees. Further it was arranging chartered flights besides imparting training in the air-craft maintenance engineering on payment of Rs. 50 per month. The club owned immovable property to the tune of Rs. 15 lakhs. Overhauling and servicing of aircrafts were undertaken by the club. In addition to the above, the Factories Act was made applicable and hence, it will be an 'industry',

6. This dispute was numbered as Industrial Dispute No. 6 of 1969 and came up for adjudication before the Additional Labour Court, Madras (the first respondent in the writ petition). By its order dated 31st May, 1971, the first respondent held that the decision rendered in the Cricket Club of India v. Bombay Labour Union, (supra), would practically govern this case and as such, the Madras Flying Club Limited was not an industry, as defined in Section 2(j) of the Act.

7. It is to quash this order, that the workmen have preferred this writ petition.

8. Mr. K.S. Narayanan, appearing for the petitioner, submits that the order of the Tribunal is incorrect in law. Though there was some doubt as to the meaning of 'industry' and the law was somewhat nebulous, in view of the decision of the Supreme Court in Civil Appeal No. 1297 of 1970, dated 6th October, 1975, Workmen of Indian Standards Institution v. Indian Standards Institution : (1976)ILLJ33SC ; it cannot any longer be contended that the respondent-club is not an industry. Having regard to the later development of the law, wherein the word 'industry' has been elaborately considered, the decision of the Labour Court must be held to be unsound. In support of this submission, the learned Counsel relies on the decision in Bombay Pinjrapole v. Their Workmen : (1971)IILLJ393SC ; and Federation of Indian Chambers of Commerce & Industries v. Their Workmen : (1971)IILLJ630SC , The very case relied on by the second respondent was also taken note of by the later Supreme Court decision, while considering the definition of industry elaborately. The only direct case is, the one relating to the Patiala Aviation Club v. Labour Court, Ludhiana (1973) 44 F.J.R. 443, and that will support the stand of the writ petition.

9. Whatever that may be, on the admitted facts, there is no difficulty in holding that the second respondent-club is an industry. The club was started in the year 1930 and was registered under the Companies Act. It is maintaining a workshop, where 25 to 30 workmen are regularly employed. The Factories Act is made applicable. The provident fund and gratuity schemes are in force. There are standing orders. Flying facilities are provided for non-members. The club undertakes overhauling. Joy rides are provided as seen from Wl, W2, W3 and W5. The evidence of W.W. 1 discloses the various material services rendered by the club.

10. Mr. M.A. Sadanand, learned Counsel for the second respondent, would refer to the Memorandum of Association of the club and submit that the true object of the formation of the club was the encouragement and development of the study of aeronautics in all its branches and the various sub-clauses under Clause (3) will clearly go to show that this is not a profit-making organisation and cannot be called an 'industry'. In construing the definition, according to him, the two decisions of the Supreme Court in S.J. Hospital, New Delhi v. K.S. Sethi : (1970)IILLJ266SC and Dhanrajgiriji Hospital v. their Workmen 1975 48 F.J.R. 63, will have to be taken note of. Those two cases are of great assistance to the club.

11. In deciding this question, I need no better than to refer to the decision in Civil Appeal No. 1297 of 1970 dated 6th October, 1975, Workmen of Indian Standards Institution v. Indian Standards Institution 1976 II L.L.J. 33; wherein, speaking for the Bench of the Supreme Court, Bhagwati, J. eloquently lays down the law as follows (at p. 39):

Here, in this case, once again arises the question as to what is an 'industry' within the meaning of the Industrial Disputes Act, 1947. This question has continually baffled and perplexed the Courts in our country. There have been various judicial ventures in this rather volatile area of the law. The Act gives a definition of ' industry' in Section 2(j) but this definition is not very vocal and it has defied analysis, so that judicial effort has been ultimately reduced merely to evolving tests by reference to characteristics regarded as essential for constituting an activity as an 'industry'. The decided cases show that these tests have not been uniform; they have been guided more by an empirical rather than a strictly analytical approach. Sometimes these tests have been liberally conceived, sometimes narrowly. The latest exposition is to be found in the judgment of a Bench of six Judges of this Court in Safdarjung Hospital v. K.S. Sethi, (supra). But while applying the tests indicated in this decision, it is necessary to remember that the Industrial Disputes Act, 1947, is a legislation intended to bring about peace and harmony between management and labour in an 'industry' so that production does not suffer and at the same time, labour is not exploited and discontended and, therefore, the tests must be so applied as to give the widest possible connotation to the term 'industry'. Whenever a question arises whether a particular concern is an 'industry', the approach must be broad and liberal and not rigid or doctrinaire. We cannot forget that it is a social welfare legislation we are interpreting and we must place such an interpretation as would advance the object and purpose of the legislation and give full meaning and effect to it in the achievement of its avowed social objective.

