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PETITIONER: BOMBAY TELEPHONE CANTEEN EMPLOYEES’ ASSOCIATION, PRABHADEVI

       Vs.

RESPONDENT: UNION OF INDIA & ANR.

DATE OF JUDGMENT:       09/07/1997

BENCH: K. RAMASWAMY, D. P. WADHWA

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T K. RAMASWAMYY. J.      This special  leave petition has come up directly, from the award  of the  Central  Government  Industrial  Tribunal No.2, Bombay,  made on  August 9, 1996 in Reference No.CGIT- 2/26/91.      Delay condoned.      The  admitted   position   is   that   the   petitioner Association,  representing  five  dismissed  employees,  had sought reference  under  Section  10(1)  of  the  Industrial Disputes Act,  1947 (for  short, the ‘Act’) to the Tribunal. The  dispute   arose  on   account  of  termination  by  the respondent-Management of  the services  of the  said employe on April  28, 1989;  It was alleged that the termination was without any  notice and payment of retrenchment compensation under Section  25-f. The  reference came to be made on April 19, 1991.  The Tribunal  has held,  that the telephone Nigam Limited, Bombay  is not an ’industry’. It, therefore, has no jurisdiction to  adjudicate the dispute. Prabhadevi Exchange had  a  total  strength  of  3000  employees  of  the  Tele- communication Department,  working in  three shifts.  As per the Administrative  Instructions issued  by the  Government, for the first shift there should be a ’3A’ type canteen, for the second  shift ’A’  type canteen  and for the third shift there should  be ‘C’  type canteen.  It was averred that for Type ‘3A’ canteen, there should be 57 employees, but only 24 employees were  working on April 27.4.1989. The claim of the petitioner is  that the  dismissed employees  had joined the service  in  1987.  They  are  claiming  wages  as  per  the directions of  this Court,  i.e.,  as  per  the  Fourth  Pay Commission’s recommendations. Since they were insisting upon payment of  the wages,  it is  alleged, the services of five employees were  terminated  without  giving  any  notice  or giving any  retrenchment compensation as enjoined by Section 25-F of  the Act.  Therefore, they sought reinstatement into service with full back wages and with continuity of service. The respondents,  on the  other  hand.  contended  that  the employees working  in the  canteen are  not ’workmen’ within the definition  of Section  2(s)  of  the  Act  nor  is  the respondent  an  ‘industry’  under  Section  2(j).  They  are

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"treated as  holding civil posts in the Central Government". They were  paid monthly  salaries  devised  by  the  Canteen Committee depending upon the increases in the cost of living etc.  The   provisions  of  Chapter  VI-B  of  the  Act  are inapplicable to  them. The  Tribunal noted  the findings  as under:      Prabhadevi  Telephone   Exchange  employed  about  4000 employees  which   is  required   under  the  provisions  of Administrative  Instructions   to  have   one   departmental canteen. In  ‘A’ type canteen, 19 employees are required per shift. It works from 5 a.m. to 12 midnight. In three shifts, there at  the relevant  time are  24 employees including the concerned five workmen. In view of a judgment of this Court, non-statutory canteen employees are entitled to the benefits of the  recommendations of Third and Fourth Pay Commissions. The Director  of Canteen accordingly directed the Department concerned to  pay the  canteen employees  wages as  per  the recommendations  of   the  Pay   Commission.    Departmental Canteen, it  is contended  by  the  management,  is  not  an ‘industry’ as  per the  Memorandum dated January 12, 1982 of the  Director   (Welfare),  Indian   Posts  and   Telegraphs Department.      Relying  upon  the  judgment  of  this  Court  in  Sub- Divisional Inspector  of Posts  Vaikkam &  Ors. vs.  Theyyam Joseph [(1996)  2 SCC  293],  the  Tribunal  has  held  that departmental canteen  is  not  an  ‘industry’.  However,  on merits, it  has held that termination of the services of the five employees  is bad  in  law.  Calling  the  decision  in question, the above special leave petition has been directly filed under  Article  136,  contending  that  the  ratio  in Theyyam Joseph’s case contrary to the judgment of this Court in Bangalore  water-supply &  Sewerage Board,  etc.  vs.  R. Rajappa &  Ors. [(1978) 3 SCR 207]. The judgment, therefore, in Joseph’s case is not correct in law. When its correctness was questioned  in another  case, notice  was issued. It is, therefore, contended  that the  ratio  of  the  Constitution Bench judgment  of seven  Judges in  Bangalore Water  Supply Case applies  to the  facts herein. The judgement in Josph’s case, was  rendered   without reference  to the  former  and hence the  matter needs  fresh examination.  The question is whether the   view  taken is  correct in  law? This Court is aware of  the decision  in Bangalore  Water Supply  case  in which this  Court had  held the test to determine whether an establishment is  an ‘industry’  within the  meaning of  the Act. Therein,  the employees  of the  appellant  Board  were fined for  misconduct and  the fine was recovered from them. They filed  an application under Section 33 C(2) of the Act? The question was whether the Tribunal has jurisdiction under Section 33-C(2) of the Act? The High Court had held it to be an   industry    and,   therefore,   the   application   was maintainable. On  appeal, this  Court laid down the tests as under:      "The term  "analogous to  the trade      of business" could not cut down the      scope of  the term  "industry". The      said words can reasonably mean only      activity  which  results  in  goods      made and  manufactured  or  service      rendered which are capable of being      converted into  saleable ones. They      must be  capable  of  entering  the      word of  "res commercium", although      they may  be kept out of the market      for some  reason.  It  is  not  the      motive of  an  activity  in  making

