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PETITIONER: GOPAL.

       Vs.

RESPONDENT: THE ADMINISTRATIVE OFFICER, MADHYA PRADESH KHADI AND VILLAGE

DATE OF JUDGMENT19/08/1985

BENCH: KHALID, V. (J) BENCH: KHALID, V. (J) ERADI, V. BALAKRISHNA (J)

CITATION:  1986 AIR  504            1985 SCR  Supl. (2) 641  1985 SCC  (4) 138        1985 SCALE  (2)324

ACT:      Labour and  Service -  Industrial Disputes  Act, 1947 - M.P. Industrial  Relations Act,  1960 - S. 2 (19) and (33) - M.P. Khadi  and Village Industries Act, 1959 - S. 14 - Khadi and  Village  Industries  Board  -  Whether  "Industry"  and "Undertaking"- Applicability  of Notification No. 9952 - XVI dt. 31st December, 1960.

HEADNOTE:      The  appellant   was  appointed  as  Store  Keeper-cum- Accountant in  one of  the branches  of the  Madhya  Pradesh Khadi  and   Village  Industries  Board,  a  body  corporate constituted under the M.P. Khadi and Village Industries Act, 1959.  His  services  were  terminated  by  an  Order  dated 23.9.1964 after giving one month’s notice.      The termination  Was challenged before the Labour Court as amounting  to retrenchment  because it  hat  been  passed without complying  with provisions  of the  M.P.  Industrial Relations Act,  1960, the charge sheet that was given to him on 27.4.1964  was based on false and baseless grounds and no enquiry was  held prior  to removal.  The appellant  claimed reinstatement  with   full  wages.   The  Respondent   Board contested the  application contending that the Board was not an industry  and that  neither the M.P. Industrial Relations Act, 1960  nor the  Industrial Disputes Act, 1947 applied to it.      The Labour  Court held  that  the  termination  of  the services of  the appellant  amounted  to  retrenchment,  set aside the  Order of  termination and  directed reinstatement with  half   salary  from   the  date   of  the  Order  till reinstatement.      The Board  preferred a  revision. The  Industrial Court affirm- ed  the order  of the Labour Court and dismissed the revision petition. 642      The Board  filed a petition under Art. 225 and 227. The High Court  allowed the  writ petition, quashed the order of the Industrial  Court and  remitted the case to it to decide the facts  afresh. The  Industrial Court  after taking fresh evidence, again held in favour of the appellant, reaffirming its previous decision to reinstate the appellant.      The Board  again moved  the High Court, which set aside

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the orders  of the  Industrial Court and the Labour Court on the  ground   that  they  acted  without  jurisdiction.  The appellant appealed  to this  Court by  certificate which was resisted by  the Board on two grounds: (i) that it is not an industry within the meaning of the Act and (ii) that it does not employ more than 100 persons.      Allowing the appeal of the appellant-employee, ^      HELD: 1.  The order  passed by  the High  Court is  set aside and  that of the Labour Court and the Industrial Court are restored. [651 B-C]      2.  The  M.P.  Industrial  Relations  Act,  1960  is  a separate Act  in the State of Madhya Pradesh to regulate the relations  of   employees  in   certain  matters  and  makes provisions  for   settlement  of  Industrial  disputes.  Any concern,  to   become  an   industry,  has  to  satisfy  the definitions of "industry"  and "undertaking" as contained in ss. 2(19)  and 2(33)  thereof. Such concerns have to satisfy yet another  condition to attract the provisions of the said Act which relates to the number of the employees the concern employs. Notification   No.  9952 XVI  dated 31st  December, 1960 issued  under sub  8. (3) of 8. 1 of the Act, makes the provisions of  the Act  applicable only to an undertaking in the industries  specified in the Schedule wherein the number of the employees on any date during Twelve months preceeding or on the date of the notification or any day thereafter was or is  more than  one hundred.  In  the  instant  case,  the evidence on  record  admits  of  no  doubt  that  the  Board employed more than 100 persons. [645 A-H; 646 A-4; 647 C]      3. One of the functions of the Board under 8. 14 of the M.P. Khadi  and Village  Industries Act 1959 is "to support, encourage, assist  and carry on Khadi and Village Industries and in  the matters  incidental to  such trade or business". The evidence  shows that  the Board supplies raw wool to Co- operative Societies, so 643 that the Societies can engage themselves in useful work. The Society after  weaving raw  wool,  convert  them  into  spun blankets and  supply them to the Board. The blankets so spun are not  the properties  of the  Societies. They  have to be given back  to the  Board. The  blankets  so  supplied  from various centres to the Board, have necessarily to be sold in the open  market. This act of sale would clearly come within the  definition   of  the  word  ’trade’  or  ’business’  as contemplated in Section 2(19) of the Act. m e conclusion is, therefore, irresistible that the Board engages itself in the business of  selling blankets. It has, therefore, to be held that the  Board is  an ’industry’  within the meaning of the Act. [650 B-D; 651 A-B]

