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PETITIONER: CRICKET CLUB OF INDIA LTD.

       Vs.

RESPONDENT: THE BOMBAY LABOUR UNION & ANOTHER

DATE OF JUDGMENT: 07/08/1968

BENCH: BHARGAVA, VISHISHTHA BENCH: BHARGAVA, VISHISHTHA SHELAT, J.M. VAIDYIALINGAM, C.A.

CITATION:  1969 AIR  276            1969 SCR  (1) 600  CITATOR INFO :  RF         1970 SC1407  (18)  RF         1971 SC2422  (25)  R          1972 SC 763  (14,16)  RF         1976 SC 145  (3)  O          1978 SC 548  (141,142,159)

ACT: Industrial Disputes Act, 1947, ss. 2(j) and  10(2)---Cricket Club  of  India Ltd. at Bombay--organised with  the  primary object of promoting and encouraging sports and games--having various  activities    bringing  income  including   letting buildings   on   rent   for   commercial   and   residential purposes--if industry within s. 2(j).

HEADNOTE: The Deputy Commissioner of Bombay made a reference under  s. 10(2)  of  the  Industrial  Disputes  Act,  1947,   to   the Industrial  Tribunal, Maharashtra, of a dispute between  the appellant  Cricket  Club  of  India  Ltd.  and  the  workmen employed  by  it in respect of various demands made  by  the workmen.  A preliminary objection was taken on behalf of the Club  that it was not an ’industry’, and, the provisions  of the Act were not applicable to it, so that a reference under s.  10(2)  was  not competent. The  Tribunal  rejected  this preliminary objection holding that the club came within  the definition of "industry" in s. 2(j) of the Act and set  down the case for hearing.     In  appeal  to  this  Court by  special  leave,  it  was contended  inter alia on behalf of the respondents, that the objects and other facts on the record showed the Club was an "industry"  as it was carrying on various activities in  the nature of trade or business, such as constructing  buildings for the purpose of earning income from the rents payable  by business concerns, letting out residential accommodation  in the  club premises to members some of whom lived there  more or less permanently, undertaking catering activities through maintaining  stalls and otherwise where various things  were sold  not  only  to members but  outsiders  also,  providing catering  for large parties on a systematic basis,  deriving large  income  from holding cricket test matches  and  other games  at its Stadium and the club premises; it was  further

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contended  that  the  club was  incorporated  as  a  limited company  under the Companies Act and the effect of  this  in law  was  that  the  club became   an  entity  separate  and distinct  from  its members so that, in  providing  catering facilities,  the  club  as  a  separate  legal  entity,  was entering  into  transactions  with  the  members  who   were distinct from the club itself.     HELD:  The order made by the Tribunal holding  that  the club was an "industry" was incorrect and must be set aside. The  appellant  was  a dub .of members  organised  with  the primary    object  of encouraging and  promoting  sports  and games.   The activity of promotion of sports and games by  a set  of people combining together to form a club  cannot  be said  to  be  an undertaking in the nature  of  a  trade  or business  in which material goods or material  services  are provided with the aid of the employees. [607 C-D]     The Secretary. Madras Gymkhana Club Employees’ Union  v. The  Management of the Gymkhana Club, [1968] 1  S.C.R.  742; followed.        601     (i)  The  Tribunal fell into an error  in  ignoring  the circumstances that the income, which was earned by the  club from  investment of immovable properties, could not be  held to be income that accrued to it with the aid and cooperation of  the employees.  From the evidence it was clear  that  in effect  no  employees of the club were  engaged  in  looking after the buildings which were let out for use as shops  and offices. [608 C, D-E]     (ii) The facility of residential accommodation  provided by the club could not be said to be in the nature of keeping a  hotel  as  this facility  was  provided  exclusively  for members  of  the  club  at much  lower  charges  than  those prevailing   at   hotels  in  the   city   with   comparable accommodation.  It was in the nature of a  serf-service   by the club  organised for its members. [509 B]     (iii)  The catering provided in the refreshment room  of the club was also clearly provided only for the members  and the  bye-laws of the Counoil lay down that even if  a  guest was  introduced by a member, the guest was not  entitled  to pay  for  any refreshment served to  him,   The  transaction continued  to  be confined to the members of  the  club  who introduced the guest. [509 G]     (iv)  The  catering facilities provided to  members  and outsiders  at stalls at the time of sports tournaments  were only  so  provided twice a year and at  concessional  rates. The provision of these stalls could not therefore be said to be for the purpose of carrying, on  an  activity  of selling snacks and soft drinks to outsiders but was really  intended as  provision of a facility to persons participating  in  or coming to watch  the tournaments in order that these may  he run  successfu’lly..  These stalls were  thus  brought  into existence  as a part of the activity of promotion  of  games and  was  not as a systematic activity for  the  purpose  of carrying  on transactions of sale of snacks and soft  drinks to outsiders. [610 C-D]     (v)  Although large parties were held at the club  where catering  was provided by the club and non-members  attended such parties, these facilities were in fact provided at  the instance of the members of the club. The privity of contract was  between the member concerned and the club and the  dues for such functions were realised from the members only.  The club  was  thus’  in fact catering  only  for  its  members. FUrthermore,  in  the absence of any evidence that  a  large number of such parties were held, no inference could  follow that holding such parties  was  a  systematic arrangement by