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    goods or  running a service but the      possibility    of    making    them      marketable if  one who  makes goods      or renders service so desires, that      should   determine    whether   the      activity lies  within the domain or      circle of  industry. But  even this      may not  be always  a  satisfactory      test. By  this  test  the  type  of      services which  are rendered purely      for the  satisfaction of  spiritual      or psychological  urges of  persons      rendering those  services would  be      excluded.  Whenever  an  industrial      dispute would  arise between either      employers  and   their  workmen  or      between  workmen  and  workmen,  it      should be considered an area within      the sphere  of "industry’  but  not      otherwise.  In   other  words,  the      nature  of  the  activity  will  be      determined by  the conditions which      give rise  to the livelihood of the      occurrence  of  such  disputes  and      their  actual   occurrence  in  the      sphere.      The  term   "sovereign  should   be      reserved   technically   and   more      correctly   for   the   sphere   of      ultimate   decisions.   Sovereignty      operates on  a sovereign  place  of      its own.  Only those services which      are governed  by separate rules and      constitutional provisions  such  as      Articles  310   and   311   should,      strictly speaking  be excluded from      the  sphere   of  industry   by   a      necessary implication.      The    special     excludes     the      applicability   of   the   general.      Certain  public   utility  services      which   are    carried    out    by      governmental      agencies       or      Corporations are treated by the Act      itself  as  within  the  sphere  of      industry. If  express  rules  under      other   enactments    govern    the      relationship between  the State  as      an employer  and  its  servants  as      employees, it  may be  contended on      the  strength  of  such  provisions      that a  particular set of employees      are  outside   the  scope   of  the      Industrial Disputes Act.      The   State    today   increasingly      undertakes commercial functions and      economic activities and services as      part of  its duties  in  a  welfare      state.   Hence    to   artificially      exclude state-run industry from the      sphere  of   the  Act,  unless  the      statutory provisions  expressly  or      by necessary  implication have that      effect, would not be correct.      Section  2(j)   of  the  Industrial

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    Disputes Act  (1947) which  defines      "industry" contains  words of  wide      import, as  wide as the Legislature      could have  possibly made them. The      problem of  what limitations  could      and should  be reasonably  read  in      interpreting the wide words used in      Section  2(j)  is  far  too  policy      oriented   to   be   satisfactorily      settled by  judicial decisions. The      Parliament   must   step   in   the      legislate in  a manner  which  will      leave no doubt as to its intention.      That    alone    can    afford    a      satisfactory   solution    to   the      question  which  has  agitated  and      perplexed  the   judiciary  at  all      levels.      Hospital    Mazdoor    Sabha    was      correctly decided  in so  far as it      held that the JJ Group of hospitals      was an industry but the same cannot      be said  in regard  to the  view of      the Court  that certain  activities      ought  to  be  treated  as  falling      outside the definition clause.      There  is   no  justification   for      excepting the  categories of public      utility  activities  undertaken  by      the Government  in the  exercise of      its inalienable functions under the      constitution,  call   it  regal  or      sovereign or  by  any  other  name,      from the  definition of "industry".      If it  be true  hat one  must  have      regard  to   the  nature   of   the      activity and  not to who engages in      it,  it  is  beside  the  point  to      enquire  whether  the  activity  is      undertaken  by   the   State,   and      further,  if   so,  whether  it  is      undertaken  in  fulfilment  of  the      State’s constitutional  obligations      or    in     discharge    of    its      constitutional functions.  In fact,      to  concede   the  benefit   of  an      exception to the State’s activities      which  are   in   the   nature   of      sovereign functions  is really   to      have  regard  not  s  much  to  the      nature of  the activity  as to  the      consideration who  engages in  that      activity: for,   sovereign function      can only be discharged by the State      and not by a private person. If the      State’s inalienable  functions  are      excepted  from  the  sweep  of  the      definition  contained   in  section      2(j), one  shall, have  unwittingly      rejected the  fundamental test that      it is  the nature  of the  activity      which ought  to  determine  whether      the  activity   is   an   industry.      Indeed, in  this respect, it should      make no  difference whether  on the