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 617 (NL) of 1975.      From the  Judgment and  Order dated  4.12.1973  of  the Madhya Pradesh High Court in Misc. Petition No. 713 of 1971.      M.K. Ramamurthy,  Vineet Kumar  and N.D.V. Raju for the Appellant.      G.B. Pai,  S.K.  Gambhir,  Ashok  Mahajan  and  Ms.  S. Kirpalani for the Respondents.      The Judgment of the Court was delivered by      KHALID, J.  This is an appeal by certificate, issued by the High Court of Madhya Pradesh under Article 133(1) of the Constitution of  India against  the Judgment  of a  Division

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Bench of  that Court  setting aside  the Order passed by the Labour  Court,   Ujjain,  confirmed   in  revision   by  the Industrial Court,  Madhya Pradesh,  allowing an  application filed by  the appellant  under  Section  31  of  the  Madhya Pradesh Industrial Relations Act, 1960 (hereinafter referred to as  the Act)  in which  he had challenged his termination which challenge  was  accepted  and  his  reinstatement  was ordered. The  facts in brief, necessary for disposal of this appeal are as follows:      2. The  appellant was  appointed as  Store  Keeper  Cum Accountant on  14.2.1957, in  the Madhya  Pradesh Khadi  and Village Industries  Board, Budhwara, Bhopal. This Board is a body corporate  constituted under the M.P. Khadi and Village Industries  Act   1959  and  is  engaged  among  others,  in activities of  encouraging production  of Khadi  and helping other village industries. It has 644 different branches  in the State of Madhya Pradesh. One such centre was  established at Berdi in Chhindwara district. The Board supplied  raw wool  to the  Co-optative Societies  and after getting  them woven  by the  societies into  blankets, received back  blankets as  finished goods.  m e services of the appellant  were terminated as per Order dated 23.9.1964, after giving one month’s notice. He challenged this Order of termination as  one amounting  to retrenchment,  and  having been passed without complying with the provisions of the Act that govern  his relationship with the Board. He stated that a charge sheet was given to him on 27.4.1964, based on false and baseless grounds and that there was no enquiry held into the said charges before his removal. The appellant thereupon moved the  Labour Court  at  Ujjain  on  7.6.1975,  for  his reinstatement with full wages.      The Board  contested the  application contending  inter alia that the Board was not an industry and that neither the M.P. Industrial  Relations  Act,  1960  nor  the  Industrial Disputes Act,  1947 applied  to it. The Labour Court, Ujjain framed necessary  issues on  the rival contentions and after recording  evidence,   held  that  the  termination  of  the appellant amounted  to retrenchment,  set aside the Order of termination and  directed the  Board to  reinstate him  with half salary front the date of the Order till reinstatement.      4. Aggrieved  by  this  Order  the  Board  preferred  a revision before  the Industrial  Court  in  Madhya  Pradesh, Indore, repeating  the contentions  raised before the Labour Court. m  e Industrial  Court by  its order  dated 3.2.1967, affirmed the  order of  the Labour  Court and  dismissed the revision petition.       5.  The Board pursued the matter further by moving the Madhya Pradesh  High Court  by a  petition under Article 226 and 227  of the Constitution of India. The High Court by its order dated  19.12.1969, allowed  the Writ Petition, quashed the order  of the  Industrial Court and remitted the case to it to  decide the  facts  afresh  with  due  regard  to  the relevant provisions  of the  M.P. Industrial  Relations Act, 1960. After remand, the Industrial Court proceeded to decide the question  itself after  taking fresh  evidence and again held in  favour of  the appellant  and  against  the  Board, reaffirming  its   previous  decision   to   reinstate   the appellant. The  matter was  taken to the High Court again by the Board  by means  of a  Writ Petition. The High Court set aside the  orders of  the Industrial  Court and  the  Labour Court, on  the ground  that they acted without jurisdiction. However, since the 645 High Court  felt that the matter was not free from doubt and