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which the club was attempting to make profits. [611 D-F]     (vi) The primary object with which the club entered into contracts  with  certain  organisations  whereby  a  certain number  of seats in the Stadium were given  exclusively  for the use of such organisations whenever any test matches were held,  was to encourage persons who were  interested in  the game  of  cricket, even though  at   the   disadvantage   of having ,to charge 1ower rates for such seats.   Furthermore, charges  from  other spectators by selling tickets  to  them when test matches were held were obviously realised in order to  ensure that the club could carry on its activity of  the promotion of the game of cricket and also make up losses for purposes  of providing other facilities and   amenities   to the  members of the club.  In these circumstances, it  could not he said that these activities, including the holding  of cricket test matches were in the nature of carrying on trade or business, but were activities in the course of  promotion of  the game of cricket and it was incidental that the  club was  able  to derive an income from  such  activities  which income was later utilised for the purpose of fulfilling  its other   objects  as  incorporated  in  the   Memorandum   of Association. [613 D, H] 602     (vii) Though the club was incorporated as a Company,  it was not like an ordinary Company constituted for the purpose of  carrying  on business. There were no  shareholders.   No dividends were ever declared and no distribution of  profits took  place.   Admission  to  the club  was  by  payment  of admission fee and not by purchase of shares.  The membership was not transferable like the right of shareholders.   There was  provision  for  expulsion of  a  member  under  certain circumstances  which feature never exists in the case  of  a shareholder holding shares in a Limited Company. ln  view  of these and other  distinguishing  features,  the club   cannot  be treated as a separate legal entity of  the nature   of  a  limited  company carrying on business.  [614 D-F]

JUDGMENT: CIVIL APPELLATE JURISDICTION:  Civil Appeal No. 833 of 1966.     Appeal  by special leave from the order dated  June  30, 1965  of the Industrial Tribunal, Maharashtra  in  Reference (IT) No. 347 of 1964. S.D. Vimadlal, C.M. Mehta and B.R. Agarwala,  for    the appellant. S.B.  Naik,  K. Rajendra Chaudhuri,  K.R.  Chaudhuri     and C.S. Srinivasa Rao, for respondent No. 1. The Judgment of the Court was delivered by     Bhargava, J. The Deputy Commissioner of Labour,  Bombay, referred  for  adjudication  by  the  Industrial   Tribunal, Maharashtra,   Bombay  (hereinafter  referred  to  as   "the Tribunal"),  under section 10(2) of the Industrial  Disputes Act  (hereinafter  referred  to as  "the  Act"),  a  dispute between  the  Cricket   Club  of  India  Ltd.   (hereinafter referred to as "the Club") and the workmen employed by it in respect  of various demands made by the workmen relating  to classification  of  employees,  dearness  allowance,   leave facilities,   payment   for  overtime,   permanency,   shift allowance, etc.  A preliminary objection was taken on behalf of  the Club that it is not an industry  and,  consequently, the  provisions  of  the  Act   were   inapplicable  and  no reference  could be competently made under s. 10(2)  of  the Act.   The  Tribunal rejected  this   preliminary  objection

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holding  that  the  Club came  within  the   definition   of "industry"  in s. 2(j) of the Act and made a direction  that the  case be set down for hearing on merits.  The  Club  has appealed  against this interim award of the Tribunal on  the preliminary question, by special leave.     The  Club  is admittedly a Members’ Club and  is  not  a proprietary  Club, though it is incorporated  as  a  Company under  the Indian Companies Act.  At the relevant time,  the Club  had  a membership of about 4800 and was employing  397 employees  who claimed to be workmen. The principal  objects of  the  Club are to encourage and promote  various  sports, particularly  the game of cricket in India and elsewhere, to lay out grounds for the  603 game of cricket, and also to finance and assist in financing cricket  matches and tournaments.  In addition, it  provides avenue  for  sports  and games as  well  as  facilities  for recreation and entertainment for the Members.  It  maintains Tennis Courts in pursuance of another outdoor activity.  The indoor games for which provision is made include  Billiards, Table  Tennis,  Badminton  and Squash.  It also maintains  a swimming pool.  The Club has also provision for residence of members, for which purpose it has constructed 48 residential flats  and  40  residential rooms, some of  which  are  air- conditioned.  Persons occupying these residential flats  and rooms  are  charged  at different  rates  according  to  the accommodation provided.  There is also a Catering Department which provides food and refreshments for the members  coming to  the  Club as well as those residing in  the  residential portion,   and  it also makes arrangements for  dinners  and parties on special occasions at the request of Members.  The affairs  of the Club are managed by an Executive  Commi’ttee and various honorary office bearers.     As  is  usual in most Clubs, the membership  is  varied. There are life members, ordinary members, temporary members, service  members and honorary members.  Guests,  both  local and  from outstation, are admitted, but subject  to  certain restrictions  and only when they are introduced by a member. The Club owns immovable properties of the value of about Rs. 67  lakhs  from which an income in the range of about Rs.  4 lakhs a year accrues, to the Club.  The other regular source of  income  is  the  subscription’  paid  by  each   member. Entrance   paid by the Members is treated as a  contribution to  the  capital of the Club.  There are regular  games  for members  of the Club;  but, apart from those games,  in  the cricket ground, which has a Stadium attached to it,  matches and  various  tournaments are held, including  Test  Matches between  the Indian teams and foreign teams visiting  India. On these occasions, public are admitted to watch the matches on  tickets sold by the Club.  In addition, it appears  that four sports organisations, amongst which mention may be made particularly of the Catholic Gymkhana Ltd., have been  given the  right, under agreements entered into with the Club,  to exclusive  use of a number of seats in the Stadium  whenever there  are official  and/or unofficial test  matches  and/or matches of similar status sponsored by the Board of  Control for  Cricket  in  India, or when a fixture is  played  by  a foreign  team on the Club grounds, though not  sponsored  by the Board.  Under these agreements, these organisations make payment  to the Club for the members’  seats   reserved   at prescribed rates and they are at liberty to charge  whatever they  like from their own members who are admitted to  those seats,  with the further facility that they can  make  their own   provision  for catering and supply of refreshments  to their  members over part of the land made available to  them

