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PETITIONER: MANAGEMENT OF THE FEDERATION OF INDIAN CHAMBERS OF  COMMERCE

       Vs.

RESPONDENT: THEIR WORKMAN, SHRI R. K. MITTAL

DATE OF JUDGMENT15/11/1971

BENCH: REDDY, P. JAGANMOHAN BENCH: REDDY, P. JAGANMOHAN VAIDYIALINGAM, C.A.

CITATION:  1972 AIR  763            1972 SCR  (2) 353  1972 SCC  (1)  40  CITATOR INFO :  F          1974 SC1527  (10,13,14,17,18,22,23,28)  F          1976 SC 145  (11,26,32)

ACT: Industrial  Disputes  Act, 1947,  s.  2(i)--‘Industry’  what is--Federation  of Indian Chambers of Commerce and  Industry whether an ’industry’. Domestic  Inquiry--Finding  as  to  misconduct  of  employee arrived  at without evidence--Labour Court is  justified  in going into evidence’ and determining question for itself.

HEADNOTE: The respondent was an employee of the appellant  Federation. His  services were lent to the Indian National Committee  of International  Chamber  of Commerce on the occasion  of  the 20th Congress of the International Chamber of Commerce  held in Delhi in February 1965.  He claimed overtime payment  for 40  days whereas he was paid only for 7 days.  He  thereupon sent  lawyers, notices to the Appellant Federation,  to  the Indian  National  Committee  aforesaid, as well  as  to  the International  Chamber  of Commerce.  This was  held  to  be misconduct by an Enquiry Officer appointed by the appellant. The consequent industrial dispute was referred to the Labour Court.   A preliminary issue was raised that the  Federation was  not an industry and therefore the Labour Court  had  no jurisdiction   to   adjudicate  on  the   reference.    This preliminary  objection was overruled and it was held on  the evidence that the charge held proved in the domestic inquiry was  illegal  and  unjustified; that the  Secretary  had  no authority to terminate the services; that the Management did not like the trade union activities of the respondent,  that the  action  of termination of services  of  the  respondent amounted to victimisation and that even if it was not an act of victimisation in any event the punishment was severe  and therefore  it  amounted to  victimisation.   The  Federation appealed  to  this  Court.,  After a  review  of  the  cases relating  to the definition of ’industry’ in s. 2(i) of  the Industrial Disputes Act, 1947, HELD : (i) The linch-pin of the definition of industry is to ascertain the systematic activity which the Organisation  is discharging  namely  whether  it partakes the  nature  of  a business  or trade, or is an undertaking or  manufacture  or

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calling  of  employers.  If it is that and there  is  a  co- operation of the employer and the employee resulting in  the production   of  material  services,  it  is   an   industry notwithstanding  that its objects are charitable or that  it does  not make profit or even where profits are  made,  they are not distributed among the members. [376 G] In  the Safdarjung Hospital case and the connected cases  of the  Tuber-culosis  Hospital  and  the  Kurji  Holi   Family Hospital  it  was  found that none of  them  carried  on  an economic  activity  analogous  to trade  or  business.,  The criteria  that  in the two latter hospitals the  object  was charitable  does not appear to have been the sole  test  for concluding  that they were not industries.  In one case  the dominant   activity   was  research   and   training   which necessarily  involved  treatment also.  In  the  other  case though the activity it carried on was training, research and treatment,  the  distribution  Of  Surplus  as  profit   was prohibited.   The cumulative effect of these activities  and the  nature  of  such  activities  determined  the  question whether 354 these institutions were an industry or not, not that because their  respective  objects were charitable, that  alone  was considered  to be the criteria for not considering it as  an industry. [372 A-C] The cases under the income-tax Act are of little  assistance in  determining  whether  an  organisation,  association  or undertaking is an industry notwithstanding the fact that its main  object is charitable.  The object of  an  Organisation may  be  charitable but, nevertheless, its activity  may  be commercial so as to satisfy the definition of an  ’industry’ as  explained and elucidated by this Court  particularly  in the  Safdarjung Hospital case.  We could therefore  envisage an  institution having its aims and objects charitable,  and yet  its activities could bring it within the definition  of industry in s. 2(j). [374 F-H] The  fact  that  in s. 32(5) of the  Payment  of  Bonus  Act Chambers  of Commerce and certain other  organisations  with charitable  purpose  were excluded did not go to  show  that they were not industries.  No such inference would arise nor can this provision be of help in the construction of s. 2(j) of the Act. [376 D] Secretary,   Madras   Gymkhana  Club  Employees   Union   v. Management  of Gymkhana Club, [1968]1 S.C.R. 742,  State  of Bombay  &  Ors. v. Hospital Mazdoor Sabha, [1960]  2  S.C.R. 866,  D. N. Banerjee v. P. R. Mukherjee, [1953] S.C.R.  302, Baroda Borough Municipality v., Its Workmen, [1960] 2 S.C.R. 942, Corporation of the City of Nagpur v. Employees,  [1960] 2  S.C.R.  942, University of Delhi v. Ram  Nath,  [1964]  2 S.C.R.  703, Ahmedabad Textile Industry’s Research Assn.  v. State  of  Bombay, [1961] 2 S.C.R. 480,  National  Union  of Commercial Employees v. M. P. Mehat-, [1962] Supp. 3  S.C.R. 157, Harinagar Cane Farm & Ors. v. State of Bihar, [1964]  2 S.C.R.  458,  Cricket Club of India Ltd.  v.  Bombay  Labour Union,  [1969]  1  S.C.R.  600,  Management  of   Safdarjung Hospital,  New Delhi v. Kuldip Singh Sethi, [1971] 1  S.C.R. 177,  Commissioner  for Special Purposes  of  Income-tax  v. Pemsel,  [1891] A.C. 531, C.I. T., Madras v. Andhra  Chamber of  Commerce, [1965] 1 S.C.R. 565, Hyderabad Stock  Exchange Ltd.  v.  C.I.T. [1967] I.T.R. 195, C.I.T.  West  Bengal  v. Bengal   Home  Industries  Assn.  [1963]  48   I.T.R.   181, Commissioner  of  Inland Revenue v. City of  Glasgow  Police Atheletical  Assn. [1963] 34 T.C. 76, Bombay, Panirapole  v. Workmen, C.A. No. 1331/66 dt. 16-8-71, Lalit Hari  Ayurvadic College Pharmacy v. Its Workmen Union, A.I.R. 1960 S.C. 1261