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    one hand, an activity is undertaken      by  a   corporate   body   in   the      discharge    of    its    statutory      functions or,  on the other. by the      State itself in the exercise of its      inalienable functions. If the water      supply and sewerage schemes of fire      fighting .  establishments run by a      Municipality can  be industries, so      ought  to  be  the  manufacture  of      coins  and   currency,   arms   and      ammunition and  the winning  of oil      and uranium.  The fact  that  these      latter kinds  of activities are, or      Can  only  be,  undertaken  by  the      State does  not furnish  any answer      to  the   question  whether   these      activities  are   industries.  When      undertaken by  a private individual      they  are   industries,  therefore,      when undertaken  by the State, they      are industries.  The nature  of the      activity is  the determining factor      and that  does not change according      to who  undertakes it. Items 8, 11,      12, 17 and 18 of the First Schedule      read with  Section, 2(n)(vi) of the      Industrial  Disputes   Act   render      support   to   this   view.   These      provisions which  were described in      Hospital  Mazdoor  Sabha  as  ’very      significant, at  lease  show  that,      conceivably,       a        Defence      Establishment, Mint  or a  Security      Press  can   be  an  industry  even      though these  activities are, ought      to be and can only be undertaken by      the State  in the  discharge of its      constitutional    obligations    or      functions. The State does not trade      when it  prints a  currency note or      strikes   a    coin.    And    yet,      considering  the   nature  of   the      activity,  it   is  engaged  in  an      industry when it does so.      A  systematic   activity  which  is      organised or  arranged in  a manner      in which  the trade  or business is      generally  organised   or  arranged      would be  an industry  despite  the      fact   that    it   proceeds   from      charitable motives.  It is  in  the      nature of the activity that one has      o  consider  and  it  is  upon  the      application of  that test  that the      State’s inalienable  functions fall      within the  definition of industry.      The very same principles must yield      the  result   that  just   as   the      consideration as  to  who  conducts      the  activity,  is  irrelevant  for      determining whether the activity is      an industry so is the fact that the      activity is charitable in nature or      is  undertaken  with  a  charitable

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    motive.  The   status  or  capacity      corporate or constitutional, of the      employer would  have,  if  at  all,      closer nexus,  than his  motive  on      the question  whether the  activity      is an  industry. The  motive  which      propels the activity is yet another      step removed  and ex hypothesis can      have no relevant on the question as      to  what   is  the  nature  of  the      activity. It  is never  true to say      that the  nature of  the activities      is   charitable.   The   subjective      motive force  of an activity can be      charity  but  for  the  purpose  of      deciding whether  an activity is an      industry one  has to  look  at  the      process involved  in the  activity,      objectively. The  jural  foundation      of any attempt to except charitable      enterprises from  the scope  of the      definition can  only be  that  such      enterprises are  not undertaken for      profit. out  then, that clearly, is      to introduce  the profit concept by      a side  wind, a  concept which  has      been rejected consistently over the      years. If any principle can be said      to be  settled law  in  this  vexed      field  it   is  this   ;  the  twin      consideration of  profit motive and      capital  investment  it  irrelevant      for      determining   whether   an      activity is  an industry. Therefore      activities which  are dominated  by      charitable motives  either  in  the      sense that  the profit,  which they      yield are  diverted  to  charitable      purposes are  not beyond the ; pale      of the  definition of section 2(j).      It is  much  beside  the  point  to      inquire who  is the  employer as it      to inquire,  why  is  the  activity      undertaken and  what  the  employer      does with the profits, if any,      By   this    test   a   Solicitor’s      establishment would be an industry.      A Solicitor is undoubtedly does not      carry on  a trade or  business when      he acts  for his  client or advises      him or pleads for him, If  and when      pleading is permissible  to him. He      pursues  a   profession  which   is      variously and justifiably described      as learned,  liberal or  noble. But      it is  difficult to  infer from the      language  of  the    definition  in      section 2(j)  that the  Legislature      could not  have intended   to bring      in a  liberal profession  like that      of an  Attorney within the ambit of      the definition of ’industry ’.      In Hospital Mazdoor Sabha the Court      while evolving  a working principle      stated that an industrial activity.

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    generally involved, inter alia, the      cooperation of the employer and the      employees, That  the production  of      goods or  the rendering of material      services to  the community  must be      the direct  and +  proximate result      of such  cooperation is  a  further      extension of  that principle and it      is  broadly,   by  the  application      thereof    that     a    Solicitors      establishment  is   held   not   to      attract  the  definition    clause.      These   refinements    are,    with      respect not  warranted by the words      of the  definition, apart  from the      consideration that in practice they      make   the   application   of   the      definition   to    Concrete   Case;      dependent upon a factual assessment      so highly subjective as to, lead to      confusion and  uncertainty  in  the      understanding  of  the  true  legal      position.   Granting    that    the      language of  the definition  is  so      wide that  some limitation ought to      be read into it, one must stop at a      point beyond  which the  definition      will  skid   into  a   domain   too      rarefied to  be realistic.  Whether      the   cooperation    between    the      employer and  the employee  is  the      proximate  cause  of  the  ultimate      product and bears direct with it is      a test  which is  almost impossible      of application  with any  degree of      assurance or certitude. It  will be      as  much   true  to  say  that  the      solicitor’s   Assistant,   Managing      Clerk, Librarian  and the Typist do      not  directly   contribute  to  the      intellectual and product which is a      creation    of     his     personal      professional   skill,    as   that,      without their active assistance and      cooperation it  will be  impossible      for him  to  function  effectively.      The unhappy  state  of  affairs  in      which  the  law  is  marooned  will      continue  to   baffle  the  skilled      professional  and   his   employees      alike as  also the Judge who has to      perform  the   unenviable  task  of      sitting  in   judgment   over   the      directness   of   the   cooperation      between  the   employer   and   the      employee, until  such time  as  the      legislature decides to manifest its      intention by  the use  of clear and      indubious language. Beside the fact      that this  Court  has  so  held  in      National   Union    of   Commercial      Employees the legislature will find      a plausible  case for exempting the      learned and  liberal professions of      Lawyers,    Solicitors,    Doctors,

