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PETITIONER: AGRICULTURAL PRODUCE MARKET COMMITTEE

       Vs.

RESPONDENT: SHRI ASHOK HARIKUNI & ANR.  ETC.

DATE OF JUDGMENT:       22/09/2000

BENCH: A.P. Misra  &  Y K Sabharwal

JUDGMENT:

Misra, J.

Leave granted.

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   The  question raised in this appeal is drawing attention of  this Court since very inception when Industrial Disputes Act,  1947  was enacted and even after the passage  of  more than  50  years,  issue remains in the fertile field  of  it yielding fresh crops time and again because of wide vaporous definition  of  the word "industry" under the said Act.   We shall  be  referring about some of these cases in the  later part  of  our judgment.  This wide definition has  given  an opportunity  to  both  employer  and  employee  for  raising issues, one trying to pull out of this definition, to be out of  the clutches of the said Act, other bringing within  it, to  receive  benefit  under  it.  Because of  width  of  the periphery  of  the  word  "industry" there  is  tug  of  war repeatedly between the two, in spite of various decisions of this Court.  This situation has led this Court, in Bangalore Water-Supply & Sewerage Board, Etc.  vs.  R.Rajappa & Others (1978)  3  SCR  207 to record with  anxiety  and  suggesting Legislature  for bringing a comprehensive Bill to clear  the fog.  It records :

   "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."

   This  led the Legislature to amend the definition of the word  "industry"  in  Section  2(j) of  the  aforesaid  Act, through  amending Act in 1982 but left the said amendment to be  given  effect  from  the  date to  be  notified  by  the Government.   Since thereafter with the passage of 18  years in  spite of observations of this Court in some cases during this inter magnum, the said amendment has not seen the light of  the day leaving the situation in doldrum for the  Courts

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to continue to give its shape.  Inter-linked with it is also the  word  "sovereign"  which is equally fluid as  the  word "industry".   The  word "sovereign" changes  its  complexion with  the  type of sovereignty a country is structured  also with  the change of political structure in view of  changing socio-cultural heritage of any country.  So defining what is sovereign,  the  Courts not only of this country  but  other countries  as well have been battling to comprehend it since 19th  century.  This has gained importance in the industrial law  as what constitute to be a sovereign function  excludes within  its ambit "industry" hence industrial law would have no application over it.

   The  question raised in this Appeal is :  a) Whether the appellant,   an   Agricultural   Produce  Market   Committee (hereinafter  referred  to  as   "the  Market   Committee"), established   under  the   Karnataka  Agricultural   Produce Marketing (Regulation) Act, 1966 (hereinafter referred to as "the  State Act") is an "industry" as contemplated under the Industrial  Disputes  Act, 1947 (hereinafter referred to  as "the  Central  Act") ?  If yes, Will not employee under  the State Act would be governed by the Central Act?

   b)  Will not the State Act over-ride the Central Act for the  reason,  the  State  Act received  the  assent  of  the President  of  India,  hence  the   Central  Act  would   be inapplicable to the employees governed by the State Act?

   To  properly appreciate the controversy, it is necessary to  give short essential matrix of facts.  The appellant  is an  Agricultural Produce Market Committee established  under the  State Act.  It regulates the marketing of  agricultural produce  for the benefit of the agriculturist.  This  market committee  is not intended to make any profit and the  whole object is only to regulate the agricultural produce both for protecting  the  interest of agriculturist and  interest  of public  at large.  The submission for the appellant is, this committee  is  not an "industry" as contemplated  under  the Central Act.  It exercises sovereign function under the Act. It  is a body corporate which has perpetual succession and a common  seal.  The committee has no power either to  appoint or regularise the services of its employees which vests with the  State Government.  Its employees are civil servants and provisions  of the Karnataka Civil Service (Conduct  Rules), 1966  and  the  Karnataka  Civil  Services  (Classification, Control  and  Appeal)  Rules,  1957  are  applicable.   This committee  is established under Section 9 of the Act and  is subject  to  the  restrictions  imposed   under  it  and  is competent  to  contract,  to acquire, hold, lease,  sell  or otherwise  transfer  any  property and do all  other  things necessary  for  the  purpose for which  it  is  established. Section  58 confers power to appoint Secretary and technical staff  to  the market committee.  It stipulates, every  such committee  shall have a Government servant as the  Secretary and  also an Additional Secretary or Assistant Secretary who will also be a Government servant.  Under sub-section (1) of Section  59  the officers and servants of  market  committee holding  the classes of posts specified in sub-sections (1), (2)  and (3) of Section 58, on the date immediately prior to the  date  of commencement of that Act, shall,  with  effect from  the  date  of such commencement  become  officers  and servants  of  the  State   Government.   Sub-section   (1-A) provides,  notwithstanding anything contained in this Act or in  any other law for the time being in force, officers  and servants  of  the market committee holding such  classes  of

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posts  on  such  dates  as may be  specified  by  the  State Government  become  officers  and   servants  of  the  State Government   with   effect  from   the  date  so   notified. Sub-section  (2) confers right on the officers and  servants of the market committee after becoming servants of the State Government  under  sub- section (1) or sub-section (1-A)  to have  the same tenure, the same remuneration, same terms and conditions  of service, with the same rights and  privileges as  to pension, gratuity, provident fund etc.  as they would have  received the same under the market committee concerned and  shall continue to receive so until their  remuneration, terms and conditions of service including the privileges are altered  by rules or other provisions made under Article 309 of  the  Constitution.   Sub-section  (3)  starts  with  non obstante  clause, notwithstanding anything contained in  the Industrial  Disputes  Act, 1947 or in any other law for  the time  being in force or in any contract, in case of transfer of any officer or servant of a market committee by virtue of sub-section (1) and (1-A) shall not entitle any such officer or  such  servant to any compensation or payment under  that Act  or  other  law or contract.  Learned  counsel  for  the appellant  strongly relies on this sub-section to  interpret that  the  Central  Act  is excluded  from  the  purview  of employees under the State Act.