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and  Workmen  employed in the Madras  Pinjrapole  v.  Madras Pinjrapole, [1962] 2 L.L.J. 472, considered. (ii) The above being the position in law the mere fact  that the  appellant  Federation had charitable aims  and  objects would  not  take it out of the definition of  industry.   An examination of the activities of the Federation showed  that the  Federation carried on systematic activities  to  assist its  members and other business men and  industrialists  and even to nonmembers as for instance in giving them the  right to subscribe to their bulletin; in taking up their cases and solving their difficulties and in obtaining concessions  and facilities  for them from the Government.  These  activities were  business activities and material services rendered  to businessmen  traders and industrialists who are  members  of the  constituents of the Federation There could be no  doubt that the Federation was an industry within the meaning of s. 2(j) of the Act [379 A-C] (iii) The Enquiry Officer in the domestic enquiry held  that having  regard to the emphatic assertion of  the  Respondent that  he  had  no  intention  to  bring  disrepute  to   the Federation in any way and that he was only 355 trying  to get his legitimate dues "it is not  necessary  to analyse  the  exact intention, but the, effect has  been  to convey  to  the  International Chamber  of  Commerce  a  low impression  about the Federation and thereby to  bring  down the   prestige  of  the  Federation  in  the  eyes  of   the International  Chamber  of  Commerce".   In  spite  of  this finding  the  Enquiry Officer found  that  the  respondent’s action  was  clearly  subversive of discipline  and  in  his opinion deserved to be so treated.  In view of the fact that the domestic tribunal acted on no evidence at all because it was  found that the intention with which the respondent  had issued the notices to the International Chamber of  Commerce and  Industry  could not be ascertained,  the  Tribunal  was justified  in  allowing  evidence  to be  led  and  on  that evidence  to come to the conclusion that the termination  of service was wrong. [379 E-G; 380 F] W.  M.  Agnani v. Badri Dass, [1963] 1 L.L.J. 684  and  Hind Construction.& Engineering Co. Ltd. v. Their Workmen, [1965] 2 S.C.R. 85, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 244 of 1967. Appeal  by special leave from the Award dated  November  22, 1966 of the Labour Court, Delhi in I.D. No. 33 of 1966. G.  B.  Pai,  P.  N.  Tiwari, and  O.  C.  Mathur,  for  the appellant. M.  K.  Ramamurthi, J. Ramamurthi and Madan Mohan,  for  the respondent. The Judgment of the Court was delivered by P.  Jaganmohan  Reddy, J. In this Appeal the  Award  of  the Labour Court directing reinstatement of the Respondent R. K. Mittal, an employee of , the Appellant (hereinafter referred to as ’the Federation’) with full back wages and  continuity of  service  is  challenged.  In February,  1965,  the  20th Congress  of International Chamber of Commerce was  held  in Delhi  for  which purpose a committee known  as  the  Indian National  Committee of Indian National chamber  of  commerce was brought into existence and the service of the respondent along   with  other  workmen  were  loaned  to  it  by   the Federation .The respondent worked for about 40 days but  was only  paid  overtime for about 7 days  and  consequently  he

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claimed overtime for the remainder of the days as acccording to  him  other workmen had also been paid  similarly.   This claim  was  not admitted by the Federation with  the  result that the Respondent caused a Lawyer’s notice to be issued to the   Federation,  to  the  Indian  National  Committee   of International Chambers of Commerce and to the  International Chamber of Commerce with its Head Office at Paris, demanding payment  of his dues amounting to about Rs. 600/-.  When  no replies were received, he caused another notice to be served threatening  to  file  a suit  whereupon  the  International Chamber  of  Commerce  sent a  telegram  to  the  Federation enquiring whether it should deal 356 with the matter or whether they would deal with it.  To this the  Federation  replied that it will deal with it,  but  it appears  that the claim of the Respondent was  not  settled. The  Respondent  then filed a suit for the  payment  of  the arrears.  The  Federation  felt  that  this  action  of  the Respondent  in  causing legal notices to be  served  on  the International  Chamber of Commerce was taken with a view  to bringing  the Federation into disrepute, and it was  capable of  so bringing it in the eyes of the International  Chamber of Commerce which Act being inconsistent with his duties and obligations  as  an  employee  constituted  misconduct.    A chargesheet  was  served on the Respondent  and  a  domestic enquiry  was  held  in which he was held  to  be  guilty  of misconduct.  This finding was forwarded to the Secretary who instead of dismissing him took a lenient view and terminated his services.  Thereafter it is alleged that he filed a suit against the Federation and subsequently raised an industrial dispute   which  was  referred  to  the  Labour  Court   for determination  of  the following issues namely  whether  the termination of the services of Shri R. K. Mittal is  illegal and  unjustified and if so what directions are necessary  in this  respect.  After this reference it is stated  that  the suit filed by him have been withdrawn. It was alleged that the workmen’s grievance was  unjustified and  in spite of his being informed that  no  discrimination has  been practised he with a view to harass the  management and compell it by unfair means to pay him more than what was legitimately   due   to  him,  started   making   complaints simultaneously  to the Federation and International  Chamber of  Commerce  which  did not employ him and  with  the  full knowledge  that whatever grievance he legitimately had,  had to  be resolved only by a reference to the Federation  which was his employer.  It was avered that the enquiry  conducted was  fully  in  accordance with the  principles  of  natural justice  and requirements of law, that the findings  of  the Enquiry Officer were fair, reasonable and fully supported by the  records  of  the  Enquiry  and  that  these  definitely established  the guilt of the Respondent.  In any  case  the Federation was not an industry.  On behalf of the Respondent it was contended that the Federation alone was not the  host but   it   was  the  Indian  National   Committee   of   the International  Chamber  of  Commerce  constituted  of   some officials of the Federation and the International Chamber of Commerce  which conducted the 20th Congress and it was  this Committee that employed the Respondent and paid him and  the other  workmen their remunerations.  The attendance  of  the workmen  was  marked  in  a  separate  attendance.  register maintained for all such workmen who were engaged to work for the Congress irrespective of the fact whether those were the employees  of the Federation or otherwise, that in spite  of the representations when 357