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    Engineers,  Chartered   Accountants      and the  like from the operation of      industrial  laws.  But  until  that      happens, in  the present  state  of      the law  it difficult  by  judicial      interpretation to create exemptions      in favour of any particular class.      The  case   of  the  clubs  on  the      present     definition  is   weaker      still.  The   definition   squarely      covers  them   and  there   is   no      justification for  amending the law      so as  to  exclude  them  from  the      operation of  the industrial  laws.      The fact  that the running of clubs      is not a calling of the club or its      managing committee,  that the  club      has no  existence  apart  from  its      members  that  it  exists  for  its      members     though     occasionally      strangers take  the benefit  of its      services and  that even  after  the      admission  of   guests,  the   club      remains  a   members’  self-serving      institution does not touch the core      of the problem.      (1) ‘Industry’  as defined  in Sec.      2(j)  and  explained  in  Banerji’s      case has a wide import.      1.(a)    Where    (i)    systematic      activity,   (ii)    organised    by      cooperation  between  employer  and      employee    (the     direct     and      substantial element is chimerical);      (iii)  for  the  production  and/or      distribution of  goods and services      calculated to  satisfy human  wants      and  wishes   (not   spiritual   or      religious,   but    inclusive    of      material things  or services geared      to celestial bliss e.g. making on a      large scale  prasad or food), prima      facie there  is  an  ‘industry’  in      that enterprise.      (b) Absence  of  profit  motive  or      gainful objective is irrelevant, be      the venture  in the  public, joint,      private or other sector.      (c) The  true focus  is  functional      and the decisive test is the nature      of  the   activity   with   special      emphasis on  the  employer-employee      relations.      (d) If  the organisation is a trade      or business it does not cease to be      one   because    of    philanthropy      animating the  undertaking.      II.  Although   section  2(j)  uses      words of  the widest  amplitude  in      its two limbs, their meaning cannot      be magnified to overreach itself.      (a)  ‘Undertaking’  must  suffer  a      contextual    and     associational      shrinkage as  explained in  Banerji      and in  this judgment;  so  also  ,

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    service, calling and the like. This      yields the  interference  that  all      organised activity  possessing  the      triple  elements   in  I   (supra),      although not trade or business, may      still be  ’industry’  provided  the      nature’ of  the activity,  viz, the      employer-  employee   basis   bears      resemblance  to  what  we  find  in      trade or  business. This  take into      the     fold      of     ’industry’      undertakings, calling and services,      adventures’   analogous    to   the      carrying on  of trade or business’.      All  features,   other   than   the      methodology of  carrying    on  the      activity  viz.  in  organizing  the      cooperation between  employer and ;      employee,  may  be  dissimilar.  It      does  not,   matter,  if   on   the      employment terms there is analogy.      III.    Application     of    these      guidelines should not stop short of      their logical  reach by  invocation      of creeds,  cults or inner sense of      incongruity  or   outer  sense   of      motivation for  or resultant of the      economic operations.  The  ideology      of the  Act being industrial peace,      regulation   and    resolution   of      industrial    disputes.     between      employer and  workmen, the range of      this statutory ideology must inform      the   reach    of   the   statutory      definition. Nothing  less,  nothing      more.      (a)  The   consequences   are   (i)      professions,   (ii)   clubs   (iii)      educational    institutions    (iv)      cooperatives,     (v)      research      institutes (vi) charitable projects      and (vii) other kindred adventures,      if they  fulfil  the  triple  tests      listed  in   (supra),   cannot   be      exempted from  the scope of section      2(j)      (b)  A   restricted   category   of      professions,  clubs,   cooperatives      and  even   gurukulas   an   little      research  labs.   may  qualify  for      exemption if,  in simple  ventures,      substantially  and   going  by  the      dominant     nature      criterion,      substantively  no   employees   are      entertained but in minimal matters,      marginal   employees    are   hired      without destroying the non employee      character of the unit.      (c) If,  in a  pious or  altruistic      mission,  many  employ  themselves,      free or for small honoraria or like      return, mainly  drawn by sharing in      the  purpose   or  cause,  such  as      lawyers volunteering  to run a free      legal services  clinic  or  doctors

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    serving in  their spare  hours in a      free medical  centre  on  asramites      working  at   the  bidding  of  the      holiness, divinity  or like central      personality, and  the services  are      supplied free  or at  nominal  cost      and those who serve are not engaged      for remuneration or on the basis of      master  and  servant  relationship,      then  the  institution  is  not  an      industry even  if  stray  servants,      manual  or  technical,  are  hired.      Such    eleemosynary     or    like      undertakings alone  are  exempt-not      other    generosity,    compassion,      developmental passion or project.      IV. The dominant nature test:      (a) Where  a complex of activities,      some   of    which   qualify    for      exemption,  others   not,  involves      employees on the total undertaking,      some of  whom are  not ‘workmen’ as      in the  University of Delhi case or      some departments are not productive      of goods  and services if isolated,      even then,  the predominant  nature      of the  services and the integrated      nature  of   the   departments   as      explained  in  the  Corporation  of      Nagpur, will  be the true test. The      whole    undertaking     will    be      ’industry’ although ; those who are      not ’workmen’ by definition may not      benefit by the status.      (b)  Notwithstanding  the  previous      clauses    sovereign     functions,      strictly    understood,    (alone),      qualify  for   exemption,  not  the      welfare  activities   of   economic      adventures undertaken by Government      or statutory bodies.      (c) Even in departments discharging      sovereign functions  if  there  are      units which are industries and they      are substantially  severable,  then      they  can  be  considered  to  come      within sec. 2(j).      (d)      Constitutionally       and      competently   enacted   legislative      provisions may well remove from the      scope of  the Act  categories which      otherwise may be covered thereby."      It  is   not  necessary  to  refer  to  the  dissenting judgments Beg,  C.J in his concurring judgment, at page 221, placitum E to G, has held thus:      "I would  also like  to make  a few      observations about  the  so  called      "sovereign"  functions  which  have      been placed  outside the  field  of      industry. I do not feel happy about      the use  of  the  term  "sovereign"      here.  I   think  that   the   term      ‘sovereign’  should   be  reserved,      technically and more correctly, for      the sphere  of ultimate  decisions.