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by the Club.  On the occasion. of 604 annual Badminton and Table Tennis open tournaments, a  stall is run by the Club where both competitors and spectators are allowed to buy snacks and soft drinks at concessional rates. In  the Catering Department alone, the turnover of the  Club is  in  the region of Rs. 10 lakhs a  year.   The  Tribunal, after  considering  these facts and  the  various  decisions which were available to when it gave its award, has come  to the conclusion that the Club is an ’industry’, so that  this reference  under the Act is competent. The Club,  which  has come  up  in  appeal,  contends that  the  decision  of  the Tribunal  is  not  correct and that, on  the  ratio  of  the decision of this Court in The Secretary Madras Gymkhana Club Employees’ Union v. The Management of the Gymkhana  Club(1), this Court should hold that the Club is not an industry.     Our  task  for  the  decision of  this  case  has   been simplified,  because  this  Court, in  the  case  of  Madras Gymkhana   Club(1), has clearly laid down the principles  of law which have to be applied in determining when a Club  can be held to be an industry. In that case, the entire previous case-law   relating  to  various  institutions   was   fully discussed.   After  that discussion, the conclusion  of  the Court was mainly expressed in the following words :--       "The  principles so far settled come to  this.   Every human activity in which enters the relationship of employers and  employees, is not necessarily creative of an  industry. Personal  services rendered by domestic and other  servants, administrative services of public officials, service in  aid of  occupations  of professional men, such  as  doctors  and lawyers,  etc., employment of teachers and so on may  result in relationship in which there are employers on the one side and  employees  on  the other, but  they  must  be  excluded because  they do not come within the denotation of the  term "industry". Primarily, therefore, industrial disputes  occur when the operation undertaken rests upon cooperation between employers  and  employees  with a  view  to  production  and distribution of material goods, in other words, wealth,  but they may arise also in cases where the co-operation  is   to produce  material services.  The normal cases are  those  in which the production or distribution is of material goods or wealth  and  they will fall within  the  expression  ’trade, business and manufacture’" Further, it was held that :--       "before  the  work engaged in can be described  as  an industry, it must bear the definite character of ’trade’  or ’business’  or  ’manufacture’  or  ’calling’.o.r  must    be capable of being described as an undertaking in mate- (1) [1968] 1 S.C.R. 742.     603 game of cricket, and also to finance and assist in financing cricket  matches and tournaments.  In addition, it  provides avenue  for  sports  and games as  well  as  facilities  for recreation and entertainment for the Members,  It  maintains Tennis Courts in pursuance of another outdoor activity.  The indoor games for which provision is made include  Billiards, Table  Tennis,  Badminton  and Squash.  It also maintains  a swimming pool.  The Club has also provision for residence of members, for which purpose it has constructed 48 residential flats  and  40  residential rooms, some of  which  are  air- conditioned.  Persons occupying these residential flats  and rooms  are  charged  at different  rates  according  to  the accommodation provided.  There is also a Catering Department which provides food and refreshments for the members  coming to  the  Club as well as those residing in  the  residential

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portion,   and  it also makes arrangements for  dinners  and parties on special occasions at the request of Members.  The affairs  of the Club are managed by an  Executive  Committee and various honorary office bearers.     As  is  usual in most Clubs, the membership  is  varied. There are life members, ordinary members, temporary members, service  members and honorary members.  Guests,  both  local and  from outstation, are admitted, but subject  to  certain restrictions  and only when they are introduced by a member. The Club owns immovable properties of the value of about Rs. 67  lakhs  from which an income in the range of about Rs.  4 lakhs a year accrues to the Club.  The other regular  source of  income  is  the  subscription’  paid  by  each   member. Entrance   paid by the Members is treated as a  contribution to  the  capital of the Club.  There are regular  games  for members  of the Club;  but, apart from those games,  in  the cricket ground, which has a Stadium attached to it,  matches and  various  tournaments are held, including  Test  Matches between  the Indian teams and foreign teams visiting  India. On these occasions, public are admitted to watch the matches on  tickets sold by the Club.  In addition, it appears  that four sports organisations, amongst which mention may be made particularly of the Catholic Gymkhana Ltd., have been  given the  right, under agreements entered into with the Club,  to exclusive  use of a number of seats in the Stadium  whenever there  are official  and/or unofficial test  matches  and/or matches of similar status sponsored by the Board of  Control for  Cricket  in  India, or when a fixture is  played  by  a foreign  team on the Club grounds, though not  sponsored  by the Board.  Under these agreements, these organisations make payment  to the Club for the members’  seats   reserved   at prescribed rates and they are at liberty to charge  whatever they  like from their own members who are admitted to  those seats,  with the further facility that they can  make  their own   provision  for catering and supply of refreshments  to their  members over part of the land made available to  them by the Cl.ub.  On the occasion of 604 annual Badminton and Table Tennis open tournaments, a  stall is run by the Club where both competitors and spectators are allowed to buy snacks and soft drinks at concessional rates. In  the Catering Department alone, the turnover of the  Club is  in  the region of Rs. 10 lakhs a  year.   The  Tribunal, after  considering  these facts and  the  various  decisions which  were  available  to  it when it gave its  award,  has come  to the conclusion that the Club is an  ’industry’,  so that  this reference under the Act is competent.  The  Club, which  has come up in appeal, contends that the decision  of the  Tribunal is not correct and that, on the ratio  of  the decision  of  ’this Court in The Secretary  Madras  Gymkhana Club  Employees’  Union V. The Management  of  the  Gymkhana Club(2),   this  Court should hold that the Club is  not  an industry.     Our  task  for  the  decision of  this  case  has   been simplified,  because  this  Court, in  the  case  of  Madras Gymkhana   Club(1), has clearly laid down the principles  of law which have to be applied in determining when a Club  can be held to be an industry. In that case, the entire previous case-law   relating  to  various  institutions   was   fully discussed.   After  that discussion, the conclusion  of  the Court was mainly expressed in the following words :--               "The  principles so far settled come to  this.               Every  human  activity  in  which  enters  the               relationship  of employers and  employees,  is               not  necessarily  creative  of  an   industry.