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the  management did not reply, the Respondent consulted  two Lawyers and instructed them to serve necessary legal notices who,  advised  him  that as the work  related  to  the  20th Congress  was managed by an independent Committee his  claim for the remuneration against the Federation alone would  not lie and that he would have to make a claim on all the  three bodies namely the Federation, the Indian National  Committee of  International Chamber of Commerce and the  International Chamber of Commerce, Paris, who constituted and managed  the affairs of the Congress.  He denied that there was any  mala fide  on  his  part nor did he ever  intend  to  defame  the Federation by serving a notice in accordance with the  legal advise  given  to him.  He, however, expressed  his  sincere regrets  to the management and submitted his appeal  to  the Secretary  General of the Federation and requested’  him  to consider  the matter, but it was not even  acknowldged.   In any case the punishment of discharge in such a small  matter is too severe and completely out of proportion and smacks of victimisation.  The assertion that the Federation was not an industry was denied. Before the Tribunal a preliminary issue was raised that the, Federation  was  not an industry and therefore,  the  Labour Court  had no jurisdiction to adjudicate on  the  reference. This preliminary objection was overruled and it was held  on the  evidence,  that  the charge  held  proved  against  the Respondent   in  the  domestic  enquiry  was   illegal   and unjustified;   that  the  Secretary  had  no  authority   to terminate  the  services; that the Management did  not  like ’the trade union activities, that the action of  termination of’ services of the Respondent amounted to victimisation and that even if it was not an act of victimisation in any event the  punishment  is  severe and therefore,  it  amounted  to victimisation. Even  before us similar arguments as were urged  before  the Tribunal    have   been   again   agitated   with    further amplification.   It is contended that the Federation is  not an industry in that, neither its activity is industrial  nor its  objects commercial but on the other hand they are of  a non-business character and are charitable. The   Appellant  contends  that  the  Fed,-ration  was   not constituted  for any one employer or group of employers  but was  to sub-serve the good of the business of the  community as  a whole.  This object of the Federation is  achieved  in various  ways.   The Federation is always nominated  by  the Government  as a member in an Advisory Committee on  various national  and International Committees which  make  economic policies.   it  organises  exhibitions:  with   the   active financial  support  and cooperation of the  Government.   In order to promote Indian business, it undertakes publications and arbitration which are ancilliary to its main  activities namely  the  promotion of business for the  community  as  a whole 358 which  is an object of general public utility.  It  is  also contended   ,that   the  Memorandum  and  article   of   the Association  of  the Federation and the evidence  on  record show  that  the  Federation  does  not  follow  any   trade, business, manufacture or undertaking or calling of employers in the production of material goods or material services nor does  it  have  a  profit motive.  On  the  basis  of  these activities  and  objects of the  Federation,  the  following material services nor does it have a profit motive.  On  the basis of these activities and objects of the Federation, the following three propositions were submitted on behalf of the Appellant

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             (1) This Court has uniformly held that  unless               the test that the activities carried on by the               employer  is  trade,  commerce,  industry   or               manufacture  or of rendering material  service               is satisfied, it will not be an industry under               the Act.               (2)  The  promotion  of  trade  and  commerce,               which, is the main activity of the employer in               this case, is not an activity in the nature of               or  analogous  to the  activities  ’Under  the               first proposition.               (3)  As  a  corollary  it  follows  that   the               Federation  which  is really  carrying  on  an               activity considered to be an object of general               public  utility  and  subserves  a  charitable               purpose cannot be held to be an industry. The  promotion of trade and commerce, it is submitted  is  a charitable  object  which  is the  dominant  object  of  the Federation ,and hence it is not an industry as held in  some of  the recent cases by this Court.  What has to be seen  is whether  the promotion of trade, commerce or industry  which is  considered to be a charitable object can be termed as  a business  or trade resulting in the production  of  material services  within the meaning of an industry under Section  2 (j)  of  the Act.  In brief it was argued that if  both  the ends and means are charitable, the, ends being the  activity and  .  the means the object, the  undertaking  cannot  come within  the  definition of industry.  In  support  of  this, several  decisions rendered under the Indian Income-tax  Act have been pressed into service and relied upon. The  Respondent’s contention on the other hand is  that  the main  objects of the Federation are given by it  in  Clauses 3(a) to(k) ,of its pamphlet "Federation of Indian Chamber of Commerce  and Industry--Organisation--Functions";  that  the Federation under-takes national and International Exhibition having  held such exhibitions in 1961 and 1965 earning  huge profits of Rs. 40 lakhs and Rs. 22 lakhs respectively;  that the Appellant Federation 359 carries  on  the  activities of  publication  of  Books  and Magazines   and  publishes  fortnightly  Review,   that   it endeavours  to  take up with the concerned  authorities  the specific difficulties expressed by its members in their  day to  day business; that it arranges  commercial  arbitrations between  co-members and between nonmembers; that it has  set up   a  tribunal  of  Arbitration  for  the   determination, settlement and adjustment of commercial disputes relating to business,  trade and manufacture arising between parties  in India or a party in India and a party in foreign country who agree or have agreed in writing to submit such disputes  and differences for arbitration under the rules of the  Tribunal and  earns huge amounts as service charges from the  parties who  submit  their disputes to the Tribunal set  up  by  the Federation;  that it is constructing a museum  to  advertise and  publicise the products of the Indian manufacturers  and that  it renders liaison service to members as well as  non- members in the matter of procuring licences, capital  issue, Company   Law  problems,  tax  problems  etc.    All   these activities the Respondent contends show that the  Federation is carrying on activities and performing all such  functions as   would   benefit   the  business   community   and   the industrialists  for  securing concessions  in  taxation  and foreign  exchange  which activities have  benefited  several industries  in a great measure and would  clearly  establish that it is an industry.

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On  the legal aspect it is submitted that the provisions  of the    Income-tax Act or the Trust Act are  inapplicable  in that  they are riot concerned with the activities  but  with the  object  which an undertaking pursues,  particularly  in respect  of  the  Income-tax Act  where  an  institution  is exempted  from tax liability if it has a charitable  object. Even assuming that the undertaking has an object of  general public utility within the meaning of the exemption, it  does not ipso facto determine its activity nor does it show  that it is not an industrial activity.  Under the Act the learned Advocate  contends it is the nature of the activity that  is the  test and though an Organisation may have  a  charitable object  it may nonetheless carry on an activity which  comes within  the  term  industry, nor does  the  distribution  of profits  or  otherwise is a crucial element  in  determining whether its activities are industrial and the undertaking an industry  within  the meaning of Sec. 2(j).  It  is  further submitted  that what has been concentrated in all the  cases cited  by the learned Advocate for the Appellant  under  the Income-tax  Act  is  what was the  dominant  object  of  the assessee  and not what it does, because in those  cases  the Courts were not concerned in determining what was the nature of the activities A but were only concerned in  ascertaining what  was the dominant object.  Whether these decisions  are relevant  for  deciding  the  question  whether  a   dispute referred  to is an industrial dispute under the Act will  be dealt with presently. 360 Before  we  examine  the nature of  the  activities  of  the Federation it will be useful to deduce the, principles which are applicable for determining whether the activities of  an undertaking are such as would justify it being treated as an industry for the purposes of an industrial dispute under the Industrial Disputes Act 1947 (hereinafter called ’the Act’). The   Act  it  may  be  stated  makes  provision   for   the investigation and settlement of industrial disputes and  for certain  other  purposes.  The meaning to be  given  to  the words  Industrial Dispute in Section 2(k), Industry in  Sec. 2(i),  Employer  in Sec. 2(g) and Workmen in Sec.  2(s)  are relevant  for  ascertaining  whether an  undertaking  is  an industry or ,otherwise.  These definitions are as follows Section 2               (g)   "employer" means-               (i)  in relation to an industry carried on  by               or  under the authority of any  department  of               the Central Government or a State  Government,               the  authority prescribed in this  behalf,  or               where no authority is prescribed, the head  of                             the department;               (ii) in relation to an industry carried on  by               or  on behalf of a legal authority, the  chief               executive officer of that authority;               (j)  "industry"  means  any  business,  trade,               undertaking,   manufacture   or   calling   of               employers  and includes any  calling  service,               employment,    handicraft,    or    industrial               occupation or avocation of workmen;               (k) "industrial dispute" means any dispute  or               difference between employers and employers  or               between  employers  and  workmen,  or  between               workmen  and workmen, which is connected  with               the employment or non-employment or the  terms               of  employment  or  with  the  conditions   of               labour, of any person;               (s)  "workman" means any person (including  an