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was debatable,  granted  certificate  to  the  appellant  to appeal to  this Court.  It is thus that the matter is before us.      6. In  the State  of Madhya Pradesh there is a separate Act to  regulate  the  relations  of  employees  in  certain matters and  to make provisions for settlement of industrial disputes and  other connected matters. mis Act is called the Madhya Pradesh  Industrial Relations  Act, 1960.  Section  2 (19) defines Industry as under:           Industry means           (a) any  business, trade, manufacture, undertaking           or calling of employers;           (b) any  calling, service,  employment, handicraft           or  industrial   occupation  or   a  vocation   of           employees; and Includes           (i) agriculture and agricultural operations;           (ii) any  branch  of  any  industry  or  group  of           industries which  the  State  Government  may,  by           notification, declare  to be  an industry  for the           purposes of this Act. Section 2 (33) defines undertaking as follows:           "Undertaking means a concern in any industry .      Thus, any  concern,  to  become  an  industry,  has  to satisfy the  above definitions  to attract the Provisions of the Act.  Such concerns have to satisfy another condition to attract the  provisions of  the Act  and that  is about  the number of employees the concern employs. This is provided in a Notification issued under the Act which reads as follows:           No. 9952 - XVI, dated 31st December, 1960.           In exercise  of  the  powers  conferred  by  ‘Sub-           Section (3)  of Section  1 of  the Madhya  Pradesh           Industrial Relations  Act 1960  (No. 27  of 1960),           the State  Government hereby  directs that all the           provisions of  the said  Act other  than section 1           and 112 thereof shall be into 646           force  on  31st  December,  1960,  in  respect  of           undertaking in  the industries  specified  in  the           schedule below  wherein the number of employees on           any date  during twelve months preceding or on the           date of  this notification  or any  day thereafter           was or is more than one hundred :                           SCHEDULE           1.   Textile including  cotton,  silk,  artificial           silk staple fibre, jute and carpet.           2.  .......................................               .......................................               ......................................"      This notification,  thus, makes  the provisions  of the Act  applicable   only  to  undertaking  in  the  industries specified in the schedule, where the number of employees, on the date  mentioned therein was or is more than 100.  We are concerned here  only with  item No.  1 in  the schedule  and therefore, have left out the other items.      7. Before  considering  the  rival  contentions  raised before us,  we may  extract the relevant sections of the Act under which  the Board  was constituted,  to understand  the functions and  duties of  the Board.  For our  purpose it is enough to  quote Sections  14 (1) & 14 (2) (a) alone, Clause (b) to  (m) are  not necessary  for the  resolution  of  the dispute involved in this case and hence are omitted.           "14. Functions of Board.           (1) It shall be the duty of the Board to organise,           develop and  regulate Khadi and Village Industries           and     perform  such   functions  as   the  State