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             Personal  services  rendered by  domestic  and               other  servants,  administrative  services  of               public   officials,   service   in   aid    of               occupations  of  professional  men,  such   as               doctors  and   lawyers,  etc.,  employment  of               teachers and so on may result in  relationship               in  which there are employers on the one  side               and  employees on the other, but they must  be               excluded  because they do not come within  the               denotation of the term "industry".  Primarily,               therefore, industrial disputes occur when  the               operation  undertaken rests  upon  cooperation               between employers and employees with a view to               production and distribution of material goods,               in  other  words, wealth, but they  may  arise               also  in cases where the co-operation  is   to               produce  material services.  The normal  cases               are   those   in  which  the   production   or               distribution  is of material goods  or  wealth               and  they  will  fall  within  the  expression               ’trade, business and manufacture’" Further, it was held that :--                     "before  the  work  engaged  in  can  be               described  as  an industry, it must  bear  the               definite character of ’trade’ or ’business’ or               ’manufacture’ or ’calling’.or must  be capable               of being described as an undertaking in mate- (1) [1968] 1 S.C.R. 742. 605               rial goods or material services.  Now, in  the               application of the Act, the undertaking may be               an  enterprise  of  a  private  individual  or               individuals.  On the  other hand, it may  not.               It  is  not necessary that the  employer  must               always be a private individual who carries  on               the operation with his own capital and with  a               view  to  his own profit.  The  Act  in  terms               contemplates   cases  of  industrial  disputes               where the Government  or a local authority  or               a public utility service may be the employer." Dealing  with  the scope of the word "undertaking",  it  was held that:--               "the  word "undertaking" must be  defined   as               any business or any work or project which  one               engages  in  or  attempts  as  an   enterprise               analogous to business  or trade." Further  essential  features were indicated by  laying  down that :               "where the activity is to be considered as  an               industry,  it must not be casual but  must  be               distinctly  systematic.   The work  for  which               labour  of   workmen   is  required,  must  be               productive  and the workmen must be  following               an    employment,   calling   or    industrial               avocation.   The salient fact in this  context               is that the workmen axe not their own  masters               but  render service at the behest of  masters.               This  follows  from  the second  part  of  the               definition   of  industry.  Then  again   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 a local authority               enter  upon business,  trade,  manufacture  or               an undertaking analogous to trade."

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It  was  also  decided  by the Court that if  a  Club  is  a member’s selfserving institution, it cannot be held to be an industry.  These  are the main principles which have  to  be kept in view in arriving at the decision whether the Club is an industry or not.     The principal argument of Mr. Vimedalal, learned counsel for  the  Club,  was  that there  is  a  basic  and  overall similarity between the Club and the Madras Gymkhana Club, so that the decision of this Court in the case of the latter is fully  applicable.  It was pointed out that both  Clubs  are Members’  Clubs  and not proprietary   Clubs.   The  primary objects  of both the Clubs are to provide venues for  sports and games and facilities for recreation and entertainment of Members  and guests introduced by Members.  Both  Clubs  are sports,  social  and  recreational   Clubs.   Grounds    are maintained  by both Clubs for promotion of sports, with  the slight 606 difference  that,  while  in the Madras  Gymkhana  Club  the outdoor  games  promoted  are  Golf,  Rugby,  Foot-ball  and Tennis,   in   the Club the two outdoor games on  which  the Club concentrates are Cricket and Tennis.  Both have  indoor games, while the Club in addition, maintains a Swimming Pool for the Members.  Both Clubs run tournaments and matches for the  benefit  of members and open tournaments are  held  for exhibition  to members as well as non-members.   Both  Clubs are  maintaining Catering Departments for the  entertainment of  members  and  their guests.  In both  Clubs  guests  are allowed  only  when  introduced  by  members.   The   annual turnover in both Clubs in the Catering Department is in  the region   of   about  Rs.  9  to   10   lakhs.    Residential accommodation  is maintained in both Clubs and is open  only to  Members. Both Clubs have capital investments from  which income  accrues to them, though the scale of investments  by the  Madras  Gymkhana Club is much smaller inasmuch  as  its total  investment is of the region of Rs. 41/2 lakhs,  while the Club has investment of immovable property to the tune of about  Rs. 67 lakhs.  In both Clubs, admission to  outsiders is restricted  in  similar  manner.   The management in both cases  is  by  Committees  elected  by  Members  and  annual accounts are made up, audited and laid before and adopted at the  annual general meetings.  Even in other respects,  such as in the matter of admission of Members, relations  between members,  inter se, convening of meetings, and expulsion  of members, the rules are similar.  In neither of the two Clubs are  profits  distributed between members.   It  was,  thus, urged  that  there is, in fact,  no  substantial  difference between the nature of the Club and the Madras Gymkhana  Club and,  consequently, it should be held that this Club is  not an  industry.   It  was  further  urged  that  a  few  minor differences will not alter the legal inference and will  not make   the  ratio  of  the  Madras  Gymkhana  Club(1)   case inapplicable. Mr.  S.B.  Naik, counsel appearing for the  Union,  however, urged that the differences that exist are not minor and they are  such  as should lead to the inference  that  this  Club carries  on its activities in such a manner that it must  be held to be an ’industry’ as explained in the Madras Gymkhana Club(1) case. The  first point urged before us was that an examination  of the  objects of the Club would show that it is not purely  a social  or  recreational Club confining  its  activities  to Members  like the Madras Gymkhana Club.  Our  attention  was drawn  to  objects  of the Club as  given  in  paragraph  3, clauses  (a), (c), (d), (g), (1) and (na) of the  Memorandum

