Madhya Pradesh High Court
Gwalior Vyapar Mela Pradhikaran Thr vs Jitendra Singh Gurjar on 4 March, 2025
Author: Milind Ramesh Phadke
Bench: Milind Ramesh Phadke
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IN THE HIGH COURT OF MADHYA PRADESH
AT G WA L I O R
BEFORE
HON'BLE SHRI JUSTICE MILIND RAMESH PHADKE
ON THE 4th OF MARCH, 2025
WRIT PETITION No. 439 of 2016
GWALIOR VYAPAR MELA
Versus
JITENDRA SINGH
Appearance:
Shri Arun Dudawat - Advocate for the petitioner.
Shei Anil Saraswat - Advocate appeared on behalf of Shri
Jagram Singh Chouhan - Advocate for respondent.
ORDER
This petition under Article 226/227 of the Constitution is filed
assailing the order dated 16.02.2012 passed by respondent No.3
whereby he referred the matter for adjudication to the Labour Court
while invoking the provisions under Section 10 of Industrial
Disputes, Act, 1947 on a dispute as mentioned in the schedule and
award dated 19.09.2015 passed by Labour Court No.1 Gwalior
answering the reference in favour of workman by holding
termination to be unlawful and directed for reinstatement without
back-wages.
2. Learned counsel for the petitioner/employer had primarily
raised two pivotal grounds:-
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(i) As the establishment of Gwalior Vyapar Mela Pradhikrana
is not an Industrial Establishment, therefore, no such dispute which
comes within the purview of ‘Industrial Disputes’ exists.
(ii) As in the establishment of Gwalior Vyapar Mela
Pradhikaran, no sanctioned vacant post of Grander-cum-Peon exists,
therefore, the impugned award thereby directing the reinstatement of
respondent No.1 is illegal and contrary to law.
3. Learned counsel for the petitioner while referring to the
judgment rendered by Hon’ble Apex Court in the case of State of
Madhya Pradesh & Ors. Vs. Somdutt Sharma reported in (2021)
12 SCC 53 submits that in the said judgment the Hon’ble Court has
held that since the Irrigation Department does not carry on the
manufacturing process, therefore, Irrigation Department will not be
an Industrial Establishment within the meaning of Section 25-L of
Industrial Disputes Act. In the light of the said judgment, the
Gwalior Vyapar Mela Prathikaran also will not be an Industrial
Establishment within the meaning of Section 25-L of Industrial
Disputes Act.
4. The petitioner has denied that it falls under the definition of
‘industry’ under the Industrial Disputes Act since it is not carrying
out any activity, which can be termed as manufacturing. The
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judgment of the Hon’ble Supreme Court in Banglore Water Supply
& Sewage Disposal Board Vs. Rajappa, reported as AIR 1978 SC
548″ is still the leading judgment on the point. The famous triple test
laid down in the said judgment still holds the field. The three tests
for determining whether an establishment is an industry or not, are :
a) systematic activity
b) organized by cooperation between employer & employees
c) for the production and/or distribution of goods & services
calculated to satisfy human wants or wishes.
5. A systematic activity which is organized or arranged in a
manner in which the trade or business is generally organized or
arranged, would be an industry, despite the fact that it proceeds from
charitable motives.
6. A service provided to the public which satisfies human
wants would also bring the establishment in the fold of ‘industry’. By
the said judgment, the Hon’ble Supreme Court overruled its earlier
judgment and held that Safdarjang Hospital Delhi was an industry.
7. The Apex Court in the matter of Des Raj & ors. Vs. State
of Punjab & Ors. (1988) 2 SCC 537, while referring to various law
developed at that time including its judgment passed by seven judges
bench in Banglore Water Supply (supra) had dealt with the
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proposed amendment in the definition of ‘Industry’ as defined
u/S.2(j), vide amending Act 46 to 1982, had dismissed and held as
under:-
“….Then came the case of Bangalore Water Supply and
Sewerage Board v. A. Rajappa & Ors [1978] 2 SCC 213.