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         Government may prescribe.           (2) Without  prejudice to  the generality  of  the           provisions of  the sub section (1) the Board shall           also in  particular discharge  and perform  all or           any of the following duties and functions namely;           (a) To start, encourage, assist and carry on Khadi           and  Village   Industries  and   in  the   matters           incidental to such trade or business." 647 With this  background we  will advert  to the  facts of  the case.      8.The  Board  resisted  the  appellant’s  case  on  two grounds (i) that it is not an industry within the meaning of the Act  and (ii)  that it  does not  employ more  than  100 persons. It  is necessary  to note  at this  stage that  the Board had  not originally  urged any  plea that  it did  not employ sufficient  employees to  attract  the  Act.  It  was during the  course of  argument that  this  plea  about  the number of  appointees was  urged by the Board. However, both the Labour Court and the Industrial Court considered the two jurisdictional questions  as to  whether the  Board  was  an industry and  as to  whether it  had employed  more than 100 persons.      9. We have gone through the orders passed by the labour Court and the Industrial Court, carefully. According to us a close examination  of the  evidence adduced  in the case and the discussions  bearing on  them by  the  Labour  Court  in particular and the Industrial Court, admits of no doubt that the Board  employed more than 100 persons. For this purpose, we content  ourselves by  extracting the following paragraph from the  order of  the Labour  Court while  considering the first point  namely whether  the provisions  of the  Act are applicable to the Board.           "Thus  the   applicant’s   contention   that   the           Parishad’s cloth weaving centres were in existence           till 2  years before and his contention in respect           of the  number of  workers  engaged  at  Mandsaur,           Gwalior, Anjad  entries etc. have not been refuted           by the  nor applicant.  It is  therefore concluded           them at  (sic) 60,  40, 4 & 3 workers were working           at  Parishad’s   centres  situated   at  Mandsaur,           Gwalior, Anjad  and Parsinga.  Besides this  there           were officials  working at  Chanderi  &  Maneshwar           weaving centres.  The  non  applicant  who  is  in           possession of  the records  of appointment and who           is also  not disclosing  the exact figures (of the           workers), therefore the conclusions go against the           non applicant.      10. This  finding on  the appreciation  of the evidence given by  the witnesses  concludes the  parties according to us, regarding  the number  of the  employees employed by the Board. Even  so, when the matter went before the High Court, the High Court felt that the jurisdictional question was not properly considered  by the  Labour Court. Therefore, in the first round  the matter  was remanded by the High Court, and the High Court made the following observations: 648           "The relevant  notification applied the provisions           of  the  Act  to  undertaking  in  the  industries           specified in  - the schedule wherein the number of           employees,  was  or  is  more  than  one  hundred.           Evidently,  it   had  no  application  to  smaller           establishments   of   notified   industries   that           employed less  than 100 persons. That being so, it           is plain  enough that the Courts below misdirected

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         themselves by taking into account the total number           of the  employees of  the Board  without regard to           the consideration  whether they  were employed  or           not in the  establishment relating to textiles and           the   findings    recorded   by    them   on   the           jurisdictional facts  do not  bear examination and           cannot be  sustained. Since  the facts  bearing on           the question have not been properly ascertained it           would be  right to  set aside  the  order  of  the           Industrial Court  and leave  it to  that Court  to           decide these  facts afresh  with due regard to all           the relevant  provisions of  the  M.P.  Industrial           Relations Act,  1960 and  then to  dispose of  the           claim made by the respondent 3 on merits.      11. We may, even at this stage, point out that the High Court could have set aside the order of the Labour Court and the Industrial  Court, on the ground that the Board did not, according to  it, satisfy the definition of industry without remanding the  case to the Industrial Court to determine the number of employees. We are making this statement in view of an objection taken by the appellant’s counsel before us that the  respondent  cannot,  in  this  appeal,  reagitate  that question, he having been concluded by the remand order which was restricted only to the number of employees in the Board.      12. After  remand, the  Industrial Court considered the question again.  The Industrial  Court understood the remand order and, according to us, rightly, as follows:           "After  the   remand  the   parties  have  adduced           evidence which  is common in both cases. The exact           question I am called upon to answer is, the number           of employees  employed  by  the  parishad  in  its           textiles activity  and not  all  other  activities           such as Oil, Paper Carpentry, Gur Tannery, Pottery           etc. me best evidence will be the record kept with           the parishad.  The oral  evidence   will not be of           much help,  though it  may  have  some  additional           value. 649      13.  After  discussing  the  evidence  in  detail,  the Industrial Court came to the conclusion thus:           "For all these reasons, I hold that in the textile           activity of  the Board  (parishad) the  number  of           employees is  or has  been over  and more than 100           from  1.12.59   to  31.12.60,   vide  Ex-D/1  and,           therefore the  employees had  a right  to file the           application under the Act.      14. The  Industrial Court  again held  in favour of the appellant The  matter went  to the  High Court  again in the Second round,  at the instance of the Board. On the question of number  of employees  in the Board, in paragraphs 10 & 11 of the Judgment, the High Court observed thus:           "....Thus from  the  statement  of  this  witness,           there can  be no  doubt that  there were more than           100 persons  in all at the wool weaving centres in           the State  and at  some of  the centres the number           was more than 100. The witness further stated that           there are  16 industries  under the Board, such as           Paper Industry,  Soap  Industry,  Khadi  Industry,           Wool Industry and so on.           Similarly, in  the connected case, namely M.P. No.           713 of 1971, in pursuance of the remand order, the           statement of Gunadeo Patil (Petitioner’s Annexure-           F)  and   the  other   witness,   Sadashiv   Patil           (Petitioner’s  Annexure-f/1)  were  recorded.  The           statements of  these two witnesses were similar to