   Section 59 of the State Act is reproduced below:

   "Absorption  of staff of market committees in Government service - (1) Officers and servants of market committees (by whatever came called) holding the classes of posts specified in  sub- sections (1), (2) and (3) of Section 58 on the date immediately  prior to the date of commencement of that  Act, shall, with effect from the date of such commencement become officers and servants of the State Government.

   Explanation  - The State Government shall determine  the designations  of  the  officers and servants of  the  market committees  who  shall become officers and servants  of  the State Government under this sub-section.

   [(1-A) Notwithstanding anything contained in this Act or in  any other law for the time being in force, officers  and servants  of market committees holding such classes of posts on  such  dates as may be specified by the State  Government shall,  with  effect  from  such date  become  officers  and servants  of the State Government and they shall draw  their salary  and  allowances  from the Consolidated Fund  of  the State.

   (2)  The officers and servants of market committees  who become  officers and servants of the State Government  under sub-section  (1)  [or  sub-section (1-A)] shall  hold  their office by the same tenure, at the same remuneration and upon the  same terms and conditions of service and with the  same rights  and  privileges as to pension,  gratuity,  provident fund and such matters as they would have held the same under the  market committee concerned and shall continue to do  so until  their  remuneration, terms and conditions of  service including  the privileges as to pension, provident fund  and gratuity  are  altered  by rules or  other  provisions  made [under  the  Karnataka State Civil Services Act, 1978],  and any  such  alteration  shall  have  effect,  notwithstanding anything contained in any contract or law for the time being in force.

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   (3) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (Central Act 14 of 1947), or in any other law  for  the  time being in force or in  any  contract  the transfer  of  the  services of any officer or servant  of  a market   committee   by  virtue  of  sub-section   (1)   [or sub-section  (1-A)]  shall not entitle any such  officer  or servant  to  any compensation or payment under that  Act  or other   law  or  contract,  and  no  such  claim  shall   be entertained by any Court, tribunal or other authority."

   Section  61  refers to the appointment of  other  staff, other  than  those who falls under Section 58.   Section  62 refers  to the Karnataka State Marketing Service.  The State Government  is empowered to constitute any class of officers or  servants  to  bring  it into  marketing  service  to  be designated  as the Karnataka State Marketing Service through issue  of  notification.   Under   its  proviso,  the  State Government  could carve out and constitute the officers  and servants  falling under sub-section (1-A) of Section 59 into a  separate  service  for  the State  to  be  designated  as Karnataka   State   Market    Committee   Services.    Under sub-section  (2) the State Government could amalgamate  both the  Karnataka  State  Marketing Service and  the  Karnataka State Market Committee Services into one single service.

   The   submission  for  the   appellant  is  that  market committee  is  not conferred with the power of  appointment, though  under Section 61(3) it could create temporary  posts and  appoint temporary employees for not more than 180  days with  the  prior  approval of the Director  of  Agricultural Marketing.     Learned   counsel     for   the    appellant, Mr.Chandrasekhar  has taken us to the various provisions  of the  Act, namely, Sections 9 (3), 58,59,63,65,66,67,69,72,73 and  83 of the State Act to show that the scheme of the  Act is  to  provide  for the better regulation of  marketing  of agricultural produce and establishment and control of market for  agricultural produce within the State.  He  emphasised, these  provisions indicates that the function of the  market committee  is  sovereign  in  nature   hence  it  could  not constitute  to  be  an  industry to make  its  employees  as workmen  under the Central Act.  Section 9(3) confers status on  every market committee to be a local authority.  Section 61  deals  with  appointments from among  the  officers  and servants  of the Karnataka State Market Committee Service or Karnataka State Market Service other officers, servants of a market  committee.   Section  63 deals with the  powers  and duties  of the market committee.  Section 65 authorises  the market  committee to levy market fees.  Section 66  empowers any  officers or servant of the State Government to  require any  person carrying on business of agricultural produce  to produce  before  him the accounts, other documents,  furnish any  information relating to the stock of such  agricultural produce, or purchases, sales, deliveries of such produce and is  also  empowered  to  seize  the  accounts,  register  or documents.   Section 67 authorises such authorities to  stop any vehicle, vessel or other conveyance which is shown to be taking  out of the market committee or moving in the  market area  for  examining the contents in the vehicle, vessel  or other  conveyance.  Section 69 confers power to acquire  the land  and  hold it.  Section 71 confers right on the  market committee  to  issue licence for the regulation  of  trading under  Section  72  and  Section 73 confers  right  of  such authority  to  cancel or suspend such licence.   Section  83 deals  with  the  production  of  account  books  etc.   The

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question  raised  is that these functions are  sovereign  in nature.