This time the same point was before a seven-Judge Bench
of this Court. This judgment undertood a review of the
entire law. Krishna Iyer, J. spoke for himself, Bhagwati
and Desai, JJ. In paragraph 139 of the judgment it was
stated:
“Banerjee (supra) amplified by Corporation of
Nagpur (supra), in effect met with its waterloo
in Safdarjung (supra). But in this latter case two
voices could be herard and subsequent rulings
zigzagged and conflicted precisely because of this
built-in ambivalence. It behoves us, therefore,
hopefully to abolish blurred edges, illumine penumbral
areas and overrule what we regard as wrong.
Hesistency, half-tones and hunting with the hounds
and running with the hare can claim heavy penalty in
the shape of industrial confusion, adjudicatory
quandary and administrative perplexity at a time when
the nation is striving to promote employment through
diverse strategies which need, for their smooth
fulfilment, less stress and distress, more mutual
understanding and trust based on a dynamic rule of
law which speaks clearly, firmly and humanely. If the
salt of law lose its savour of progressive certainty
where with small it be stalled? So we proceed to
formulate the principles, deducible from our
discussion which are decisive, positively and
negatively, of the identity of industry under the Act. We
speak, not exhaustively, but to the extent covered by
the debate at the bar and, to that extent,
authoritatively, until overruled by a larger bench or
superseded by the legislative branch.”
“Industry as defined in section 2(j) and explained
in Banerjee (supra) has a wide import.
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(a) Where (i) systematic activity, (ii) organised by
cooperation between employer and employee (the
direct and substantial element is chimerical) (iii) for
the production and/or distribution of goods and
services calculated to satisfy human wants and wishes
(not spiritual or religious but inclusive of material
things or services geared to celestial bliss e.g. making,
on a large scale prasad or food), prima facie, there is
an industry in that enterprise.
(b) Absence of profit motive or gainful objective is
irrelevant, be the venture in the public, joint, private or
other sector
(c) The true focus is functional and the decisive test is
the nature of the activity with special emphasis on the
employer-employee relations.
(d) If the organisation is a trade or business it does not
cease to be one because of philanthropy animating the
undertaking.
Although section 2(j) uses words of the widest amplitude
in its two limbs, their meaning cannot be magnified to
over-reach itself.
Undertaking must suffer a contextual and associational
shrinkage as explained in Banerjee and in this judgment;
so also, service, calling and the like. This yields the
inference that all organized activities possessing the triple
elements in I, although not trade or business, may still be
industry provided the nature of the activity, viz. the
employer-employee basis, bears resemblance to what we
find in trade or business. This takes into the fold of
industry undertakings, callings and services, adventures
‘analogous to the carrying on of the trade or business’. All
features, other than the methodology of carrying on the
activity viz. in organizing the cooperation between
employer and employee, may be dissimilar. It does not
matter, if on the employment terms there is analogy.
Application of these guidelines should not stop short of
their logical reach by invocation of creeds, cults or inner
sense of incongruity or outer sense of motivation for or
resultant of the economic operations. The ideology of the
Act being industrial peace, regulation and resolution of
industrial disputes between employer and workmen, the
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range of this statutory ideology must inform the reach of
the statutory definition. Nothing less, nothing more.
(a) The consequences are (i) professions,
(ii) clubs, (iii) educational institutions, (h) cooperatives,
(v) research institutes, (vi) charitable projects and (vii)
other kindred adventures, if they fulfil the triple tests listed
in I cannot be exempted from the scope of section 2(j).
(b) A restricted category of professions, clubs,
cooperatives and even gurukulas and little research labs,
may qualify for exemption if, in simple ventures,
substantial and, going by the dominant nature criterion,
substantively, no employees are entertained but in minimal
matters, marginal employees are hired without destroying
the non-employee character of the unit.
(c) If, in a pious or altruistic mission many employ
themselves, free or for small honoraria or like return,
mainly drawn by sharing in the purpose or case, such as
lawyers volunteering to run a free legal services clinic or
doctors serving in their spare hours in a free medical
centre or ashramites working at the bidding of the
holiness, divinity or like central personality, and the
services are supplied free or at nominal cost and those
who serve are not engaged for remuneration or on the
basis of master and servant relationship, then, the
institution is not an industry even if stray servants, manual
or technical, are hired. Such eleemosynary or like
undertakings alone are exempt-not other generosity,
compassion, developmental passion or project.