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         the statements in the main case. (The High  Court was  dealing with the case of two employees in Misc.  Petition No. 712/1971 and 713/1971 and that is why mention is MADE about the connected case.)      15.  After   holding  thus,   the  High   Court   spent considerable  part  of  the  Judgment  for  considering  the kindred question  whether the  board was an industry or not. The appellant’s  counsel raised an objection that it was not open to  raise this question as it was covered by the remand order (which  was confined only to the number of employees). In our  view, this  objection is  well founded and has to be upheld. According  to  us,  the  appellant  is  entitled  to succeed on  this ground  alone. However,  we would  like  to answer 650 the other  question also  for the  purpose of  completion of this  Judgment   and  to   set  at   rest  possible   future controversies on the subject .      16. The  definition clause  in  the  Act  is  far  from satisfactory. The  definition of  word ’industry’ in Section 2(19) and  the word  ’undertaking’ in Section 2(33) does not make happy reading but this unhappy phraseology need not vex us. If  from the  evidence available,  we can  say, that the Board carries  on trade  or business,  it would straightaway become an  industry under the Act. We have already seen that one of  the functions of the Board is to support, encourage, assist and  carry on Khadi and Village Industries and in the matters incidental to such trade or BUSINESS. What the Board does is to supply raw wool to Cooperative Societies, so that the Societies  can engage  themselves in  useful  work.  The Societies after  weaving raw  wool, convert  them into  spun blankets and  supply them to the Board. The blankets so spun are not  the properties  of the  Societies. They  have to be given back  to the  Board. The  blankets  so  supplied  from various centres to the Board, have necessarily to be sold in the open  market. This act of sale would clearly come within the definition of the word trade or business as contemplated in Section  2 (19)  of the  Act. This  finding  of  ours  is supported by the evidence in the case also. The appellant in his evidence  stated that at the centre where he was posted, weaving of  woolen blankets  was done  by the  Societies and other centres  constituted at  various places  and the woven blankets were  supplied back  to the  Board. Three witnesses were examined  on behalf  of the  Board. Sh.  Choudhary, the first witness  and Sh. Patil the next witness, admitted that the spinning and weaving work of cotton and woolen cloth was got done  by the  Board through various Societies. These two said witnesses admitted that the looms belonged to the Board and  the   Board  supplied  wool  and  other  materials  and implements and  sold manufactured goods after obtaining them from the  Societies. They  also made  an important admission that the  Society could  not sell  the goods prepared out of the wool  supplied by  the Board  to anybody else. The third witness also  supported this  case though  differed from the second witness  and stated that the Board extended marketing facilities to the Societies.      17. We thought it necessary to refer to the evidence in the case  to disabuse  an impression attempted to be created that the  Board did  not sell  the blankets  it got from the various societies  spun out  of the  wool supplied  to them. There is a clear admission by one witness that the Societies cannot sell the blankets 651 prepared out  of the  wool supplied  by the Board to any one else. No  argument is  necessary to  hold that  the blankets

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received by  the Board  from various centres have only to be sold and not used by the Board for its own purpose. Or. this evidence the  conclusion  is  irresistible  that  the  Board engages itself  in the  business of selling blankets. It has therefore to  be held  that the  Board is an industry within the meaning of the Act.      18. The  appellant is  entitled to  succeed on both the grounds. We set aside the order passed by the High Court and restore the  orders passed  by  the  labour  Court  and  the Industrial Court.  The appellant  will get his cost from the first Respondent quantified at Rs. 2,500. A.P.J.                                       Appeal allowed. 652