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    Sovereignty operates on a sovereign      plane of  its own as I suggested in      Keshavananda     Bharati’s     case      supported  by   a  quotation   from      Ernest   Barker’s    "Social    and      Political Theory". Again the term a      "Regal",  from   which   the   term      "sovereign"   functions appears  to      be derived,  seems   to be a misfit      in a  Republic  where  the  citizen      shares the political sovereignty in      which he  has even  a legal  share,      however small  in  as  much  as  he      exercises the  right to  vote. What      is meant  by the  use of  the  term      "sovereign",  in  relation  to  the      activities of  the State,  is  more      accurately brought out by using the      term  "governmental"      functions      although  there   are  difficulties      here  also   in  as   much  as  the      Government has  entered largely now      fields of industry. Therefore, only      those services  which are  governed      by     separate      rules      and      constitutional provisions,  such as      Article   310   and   311   should,      strictly speaking, be excluded from      the sphere of industry by necessary      implication."      In State  of Bombay  & ors,  vs. The  Hospital  Mazdoor sabha &  ors. [(1960) 2 SCR 866], this Court had given wider interpretation to  the  word  "industry",  with  a  view  to achieve the  scope and  object of the Act, so as to make the remedy  available   to  the   workmen.  Similarly,   in  The Corporation of  the city of Nagpur vs. Its Employees [(1960) 2 SCR 942] this Court had pointed out that the definition of the word  ‘industry’ is  very   comprehensive. It  is in two parts.  It   is  not  necessary  that  an  activity  of  the Corporation must  share the  common  characteristics  of  an industry  before     it   can  come   within  the  statutory definition. The words of Section 2(14) of the City of Nagpur Corporation Act  which is  equivalent to Section 2(j) of the Act, are    clear  and  unambiguous.  The  wide  definition, however,   cannot include the regal, primary and inalienable functions of  the State,  though statutorily  delegated to a Corporation and  the  ambit  of  such  functions  cannot  be extended so as to include the welfare activities of a modern State,  and   must  be   confined  to   legislative   power, administration of  law and judicial power. "The real test as to whether  a service  undertaken by  a  Corporation  is  an industry must  be whether  that service,  if performed by an individual or  a  private  person,  would  be  an  industry. Monetary consideration cannot be an essential characteristic of an  industry  in  a  modern  State.  It  was,  therefore, incorrect to say that only such activities as were analogous to trade  or business could come within Section 2(14) of the Act". "When  a service  rendered  by  a  Corporation  as  an industry, the  employees of  the departments  connected with the service, whether financial, administrative or executive, would be entitled to the benefits of the Act".      In 1960’s  and 1970’s,  there was  parallel  stream  of thinking being developed by this Court to engulf the service conditions  of   the  employees   of  a  Corporation  either registered under  the Companies  Act or  under the Societies