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             apprentice) employed in any industry to do any               skilled  or  unskilled  manual,   supervisory,               technical or clerical work for hire or reward,               whether the terms of employment be express  or               implied,   and   for  the  purposes   of   any               proceeding  under this Act in relation  to  an               industrial  dispute, includes any such  person               who has been dismissed, 361 discharged  or  retrenched  in  connection  with,  or  as  a consequence of, that dispute, or whose dismissal,  discharge or  retrenchment  has  led to that  dispute,  but  does  not include any such person-               (i)  Who is subject to the Army Act, 1950,  or               the   Air  Force  Act,  1950,  or   the   Navy               (Discipline) Act, 1934; or               (ii) Who is employed in the Police service  or               as  an officer or other employee of a  prison;               or               (iii)  Who is employed mainly in a  managerial               or administrative capacity; or               (iv)  Who,  being employed  in  a  supervisory               capacity,  drawn wages exceeding five  hundred               rupees per mensem or exercises, either by  the               nature of the duties attached to the office or               by  reason  of  the  powers  vested  in   him,               functions mainly of a managerial nature. A cursory examination of the definition of industry in  Sec. 2(j) without the assistance of the case law would show  that it  has been divided into 2 parts; the first is, as  meaning any business, trade, undertaking, manufacture or calling  of employers  and  the  second is, as  including  any  calling, service, employment, handicraft, or industrial occupation or avocation of workmen.  The first part defines it in relation to  the  activities of the undertaking  i.e.,  the  employer while the second, in relation to the nature of the work done by  the employees and gives an extended  connotation  though this part standing alone cannot define what an industry  is. In  either case the activity whether of the  undertaking  or the  employees of that undertaking are to be  determined  in relation  to  its  being  a  business,  trade,  undertaking, manufacture  or  calling  Of employers.   In  several  cases decided   by  this  Court,  these  definitions   have   been understood differently in their application to the facts and circumstances of each case which prompted Hidayatullah,  J., as  he  then  was in the  Secretary,  Madras  Gymkhana  Club Employees Union v. Management of the Gymkhana Club,(1) after pointing  out that the definitions in the Act  are  borrowed from  other  statutes particularly the latter  part  of  the definition  of  ’industry’  was taken from  Sec.  4  of  the Commonwealth  Conciliation  and Arbitration Act,  which  had caused  some  trouble, to say "Decisions rendered  on  these definition  (and some Others very similar)"  have  naturally influenced  opinion  making in this Court.   The  Australian cases  in  particular "have been subrose all the  time"  (p. 754). (1) [1968] 1 S.C.R. 742. 362 For  the  first time in the State of Bombay &  Ors.  v.  The Hospital  Mazdoor Sabha & Ors.(1) a Hospital was held to  be an  industry  within the meaning of Sec. 2(j)  of  the  Act. That  was  a  case  in which the Hospital  was  run  by  the Government.  A distinction was sought to be made between the activities  of  the  Government in its  Regal  or  sovereign sphere  and  other activities which were undertaken  in  the

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socio  economic  progress  of  the  country  as   beneficial measures.  The former were held not to come within the ambit of Sec. 2(j) while it was said that it would be  incongruous and  contradictory  to suggest that  the  latter  activities should  be exempted from the operation of the Act  which  in substance, is a very important beneficial measure in itself. This  latter  conclusion  was sought to be  supported  by  a reference  to the definition of employer in S. 2 (g) (i)  as meaning  "in relation to an industry carried on by or  under the authority of any Department of the Central Government or State  Government  authority prescribed in this  behalf,  or where   no   authority  is  prescribed  the  Head   of   the Department".  This definition Gajendragadkar, J., as he then was  said "clearly indicates that the  legislature  intended the application of the Act "to activities of the  Government which  fall within "Sec. 2(j).  In considering the  question as   to   whether  the,  group  of   hospitals   run........ undoubtedly for the "purpose of giving medical relief to the citizens and "for helping to impart medical education are an undertaking  "or  not,  it would  be  pertinent  to  enquire whether  an  "activity of a like nature would be  an  under- taking  if it is carried on by a private citizen or a  group of "private citizens.  There is no doubt that if a "Hospital is  run  by  private citizens for profit it "  would  be  an undertaking  very much like the trade or "business in  their conventional  sense.   We  have  already  stated  that   the presence of profit motive, is not "essential for bringing an undertaking  within  Sec.2(j)". Even where  no  profits  are earned or even where it is run without charging fees it  was considered to be an undertaking because it is the  character of  the  activities involved in running the  Hospital  which brings the institution of the Hospital within the meaning of Sec.  2(j).  The several attributes which are  necessary  to constitute  the  activity into an undertaking  analogous  to trade or business have been stated though the difficulty  of setting  out  all  the  possible  attributes  definitely  or exhaustively was recognised, and as working principle it was stated that (a) an activity is systematically or  habitually undertaken  for the production or distribution of  goods  or for  the  rendering of material services to the  commity  at large or a part of such community with the help of employees is  an undertaking; (b) such an activity generally  involves the  cooperation of the employer and the employees with  the object of satisfying (1)  [1960] 2 S.C.R. 866. 363 material  human needs; (c) it must be organised or  arranged in  a  manner  in  which  trade  or  business  is  generally organised  or arranged; (d) it must not be casual, nor  must it  be  for  oneself nor for pleasure.   After  setting  the aforesaid it was also observed that "the manner in which the activity in question is organised or arranged, the condition of  the  cooperation  between  employer  and  the   employee necessary for its success and its object to render  material service  to  the community can be regarded as  some  of  the features  which are distinctive of activities to which  Sec. 2(j)  applies".  This decision also considered the  question whether  any  quid pro quo was necessary  for  bringing  an. activity  under  Sec.  2(j) and it was  held  that  no  such element was involved.  This case was considered to be on the verge  as  taking  an extreme view in  the  Madras  Gymkhana Club(1)  case,  to which one of us Vaidialingam, J.,  was  a party. The Gymkhana Club case reviewed the previous case law in  D. N.  Banerji  v. P. R. Mukherjee &  Ors.(2),  Baroda  Borough