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of  Association  of  the  Club.   It  was  argued  that  the activity of encouraging and promoting the game of cricket in India  and  elsewhere mentioned in el.  (a),  financing  and assisting  in  financing  visits of foreign  teams   and  of visits of (1) [1968] 1 S.C.R. 742. 607 Indian teams to foreign countries in cl. (c), organising and promoting  or assisting in the organisation or promotion  of Provincial   Cricket   Associations   and   Inter-Provincial Tournaments   in   el.  (d),  buying,   repairing,   making, supplying, selling and dealing in all kinds of apparatus and appliances and all kinds  off provisions, liquid and  solid, required  by persons frequenting the Club buildings  or  the cricket grounds or other premises of the Club in clause  (g) and  paying all or any part of the experts of  any   cricket match,  tour or tournament, or any other sporting events  or match  or competition in any other form of game,  athletics, or  sport  and  any kind  of  entertainment,  exhibition  or display   in  clause (1 ), are not activities  which  should form  part of a social and recreational Club.  The  argument ignores  the  fact that the Club is not only  a  social  and recreational  Club, but is a Club of Members organised  with one  of ’the primary objects of  encouraging  and  promoting sports  and games.  The activity of promotion of sports  and games  by a set of people combining together to form a  Club cannot be said to be an undertaking in the nature of a trade or business in which material goods or material services are provided with the aid of the employees.  In clause (na), the object mentioned is to construct on any premises of the Club buildings of any kind for residential, commercial,  sporting or  other uses  and to repair,  or  alter or pull down,   or demolish the same.  In this clause, emphasis was laid on the word  "commercial"  and it was urged that, if buildings  are constructed  for commercial purposes, this object will  make the Club an ’industry’.  We do not consider it necessary  to deal  with this point at this stage, because the  very  next point  relating to investment of large sums  of   money   in immovable  properties  indicates how this  object  is  being carried  out in practice and, when dealing with this  point, we  shall  indicate  that this activity ’is not  of  such  a nature as to make the Club an industry’. We have already mentioned earlier that the Club has acquired immovable  properties  of the value of about Rs.  67  lakhs. Some  of  these properties consist of  buildings  which  are being  used by the Members of the Club. These are  the  main Club  building  and  the residential flats  and  rooms.   In addition, there is a Stadium that is used on occasions  when Cricket  Matches are held on the grounds maintained  by  the Club.  Apart from all these, there are a certain  number  of buildings  just outside the Stadium which are  let  out  for use as shops and offices by business concerns.   The  income that  the Club earns is primarily from these  last-mentioned constructions.   It  was  urged  that  the  Club   in   thus constructing building for the purpose of earning income from rents payable b.y business concerns, to whom those  premises ’are  let  out, is carrying on an activity which is  in  the nature  of trade or business  and,  consequently, it  should be held that the Club is an industry. The Tribunal  accepted this submission and held :-- 608               "A company which has as its business acquiring               of  immovable properties on a large scale  and               for  making  profit out of the  rents  thereof