The dominant nature test:
(a) Where a complex of activities, some of which
qualify for exemption others not, involves employees
on the total undertaking, some of whom are not
workmen as in the University of Delhi v.Ram Nath,
[1964] 2 SCR 703 or A some departments are not
productive of goods and services if isolated, even then,
the predominant nature of the services and the
integrated nature of the departments as explained in
the Corporation of Nagpur, will be the true test. The
whole undertaking will be industry although those who
are not workmen by definition may not benefit by the
status.
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(b) Notwithstanding the previous clauses, sovereign
functions, strictly understood, (alone) qualify for
exemption, not the welfare activities or economic
adventures undertaken by government or statutory bodies.
(c) Even in departments discharging sovereign functions,
if there are units which are industries and they are
substantially severable, then they can be considered to
come within section 2(j).
(d) Constitutional and competently enacted legislative
provisions may well remove from the scope of the Act
categories which otherwise may be covered thereby.”
Beg, CJ., wrote a separate judgment and prefaced it by
saying:
“I am in general agreement with the line of thinking
adopted and the conclusions reached by my learned
brother Krishna Iyer.”
In paragraph 149 of the judgment, the learned Chief
Justice observed:
“In his heroic efforts, my learned brother Krishna Iyer,
if I may say so with great respect, has not discarded
the tests of industry formulated in the past. Indeed, he
has actually restored the tests laid down by this Court
in D.N. Banerjee’s case, and, after that,
in Corporation of the City of Nagpur v. Its Employees,
and State of Bombay v. The Hospital Mazdoor
Sabha to their pristine glory.”
The learned Chief Justice again stated:
“Each of us is likely to have a subjective notion about
industry. For objectivity, we have to look first to the
words used in the statutory provision defining industry
in an attempt to find the meaning. If that meaning is
clear, we need proceed no further. But, the trouble here
is that the words found there do not yield a meaning so
readily. They refer to what employers or workers may
do as parts of their ordinary avocation or business in
life .. ”
“Thus, in order to draw the circle of industry, to use
the expression of my learned brother Iyer, we do not
find even the term workman illuminating. The
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8persons employed in the service of the State are
excluded from the purview of industrial dispute which
the Act seeks to provide for in the interests of industrial
peace and harmony between the employers and
employees so that the welfare of the nation is secured.
The result is that we have then to turn to the preamble
to find the object of the Act itself, to the legislative
history of the Act, and to the socio-economic ethos and
aspirations and needs of the times in which the Act
was passed.”
After quoting the definition of industry, the learned Chief
Justice proceeded to say in paragraph 158 of the
judgment:
“It seems to me that the definition was not meant to
provide more than a guide. It raises doubts as to what
could be meant by the calling of employers even if
business, trade, undertaking or manufacture could be
found capable of being more clearly delineated. It is
clear that there is no mention here of any profit motive.
Obviously, the work manufacture of employers could
not be interpreted literally. It merely means a process
of manufacture in which the employers may be
engaged. It is, however, evident that the term employer
necessarily postulates employees without whom there
can be no employers …… ”
In paragraph 165 of the judgment, the learned Chief
Justice added: G “I have contended myself with a very
brief and hurried outline of my line of thinking partly
because I am in agreement with the conclusions of my
learned brother Krishna Iyer and I also endorse his
reasoning almost wholly, but even more because the
opinion I have dictated just now must be given today if I
have to deliver it at all. From tomorrow I cease to have
any authority as a Judge to deliver it. Therefore, I have
really no time to discuss the large number of cases cited
before us, including those what are known as sovereign
functions.”
Chandrachud, J., as he then was, on behalf of himself
Jaswant Singh and Tulzapurkar, JJ. added a note by
saying:
“We are in respectful agreement with the view
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9dismissed. We will give our reasons later indicating the
area of concurrence and divergence, (underlining is
ours) if any, on the various points in controversy on
which our learned Brother has dwelt.”
