Case Summary
| Citation | Arihant Siddhi Co.Op. Hg. Soc. Ltd. V. Pushpa Vishnu More |
| Keywords | section 2(j) of Industrial Disputes Act, industry, cooperative society, dominant function, personal services, profit motive, commercial activity |
| Facts | Arihant Siddhi society, the petitioner, hired respondent no. 1 as a watchman. Upon reaching 60 years of age, his employment was ended on November 1, 2000. The petitioner claimed this termination was consensual and that the respondent received and accepted his retirement benefits. Subsequently, the respondent demanded reinstatement. He countered, alleging improper termination without inquiry or retrenchment compensation. The petitioner, a housing society, argued the respondent provided personal services. The labor court, however, ruled the society qualified as an industry due to profit generation from members, dismissing the petitioner’s non-maintainability claim. The petitioner then contested the labor court’s award concerning the Industrial Dispute Act in Mumbai. |
| Issues | Whether the cooperative housing society comes under the definition of industry? |
| Contentions | The petitioner contended that the respondent’s termination was by mutual consent, as demonstrated by his acceptance of the retirement benefits. They also argued that as a housing society, providing personal services, they are not an “industry” under the Industrial Dispute Act, and the respondent is not a “workman” within its scope. Respondent no. 1 claimed permanent employment and maintained that his termination was invalid due to the absence of a proper inquiry and retrenchment compensation. |
| Law Points | The court stated that the society’s collection of fees for members’ neon sign advertisements for coaching classes and dispensaries did not constitute an “industry” involved in neon sign hiring or advertising. It was further clarified that the respondent’s services were not “personal services.” The judge also identified an error in the labor court’s decision, which incorrectly linked income earned on the premises to the society’s classification as a non-housing society. Drawing upon the precedent set in M/S Shantivan II Co-op. Hsg. Society v. Smt. Manjula Govind Mahida, and reinforced by Bangalore Water Supply, the court determined that a housing cooperative society does not fall within the definition of “industry” under the Industrial Disputes Act, 1947, where its commercial activities are merely ancillary to its primary purpose of providing services to its members. |
| Judgement | The court overturned the labor court’s order for reinstatement with continuous service and full back wages, deeming the impugned award an error of jurisdiction. |
| Ratio Decidendi & Case Authority |
Full Case Details
1. Heard learned Counsel for the Petitioner and Respondent No.3 State. Respondent Nos. 1(a) to 1(g), who are legal heirs of Original Respondent No.1, who have been brought on record by way of an amendment, are absent.
2. The petition challenges an award passed by the Labour Court at Mumbai in a reference made to it under the Industrial Disputes Act. The controversy concerns the claim of reinstatement with full back wages and continuity of service of original Respondent No.1. By the impugned award, the reference was allowed and reinstatement with full back wages and continuity in service was ordered. That order was challenged in the present petition chiefly on the ground that the Petitioner, against whom the award was passed, is not an ‘industry’ Pg 1 of 4 wp787-07.doc within the meaning of Section 2(j) of the Industrial Disputes Act.
3. The Petitioner is a Co-operative Housing Society. It had engaged Respondent No.1 as a watchman. Upon his completion of 60 years of age, his services were terminated with effect from 1 November 2000. It is the Petitioner’s case that the termination was with mutual consent. That is a matter of dispute. Respondent No.1 was paid ex- gratia/retirement benefit, which was accepted by him. He, thereafter, raised a demand for reinstatement. It was his case that he was a permanent employee of the Petitioner and was terminated without any enquiry or offering proper retrenchment compensation. The reference was resisted by the Petitioner herein on the ground that the Petitioner was a housing society; that the services rendered by Respondent No.1 were personal services; and that the society not being an industry or Respondent No.1 its workman within the meaning of the term under the Industrial Disputes Act, the reference was not maintainable. By its impugned award, the Labour Court held that though the society was a co-operative housing society, it earned profits by way of additional income from its members and accordingly, fell within the definition of industry. The Court held that the profit motive was proved and that the society could not be termed merely as a housing society. It, accordingly, held the reference to be maintainable and then proceeded to decide the other issues concerning legality of the termination and the reliefs to be granted to Respondent No.1.
4. This Court, in its judgment in the case of M/s. Shantivan Co. Op. Hsg. Society vs. Smt. Manjula Govind Mahida [W.P. No. 360 of 2007 dated June 21, 2018]has considered whether a co-operative housing society can be termed as an industry within the meaning of Section 2(j) of the Industrial Disputes Act merely because it carries on some commercial activity, not as its predominant activity, but as an adjunct to its main activity. This Court has held that such society is not an industry. In a case like this, that is to say, where there is a complex of activities, some of which may qualify the undertaking as an industry and some would not, what one has to consider is the predominant nature of services or activities. If the predominant nature is to render services to its own members and the other activities are merely an adjunct, by the true test laid down in the case of Bangalore Water Supply and Sewerage Board vs. A. Rajappa [(1978) 2 SCC 213], the undertaking is not an industry.
5. The Labour Court appears to have been swayed by the fact that a few members of the society were carrying on business such as coaching classes and dispensary and the society was charging advertisement charges for the neon signs put up by the members. The Court was of the view that the society was thereby earning income and, in the premises, could not be termed as a mere housing society. The Court also observed that in the premises the services rendered by Respondent No.1 to the society and its members could not be termed as personal services. The Court observed that the judgment of Som Vihar Apartment Owners’ Housing Maintenance Society’s case accordingly had no application to the facts of the present case. There is a fundamental fallacy in this reasoning. As held by the Supreme Court in Bangalore Water Supply case when there are multiple activities carried on by an establishment, what is to be considered is the dominant function. In the present case, merely because the society charged some extra charges from a few of its members for display of neon signs, the society cannot be treated as an industry carrying on business of hiring out of neon signs or allowing display of advertisements. In the premises, the impugned award of the Labour Court suffers from a serious error of jurisdiction.
6. Rule is, accordingly, made absolute and the petition allowed. The reference before the Labour Court is held to be not maintainable and the order of reinstatement with continuity of service and full back wages passed by the Labour Court is quashed and set aside. No order as to costs.