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             would   come   within   the   definition    of               ’industry’.   The  properties  of  the  C.C.I.               which   are  let  out,  viz.  48   residential               f1flats,   40  ordinary  and   air-conditioned               rooms;  and  the  premises let  to  shops  and               offices form a very large group of properties;               the management of them as well as the earnings               from  them,  particularly in the case  of  the               rooms  which  are  let  out  with   compulsory               boarding require co-operation between  capital               and labour." In  examining  this  aspect, the Tribunal a   ears  to  have fallen  into an error in ignoring the circumstance that  the income,  which earned by the Club from investment  on  these immovable  properties,  cannot  be held to  be  income  that accrues  to  it  with  the  aid  and  co-operation  of   the employees.   The material on the record shows that,  out  of 397 employees, only 14 attend the three immovable properties consisting of the Club Chambers,  North  Stand Building, and Stadium  House.   It may be  presumed  that   the  buildings which  are let out for use as shops and offices are part  of the Stadium House; but there ’is nothing to show how many of these  employees  are employed in the  work  connected  with these  buildings.   In  fact, on the face of  it,  it  would appear that, once those buildings have been let out to other persons for use as shops and offices, there would be no need at  all for the Club to maintain an employee-staff in  order to look after those buildings, so that it is likely that all the 14 employees, who, it is admitted, attend the  immovable properties,  must  be doing so primarily in  order  to  look after the Club buildings and the residential  accommodation. It has already been mentioned earlier that the income  which the  Club  ’is earning from these  immovable  properties  is primarily  from the buildings let out for use as  shops  and offices  and that income, the circumstances, cannot be  held to have been earned as a result of any co-operation  between the  Club and its  employees.  In earning this  income,  the Club  is  not carrying on an activity as a result  of  which material  goods or material services are produced  with  the co-operation of employees. So  far as the residential buildings are  concerned,   where it  appears that some employees must be  contributing  their labour, the principal consideration for holding that it does not  amount to an activity of the nature of an  industry  is that this  residential accommodation is provided exclusively for the Members of the Club.  It has been stated that it  is meant  primarily  for  outstation Members of  the  Club  who occupy  this  residential  accommodation  when  they   visit Bombay.  In addition, it seems that there are 11 Members  of the Club who are residing more or less permanently in 11  of these residential rooms.  It is also true that  members 609 occupying the residential accommodation are required to take advantage  of the catering facilities provided by the  Club. They are charged consolidated amounts for occupation of  the rooms as well as for the food served to them.  The  Tribunal has  held that this activity is in the nature of  keeping  a Hotel.  The view taken by the Tribunal is clearly incorrect, because  it ignores the circumstance that this  facility  is available  only to Members of the Club and  to no  outsider. It  is  in  the  nature of  a  self-service  by   the   Club organised  for  its  Members.  The  rules  which  have  been brought  to  our  notice  make it  clear  that,  apart  from Members,  no  one is allowed to stay  in  these  residential rooms  and that, in exceptional cases where  some  important

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visitors  come  to the Club or competitors  taking  part  in tournaments visit this place, they are permitted to stay  in these  residential rooms, but, in such cases, they  are  all made  Honorary  Members of the Club.  The facility  is  thus availed  of by them in the capacity of Members of the  Club, even  though that membership is honorary.  The principle  of having  honorary members is quite common to most Clubs   and existed  even  in the Madras Gymkhana Club.  Once  a  person becomes  an honorary member, provision of facilities of  the Club  for  him  partakes of the same  nature  as  for  other members  and,  consequently, such an activity  by  the  Club continues  to  remain  a  part  of  it  as  a   self-serving institution.   It  is  quite wrong to equate   it  with  the activity of a Hotel. It may also be mentioned that there  is definite  evidence  given  on behalf of the  Club  that  the charges for the residential accommodation with catering  are much  lower  in the Club than the charges made  for  similar facility  in  any decent Hotel in  Bombay  where  comparable accommodation  may be provided. This further  clarifies  the position  that  this is a facility provided by the  Club  at concessional rates exclusively for its Members. We may at this stage also deal with the argument advanced on behalf  of  the Union in respect of the nature  of  catering activities  of  the  Club.  So far as the  catering  in  the Refreshment  Room  maintained by the Club  and  for  persons occupying the residential accommodation is concerned, it  is confined  to  Members  of  the Club only.   No  outsider  is allowed  to take advantage of  this facility.  In fact,  the bye-laws of the Club clearly lay down that, even if a  guest is introduced by a Member, the guest is not entitled to  pay for   any  refreshment  served  to  him.   The   transaction continues  to  be  confined to the Member of  the  Club  who introduces  the guest.  The Club is, of course, not open  to public in general and, even when non-members are admitted in the  Club, they are only allowed as guests of  members  with certain  restrictions.   Such guests cannot enter  into  any transaction  with  the  Catering  Department  of  the  Club. Consequently,  this catering activity is also in the  nature of a self-service by the Club for its members. In connection with this activity of catering, reliance  was, however, placed by the respondent Union on two aspects.- One is that 610 it  has been admitted that, on occasions when Badminton  and Table Tennis open tournaments are held, a stall ’is kept  by the   Club  where,  apart  from  Members,  competitors   and spectators  can also buy snacks and soft drinks; and it  was urged  that  this sale of snacks and soft  drinks  to  non,- members is clearly an activity in the nature of business  or trade.   It appears, however, that  these stalls are  opened as  a rare feature only on occasions when  annual  Badminton and  Table Tennis open tournaments’ are held.  We have  been informed  that  there is only one Badminton  and  one  Table Tennis open tournament every year, so that these stalls  are run only twice a year.  Further, there is a clear  Statement that the snacks and soft drinks are provided to  competitors and  spectators at concessional rates. 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