On 7th of April, the reasonings were delivered by Chief
Justice Chandrachud for himself as by then Jaswant
Singh, J. delivered a separate set of reasonings for himself
and Tulzapurkar, J. The learned Chief Justice (because by
then he had assumed that office) referred to several
authorities and tests and in paragraph 181 of the
judgment stated:
“…….. These refinements are, with respect, are not
warranted by the words of the definition, apart from
the consideration that in practice they make the
application of the definition to concrete cases
dependent upon a factual assessment so highly
subjective as to lead to confusion and uncertainty in
the understanding of the true legal position. Granting
that the language of the definition is so wide that some
limitation ought to be read into it, one must step at a
point beyond which the definition will skid into a
domain too rarefied to be realistic. Whether the
cooperation between the employer and the employee is
the proximate cause of the ultimate product and bears
direct nexus with it is a test which is almost impossible
of application with any degree of assurance or
certitude. It will be as much true to say that the
solicitor’s assistant, managing clerk, librarian and the
typist do not directly contribute to the intellectual end
product which is a creation of his personal
professional skill as that, without their active
assistance and cooperation it will be impossible for
him to function effectively. The unhappy state of affairs
in which the law is marooned will continue to baffle
the skilled professional and his A employees alike as
also the Judge who has to perform the unenviable task
of sitting in judgment over the directness of the
cooperation between the employer and the employee,
until such time as the legislature decides to manifest its
intention by the use of clear and indubious language.
Besides the fact that this Court has so held in National
Union of Commercial Employees v. M.R. Meher,
lndustrial Tribunal, Bombay, [1962] Supp. 3 SCR 157
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10the learned and liberal professions of lawyers,
solicitors, doctors, engineers, chartered accountants
and the like from the operation of industrial laws. But
until that happens, I consider that in the present state
of the law it is difficult by judicial interpretation to
create exemptions in favour of any particular class.”
The remaining two learned Judges added their separate
opinion and in the concluding part stated:
“In view of the difficulty experienced by all of us in
defining the true denotation of the term industry and
divergence of opinion in regard thereto-as has been
the case with this Bench also- we think, it is high time
that the Legislature steps in with a comprehensive bill
to clear up the fog and remove the doubts and set at
rest once for all the controversy which crops up from
time to time in relation to the meaning of the aforesaid
term rendering it necessary for larger Benches of this
Court to be constituted which are driven to the
necessity of evolving a working formula to cover
particular cases.”
The ultimate position available from the seven-Judge
Bench decision, therefore, is that while three learned
Judges delivered their view through Krishna Iyer, J., Beg
CJ spoke somewhat differently, yet agreed with the
conclusion reached by Krishna Iyer J. Chandrachud, CJ.
also agreed with the majority while the remaining two
learned Judges looked for legislative clarification to meet
the situation.
8. Perhaps keeping in view the observations of the
learned Judges constituting the seven-Judge Bench, the
definition of industry as occurring in section 2(j) of the Act
was amended by Act 46 of 1982. Though almost six years
have elapsed since the amendment came on to the Statute
Book, it has not been enforced yet. Bare Acts and
Commentaries on the Industrial Disputes Act have,
however, brought in the new definition by deleting the old
one with a note that the new provision has yet to come into
force. This situation has further added to the confusion.
13. The Administrative Report of the facts found by the
High Court in the instant case have attempted to draw out
certain special features. The legal position has been
indicated in the earlier part of our judgment. On the tests,
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as already laid down in the judgments, we do not think
these facts found in this case can take out the Irrigation
Department outside the purview of the definition of
‘industry’. We have already referred to the Dominant
Nature test evolved by Krishna Iyer, J. The main functions
of the Irrigation Department where subjected to the
Dominant Nature test clearly come within the ambit of
industry. We have not been able to gather as to why even
six years after the amendment has been brought to the
definition of industry in section 2(j) of the Act the same
has not been brought into force. This Court on more than
one occasion has indicated that the position should be
clarified by an appropriate amendment and when keeping
in view the opinion of this Court, the law was sought to be
amended, it is appropriate that the same should be
brought into force as such or with such further alterations
as may be considered necessary, and the legislative view
of the matter is made known and the confusion in the field
is cleared up.
14. For the reasons we have indicated above, these
appeals succeed. We make it clear that in the event of the
definition of industry being changed either by enforcement
of the new definition of industry or by any other legislative
change, it would always be open to the aggrieved
Irrigation Department to raise the issue again and the
present decision would not stand in the way of such an
attempt in view of the altered situation. The appeals are
allowed without costs”
8. In the case on hand, the petitioner has led no evidence to
show that the establishment i.e. the petitioner where the respondent
was working did not fall under the definition of Section 2(j) of
Industrial Disputes Act, in order to claim exemption from the all-
encompassing definition of industry as defined under the said
section. Thus, the first ground raised by the petitioner is not tenable
and therefore, the same is rejected.