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Act or  under a statute, vis-a-vis the Government employees. In Heavy Engineering Mazdoor Union vs. The State of Bihar  & Ors. [(1969) 3 SCR 995], this Court held that the Government Company is  distinct from  Government. In  Praga  vs.  Tools Corporation  vs.  C.V.  Imanual  [(1969)  3  SCR  773],  the employees were held not entitled to availed the remedy under Article 226 of the Constitution. In Sukhdev Singh & Ors. vs. Bhagatram Sardar  Singh Raghuvanshi  & Anr.  [(1975)  3  SCR 619], a  break-through was  effected by a Constitution Bench in considering  whether the  Oil and Natural Commission, the Industrial  Financial  Corporation  or  the  Life  Insurance Corporation is  an ‘authority’ within the meaning of Article 12 of  the Constitution and whether the employees working in the Corporation  are entitled  to the protection of judicial review under  Article 14.  It was  answered it favour of the employees. In  separate but  concurrent judgment, Mathew, J. laid the  foundation demolishing  the autonomous  status and non-amenability  to   judicial  review  of  the  actions  of corporate sector  and  held  that  when  a  Corporation  was created by  a statute, its rules or instructions partake the statutory  character   like   a   subordinate   legislation. Therefore, they  are to  act consistently  with the Rules or Regulations  made   under  the   Act  or  by  the  statutory authority.      The power  of statutory  authority  is  controlled  and restricted by the statute which created r them and the rules and regulations framed thereunder. Any action of such bodies in excess  of their  power or  in violation  of restrictions placed on  that power  is ultra  vires. Thus,  the corporate veil given  in Praga  Tools case  was torn  apart and  their actions were made amenable to judicial review. In Ajay Hasia etc. vs.  Khalid Mujib  Sehravardi & Ors. etc. [(1981) 2 SCR 79], another  Constitution Bench had held that having regard to the  Memorandum of  Association  and  the  Rules  of  the Society, the  respondent-College  was  a  State  within  the meaning of  Article 12.  The composition  of the  Society is dominated by  the representatives  appointed by  the Central Government and the Governments of Jammu and Kashmir, Punjab, Rajasthan and Uttar Pradesh with the approval of the Central Government.   Accordingly,    it   was   held   to   be   an instrumentality  of  the  State.  In  R.D.  Shetty  vs.  The International Airport  Authority of  India &  Ors. [(1979) 1 SCR 1042] and U.P. Warehousing Corporation & Anr. vs. Narain Vajpayee [(1980)  3 SCC  459] this  Court laid  the test  to determine as  to when  a  Corporation  can  be  said  to  be instrumentality or  agency of  the Government.  The test  of deep and permissive control was laid down thereunder. It was held that  the statutory  authorities are  amenable to  writ jurisdiction being  an instrumentality or an authority under the  State   within  the   meaning  or  Article  12  of  the Constitution. It  was further  held that the Corporation may be an  authority and,  therefore, a State within the meaning of Article  12. Yet,  it may not be elevated to the position of State  for the purpose of Articles 309, 310 and 311 which find place  in Part  XIV. For the purpose of Part III it has separate jurisdictional  entity, though  it would  not be so for the  purpose of  Part XIV  or another  provisions of the Constitution. In  U.P.  Warehousing  corporation  case,  the respondent, on the basis of the complaints after preliminary enquiry,  was  charged  with  certain  allegations  and  his explanation was sought and to indicate his evidence, if any. He had  expressed his  intention  to  cross-examine  certain witnesses as also to examine some others in defence. Without taking any action on the respondent’s request, the appellant passed an  order dismissing him from service w.e.f. the date

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of his  suspension. In  the writ  petition filed  by him the High Court  quashed the order and directed his reinstatement with full  back-wages. This  Court, on these facts, had held that  "in   cases  where  there  is  an  element  of  public employment and service or support by statute or something in the nature  of an  office or  a  status, which is capable of protection, then  irrespective of  the terminology used, and even though  in some  inter parties aspects the relationship may be  called that  of master  and servant,  there  may  be essential procedural  requirement to  be observed on grounds of natural justice". The Warehousing Corporation was held to be an  authority and  the dismissal,  without conducting  an enquiry and without an opportunity to lead evidences for the proposed punishment given to the respondent, was bad in law. Therefore, the  appeal was dismissed and the judgment of the High Court  was upheld. Chinappa Reddy, J. in his concurring judgment had  held that  there is hardly any distinction, on the  principle,   between  a   person  directly   under  the employment  of  the  Government  and  a  person  under  the. employment of an agency or instrumentality of the Government or a  Corporation set up under a statute or incorporated but wholly owned  by the Government. Therefore, there is no good reason, why,  if Government is bound to observe the equality clauses of  the Constitution in the matter of employment and in its  dealings with the employees, the Corporations should not be  equally bound. Some elements of public employment is all that is necessary. to take the employee beyond the reach of the  rule which denies him access to a court to enforce a contract of  employment and  denies him  the  protection  of Articles 14  and 16  of the  Constitution.  Rajasthan  State Electricity Jaipur  vs. Mohan  Lal & Ors. [(1967) 3 SCR 377] is also  a case  of the  Rajasthan State  Electricity  Board questioning whether  it is  an authority under Article 12 of the Constitution.  It was  held by a Constitution Bench that it is  an authority  under Article  12 or instrumentality of the State.  In D.T.C.  vs. D.T.C.  Mazdoor Congress  &  Ors. [1991 Supp.(l) 600], the question arose whether D.T.C. is an instrumentality under  the State  and whether it is entitled to dismiss  the employee  by issuing one month notice or pay in lieu thereof in terms of Regulation 9 of the Regulations. A Constitution  Bench, per  majority had  held that  it is a State within  the meaning of article 12 of the Constitution. It has  no power  to dismiss  an employee  with one  month’s notice or  salary in  lieu thereof,  In Moti  Ram  Deka  vs. General  Manager,   NEF  [(1964)   5   SCC   683],   another Constitution Bench  had held that the service of an employee of the Railway establishment cannot be dispensed with except in  accordance with the procedures established and unless the essential steps of procedural fairness are adhered to. Central  Inland  Water Transport Corporation Ltd, & Anr. vs. Brojonath  Ganguli & Anr. [(1986) 3 SCR 156], a Bench of two Judges  of this  Court reiterated  the same  view giving extended   interpretation    and   making    available   the constitutional remedy under Article 226 of the Constitution. In Air  India   Statutory Corporation etc. vs. United Labour Union  &  Ors.  etc.[1996  (9)  SCALE  70],  the  Air  India statutory  Corporation, on abolition of the contract labour, had not absorbed employees working on contract labour basis after contract  labour system  was abolished. They filed the writ petition  in the  High Court.  The High  Court gave the directions to  absorb them on regular basis. On appeal, this Court considered  the entire  case law  and  laid  down  the following principles in para 26 thus:      "(1)  The   constitution   of   the      Corporation or  instrumentality  or