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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 under- taking of the nature of business or trade. It was then  pointed out that there have been occasions when very big parties have been held in this Club where  catering has been provided by the Club and, at these  parties,   non- members  have attended in large numbers.  On behalf  of  the respondent Union, an example was cited of an occasion when a function  was  held to celebrate the Golden Jubilee  of  the Bank of  India  and catering was provided for a large number of  guests at the Club. In answer to interrogatories  served by the workmen, it was admitted by the Secretary of the Club that  there was also another function of celebration of  the silver  Jubilee of the Bombay Mercantile  Co-operative  Bank Ltd.  when  also catering was provided by the Club.  It  was stated  on behalf of the workmen that, on  these  occasions, the invitations were issued not in the name of any Member of the  Club, but in the name of the organisations  which  held the functions.  The affidavit filed by the Secretary  of the Club,  however,  shows that in these two cases or  in  other cases  where parties or functions are held in the Club,  the Club never enters into any contract with any outsider.   The Club,  in fact. provides the catering at the instance  of  a Member  of  the Club.  It appears that some Members  of  the Club are connected with organisations like the Bank of India or  the Bombay Mercantile Co-operative Bank Ltd.,  and  they adopted ’the course of arranging the function with the  Club in  their capacity as Members.  The privity of contract  was between them and the Club, and the Club itself had 611 nothing  to do with the two organisations. May be  that,  in arranging such functions, the Members of the Club, to   some extent, abused their privilege of having functions  arranged by  the  Club,  but  it cannot be held  that  the  Club,  in agreeing to cater at such functions, was really intending to sell its goods to persons other than Members.  The Club,  in fact,  realised  the  dues  for   such  functions  from  the Members  only. The Members were responsible for  payment  to the Club and did, in fact, make  the  payments. The Club, in thus  catering for such functions, was in fact catering  for its  Members  and was not at all intending to  carry  on  an activity  of  providing  the facility  of  catering  at  the instance   of  outsiders. On behalf of the workmen,  it  was urged  that functions    of  this nature are numerous and  a regular feature in this Club.  In fact, the Tribunal in  its order has held that :--               "a  systematic arrangement by which  Companies               and   other  institutions  book  the   grounds               through members, whereby the Club makes profit               by charging refreshments per head would  bring               a Club on the other side of the border line so               as to make it an industry." In  accepting  this view, the Tribunal again  fell  into  an error for’ two reasons.  The first was that the Tribunal did not  attach  due importance to the  circumstances  that  the functions  were  arranged by the Club only  because  of  the request of a Member and the Club confined its contract  with the   Member  without  in  any  way  dealing  with   outside organisations.   The  second  point is  that  there  was  no material  to  show  that such functions  form  a  systematic arrangement.   In fact, only two instances were put  forward on  behalf of the workmen where functions were arranged  for purposes of celebrating the Jubilee functions of two  Banks. Further,  the affidavit of K.K. Tarapor filed on  behalf  of

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the Club shows that, during the four years 1961-62, 1962-63, 1963-64 and 1964-65, the total number of functions at  which the  attendance was 800 and more, including Members  of  the Club, was 28.  We were told that the Tribunal had asked  for the  figures  of functions held during these four  years  at which  the attendance was 800 or more, and, thereupon,  this information was supplied in the affidavit of Tarapur.  There is no material to show how many of these  28  functions were of  the nature of the two functions held for celebration  of Jubilees of the two Banks.  It is quite likely that a  large number  of these parties at which the attendance was 800  or more  may have been given personally by Members of the  Club on their own account in order to entertain people for  their own personal celebrations on occasions such as marriages  of sons  or daughters.  In fact, the evidence given before  the Tribunal  was limited to only two specific  instances  where functions  were held for celebration by  organisations  and. not  by Members of the Club themselves.  In the  absence  of any material showing that a large number of parties were  of that nature, no inference could follow that this was a sys- L13Sup.C.I./68---8 612 tematic arrangement by which the Club was attempting to make profit;  and the Tribunal, in phasing its decision  on  this ground, was not correct.  The few instances cited do not, in our  opinion,  indicate ’that the Club is carrying  on  this activity  in  such a manner that it must be held  to  be  an industry. Very  great reliance was placed in support  of the  decision of  the  Tribunal on the fact that the Club  has  erected  a Stadium  at  the Cricket field where matches  are  held  and makes  an income of about Rs. 2 lakhs on each occasion  when a  Test Match is held on the Cricket ground by charging  for admission tickets sold to persons who come as spectators  to watch  the Test Matches.  It was further pointed  out  that, apart  from  charging  for admission  to  the  Stadium  from spectators  by selling tickets to  them,  the Club has  also entered  into  agreements with   four   organisations  under which   a  number  of  seats  in  ’the  Stadium  are   given exclusively  for  the use of those organisations.   We  have already   had   occasion  to  mention   earlier   one   such organisation,  viz., the Catholic Gymkhana Ltd.  The  nature of  these  agreements  is  clear   from   the  copy  of  the Agreement  filed before the Tribunal which was entered  into between the Club and the Catholic Gymkhana Ltd.  Under  that Agreement,  the Club allotted for seating  accommodation  to the  Gymkhana 831 seats in ,the North Stand for a period  of 12 years.  The allotment was for use by ’the Gymkhana on all occasions  when  official  and/or  unofficial  Test  Matches and/or  matches of similar status sponsored by the Board  of Control for Cricket in India were held, or a fixture  played by  a foreign touring teem not sponsored by the said  Board. Under  the  Agreement,  the Gymkhana had to pay Rs. 5/-  per seat  for the first fixture; Rs. 5 per seat for  the  second fixture;  Rs. 4 per seat for the third fixture and  Rs.  4/- per seat for ’the fourth fixture.  The question that  arises is  whether  these  charges  made by  the  Club  from  these organisations,  like  the Catholic Gymkhana  Ltd.,  or  from spectators to whom tickets are sold, bring into existence an activity of the nature of business or trade so as to convert it  into  an industry. It is to be noted that  one  of  ’the principal  objects of the Club is the promotion of the  game of cricket.  In fact, the very first object mentioned in the Memorandum  of Association is ’to encourage and promote  the game of cricket in India and elsewhere.   The second  object