9. With regard to the second ground, it is submitted by the
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12counsel for the petitioner that as the appointment of the respondent
was as daily wager on stop gap arrangement and the petitioner was
appointed for the preparation of trade fair which is organized every
year and in compliance of provisions of Section 17B of Industrial
Disputes Act, the petitioner is paying wages to the respondent and
also since there is no sanctioned vacant post, the order of
reinstatement passed by the Labour Court, No.1 Gwalior is bad in
law.
10. The aforesaid argument raised on behalf o the petitioner
has no force, as it is established by cogent reasoning by learned
Labour Court that the respondent had worked for more than 240
days in a calendar year, which could not be rebutted by the
petitioner, thus, employer-employee relationship is existed between
the two, thus, the order of Labour court cannot be said to be bad.
11. Another issue raised by counsel for the petitioner that
whether the respondent who had worked from October, 2007 till
April, 2010, is entitled for reinstatement or could be given monetary
compensation in lieu thereof.
12. So far as the above question of reinstatement with back
wages with compensation of 10% amount is concerned, the Supreme
Court in the matter of Bharat Sanchar Nigam Limited Vs.
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13Bhurumal reported in (2014) 7 SCC 177 has held as under:-
“33. It is clear from the reading of the aforesaid judgments
that the ordinary principle of grant of reinstatement with full back
wages, when the termination is found to be illegal is not applied
mechanically in all cases. While that may be a position where
services of a regular/permanent workman are terminated illegally
and/or mala fide and/or by way of victimisation, unfair labour
practice, etc. However, when it comes to the case of termination of
a daily-wage worker and where the termination is found illegal
because of a procedural defect, namely, in violation of Section 25-
F of the Industrial Disputes Act, this Court is consistent in taking
the view that in such cases reinstatement with back wages is not
automatic and instead the workman should be given monetary
compensation which will meet the ends of justice. Rationale for
shifting in this direction is obvious.”
13. The Supreme Court in the case of Hari Nandan Prasad Vs. Food
Corporation of India, reported in (2014) 7 SCC 190 has held as under:-
”19. The following passages from the said
judgment would reflect the earlier decisions of this Court on the
question of reinstatement: (BSNL case, SCC pp. 187-88, paras
29-30) “29. The learned counsel for the appellant referred to
two judgments wherein this Court granted compensation
instead of reinstatement. In BSNL v. Man Singh, this Court has
held that when the termination is set aside because of violation
of Section 25-F of the Industrial Disputes Act, it is not
necessary that relief of reinstatement be also given as a matter
of right. In Incharge Officer v. Shankar Shetty, it was held that
those cases where the workman had worked on daily-wage
basis, and worked merely for a period of 240 days or 2 to 3
years and where the termination had taken place many years
ago, the recent trend was to grant compensation in lieu of
reinstatement.
30. In this judgment of Shankar Shetty, this trend was
reiterated by referring to various judgments, as is clear from
the following discussion: (SCC pp. 127-28, paras 2-4) ‘2.
Should an order of reinstatement automatically follow in a case
where the engagement of a dailywager has been brought to an
end in violation of Section 25-F of the Industrial Disputes Act,
1947 (for short “the ID Act“)? The course of thedecisions of this
Court in recent years has been uniform on the above question.
3. In Jagbir Singh v. Haryana State Agriculture Mktg.
Board, delivering the judgment of this Court, one of us (R.M.
Lodha, J.) noticed some of the recent decisions of this Court,
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namely, U.P. State Brassware Corpn. Ltd. v. Uday Narain
Pandey, Uttaranchal Forest Development Corpn. v. M.C.
Joshi, State of M.P. v. Lalit Kumar Verma, M.P.