12. In that case, the point that arose for adjudication was whether the Indian Standards Institution was an 'industry' or not. It was pointed out (at pp. 39-40):

The Industrial Tribunal proceeded to examine the legal position for the purpose of determining when a particular activity can be regarded as an industry within the meaning of Section 2(j) of the Act. It observed that there were five tests laid down by the decisions of this Court in Madras Gymkhana Club Employees' Union v. Madras Gymkhana Club : (1967)IILLJ720SC and Cricket Club of India Ltd. v. Bombay Labour Union : (1969)ILLJ775SC , which were required to be satisfied before an activity could be held to be an ' industry' and they were as follows:

1. When the operation undertaken rests upon co-operation between employers and employees with a view to production and distribution of material goods or material services;

2. It must bear the definite character of trade or business or manufacture or calling or must be capable of being described as an undertaking analogous to business or trade resulting in material goods or material services;

3. The activity to be considered as an ' industry' must not be casual but must be distinctly systematic;

4. The work for which labour of workmen is required, must be productive and workmen must be following an employment, calling, or industrial avocation; and

5. When private individuals are the employers, the industry is run with capital and with a view to profits. (These two circumstances may not exist when Government or local authority enters upon business, trade, manufacture or an undertaking analogous to trade).'

It was further held (at p. 40):

Now, the word 'industry' in defined in Section 2(j) and that section reads:

'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;

This definition is in two parts. The first part says that it means any business, trade, undertaking, manufacture or calling of employers and then it goes on to say in the second part that it includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen. This Court, had occasion to consider this definition in the case of State of Bombay v. Hospital Mazdoor Sabha : (1960)ILLJ251SC , where this Court sought to expand the concept of 'industry' by a process of judicial interpretation to meet the changing requirements of modern currents of socio-economic thought. It was pointed out by this Court that Section 2(j) does not define 'industry' in the usual manner by prescribing what it means: the first clause of the definition gives the statutory meaning of 'industry' and the second clause deliberately refers to several other items of industry and brings them in the definition in an 'inclusive way.' But this interpretation of the definition was disapproved by a larger Bench of this Court in Management of Safdarjung Hospital v. K.S. Sethi, (supra). We shall immediately proceed to examine that decision, as that is the decision which presently holds the field and must ultimately govern the determination of the present case. But, before we do so, we must refer to another decision of this Court which came a little before Safdar jung Hospital case, That is the decision in Madras Gymkhana Club Employees' Union v. Madras Gymkhana Club : (1967)IILLJ720SC . While dealing with the definition of ' industry ' in this case, it was pointed out by this Court that 'denotation of the term 'industry' is to be found in the first part relating to employers and the full connotation of the term is intended to include the second part relating to workmen ' and it was concluded: ' 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'.... By the inclusive part of the definition the labour force employed in an industry is made an integral part of the industry for purpose of industrial disputes although industry is ordinarily something which employers create or undertake. We may point out that the concept underlying the observation that 'industry is ordinarily something which employers create or undertake' is gradually yielding place to the modern concept which regards industry as a joint venture undertaken by employers and workmen--an enterprise which belongs equally to both. But we need not dwell on this any longer, as it is not of immediate concern to us in this case. It is sufficient to point out that the interpretation of the definition of 'industry' given in Madras Gymkhana case (supra), struck slightly different note from what it was understood to mean in the State of Bombay V. Hospital Mazdoor Sabha case : (1960)ILLJ251SC , But again in Safdarjung Hospital case, (supra), this Court found it necessary to qualify what it had said in the Madras Gymkhana case, in regard to the meaning of 'industry' and after referring to the definition of industry in Section 4 of the Common wealth Conciliation and Arbitration Act, 1909-1970, this Court observed : (1970)IILLJ266SC :

Although the two definitions are worded differently the purport of both is the same. It is not necessary to view our definition in two parts. The definition read as a whole denotes a collective enterprise in which employer and emplo yees are associated. It does not exist either by employers alone or by employees alone. It exits only when there is a relationship between employers and employees, the former engaged in business, trade, undertaking, manufacture or calling of employers and the latter engaged in any calling, service, employment, handicraft or industrial occupation or avocation. There must, therefore, be an enterprise in which the employers follow their avocations as detailed in the definition and employ workmen. The definition no doubt seeks to define 'industry' with reference to employers' occupation but includes the employees, for without the two there can be no industry. An industry is only to be found when there are employers and employees, the former relying upon the services of the latter to fulfill their own occupations.