   Seven  persons serving under the market committee raised dispute,  following termination of their services before the Labour Court.  First is Shri A.G.Harakuni, who was appointed as  an  Assistant Engineer on 3rd March, 1987 on daily  wage for  looking  after the construction work and he  worked  as such  till 16th May, 1989 when his services were terminated. Next  is  Shri G.Nagaraj, who was appointed on  27th  April, 1978  as  a market fee collector on temporary basis and  his services were terminated on 31st March, 1982.  Third is Shri Shivakumar,  who was appointed as maistry on 25th  November, 1981  on  daily  wages though he was paid salary once  in  a month  and  his  services were terminated on  31st  October, 1986.   Next is Shri Nirvanappa.  He was appointed as a peon on  18th March, 1964 whose appointment was approved on  26th March,  1969.   His  service was terminated on  3rd  August, 1971.   Next  is  Umesh  Hegde.  He was  appointed  as  work inspector  on daily wages vide appointment order dated  28th December,  1984 and his service was terminated on 3rd April, 1987.    Next  is  Siddappa   Rudrappa  Chickamani  who  was appointed as watchman on 8th April, 1982 and his service was terminated   on  13th  September,   1989  and  finally  Shri M.M.Satyannavar.   He was appointed as an Assistant Engineer on  25th  May,  1984 on daily wage basis for  looking  after development work and his service was terminated on 15th May, 1989.   Each of these seven persons are respondents in  this case.   The  Labour  Court  allowed  their  applications  by setting  aside their order of termination and directed their reinstatement.   The appellant aggrieved filed writ petition challenging  these  orders,  among  other  grounds,  one  is challenge  to  the jurisdiction of the Labour Courts to  try the cases of these seven respondents as the appellant is not an  "industry" within the meaning of the Central Act,  hence the  Labour Courts have no jurisdiction to try their claims. Learned  single  Judge of the High Court dismissed the  writ petition,  holding that the appellant-market committee is an "industry" and hence Labour Courts, have the jurisdiction to decide  their  cases.   Feeling   aggrieved  the  appellants preferred  writ  appeal  and the  Division  Bench  similarly dismissed  the same upholding that appellant-committee is an "industry" within the meaning of the Central Act.

   Learned  counsel  for  the  appellant  challenges  these concurrent  findings  by  submitting that functions  of  the appellant   committee   being  sovereign   in   nature   and inalienable  in character cannot be construed an "industry". The  power of appointment of the various employees under the Act  is  only with the State Government, only limited  power vests   on  the  appellate-committee,   to  appoint   person temporarily  for  a  period not exceeding 180  days.   Under Section 61(3) such person cannot get any lien over any post. He  has  no right to seek regularisation.  Once a person  is appointed  under  the  State Act his services would  not  be governed  by the Central Act.  The claimants being appointed under  the State Act which received assent of the  President of  India  on  19th August, 1966 it will  prevail  over  the Central  Act.  The functions of market committee are for the regulation  of  trade in notified agricultural  produces  in order  to  safeguard the interest of the  agriculturist  and public at large.  This was to ensure legitimate price of the agricultural  produce  to be sold in the market area.   This committee  is not constituted for making any profit but only to  serve  the cause of the agriculturist so that  they  may

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receive  fair  price of their produce.  The  submission  is, persons  appointed  to work under this market committee  are government  servants,  and they are appointed in  accordance with  the  cadre  and  their  wages  are  paid  out  of  the consolidated fund.  The temporary employees appointed by the market  committee are paid salaries out of the fund known as market fund.  Hence there is no relationship of employer and employee  of those serving under it.  It may be stated here, in the present case the subject matter relates only of those employees  who  were temporarily appointed and have yet  not become  government servant.  Another submission is that  the High Court erred in not bringing the market committee within the  exception clause referred in the decision of  Bangalore Water-Supply  case  (supra).   On the  other  hand,  learned counsel  Shri  Ravindra  Bhat  appearing on  behalf  of  the respondents,  submits that in view of the decisions of  this Court,  especially with reference to Bangalore  Water-Supply case  (supra), the market committee is an "industry"  within the  meaning  of the Central Act.  The submission  is,  only strictly   "sovereign  functions"  as   held  in   Bangalore Water-Supply  case  (supra)  which  is  explained  in  Chief Conservator  of  Forests  &   Anr.   Vs.   Jagannath  Maruti Kondhare  &  Ors., 1996 (2) SCC 293, could be exempted  from the  provisions  of  the Central Act.   Hence,  neither  all governmental  functions  could be construed to be  sovereign nor  all  statutory  services  could  either  be  termed  as sovereign  or to exclude it from the purview of the  Central Act.

   The  main  thrust of submission for either side is,  one trying  to  bring the functions of  the  appellant-committee within  sovereign functions and the other stretching it  out of it.  The submission for the appellant is the power of the government and functions of the committee, namely, notifying the intention of the government to regulate the marketing of specified  agricultural produce within specified area  under Section  3,  declaration  of market area  under  Section  4, establishment   of  market  under   Section  7,  payment  of Secretary  and technical staff under Section 58,  absorption of  staff of market c*ommittee in government services  under Section  59,  appointment of other staff under  Section  61, levy of market fees under Section 65, grant of license under Section  72,  de-notification of market area  under  Section 143, and amalgamation of market committees under Section 144 are  all  sovereign  in  nature and hence it  could  not  be construed  to  be an industry.  On the other  hand,  learned counsel  for the respondent submits sovereign functions  are restricted  to  legislative, maintenance of law  and  order, administration  of  law  and  legal  system.   Hence,  other functions,  to  which  the appellant case falls,  cannot  be construed to be a sovereign function.