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Municipality v. Its Workman(3) , The Corporation of the City of Nagpur v. Its Employees(4), University of Delhi & Anr. v. Ram  Nath(5),  The  Ahmedabad  Textile  Industry’s  Research Association v. The State of Bombay & Ors. (6),  (Association Case).  The National Union of Commercial Employees & Anr. v. M. P. Meher, Industrial Tribunal, Bombay & Ors. ( 7 )   (the Solicitor  case),  Harinagar Cane Farm & Ors.  v.  State  of Bihar  &  Ors.(8), State of Bombay & Ors.  v.  The  Hospital Mazdoor  Sabha  & Ors.(9), to. ascertain  the  criteria  for detaining  what an ’industrial dispute’ under Sec. 2(k)  and an ’industry’ under Sec. 2(j) of the Act, is for the purpose of  a reference of a dispute between employer  and  employee under Sec. 10(1) of the Act.  Hidayatullah J. as he then was thought  that  the  changes  made  in  the  meaning  of  the expression used in the definition of industry in the Act  by the  several  decisions  referred to  therein  ’disclosed  a procrustean  approach  to the problem’, and that  "too  much insistence upon partnership between employers and  employees is  evident  in  the  Solicitor’s case  and  too  little  in Association’s case" (page 751752).  In the Association  case which  was a Research Association maintained by the  Textile Industry and employing technical and other staff, the  tests for  determining whether the activities of  the  Association could  be  construed  as an industry as  laid  down  in  the Hospital case were repeated and applied.  It was pointed out that for the first time in that case, namely the Association case  "a fresh test was added that as the employees  had  no rights in the results: (1) [1968] 1 S.C.R. 742. (6)   [1961]  (2) S.C.R. 480. (2) [1953] S.C.R. 302.   (7) [1962] (Suppl.) (3) S.C.R. 157. (3) [1957] S.C.R. 33.    (8) [1964] (2) S.C.R. 458, (4) [1960] (2) S.C.R.942.(9) [1960] 2 S.C.R. 866. (5) [1964] (2) S.C.R. 703. O-L50OSupCI/72 364 of their labour or in the nature of business and trade,  the partnership  is  only association between the  employer  and employee".   Further after setting out the various facts  of the relationship of employers and employees and the need  to correlate  this to an industry it was observed at page  752, "stated  broadly  the  definition  of  ’industrial  dispute’ contains   two   limitations.    Firstly,   the   .adjective ’industrial relates the dispute to an industry as defined in the Act and, secondly, the definition expressly states  that not  disputes  and differences of all sorts but  only  those which  bear upon the relationship of employers  and  workmen and  the terms of ,employment and conditions of  labour  are contemplated".   It  was also pointed out at page  755  that "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..... 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 cooperation is to produce  material services.   The  normal cases are those in  which  the  pro- duction  or distribution is of material goods or wealth  and they  will fall within the expressions trade,  business  and manufacture".   Again at page 756, the principle was  summed

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up  thus  : "it is, therefore, clear that  before  the  work engaged  it  (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 resulting in material goods  or material services".  In this context the meaning of the word ’trade’  was  considered to bear the meaning  given  in  the Halsbury’s  Laws  of England as (a) exchange  of  goods  for goods or goods for moneys; (b) any business carried on  with a   view  to  profit,  whether  manual  or  mercantile,   as distinguished  from the liberal arts or learned  professions and from agriculture; and business means an enterprise which is   an   occupation   as   distinguished   from   pleasure. Manufacture  is a kind of productive industry in  which  the making  of articles or material (often on a large scale)  is by physical labour or mechanical power.  Calling denotes the following of a profession or trade".  The word  undertaking’ which is the most elastic was given as ’any business or  any work  or  project which ,one engages in or  attempts  as  an enterprise analogous to business or ’trade’.  This test  was said  to  have  been laid down in  Banerji’s  ,case(1),  and followed in the Baroda Borough Muncipality (1)  1953 S.C.R. 302. 365 case(1),  and  it was observed that "Its  extension  in  the Corporation  case  "was  unfortunate  and  contradicted  the earlier cases".  Even where the activity is considered to be an  industry the second question which arises is the  nature of  the work which the employees render.  The work  must  be productive  and  workmen  must be  following  an  employment calling  or  industrial avocation and are not working  in  a managerial  capacity nor are they highly  paid  supervisors. It  is also not necessary that the workmen should receive  a share  though there may be occasions when he may  receive  a share of the produce as part of their wages or as bonus as a benefit. Applying  the  aforesaid tests it was held  that  after  the first part of the definition and the essential character  of the  Club is taken into consideration, the activity  of  the Club  cannot  be  described as  a  ’trade’,  ’business’,  or ’manufacture’ and the running of the club is not a ’calling’ of  the Respondent Club or its managing committee;  nor  can the   Club  be  said  to  exist  for  its   members   though occasionally strangers also, take benefit from its services. It  was pointed out that even after the admission of  guests the  club remains the member’s  self-servicing  institution, and while no doubt the material needs or wants of a  section of  the community is catered for, this is not  enough,  but- that  must  be done as part of trade or business  or  as  an undertaking  analogous to trade or business,  which  element was found to be completely missing in a "member’s" club.  In the  end  in answer to the contention that the case  of  the Club  is  indistinguishable from the Hospital case,  it  was said "That case is one which may be said to be on the verge. There  are reasons, to think- that it took the extreme  view of an     industry" and that "the case of a ’members’club is beyond even    the confines established by that case". The Gymkhana case (2) was referred to in the Cricket Club of India  Ltd. v. The Bombay Labour Union and Anr.(3). In  that case 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 Sec. 10 was  not  competent: The Tribunal  rejected  this  objection against which the Club came in appeal before this Court.  It may  be noticed that the Appellant was Registered under  the

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Indian  Companies  Act  1913 with the  objects  set  out  in paragraph 3, clauses (a), (c), (d), (g), (1) and (na) of the Memorandum  of Association of the Club.  The  Gymkhana  Club case  was sought to be distinguished on the ground that  the activities of encouraging and promoting the game of  Cricket in  India and elsewhere mentioned clause (a), financing  and assisting in financing visits of foreign teams and of (1) [1957] S.C.R. 33.         (3) [1969] 1 S.C.R, 600. (2) [1968] 1 S.C.R.742. 366 visits  of  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 cl. (d) etc., are not  activities which  should  form part of a social or  recreational  club. This  Court found that the Appellant was a Club  of  members organised with the primary object of encouraging sports  and games; that the income, earned by the Club from  investments 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;  that  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 in the city with comparable accommodation; that the catering provided in the  refreshment room of the Club was also confined  to  the members  of the Club only.  No outsider is allowed  to  take advantage of this facility, and the bye-laws of the Club lay down  that even if a guest was introduced by a  Member,  the guest  is not entitled to pay for any refreshment served  to him; that 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; nor  was  there  any evidence that a large number of such parties were field  for drawing  an  inference  that  holding  such  parties  was  a systematic  arrangement by which the Club was attempting  to make  profits.   The  catering  facilities  to  members  and outsiders  at the stalls at the time of tournament  were  so provided  only  twice a year and at concessional  rates  and could  not  therefore  be  said to be  for  the  purpose  of carrying  on an activity for 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 tournaments  in order that these may run  successfully.   It appears  that the test matches were held in the  Stadium  of the Club.  It also appears that the Club was making a  large income  therefrom.  Of the 17 matches held there during  the period,  each match netted nearly 2 lakhs.  Even so, it  was held  that holding of test matches or the catering  provided in the stalls at the time of these matches was a  subsidiary purpose  to the promotion and encouragement of  the  persons whose interest in the game of Cricket was not systematic  an consequently  was not in the nature of carrying on trade  or business but were activities in the promotion of the game of cricket.   The income derived from all these activities  was incidental  which income was later utilised for the  purpose of  fulfilling  its  other objects as  incorporated  in  the Memorandum of Association. 367 After setting out and examining in detail the object and the purposes  for  which the Club came into  existence  and  the