This Court then proceeded to add, that 'every case of employment is not necessarily productive of an industry. Domestic employment, administrative services of public officials, service in aid of occupations of professional men, also disclose relationship of employers and employees but they cannot be regarded as in the course of industry'. A work man can be regarded as one employed in an industry only ' if he is following one of the vocations mentioned in conjunction with his employers engaged in the vocations mentioned in relation to the employers'. Thus, a basic requirement of ' industry 'is that the employers must be 'carrying on any business, trade, undertaking, manufacture or calling of employers. If they are not, there is no industry as such'. Now, what these expressions mean has been discussed in a large number of cases decided by this Court. These cases have all been reviewed in the Madras Gymkhana case, (supra).

Again, the learned Judge has quoted the judgment of Hidayatullah, C.J. in Safdarjung Hospital case : (1970)IILLJ266SC , as follows:

What is meant by 'material' services in this context was explained by the learned Chief Justice in these words:Material services are not services which depend wholly or largely upon the contribution of professional knowledge, skill or dexterity for the production of a result. Such services being given individually and by individuals are services no doubt but not material services. Even an establishment where many such operate cannot be said to convert their professional services into material services. Material services involve an activity carried on through co-operation between employers and employees to provide the community with the use of something such as electric power, water, transportation, mail delivery, telephones and the like. In providing these services, there may be employment of trained men and even professional men, but the emphasis is not on what these men do but upon the productivity of a service organised as an industry and commercially valuable. Thus the services of professional men involving benefit to individuals according to their needs, such as doctors, teachers, lawyers, solicitors, etc., are easily distinguishable from an activity such as transport service. The latter is of a commercial character in which something is brought into existence quite apart from the benefit to particular individual. It is the production of this something which is described as the production of material services.'.

I am particularly referring to these decisions copiously, because most of the decisions which deal with the meaning of 'industry' have been considered thereunder.

13. In Bombay Pinjrapole v. Their Workmen : (1971)IILLJ393SC , the question arose whether the activities of the Bombay Pinjrapole would fall within the purview of 'industry' under Section 2(j) of the Act. The Supreme Court held that the value of the milk sold in the market being substantially more than the milk utilised for the sick and the infirm animals, the activities of the Bombay Pinjrapole was carried as a business for making profit and hence, an industry. It is somewhat interesting to note that the two decisions relating to Workmen of Madras Pinjrapole v. Madras Pinjrapole (1962) 23 F.J.R. 93 and Madras Pinjrapole v. Their Workmen (1967) 31 F.J.R. 31, were noted in this case and it was held (at p. 143):

We have referred at some length to the Madras Pinjrapole case to show the analogy of the activities of the Madras Pinjrapole to the Bombay Pinjrapole. Save for the fact that the Madras Pinjra pole definitely and expressly changed its objective by starting a dairy farm and purchasing much cows and stud bulls there is very little difference between the facts of the case before us and those in the Madras Pinjrapole case.

14. About the very decision relied on by the Labour Court (the second respondent in this case), it was observed by the Supreme Court in the Bombay Pinjrapole v. Their Workmen, (supra):

In this view of the matter, it is hardly necessary to consider the other cases which were cited at the Bar, namely, Gymkhana Club Union case (supra) Cricket Club of India Ltd. v. Bombay Labour Union, (supra) and Harinagar Cane Farm v. State of Bihar (1963) 24 F.J.R. 485. It was remarked in the Gymkhana Club case, (supra) that the activity of the club is conducted with the aid of employees who follow callings or avocations and that the activities of the club was not a calling or business of its members of the managing committee and there was no undertaking analogous to trade or business. In the Cricket Club's case, (supra) the Court examined the different activities of the club and came to the conclusion that they did not lead to the inference that the club was carrying on an industry.

The case reported in Federation of Indian Chambers of Commerce and Industry v. Their Workmen : (1971)IILLJ630SC related to the activities of the Federation of Indian Chambers of Commerce and Industries and it was held that it was an industry and the absence of profit motive or distribution of profits was held not relevant in deciding this question. The material passage for the purpose of the case on hand, occurs at page 645 which is as follows:

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 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 profits or even where profits are made, they are not distributed among the members.