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    agency or  Corporation aggregate or      Corporation sole  is  not  of  sole      material   relevance    to   decide      whether  it  is  by  or  under  the      control    of    the    appropriate      Government under the Act.      (2)   If    it   is   a   statutory      Corporation,     it      is      an      instrumentality or  agency  of  the      State. If  it is  a  company  owned      wholly  or  partially  by  a  share      capital.   floated    from   public      exchequer, it gives indicia that it      is  controlled   by  or  under  the      authority   of    the   appropriate      Government.      (3)   In    commercial   activities      carried   on   by   a   Corporation      established by or under the control      of   the   appropriate   Government      having protection under Articles 14      and 19(2), it is an instrumentality      or agency of the State.      (4)  The   State   is   a   service      Corporation. It  acts  through  its      instrumentalities,   agencies    or      persons - natural or judicial.      (5) The  governing power,  wherever      located, must  be  subject  to  the      fundamental          constitutional      limitations  and   abide   by   the      principles laid  in  the  Directive      Principles.      (6)  The   framework   of   service      regulations     made     in     the      appropriate  rules  of  regulations      should  be   consistent  with   and      subject  to  the  same  public  law      principles and limitations.      (7)  Though   the  instrumentality,      agency    or     person    conducts      commercial activities  according to      business   principles    and    are      separately accountable  under their      appropriate bye-laws  or Memorandum      of Association, they become the arm      of the Government.      (8)  The   existence  of  deep  and      pervasive  State   control  depends      upon the facts and circumstances in      a given situation and circumstances      in a  given situation  and  in  the      altered situation  it  is  not  the      sole criterion  to  decide  whether      the agency  or  instrumentality  or      persons is, by or under the control      of the appropriate Government.      (9)      Functions       of      an      instrumentality, agency  or persons      are of public  importance following      public interest element.      (10) The instrumentality, agency or      person  must  have  an  element  of      authority or  ability to effect the      relations  with  its  employees  or

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    public by virtue of power vested in      it   by    law,    memorandum    of      association or bye-laws or articles      of association.      (11) The instrumentality, agency or      person renders an element of public      service  and   is  accountable   to      health and strength of the workers,      men and  women, adequate  means  of      livelihood,   the    security   for      payment of living wages, reasonable      conditions of work, decent standard      of life  and opportunity  to  enjoy      full   leisure   and   social   and      cultural activities to the workmen.      (12) Every  action  of  the  public      authority,        agency         or      instrumentality   or   the   person      acting in  public interest  or  any      act  that   gives  rise  to  public      element should  be guided by public      interest  in   exercise  of  public      power or  action hedged with public      element and  is open  to challenge.      It   must    meet   the   test   of      reasonableness,    fairness     and      justness.      (13) If  the exercise  of the power      is arbitrary,  unjust  and  unfair,      the        public        authority,      instrumentality,  agency   or   the      person acting  in public  interest,      though in the field of private law,      is  not   free  to   prescribe  any      unconstitutional   conditions    or      limitations in their actions.      It was directed that since the workman were employed by the contractor,  on abolition of the contract labour system, the appellant-Corporation  being an  instrumentality even in the private  field of  contract, was  bound by the essential principles  justice, equity and fair procedure and equality. In Bangalore  Water Supply Board case, the Board was held to be an  ‘industry and the action was amenable to adjudication under the Contract Labour (Regulation & Abolition) Act.      It is, therefore clear that there have been two streams of thinking  simultaneously in the process of development to give protection  to the  employees of  the Corporation.  Its actions are  controlled as  an instrumentality  of the State and the  rules are  made amenable  to judicial review. Where there exists  no statutory  or analogous rules/instructions, the provisions  of the  Act get attracted. The employees are entitle to  avail constitutional remedy under Article 226 or 32 or 136, as the case may be. The remedy of judicial review to every citizen or every person has expressly been provided in the  Constitution. It  is a  fundamental right  of  every citizen.  In   the   absence   of   statutory/administrative instruction in  operation, the  remedy  of  reference  under Section 10  of the Act is available. Therefore, two streams, namely, remedy  under the Act by way of reference and remedy of judicial  redressal by  way of  proceedings under Article 226 or  a petition  filed before the Administrative Tribunal to the  aggrieved persons  are co-existing.  If the doctrine laid in  Bangalore  Water  Supply  Board  case  is  strictly applied, the  consequence is  catastrophic and  would give a carte blanche  power with  laissez fair legitimacy which was