   We  now proceed to consider as to what would be the test to find an enterprise to be an "industry".  As we have said, the matter has been under consideration by various courts in various  parts of this country, including this Court.   Some of  which  we  are proceeding to refer  hereunder.   In  The Corporation  of the city of Nagpur vs.  Its Employees,  1960 (2)  SCR  942, the question raised was, whether and to  what extent the municipal activities of the Corporation of Nagpur City fell within the term "industry" as defined by Section 2 (14)  of  the C.P.  & Berar Industrial  Disputes  Settlement Act,  1947.   Applying  the decision of this Court  in  D.N. Banerji  vs.   P.R.   Mukherjee & Ors., 1953 SCR  302,  this Court  held:   "It is not necessary that an activity of  the

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Corporation  must  share  the common characteristics  of  an industry  before it can come within the section.  The  words of  s.   2(14) of the Act are clear and unambiguous and  the maxim noscitur a socii can have no application.  The history of  industrial  disputes  and   the  legislation,   however, recognises  the  basic concept that the activity must be  an organised  one  and  not  one that pertains  to  private  or personal employment."

   With  reference  to  State of Bombay &  Ors.   vs.   The Hospital  Mazdoor Sabha & Ors.  1960 (2) SCR 866, this Court held:

   "But  the definition, however, wide, cannot include  the regal primary and inalienable functions of the State, though statutory  delegated to a Corporation and the ambit of  such functions cannot be extended so as to include the activities of a modern State and must be confined to legislative power, administration of law and judicial power."

   This case further records:

   "Before   considering  the  positive   aspects  of   the definition,  what  is  not an industry  may  be  considered. However, wide the definition of "industry" may be, it cannot include  the regal or sovereign functions of State.  This is the  agreed  basis of the arguments at the Bar,  though  the learned  counsel  differed on the ambit of  such  functions. While  the learned counsel for the Corporation would like to enlarge the scope of these functions so as to comprehend all the  welfare  activities  of  a modern  State,  the  learned counsel  for  the respondents would seek to confine them  to what are aptly termed "the primary and inalienable functions of  a constitutional government ....Lord Watson, in  Coomber v.   Justices  of  Berks, describes the  functions  such  as administration   of  justice,  maintenance   of  order   and repression  of  crime, as among the primary and  inalienable functions  of  a constitutional Government.  Isaacs, J.   in his  dissenting  judgment  in  The  Federated  State  School Teachers’   Association  of  Australia  v.   The  State   of Victoria, concisely states thus at p.  585:

   "Regal  functions are inescapable and inalienable.  Such are  the legislative power, the administration of laws,  the exercise  of the judicial power.  Non-regal functions may be assumed  by  means of the legislative power.  But when  they are  assumed  the State acts simply as a  huge  corporation, with  its legislation as the charter.  Its action under  the legislation,  so far as it is not regal execution of the law is  merely analogous to what of a private company  similarly authorised.

   Supreme  Court  of America in Verisimo Vasquez Vilas  v. City  of Manila expounded the dual character of a  municipal corporation thus:

   "They  exercise powers which are governmental and powers which  are  of a private or business character.  In the  one character  a  municipal corporation is a  governmental  sub- division,  and  for that purpose exercises by  delegation  a part  of  the  sovereignty  of  the  State.   In  the  other character  it is a mere legal entity or juristic person.  In

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the  latter  character  it stands for the community  in  the administration  of local affairs wholly beyond the sphere of the  public  purposes for which its governmental powers  are conferred.

   Isaacs  and  Rich, JJ., in The Federated  Municipal  and Shire  Council  Employees’ Union of Australia v.   Melbourne Corporation  in  the context of the dual functions of  State say much to the same effect at p.  530:

   "Here  we  have the discrimen of Crown exemption.  If  a municipality  either (1) is legally empowered to perform and does  perform any function whatever for the Crown, or (2) is lawfully  empowered to perform and does perform any function which constitutionally is inalienable a Crown function - as, for   instance,   the  administration  of  justice   -   the municipality  is in law presumed to represent the Crown, and the  exemption  applies.   Otherwise,  it  is  outside  that exemption,  and,  if impliedly exempted at all,  some  other principle  must be resorted to.  The making and  maintenance of  streets  in  the  municipality   is  not  within  either proposition."

   A corporation may, therefore, discharge a dual function: it  may  be  statutorily   entrusted  with  regal  functions strictly  so-called,  such  as making of laws,  disposal  of certain  cases judicially etc., and also with other  welfare activities.   The  former, being delegated regal  functions, must  be  excluded  from  the ambit  of  the  definition  of "industry"

   Finally the definition of "industry" is summarised:

   "The  result of the discussion may be summarised thus  : (1)  The  definition  of  "industry"  in  the  Act  is  very comprehensive.   It  is in two parts:  one part  defines  it from  the standpoint of the employer and the other from  the standpoint  of  the  employee.  If an activity  falls  under either part of the definition, it will be an industry within the  meaning  of  the Act.  (2) The  history  of  industrial disputes  and  the legislation recognizes the basic  concept that  the  activity shall be an organized one and  not  that which  pertains to private or personal employment.  (3)  The regal  functions  described  as   primary  and   inalienable functions  of  State  though   statutorily  delegated  to  a corporation are necessarily excluded from the purview of the definition.   Such  regal  functions shall  be  confined  to legislative power, administration of law and judicial power. (4)  If  a  service rendered by an individual or  a  private person would be an industry, it would equally be an industry in the hands of a corporation.  (5) If a service rendered by a  corporation  is  an  industry,   the  employees  in   the departments  connected with that service, whether financial, administrative  or  executive,  would  be  entitled  to  the benefits  of the Act.  (6) If a department of a municipality discharges  many  functions, some pertaining to industry  as defined  in the Act and other non-industrial activities, the predominant  functions  of  the   department  shall  be  the criterion for the purposes of the Act.