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Stadium  was constructed and used, Bhargava, J, at page  613 observed on behalf of the Court :--               "In these circumstances we are not inclined to               accept  the submission made on behalf  of  the               workmen that this activity by the Clubs 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   of               fulfilling  its other objects as  incorporated               in the Memorandum of Association". It  was  also  sought  to be contended  that  the  Club  was registered under the Indian Companies Act, 1913, unlike  the Madras  Gymkhana  Club and consequently 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.  This contention was not considered  to be of importance even by the Tribunal  itself with which this Court agreed on the ground that, what has to be  seen  is  the  nature of the activity  in  fact  and  in substance.   In  fact  it was found that the  club  was  not constituted for the purposes of carrying on business;  there are  no  shareholders,  no dividends  are  declared  and  no distribution  of profits takes place.  The 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  and the expulsion of the member under  certain circumstances  when he looses his right are  features  which never exist in the case of a shareholder holding shares in a Limited  Company.  In these circumstances the Club  was  not considered  as a separate legal entity as a Limited  Company carrying in business. The  Madras Gymkhana Club(1) as well as the Cricket Club  (2 cases were again considered by a larger Bench of six  Judges of  this  Court in Management of  Safdarjung  Hospital,  New Delhi  v. Kuldip Singh Sethi(3), when the previous case  law was also reviewed.  In that case this Court was  considering whether  Safdarjung Hospital, the Tuberculosis Hospital  and the  Kurji  Holy  Family  Hospital  were  industry  for  the purposes of reference under Sec. 10(1)(d) of the Act. (1)   [1968] 1 S.C.R. 742. (2)  [1969] 1 S.C.R. 600. (3)  1971 (1) S.C.R. 177. 368 In  the Safdarjung Hospital case the Hospital Mazdoor  Sabha case again loomed large because on the facts and the circum- stances  of  that case the principles stated  therein  would have  been applicable, if it was considered to be good  law. But as earlier stated certain criteria and tests which  were laid  down in the Gymkhana case were logically  extended  to this  case  and in doing so the extreme view  taken  in  the Hospital  case  was  held to be  not  justified.   What  was considered  in the Safdarjung case was "whether  a  hospital can be considered to fall within the concept of industry  in the  Industrial Disputes Act and whether all  Hospitals  "of whatever  description can be covered by the concept of  only some Hospitals under special conditions". We  have earlier set out the relevant passages in  the  Gym- khana case which laid down the criteria for determining  the various   activities  which  would  determine  whether   the

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undertaking is an industry within the meaning of Sec.  2(j). Hidayatullah, C.J., in the Gymkhana(1) case after  referring to the two notions of the definition-the first Part  dealing with  what  it  means  and the  second  part  with  what  it includes, summed up the conclusion in the following  passage at page 753-754 :               "If  the  activity  can  be  described  as  an               industry  with reference to the occupation  of               the  employers,  the ambit  of  the  industry,               under  the force of the second part, takes  in               the  different  kinds of activity of  the  em-               ployees mentioned in the second part.  But the               second  part  standing  alone  cannot   define               ’industry....... By the inclusive part of  the               definition  the  labour force employed  in  an               industry  is  made  an integral  part  of  the               industry  for purposes of industrial  disputes               although  industry  is  ordinarily   something               which employers create or undertake". The   learned   Chief  Justice  thought   that   the   above observations in the Gymkhana club case needed to be somewhat qualified.   It  was  pointed  out by  a  reference  to  the definition  of  industry  in  Sec.  4  of  the  Commonwealth Conciliation  and Arbitration Act of Australia that the  two definitions  were worded differently though the  purport  of both  is the same.  It was however thought that it  was  not necessary to view each definition in two parts.  At page 184 it was observed               "The  definition  read as a  whole  denotes  a               collective  enterprise in which employers  and               employees  are associated.  It does not  exist               either  by  employers alone  or  by  employees               alone.   It  exists  only  when  there  is   a               relationship between employers and  employees,               the (1) [1968] 1 S. C. R. 742. 369               former    engaged    in    business,    trade,               undertaking,   manufacture   or   calling   of               employers  and  the  latter  engaged  in   any               calling,  service, employment,  handicraft  or               industrial  occupation  or  avocation.   There               must therefore,. be an enterprise in which the               employers follow their avocations as  detailed               in  the  definition  and  employ  workmen  who               follow  one  of the  avocations  detailed  for               workmen.   The  definition no doubt  seeks  to               define ’industry’ with reference to employers’               occupation  but  includes the  employees,  for                             without  the two there can be no indus try.   An               industry  is only to be found when  there  are               employers  and employees, the  former  relying               upon  the  services of the  latter  to  fulfil               their own occupations". After setting out the passages to which references have been made while examining the Gymkhana case it was again  pointed out  that  when Lord Wright said that ’trade’ is a  term  of widest  scope,  it  was true but "the word as  used  in  the statement  be distinguished from professions  although  even professions have ‘trade unions’.  The word ’trade’  includes persons in a line of business in which persons are  employed as  workmen".  Similarly it was pointed out  that  "Business too is a word of wide import.  In one sense it includes  all occupations and professions.  But in the collocation of  the