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burried fathom  deep under  the lethal blow of Article 14 of the Constitution  which assures  to every  person just, fair and reasonable  procedure before  terminating the service of an employee.  Instead, it  gives the management/employer the power to  dismiss  the  employee/workman  with  one  month’s notice  or   pay  in   lieu  thereof,   and/or  payment   of retrenchment compensation  under the  Act. The  security  of tenure would  be in great jeopardy. The employee would be at the beck  and call  of the employer always keeping his order of employment  in a  grave uncertainty  and in a fluid state like demorcus’s sword hangs over the neck. On the other hand if the  interpretation of providing efficacious remedy under Article 226  gives protection  to the  workmen/employee  the speedy  remedy   under  Article   226/Section  19   of   the Administrative  Tribunal   Act.  They   would  protect   the employee/workman  from  arbitrary  action  of  the  employer subserving the constitutional scheme and philosophy. The Court  would, therefore,  strike a  balance between  the competing rights  of the  individual and the state/agency or instrumentality and  decide the  validity of action taken by the Management. Necessarily, if the service conditions stand attracted, all  the conditions  laid  therein  would  become applicable to  the employees  with a  fixity of  tenure  and guarantee of  service, subject  to disciplinary  action. His removal should  be in  accordance with  the  just  and  fair procedure envisaged  under the  Rules or  application of the principles of  natural justice, as the case may be, in which event the  security of the tenure of the employee is assured and the  whim and  fancy and vagory of the employer would be detered and if unfair and unjust action is found established it would  be declared  as an  arbitrary,  unjust  or  unfair procedure. On  the other  hand, if the finding is that there exist no  statutory rules or certified standing orders exist or they  are not either made or are inapplicable, the remedy of reference  under section  10 of  the Act  would always be available and  availed of  as it  is an industry and indicia laid in Bangalore Water Supply Board case gets attracted.      From this  perspective, this  Court had  approached the problem in  T. Joseph’s  case. T  Joseph’s case  was a  case relating to  the departmental  employee whose  services  was dispensed with.  Considering the  rules in operation in that behalf, it  was held that the telephone department is not an industry. The appointment orders were given under the rules. In that  behalf, it  was held  that India  is  a  Sovereign, Socialist, Secular  Democratic Republic. It has to establish an egalitarian  social order  under the  rule  of  law.  The welfare  measures   partake  the   character  of   sovereign functions and the traditional duty to maintain law and order is no  longer the concept of the State, Directive Principles of the  State Policy  enjoin the  State to undertake diverse duties envisaged  under Part  IV of the Constitution. One of the duties  of the  State is  to provide  tale-communication services to  the general  public an  amenity; so,  it is  an essential part  of the sovereign functions of the State as a welfare States  In Physical  Research  Laboratory  vs.  K.G. Sharma [CA  No. 2663/97]  decided  on  April  8,  1997,  the question was whether the appellant who conducted research in a scientific  laboratory was a ’workman’ and the institution an  ‘industry’,   Since  the   service  conditions  regulate conditions  of   employment,  the  Tribunal  was  devoid  of jurisdiction to  entertain the application under the Act for deciding the  dispute. following the judgment in T. Joseph’s case and  distinguishing a judgment of three Judge bench, it was held  that research  institute was  a State  within  the meaning of  Article 12. It is not an industry attracting the

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provisions of the Act. So, in Chief Conservator of Forests & Anr. vs. Jagannath Maruti Kandhara [(1996) 2 SCC 293],  this Court referred  with approval  the  Bangalore  Water  Supply Board case.  In K.G.  Sharma’s case, the industrial Tribunal had observed  that the  Physical Research  Laboratory is  an industry but  this Court  reversed lt. The Telecommunication Department is  not an  industry and  the Rules governing the conditions of  service of  the employees stand attracted and there by the remedy under Article 226 would be available. To that area, the Act does not stand attracted. The respondents admit that  the dismissed  workmen who  were  holding  civil post, by  necessary implication,  were excluded  as  workmen under Section  2(s).  Even  though  the  activities  of  the Corporation partake  the character  of a private enterprise, since the  workmen engage  themselves in rendering services, It is  not an  industry. If  there exists no statutory rules binding standing  orders, necessarily,  the reference  under Section  10(1)   would  be   valid  and   the  Tribunal  has jurisdiction to  go  into  or  the  employee  may  avail  of judicial review or common law review.      On an  overall view, we hold that the employees working in the  statutory canteen,  in view of the admission made in the counter-affidavit  that they are holding civil posts and are  being  paid  monthly  salary  and  are  employees,  the necessary conclusion  would be  that  the  Tribunal  has  no jurisdiction to  adjudicate the dispute on a reference under Section 10(1)  of the  Act. On the other hand, the remedy to approach the  constitutional  court  under  Article  226  is available. Equally,  the remedy  under  Section  19  of  the Administrative Tribunal  Act is  available. But,  generally, the practice  which has  grown is  to direct  the citizen to avail, in  the first  instance, the remedy under Article 226 or under  Section 19  of the Administrative Tribunal Act and then avail  the right  under Article 136 of the Constitution by special  leave to  this court  etc. Thus,  in view of the admission made by the respondents in their counter-affidavit that the  workmen of  the appellant-Association  are holding civil posts  and are  being paid  monthly wages and benefits and are  considered to be employees, the jurisdiction of the Industrial Tribunal  stands excluded.  It  is  open  to  the aggrieved  party   to  approach   appropriate  authority  in accordance with  law. In  that  view,  the  finding  of  the Tribunal in  the impugned  judgment is legal and warrants no interference. It is open to the respondents to avail of such remedy as  is available  to a regular employee including the right to approach the Central Administrative Tribunal or the High Court  or this  Court thereafter for redressal of legal injury.      The Special Leave Petition is accordingly dismissed.