   Within  this  premises  this  Court  considered  various departments  of  the corporation as to whether employees  of

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such  department would be covered by the Central Act.   This Court holds various departments of the corporation including tax  department, assessment department, marketing department to be an "industry".

   This  Court  in Bangalore Water-Supply & Sewerage  Board etc.    vs.    R.   Rajappa  &   Ors.   1978  (3)  SCR   207 (Constitution   Bench),   considered   the   definition   of "industry" as defined under Section 2(j) of the Central Act. This Court held:

   "Although  we are not concerned in this case with  those categories   of  employees  who   particularly  come   under departments  charged  with the responsibility for  essential constitutional functions of government, it is appropriate to state  that if there are industrial units severable from the essential  functions  and possess an entity of their own  it may  be plausible to hold that the employees of those  units are  workmen  and  those  undertakings  are  industries.   A blanket  exclusion  of  every one of the host  of  employees engaged  by government in departments falling under  general rubrics  like, justice, defence, taxation, legislature,  may not  necessarily  be thrown out of the umbrella of the  Act. We  say  no more except to observe that closer  exploration, not summary rejection, is necessary."

   This  decision  also records Corporation of Nagpur  City case  (supra) as to how in that case various departments  of the  corporation were held to be an "industry".  This  Court considered  the  submission,  as in the  present  case  that functions  of  the  various  department   are  only  out  of statutory  sanction and no private individual can  discharge those  statutory functions.  Corporation of Nagpur City case (supra)  considered this aspect and records to the following effect:

   "It  is  said that the functions of this department  are statutory  and  no  private individual can  discharge  those statutory  functions.   The  question  is  not  whether  the discharge of certain functions by Corporation have statutory backing,   but  whether  those   functions  can  equally  be performed by private individuals."

   Strong  reliance  is placed by learned counsel  for  the appellant  to  the following observations of this  Court  in Bangalore  Water-Supply  case (supra) which is an  exception which excludes it from the operation of the Central Act:

   "In any case, it is open to Parliament to make law which governs  the State’s relations with its employees.  Articles 309  to  311  of the Constitution of India,  the  enactments dealing  with  the  Defence  Forces  and  other  legislation dealing  with  the  employment under statutory  bodies  may, expressly or by necessary implication, exclude the operation of the Industrial Disputes Act, 1947."

   The  submission is, this observation excludes implicitly services  under  the statutory bodies from the operation  of the   Industrial   Disputes  Act.     This   submission   is misconceived.    This   observation   merely  records   what Parliament  can  make  law in relation to the  employees  of statutory  bodies etc.  In other words, if it so desires may exclude  the employees of any statutory bodies expressly  or

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by  necessary  implication  from the purview  of  Industrial Disputes  Act.   This  decision  does   not  carve  out  any exception  to exclude employees of all the statutory bodies. It  merely  indicates power of the Parliament, to place  any class  of employees outside the purview of the Central  Act. The  question is, whether there is any such provision  under the  State  Act  or the Central Act,  which  excludes  these employees  from the operation of the Central Act.  In  fact, Section  2(a) of the Central Act itself reveals large number of  statutory  corporations  falling within  the  rubric  of "industry".

   In  relation  to  what  are  "sovereign"  and  what  are "non-sovereign"  functions, this Court in Chief  Conservator of  Forests  and  Anr.  vs.  Jagannath Maruti  Kondhare  and Ors., 1996 (2) SCC 293, holds:

   "We  may  not go by the lebels.  Let us reach  the  hub. And  the  same  is  that  the  dichotomy  of  sovereign  and non-sovereign functions does not really exist - it would all depend  on  the  nature  of  the power  and  manner  of  its exercise,  as observed in para 23 of Nagendra Rao case.   As per the decision in this case, one of the tests to determine whether  the executive function is sovereign in nature is to find  out whether the State is answerable for such action in courts  of law.  It was stated by Sahai, J.  that acts  like defence of the country, raising armed forces and maintaining it,  making peace or war, foreign affairs, power to  acquire and  retain territory, are functions which are indicative of external sovereignty and are political in nature.  They are, therefore,  not  amenable  to the jurisdiction  of  ordinary civil  court inasmuch as the State is immune from being sued in  such matters.  But then, according to this decision  the immunity ends there.  It was then observed that in a welfare State,  functions  of the State are not only the defence  of the  country or administration of justice or maintaining law and  order  but  extends to regulating and  controlling  the activities  of  people in almost every sphere,  educational, commercial,  social,  economic, political and even  martial. Because  of this the demarcating line between sovereign  and non-sovereign powers has largely disappeared.

   The  aforesaid  shows  that  if we were  to  extend  the concept  of  sovereign  function  to  include  all   welfare activities  as  contended on behalf of the  appellants,  the ratio  in Bangalore Water Supply case would get eroded,  and substantially.   We would demur to do so on the face of what was  stated in the aforesaid case according to which  except the   strictly   understood   sovereign  function,   welfare activities of the State would come within the purview of the definition of industry;  and, not only this, even within the wider  circle  of sovereign function, there may be an  inner circle  encompassing some units which could be considered as industry if substantially severable."