15. In Patiala Aviation Club v. Labour Court, Ludhianu, the question arose before the Punjab and Haryana High Court whether the Patiala Aviation Club, which was engaged in the promotion of art and science of aviation and aeronautics and also carrying on business as private and commercial air carriers, would fall within the definition of industry, notwithstanding the non-payment of dividends by way of profit to the members of the club. It was held to be an industry. In dealing with this question, the decision in Cricket Club of India case, was discussed and it was held (at p. 781):

In the Cricket Club of India case : (1969)ILLJ775SC , the Supreme Court was concerned with the question whether a self-serving club could be regarded as an industry or not. It was conceded in the case that the club also ran canteens which catered to the needs of its members and outsiders. But while elaborating this aspect of the case, the Court observed thus (at p. 781):.This indicates that the provision of these stalls is not for the purpose of carrying on an activity of selling snacks and soft drinks to outsiders, but is really intended as provision of a facility to persons participating in or coming to watch the tournament in order that the tournaments may be run successfully. These stalls are thus brought into existence as a part of the activity of promotion of games and is not a systematic activity for the purpose of carrying on transactions of sale of snacks and soft drinks to outsiders. The opening of stalls on two such occasions in a year with this limited object cannot be held to be an undertaking of the nature of business or trade.'

In short, the Supreme Court drew distinction between ordinary trade activity and an activity of this type which was indulged in for the purpose ancillary to the main purpose of the club.

16. In the light of the above principles of law, I will now proceed to examine the facts of this case.

17. As rightly contended by Mr. Somayaji, a number of commercial activities are carried on by the second respondent-club. Firstly, joy ride is evidenced by Exts, W1 and W3. Exhibit W5 shows the statement of revenue earned by joy ride flights. That exhibit also shows the revenue earned by chartered flights. What is important to be noted is, that these activities are carried on in a systematic fashion. In addition to the above, the evidence of W.W. 1 shows the various material services rendered by the club. He is categoric in his statement that charges are levied at the rate of Rs. 50 for non-members in affording training in ground engineering. Besides, charges are made for maintenance of planes owned by Tatas. Services relating to film and aerial photography are also afforded. Aerial spraying of notices are also carried out. These are offered to non-members, a few of them were English Electric Company, Burmah-Shell, Binny Engineering and Simpson & Company.

18. Having regard to this evidence, I am of the view that the second and third tests adumbrated in the Madras Gymkhana Club case (supra) and the Cricket Club of India case, (supra) (which have been extracted above) are satisfied in the instant case.

19. Turning to Clause 3 of the Memorandum of Association of the Club, on which reliance is placed by the second respondent, there again, I find that the activities mentioned in the sub clauses clearly partake the character of business activity. It cannot be contended, as is sought to be done by the respondent-club, that these are done as ancillaries to the main activity of the club. Overhauling, maintenance and repair and letting them for hire have not been casual. Just as in the Patiala Aviation Club's case, (supra) the Memorandum of Association shows an equal amount of emphasis with regard to these commercial activities. The fact thatit is a non-profit making club, even assuming it to be so, is not material.

20. S.J. Hospital, New Delhi v. K.S. Sethi, (supra), dealt with the question as to whether a hospital or nursing home or dispensary could be considered an industry. It was held therein that the Safdar Jung Hospital, New Delhi, was not an industry as it has not embarked on economic activity analogous to trade or business. It was also held that the Tuberculosis Hospital, New Delhi, is not an industry as it is wholly charitable and its dominant purpose is research and training.

21. These cases are not of any assistance to the respondent-club.

22. Again, in Dhanrajgirji Hospital v. Their Workmen, (supra), on the same principles, it was held that the Dhanrajgirji Hospital, Sholapur, was not an industry.

23. This case is distinguishable because of the systematic business activity that is carried on by the club.

24. By a reading of the order of the Labour Court, I find that it was influenced to a great extent by Ext. W8, which cannot have any bearing in deciding this legal question, which, as has been pointed out repeatedly, must be decided on its own merits. Nor is it correct on the part of the Labour Court to hold that the activities evidenced by W2, W3, W4 and W5 will not go to show that the Flying Club had any commercial idea behind it. This finding ignores Clause (1) of Ext. M6.

25. I have already referred to the decision of the Supreme Court and the Punjab and Haryana High Court wherein the Cricket Club of India case, (supra), was noted and how in that case the club was held to be an industry. But, the position here is very different. I am unable to agree with the finding of the Labour Court that providing of joy rides, aerial spraying or permitting chartered flights, were all done with a view to encourage the development of the study of aeronautics. On the contrary, these activities are done only with a commercial motive and there is no nexus between the main object, viz., study of aeronautics and these activities.

26. In the result, I hold that the second respondent-club is an industry within the meaning of the definition of Section 2(j) of the Act. The order of the Labour Court is quashed. The writ petition is allowed and the rule nisi is made absolute. However, I make no orders as to costs.


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