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terms  and  their definitions these terms  have  a  definite economic content of a particular type and on the authorities of  this  Court have been uniformly  accepted  as  excluding professions  and  are only concerned  with  the  production, distribution  and consumption of wealth and  the  production and  availability of material services.  Industry  has  thus been accepted to mean only trade and business,  manufacture, or  undertaking  analogous  to trade  or  business  for  the production   of  material  goods  or  wealth  and   material services". What is meant by material services, was also explained  thus at page 187 :-               "Material  services  are  not  services  which               depend wholly or largely upon the contribution               of professional knowledge, skill or  dexterity               for the production of a result.  Such services               being  given individually and  by  individuals               are  services no doubt but not  material  ser-               vices......  Matterial  services  involve   an               activity   carried  on   through   cooperation               between employers and employees to provide the               community with the use of something. . . .  ..               but  the emphasis is not on what these men  do               but   upon  the  productivity  of  a   service               organised  as  an  industry  and  commercially               valuable......  It is the production  of  this               something which is described as the production               of material services". 370 A  contention  was however urged that the word  ’trade’  and ’workman’ ought not to be given a narrow meaning but it  was pointed  out that the reasons for some of the cases  decided by  this Court lay in the kind of establishment  which  were sought  to  be explained and elucidated.  At  page  188  the following observations are worthy of note :               "It   therefore,   follows  that   before   an               industrial  dispute  can  be  raised   between               employers  and  their  employees  or   between               employers  and employers or between  employees               and employees in relation to the employment or               non-employment  or the terms of employment  or               with  the conditions of labour of any  person,               there must be first established a relationship               of   employers   and   employees   associating               together,   the  former  following  a   trade,                             business,  manufacture, undertaking or   calling               of  employers  in the production  of  material               services and the latter following any calling,               service, employment, handicraft, or industrial               occupation  or avocation of workmen in aid  of               the   employers’   enterprise.   It   is   not               necessary  that there must be a profit  motive               but the enterprise must be analogous to  trade               or business in a commercial sense". Though it was considered unnecessary to refer to the earlier cases  as  they were all referred to in  the  Gymkhana  Club case,  the  following propositions which were  deduced  from them have been summed up at page 189 :-               ".  .  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 he  capable               of being described as an undertaking resulting               in material goods or material services".

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Thereafter  the Hospital Mazdoor Sabha(") case  was  closely considered  and  while  doing  so it was  said  that  "if  a hospital, nursing home or dispensary is run as a business in a commercial way there may be found elements of an  industry there.  Then the hospital is more than a place where persons can get treated for their ailment.  It becomes a  business". It  was  further pointed out that in  the  Hospital  Mazdoor Sabha  case,  hospitals  run by Government  and  even  by  a private   association,  not  on  commercial  lines  but   on charitable  lines or as part of the functions of  Government Department of Health were held included in the definition of industry.  The reason given was that the second part of  the definition  of industry contained an extension of the  first part  by including other items of industry.  But  this,  the learned  Chief  Justice said was not  correct  because  "the first and the second parts of the (1) [1960] 2 S.C.R. 866. 371 definition  are not to be read in isolation as if they  were different  industries but only as aspects of the  occupation of  employers  and employees in an industry.  They  are  two counterparts  in  one industry.  The case  proceeds  on  the assumption that there need not be an economic activity since employment  of  capital and profit  motive  were  considered unessential.  It is an erroneous assumption that an economic activity must be related to capital and profit-making alone. An economic activity can exist without the presence of both. Having rejected the true test applied in other cases before, the  test  applied was ’can such activity be carried  on  by private individuals or group of individuals’?  Holding  that a  hospital could be run as a business proposition  and  for profit,  it  was  held that a  hospital  run  by  Government without profit must bear the same character.  With  respect, we do not consider this to be the right test.  That test was employed to distinguish between the administrative functions of  Government but it cannot be used in this context.   When it was emphasised in the same case that the activity must be analogous  to  business  and  trade  and  that  it  must  be productive  of goods or their distribution or for  producing material services to the community at large or a part of it, there  was no room for the other proposition that  privately run  hospitals may in certain circumstances be  regarded  as industries". It  may be noticed that in the Safdarjung Hospital(1)  case, apart  from  the case of the Safdarjung Hospital  two  other appeals  were  being  considered,  namely  one  relating  to Tuberculosis  Hospital  and the other to Kurji  Holy  Family Hospital.   In so far Safdarjung Hospital is  concerned,  it was  held that it was "not embarked on an economic  activity which  can  be said to be analogous to  trade  or  business. There  is  no evidence that it is more than  a  place  where persons can get treated.  This is a part of the functions of Government  and  the  Hospital is run  as  a  Department  of Government. it cannot therefore, be said to be an industry". The  Tuberculosis Hospital was said to be wholly  charitable and  a research institute the dominant purpose of which  was research and training but as research and training cannot be given  without  beds in a hospital, the hospital  was  being run.  The treatment was therefore, part of the research  and trade.   As  such it was not considered to be  an  industry. The object of the Kurji Holy Family Hospital as found to  be entirely  charitable. it also carries on work  of  training, research  and  treatment  and the  distribution  of  surplus profit if any was Prohibited.  That was also not  considered to be an industry.  We refer to these two cases particularly

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because a good deal of argument has been addressed to us  in support  of  the  proposition that where the  object  of  an institution  is for a charitable purpose that would  exclude its  activity  from  coining within  the  definition  of  an industry  under  Sec.  2(j);  that  in  the  two  particular instances the Hospitals were charitable institutions (1) [1971] 1 S.C.R. 177. 372 and  therefore it was contended that merely on  that  ground they  were  not an industry.  In these three  cases  it  was found  that  none  ,of them carry on  an  economic  activity analogous  to trade or business.  The criteria that  in  the two  latter  hospitals the object was  charitable  does  not appear  to have been the sole test for concluding that  they were not industries.  In one case the dominant activity  was research  and training which necessarily involved  treatment also.   In the other case though the activity it carried  on was  training, research and treatment, the  distribution  of surplus as profit was prohibited.  The cumulative effect  of these   activities  and  the  nature  of   such   activities determined  the question whether these institutions were  an industry  or not, not that because their respective  objects were  charitable,  that  alone  was  considered  to  be  the criteria for not considering it as an industry. The cases of charitable object which were referred to by the learned  Advocate for the Appellant were concerned with  the direct  application of Sec. 4, sub-sec. 3(i) of the  Income- tax  Act  1922 (hereinafter referred to as  ’the  Income-tax Act’) which exempted income derived from property held under Trust  or  other  legal  obligation  wholly  for  charitable purpose on the basis that charitable purpose included relief of the poor...... and the advancement of any other object of the  public  utility.  The definition had  therefore  to  be satisfied  by  the  character of  the  Association  and  its activities.   No  doubt  the  words  advancement  of   other purposes  of  general public utility in  the  definition  of Section were very wide and were applied in Re.  Trustees  of Tribune Press, Lahore v. The Commissioner of  Income-tax(1), as  their Lordships latter explained in All India  Spinners’ Association  of  Mirzapur,  Ahmedabad  v.  Commissioner   of Income-tax(2),  "without any very precise definition to  the production of the newspaper in question under the conditions fixed by the Testator’s will".  The Privy Council had in the Tribune case stated "that the object of the paper may fairly be  described as ’the object of supplying the proVince  with an  organ of educated public opinion"’ and that  "it  should pirma  facie  be  held to be an  object  of  general  public utility".   These words their Lordships thought in  the  All India  Spinners’ Association excluded the object of  private gain,  such as an undertaking for commercial profit,  though all the same it would subserve general public utility. In  the  Tribune case the printing and  publication  of  the newspaper which was not carried on for private profit to any person  was  held by the Privy Council to  be  a  charitable object  of  general public utility  although  the  newspaper charged   its  readers  and  advertisers  at  the   ordinary commercial rates.  It would therefore (1) [1939] L.R. 65 I.A. 241. (2) 71 Indian Appeals 159. 373 appear that a commercial Organisation run for profit is  not necessarily excluded from the exemption under the Income-tax Act  if  its object was the accomplishment of  a  charitable purpose.   In  the All India Spinners’  Association(1)  case Lord Wright explained the difference between the English law