   In  other  words, it all depends on the nature of  power and  the  manner  of its exercise.  What is approved  to  be "Sovereign" is defence of the country, raising armed forces, making  peace or war, foreign affairs, power to acquire  and retain   territory.    These  are   not  amenable   to   the jurisdiction  of ordinary civil courts.  The other functions of  the State including welfare activity of State could  not be construed as "sovereign" exercise of power.  Hence, every governmental  function  need  not   be  "sovereign".   State

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activities  are  multifarious.   From the  primal  sovereign power,  which exclusively inalienably could be exercised  by the  Sovereign  alone, which is not subject to challenge  in any  civil court to all the welfare activities, which  would be  undertaken  by  any private person.  So  merely  one  is employee  of statutory bodies would not take it outside  the Central  Act.  If that be then Section 2 (a) of the  Central Act  read  with Schedule I gives large number  of  statutory bodies  should have been excluded, which is not.  Even if  a statute  confers  on any statutory body, any function  which could  be  construed to be "sovereign" in nature  would  not mean every other functions under the same statute to be also sovereign.   The court should examine the statute to  severe one  from  the  other by comprehensively  examining  various provisions  of that statute.  In interpreting any statute to find  it  is "industry’ or not we have to find its pith  and substance.   The Central Act is enacted to maintain  harmony between  employer and employee which brings peace and  amity in  its  functioning.   This peace and amity should  be  the objective in the functioning of all enterprises.  This is to the  benefit  of  both, employer and  employee.   Misuse  of rights  and  obligations by either or stretching  it  beyond permissible  limits  have to be dealt with within the  frame work  of  the  law  but  endeavor   should  not  be  in  all circumstances  to  exclude  any enterprise from  its  ambit. That  is  why  courts have been defining "industry"  in  the widest permissible limits and "sovereign" functioning within its limited orbit.

   In  N.  Negendra Rao & Co.  vs.  State of A.P.  1994 (6) SCC  205, the question raised was about the liability of the State  to pay compensation for the negligence or misfeasance on  the  part of its officers in discharge of  their  public duties  under  a statute, which are incidental or  ancillary and  not primary or inalienable function of the State.  This decision holds that the State is immuned only in cases where its  officers perform primary or inalienable functions  such as  defence  of  the  country,  administration  of  justice, maintenance of law and order.  This Court held:

   "A  search  or seizure effected under such law could  be taken  to be an exercise of power which may be in domain  of inalienable  function.   Whether the authority to whom  this power  is delegated is liable for negligence in discharge of duties  while  performing  such  functions  is  a  different matter.   But when similar powers are conferred under  other statute  as  incidental or ancillary power to carry out  the purpose  and objective of the Act, then it being an exercise of  such State function which is not primary or inalienable, an  officer acting negligently is liable personally and  the State vicariously.

   In the modern sense the distinction between sovereign or non-sovereign  power thus does not exist.  It all depends on the  nature  of power and manner of its exercise.....One  of the  tests  to  determine if the  legislative  or  executive function  is  sovereign  in nature is whether the  State  is answerable for such actions in courts of law.  For instance, acts  such  as defence of the country, raising armed  forces and  maintaining  it, making peace or war, foreign  affairs, power  to acquire and retain territory, are functions  which are  indicative of external sovereignty and are political in nature.  Therefore, they are not amenable to jurisdiction of ordinary civil court."

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   With  reference to irrigation department of the State of Punjab  this Court considered the question whether it is  an "industry" within the meaning of Section 2(j) of the Central Act.  The function of this department is for the development of  agriculture.   It undertakes harness of the surface  and ground   water  resources  of   the  State,  the   equitable distribution.  It involves construction of major, medium and minor  irrigation  projects,  maintenance   of  network   of channels, regulation of canal supplies, enforcement of water laws  etc.  It is also responsible to provide protection  to the  valuable  irrigated  lands  and  public  property  from flooding,  river  action  and waterlogging.   This  requires construction  of flood protection, river training,  drainage and  anti-  waterlogging works and their  maintenance.   Its functions  includes  plan for irrigation development in  the State.   Each  of these functions overall are inherently  of the  State.  With reference to this irrigation department in Des  Raj and Ors.  vs.  State of Punjab & Ors.  1988 (2) SCC 537  this Court held:- "With regard to the activities of the irrigation  department  and as also the tests laid  down  in various  decisions  of this Court particularly applying  the Dominant  Nature test in Bangalore Water Supply and Sewerage Board case (Supra), it was held to be an "industry"."

   In this background we may proceed to examine the present State Act.  The preamble of this Act records:

   "An  Act  to  provide  for   the  better  regulation  of marketing and agricultural produce and the establishment and administration  of  markets for agricultural produce in  the State of Karnataka".