Admn. v. Tribhuban, Sita Ram v. Moti Lal Nehru Farmers
Training Institute, Jaipur Development Authority v. Ramsahai,
GDA v. Ashok Kumar and Mahboob Deepak v. Nagar
Panchayat, Gajraula and stated as follows: (Jagbir Singh case,
SCC pp. 330 & 335, paras 7 & 14)
“7. It is true that the earlier view of this Court
articulated in many decisions reflected the legal position that if
the termination of an employee was found to be illegal, the
relief of reinstatement with full back wages would ordinarily
follow. However, in recent past, there has been a shift in the
legal position and in a long line of cases, this Court has
consistently taken the view that relief by way of reinstatement
with back wages is not automatic and may be wholly
inappropriate in a given fact situation even though the
termination of an employee is in contravention of the prescribed
procedure. Compensation instead of reinstatement has been
held to meet the ends of justice.
***
14. It would be, thus, seen that by a catena of decisions
in recent time, this Court has clearly laid down that an order of
retrenchment passed in violation of Section 25-F although may
be set aside but an award of reinstatement should not, however,
be automatically passed. The award of reinstatement with full
back wages in a case where the workman has completed 240
days of work in a year preceding the date of termination,
particularly, daily-wagers has not been found to be proper by
this Court and instead compensation has been awarded. This
Court has distinguished between a daily-wager who does not
hold a post and a permanent employee.”
4. Jagbir Singh has been applied very recently in
Telegraph Deptt. v. Santosh Kumar Seal, wherein this Court
stated: (SCC p. 777, para 11)
11. In view of the aforesaid legal position and the fact
that the workmen were engaged as dailywagers about 25 years
back and they worked hardly for 2 or 3 years, relief of
reinstatement and back wages to them cannot be said to be
justified and instead monetary compensation would subserve
the ends of justice.'”
****
21. We make it clear that reference to Umadevi, in the
aforesaid discussion is in a situation where the dispute referred
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15out above, had it been a case where the issue is limited only to
the validity of termination, Appellant 1 would not be entitled to
reinstatement………..”
14. The Supreme Court in the matter of O.P. Bhandari Vs. Indian Tourism
Development Corporation Limited & Others reported in (1986) 4 SCC 337 has
held as under :-
“6. Time is now ripe to turn to the next question as to
whether it is obligatory to direct reinstatement when the concerned
regulation is found to be void. In the sphere of employer employee
relations in public sector undertakings, to which Article 12 of the
Constitution of India is attracted, it cannot be posited that
reinstatement must invariably follow as a consequence of holding
that an order of termination of service of an employee is void. No
doubt in regard to “blue collar” workmen and “white collar”
employees other than those belonging to the managerial or similar
high level cadre, reinstatement would be a rule, and compensation
in lieu thereof a rare exception. Insofar as the high level managerial
cadre is concerned, the matter deserves to be viewed from an
altogether different perspective — a larger perspective which must
take into account the demands of National Interest and the resultant
compulsion to ensure the success of the public sector in its
competitive co-existence with the private sector. The public sector
can never fulfil its life aim or successfully vie with the private sector
if it is not managed by capable and efficient personnel with
unimpeachable integrity and the requisite vision, who enjoy the
fullest confidence of the “policy-makers” of such undertakings. Then
and then only can the public sector undertaking achieve the goals of
(1) maximum production for the benefit of the community, (2) social
justice for workers, consumers and the people, and (3) reasonable
return on the public funds invested in the undertaking.
7. It is in public interest that such undertakings or their
Boards of Directors are not compelled and obliged to entrust their
managements to personnel in whom, on reasonable grounds, they
have no trust or faith and with whom they are in a bona fide manner
unable to function harmoniously as a team working arm-in-arm with
success in the aforesaid three- dimensional sense as their common
goal. These factors have to be taken into account by the court at the
time of passing the consequential order, for the court has full
discretion in the matter of granting relief, and the court can
sculpture the relief to suit the needs of the matter at hand. The court,
if satisfied that ends of justice so demand, can certainly direct that
the employer shall have the option not to reinstate provided the
employer pays reasonable compensation as indicated by the court.”
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15. In view of above, the impugned order dated 19.09.2015 passed by
Labour Court No.1, Gwalior in COC-8/A/ID Act/2012/reference is modified
and in place of reinstatement, it is directed that the respondent shall be
entitled for monetary compensation of Rs.2,00,000/-(Rupees Two Lakhs
only).
16. With the aforesaid, this petition stands disposed of.
(MILIND RAMESH PHADKE)
ojha JUDGE
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 06-03-2025
10:39:53 AM