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is  of laying down grounds for playing the game of  cricket, and  the  third  object  ’is  clearly  for  the  purpose  of encouraging  matches between Indian and foreign teams.    It is  clear that the Cricket grounds are being  maintained  by the  Club  in pursuance of these objectives.   The  game  of cricket can only be promoted and encouraged if, when matches are held, facilities are provided not merely for holding the matches,  but  also for people to watch the matches  and  to create  interest  in the public in general in  the  game  of cricket.   It  was  obviously with  this   object  that  the Stadium  was constructed.  Its use by spectators  interested in 613 the matches or by members of other organisations  interested in  the  game  of  cricket is  purely  for  the  purpose  of encouraging  and promoting the game of cricket in  pursuance of  that  primary object of forming the Club.   It  is  true that,  in carrying on this object of the Club, the Club  has been  charging the spectators  by  selling tickets  to  them and also charging organisations to whom seats are  specially allotted.   So far as seats allotted to those  organisations are  concerned,  we  are inclined  to  accept  the  argument advanced ’by Mr. Vimedalal that this arrangement, instead of enuring  to  the  benefit of the Club, in  fact  is  to  its disadvantage.   We have already indicated that at  least  in one  case of the Catholic Gymkhana Ltd., the charge that  is made from the Gymkhana is at a very low rate of Rs. 5 or Rs. 4 per seat. On the face of it, if the Club was intending  to make  profits,  it need not have given those  seats  to  the Gymkhana and could have sold the seats to outsiders at  much higher  rates. The very fact that such agreements have  been entered  into with organisations connected with the game  of cricket  shows that, in entering into these agreements,  the primary object of the Club was to encourage persons who  are interested  in  the  game of cricket,  even  though  at  the disadvantage  of charging them at much lower rates.  So  far as charges from spectators are concerned by selling  tickets to  them, they are obviously  realised  in order  to  ensure that the Club can carry on its activity of the promotion  of game  of  cricket and also make up losses  for  purposes  of providing  other facilities and amenities to the Members  of the Club.  It is to be noticed that, in the whole period  of 37 years, only 13 Test Matches have been held on the grounds of  the  Club. Even these Matches are not organised  by  the Club itself.   They are, in fact, organised by the Board  of Control   for   Cricket  in India. The Board  then  arranges with   the   Bombay  Cricket  Association,  which   is   the controlling  body,  for the venue of the  Test  Match.   The Bombay  Cricket Association  has no  ground  or  Stadium  of its  own.   It  is  the  Bombay  Cricket  Association   that approaches the Club to promote the Test Matches to be played at  the Brabourne Stadium of the Club, and the Club  accedes to these requests.  It will thus be seen that the Club comes in  at  the  last stage of providing the  venue  and  making arrangements for the successful holding of the Test  Matches and  it is for that purpose, on the few occasions when  Test Matches  are allotted to the grounds of the Club,  that  the Club is able to sell tickets  in  the Stadium and make  some income.   In  these circumstances, we are  not  inclined  to accept  the  submission made on behalf of the  workmen  that this activity by the Club is an undertaking in the nature of trade  or  business.   It is, in fact, an  activity  in  the course  of  promotion  of  the game of  cricket  and  it  is incidental that the Club is able to make an income on  these few occasions which income is later utilised for the purpose

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of  fulfilling  its other  objects  as incorporated  in  the Memorandum of Association.  The holding 614 of  the Test Matches is primarily organised by the Club  for the purpose of promoting the game of cricket.  This activity by  the Club cannot, by itself in our opinion, lead  to  the inference that the Club is carrying on an industry. Lastly, reference was made to the circumstance that,  unlike the Madras Gymkhana Club, the Club has been incorporated  as a  Limited Company under the Indian Companies Act.   It  was urged that the effect of this incorporation in law was  that the  Club  became an entity separate and distinct  from  its Members,   so  that, in providing catering  facilities,  the Club,  as  a  separate  legal  entity,  was  entering   into transactions  with  the Members who were distinct  from  the Club  itself.   In our opinion, the Tribunal  was  right  in holding  that the circumstance of incorporation of the  Club as a Limited Company is not of importance.  It is true that, for  purposes of contract law and for purposes of  suing  or being  sued,  the  fact of incorporation makes  the  Club  a separate legal entity; but, in deciding whether the Club  is an  industry or not,  we  cannot base our decision  on  such legal technicalities.  What we have to see is the nature  of the  activity in fact and in substance.  Though the Club  is incorporated  as  a  Company, it is  not  like  an  ordinary Company   constituted  for  the  purpose  of  carrying    on business. There are no share-holders.  No dividends are ever declared  and  no  distribution  of  profits  takes   place. Admission to the Club is by payment of admission fee and not by  purchase of shares.  Even this admission is  subject  to balloting.    The  membership is not transferable  like  the right of shareholders.  There is the provision for expulsion of  a  Member under certain   circumstances   which  feature never exists in the case of a shareholder holding shares  in a  Limited  Company.   The membership is  fluid.   A  person retains rights as long as he continues as a Member and  gets nothing at all when he ceases to be a Member, even though he may  have  paid a large amount as admission  fee.   He  even loses his  rights  on expulsion.  In these circumstances, it is clear that the Club cannot be treated as a separate legal entity  of  the  nature of a  Limited  Company  carrying  on business.   The  Club, in fact, continues to be  a  Members’ Club   without  any  shareholders  and,  consequently,   all services provided in the CLub for Members have to be treated as activities of a self-serving institution. For  these reasons, we consider that the order made  by  the Tribunal,  holding  that  ’the Club  is  an  ’industry’,  is incorrect and must be set aside.  The appeal is allowed, and the  order  of  the  Tribunal.  dismissing  the  preliminary objection  of the Club, is set aside.  In the  circumstances of  this case, we direct parties to bear their own costs  of this appeal. R.K.P.S.                                    Appeal allowed., 61 5