   We  may  also usefully produce the Statement of  Objects and Reasons of the State Act :

   "STATEMENT OF OBJECTS AND REASONS:

   Among other things, provision is made in this Bill for -

   (i)  defining  ‘agricultural  produce’  to  include  all produce   of  agriculture,   animal  husbandry,  apiculture, horticulture,   forest  produce  and   any  other   produce, live-stock and poultry;

   (ii)  notifying the intention of Government to  regulate the  purchase and sale of agricultural produce in  specified area and declaration of market area and of market yard;

   (iii)  Establishment of market committees for trading in specified  kinds  of agricultural produce and also  separate market committees within the same market area for trading in any particular kind of agricultural produce;

   (iv)   representation  on  the   market   committee   to purchasers  of agricultural produce, representatives of  the purchasers’  co- operative societies, representatives of co- operative    marketing     and      processing    societies, municipalities,  taluk  boards and the  Central  Warehousing Corporation or State Warehousing Corporation;

   (v)  levy  and collection of market fees by  the  market committee;

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   (vi)  constitution of market committee funds and Central Market Fund;

   (vii) conferring borrowing powers on market committee;

   (viii)   appointment   of     Government   servants   as Secretaries,  Assistant Secretaries, Technical Accounts  and Audit  Staff  of  market   committees  to  ensure  efficient administration and control of markets;

   (ix)  inquiry  or  inspection  by  the  Chief  Marketing Officer;

   (x)  supersession  of  market committee for  failure  to perform duties."

   The  aforesaid  preamble  and Statement of  Objects  and Reasons  clearly  disclose the sphere of this Act to be  for the  regulation  of  marketing   of  agricultural   produce, establishment  of market committee for controlling,  trading in  specified kind of agricultural produce.  It provides for levying  of market fees by the market committee.  It confers power  on  the  market  committee   to  borrow  money.   The appointment of Government servants as Secretaries, Assistant Secretaries, Technical Accounts and Audit Staff is to ensure efficient  administration and control of markets.  In  order to  strengthen the said objectives Chapter II deals with the establishment  of markets, Chapter III with constitution  of market  committees including provisions for election of  its members.  The constitution of the committee under Section 11 consists  of 11 members out of which one has to be a  woman, two  persons  belonging  to Scheduled Castes  and  Scheduled Tribes elected by the agriculturists in the market area, one member to be person other than retail traders, one member to be  a  representative  of   co-operative  marketing  society carrying  on business in notified agricultural produce,  one member  to  be  representative of  agricultural  cooperative processing  society, one to be an officer not below the rank of  Secretary of the concerned market committee nominated by the  Director of Agricultural Marketing who has no right  to vote  and  three  members  to  be  nominated  by  the  State Government  who  have right to vote.  Chapter IV deals  with conduct  of  business  of the market  committee,  Chapter  V refers  to  staff of the market committee, Chapter VI  deals with  the  powers  and  duties   of  market  committee.   It indicates  it  is for regulating the trading of  agriculture produce  within the market area, Chapter VII directly  deals with regulation of trading which includes grant of licences, power  to  cancel and suspend it, Chapter VIII  pertains  to market  fund,  Chapter  IX  refers  to  special  commodities market,  Chapter X deals with Mandal Pachayats as agents  of market  committee,  Chapter XI deals with  establishment  of independent  markets  and  market   committees  for  special commodities.   Chapter XII is about penalties, Chapter  XIII controls the functioning of the various officers and members including  that  of  market  committee and  Chapter  XIV  is miscellaneous  which  includes provisions for recovering  of sums  due  to  the  market committee or  board  etc.   After scanning  the  whole  Act  and  perusing  the  preamble  and Statement of Objects and Reasons of the Act, it reveals that this  Act deals with various facets of regulating activities within  the  market  area  with respect to  the  trading  in agricultural  produce.  It includes establishment of various

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committees  including charging of fees for service  rendered to  the  traders of agricultural producers.  Any  enactment, scheme  or  project  which  sponsors helps  in  the  trading activity  is one of the State’s essential functions  towards welfare  activities  for the benefit of its  subject.   Such activities  can  be undertaken even by any  non-governmental organisation  or a private person, corporate or company.  In fact,  prior  to  the abolition of Zamindari, the  Hats  and Bazars  (Markets)  held on Zamindar’s (Landowner) land,  the Zamindar  used  to  charge fees for  rendering  service  for holding such market, by providing land and facilities to the participants  of such market.  By this it helped  producers, sellers  and public at large through such trading.  This  is similar,  in  a  nature and form to what is being  done  now under  the State Act through statutory functionaries.   Thus none  of these functions could be construed to be  sovereign in nature or inalienable in character.

   It  is  true  various functionaries under this  Act  are creature  of  statute.   But creation as  such,  by  itself, cannot  confer  it  the  status  of  performing  inalienable functions  of the State.  The main controlling functions and power   is   conferred  on   the  market   committee   whose constitution itself reveals, except one or two rests are all are  elected  members representing some on other class  from the  public.  In fact, all governmental functions cannot  be construed  either primary or inalienable sovereign function. Hence  even if some of the functionaries under the State Act could  be  said to be performing sovereign functions of  the State  Government that by itself would not make the dominant object  to be sovereign in nature or take the aforesaid  Act out of the purview of the Central Act.

   Thus  merely an enterprise being statutory  corporation, creature  under  a  statute, would not take it  outside  the ambit of "industry" as defined under the Central Act.  We do not  find the present case falling under any exception  laid down in the Bangalore Sewerage Board case (Supra).  The mere fact  that  some employees of the appellant  are  government servants would make no difference as the true test to find - has  to  be  gathered  from the dominant  object  for  which functionaries  are  working.  It cannot be doubted that  the appellant  is  an  undertaking performing its  duties  in  a systematic  and  organised manner, regulating the  marketing and  trading of agricultural produce, rendering services  to the  community.   In the present case, as we  have  recorded earlier,  we are concerned only with those employees who are not  government  servants.  Testing the dominant  object  as laid down in Bangalore Sewerage Board case (Supra), we reach to inescapable conclusion that none of the activities of the Agriculture  Produce Market Committee could be construed  to be sovereign in nature.  Hence we have no hesitation to hold that  this  corporation  falls   within  the  definition  of "industry" under Section 2(j) of the Central Act.

   Section  2(a)  of the Central Act  defines  ‘Appropriate Government’   in  relation  to   any   industrial   disputes concerning any industry carried on by or under the authority of  Central Government, or railway company etc.  and  refers to  large number of corporations and corporate bodies  which falls  in  the category of "industry".  This indicates  even Legislature’s  intends  a very large arms of "industry",  to include large number of enterprises to be industry to confer benefit to the employees working under it.  In fact, several corporations  conferred with statutory powers also  curtails

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individual   rights  like,  through   levy  of   demurrages, detention  charges in the warehousing corporation under  the Warehouse  Corporation  Act;   Regulation   of  entry   into airport,  ATC, levy and regulation of taxes and fees by  the international  airport  authority.  Assessment and  levy  of damages  as  well  as  penalties by  authorities  under  the Employees  State Insurance Act and Employees Provident  Fund Act.    Though  each  of   the  aforesaid  corporations  and statutory  bodies  are  "industry".  So one  of  the  feeble submission  that curtailment of right of an individual could only  be  by  the exercise of sovereign power  has  also  no merit.

   From the aforesaid catena of authorities, inalienability is  one  of  the  basic   character  of  sovereignty.    The Encyclopedia  of the American Constitution with reference to "sovereignty" attempts to define sovereignty.  It records:

   "Within  the  American  regime the  ultimate  power  and authority  to  alter  or  a  abolish  the  constitutions  of government  of state and Union resides only and  inalienably with  the  people.  If it be necessary or useful to use  the term "sovereignty" in the sense of ultimate political power, then there is no sovereign in America but the people.

   DENNIS J.  MAHONEY"

   Words  and  Phrases, Permanent Edition, Volume 39A  with reference to "sovereign power" records:

   "The  "sovereign powers" of a government include all the powers  necessary  to  accomplish its  legitimate  ends  and purposes.    Such  powers  must   exist  in  all   practical governments.   They  are  the incidents of  sovereignty,  of which  a  state cannot devest itself.  Boggs v.  Meree  Min. Co.,   14   Cal.   279,   309.....In  all   governments   of constitutional  limitations  "sovereign   power"   manifests itself  in  but  three  ways.  By exercising  the  right  of taxation;   by the right of eminent domain;  and through its police  power.   United States v.   Douglas-Willan  Sartoris Co., 22 p.  92, 96, 3 Wyo.  287."

   So,  sovereign  function in the new sense may have  very wide  ramification  but essentially sovereign functions  are primary  inalienable  functions  which   only  State   could exercise.   Thus,  various  functions of the State,  may  be ramifications  of  ‘sovereignty’  but  they  all  cannot  be construed  as primary inalienable functions.  Broadly it  is taxation,  eminent domain and police power which covers  its field.    It   may   cover    its   legislative   functions, administration  of  law, eminent domain, maintenance of  law and  order, internal and external security, grant of pardon. So,  the  dichotomy  between   sovereign  and  non-sovereign function could be found by finding which of the functions of the State could be undertaken by any private person or body. The  one  which  could  be undertaken  cannot  be  sovereign function.   In  a  given case even in subject on  which  the State  has the monopoly may also be non-sovereign in nature. Mere  dealing in subject of monopoly of the State would  not make  any  such enterprise sovereign in nature.  Absence  of profit  making  or  mere quid pro would also not  make  such

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enterprise  to be outside the ambit of "industry" as also in State of Bombay & Ors.  case (Supra).

   The  last submission for the appellant is with reference to  sub-section  (3)  of Section 59 of the  said  Act.   The submission  is, this excludes the application of the Central Act  to the employees under the State Act.  The reliance  is placed  on  the following opening words of this  sub-section (3) namely:

   "Notwithstanding  anything  contained in the  Industrial Disputes Act, 1947."

   On  the  contrary this indicates that exclusion  of  the Central Act is limited to the sphere as specified under this sub-section, namely, payment of compensation to the officers or servants of the transferred employees.  Thus by necessary implication,  other  field  under the Central  Act  is  made applicable.  Hence this submission has no merit.

   In  view  of the aforesaid settled legal  principle  the width of "industry" being of widest amplitude and testing it in  the  present case, in view of the preamble, Objects  and Reasons  and the scheme of the Act, the pre-dominant  object clearly   being  regulation  and   control  of  trading   of agricultural produce, thus appellant-committee including its functionaries  cannot  be  said to be  performing  functions which  are  sovereign in character.  Most of  its  functions could  be  undertaken  even by private  persons.   Thus  the appellant  would  fall within the definition  of  "industry" under  Section 2(j) of the Central Act.  In view of this, we uphold  that  respondent employees are ‘workman’  under  the Central Act as held by the Labour Court and confirmed by the High Court.  The Labour Court has dealt with each individual cases   and   came   to  the   conclusion   in   favour   of respondent-employees  which  has  also   been  confirmed  by learned  Single Judge and Division Bench of the High  Court, which  does not call for any interference.  Accordingly, the present  appeals have no merit and are dismissed.  Costs  on the parties.