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of charity which was largely influenced by Lord Macnaghten’s definition in Commissioners for Special Purposes of  Income- tax  v. Pemsel(2) and Sec. 4 (3) (i) of the Income-tax  Act. Under the English law decisions on "the law of charities are not based on definite and precise statutory provisions"  but were spelled from a list of charitable objects contained  in the  preamble of Act of 43 Elizabeth (1601) and in doing  so they  made  liberal  use of analogies, so  that  the  modern English law can only be ascertained by considering a mass of particular  decisions  often difficult  to  reconcile.   The difference  in  language  of the definition  given  by  Lord Macnaghten  of other purposes beneficial to  the  community’ and  the  inclusion in the Indian Act of the  word  ’public’ gives  a wider scope to the Indian Act.  The Indian  Act  it was said gives a clear and succinct definition which must be construed  according to its actual language and meaning  and consequently English decisions have no binding authority  on its construction and though they may sometimes. afford  help or  guidance  cannot  relieve the  Indian  Courts  from  the responsibility  of  applying  the  Act;  in  the  particular circumstance  that emerge-under conditions of  Indian  life. In  the  All India Spinners’ Association(1)  case  also  the activity  was a commercial activity from which profits  were derived, and since the primary object was charitable  namely relief  to  the  poor that was  considered  prima  facie  to satisfy  the statute.  It was also held that there was  good ground  for holding that the purpose of the Association  in- cluded the advancement of other general public utility which words,  though  wider  were  left  by  their  Lordships  for consideration on other occasions. It  is true that in the Commissioner of Income-tax,  Madras, v.  Andhra Chamber of Commerce(3), this Court held that  the main,  object  of  the Chamber of  promotion  of  trade  and commerce  was  in object of general public utility,  as  not only  the trading class but ,he whole country would  benefit by  it.  What was sought to be contended there was that  the benefit  must include all mankind, which was not  considered to  be necessary for satisfying the definition in Sec.  4(3) (i)  of the Income-tax Act.  But it was sufficient,. of  the intention  was  to benefit a section of the public  as  dis- tinguished from specified individuals.  This case is not  an authority  for  the  proposition that  if  the  activity  is commercial  thought  the  object  charitable,  it  does  not satisfy the definition under Sec. 4(3) (i) of the Act.  Even the decision of the Andhra Pradesh. (1) 71 Indian Appeals 159.    (2) [1891] A.C. 531, 583. (3) [1965] (1 S.C.R. 565. 374 High  Court in the Hyderabad Stock Exchange Ltd. v.  Commis- sioner   of  Income-tax,  A.P.(1),  to  which  one   of   us (Jaganmohan  Reddy,  J.)  was a party  took  the  matter  no further.  It was held there following the Andhra Chamber  of Commerce case that the Hyderabad Stock Exchange(1) served an object  of  general  public utility which was  not  only  to further  the interests both of the brokers and  dealers  but also  of  the  public interested in  securities  to  assist, regulate  and control the trade in securities,  to  maintain high  standards  of  commercial  honour  and  integrity,  to promote  and  inculcate  honourable  practices,  trade   and business  etc.   In  the Commissioner  of  Income-tax,  West Bengal  v. Bengal Home Industries Association(2) Mitter  and Ray, JJ. as they then were referred to the three  principles deduced in Commissioner of Inland Revenue v. City of Glasgow Police  Atheletical  ’Association(3)  by  Lord  Cohen   from English cases and applied them to the facts of that case  to

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ascertain  whether  any Association formed  to  promote  and develop  Home Industries, arts and crafts in the  Presidency of  Bengal was a public charitable institution and  as  such entitled to exemption under Sec. 4 (3) (i) of the Income-tax Act.   It  is  contended by the  learned  Advocate  for  the Appellant  that  the  Andhra  Chamber  of  Commerce(4)  case illustrates  the first principle, the Bombay  Panirapole  v. The  Workmen and Anr.(5), illustrates the  second  principle and the Ahmedabad Textile Research Association(6) case,  the third principle.  What the House ,of Lords were  considering in   the  case  of  City  of  Glasgow   Police   Atheletical Association(3) was where an Association has two purposes one charitable  and  the other not and if the two  purposes  are such  and so related that the non charitable purpose  cannot be  regarded as incidental to the other, the Association  is not a body established for charitable purposes only. We had occasion to point out during the course of the  argu- ment  of  the learned Advocate for the  Appellant  that  the cases  under the Income-tax Act are of little assistance  in determining   whether   an  Organisation,   association   or undertaking is an industry notwithstanding the fact that its main object is charitable.  There is no doubt and it has not been denied by the learned Advocate for the Respondent  that the object of the Federation and even for that matter if  it is  the  main object, subserves general public  utility  and therefore charitable.  But nevertheless its activity may  be commercial so as to satisfy the definition of an  ’industry’ as  explained  and elucidated in the latter  cases  of  this Court particularly that in the Safdarjung Hospital case.  We could therefore envisage an institution having its aims  and objects charitable, and yet (1)   [1967] I.T.R. (66) 195. (3)   (1953) 34 T.C. 76. (2)   [1963] 48 I.T.R. 181. (4)   [1965] 1 S.C.R. 565. (5)   Civil Appeal No. 1331 of 1966 (decided on 16-8-71). (6 [1961] 2 S.C.R. 480. 375 its  activities  could  bring it within  the  definition  of industry  in 2(j).  The Tribune and the All India  Spinners’ Association cases would have illustrated this if a  question had arisen under the Act.  In so far as a decision under the Act  is concerned that is illustrated by the  case  recently decided in the Bombay Panjrapole(1) case to which one of  us (Jaganmohan Reddy, J.) was a party.  In that case the Bombay Panjrapole  was  undoubtedly  brought  into  existence   for charitable purposes namely for establishing a Panjrapole for keeping  of stray, sick and infirm cattle and other  animals and  for  protecting their lives.  This endowment  had  been made  as long ago as 18th October 1834 to put a stop to  the practice of killing of stray dogs by the sepoys of the  East India  Company and subsequently several deeds were  executed one in 1850, another in 1871 and ultimately it was  declared an infirmary under the Prevention of Cruelty to Animals  Act (IX  of  1890).  The activities of the  Panjrapole  expanded considerably over the years and it had branches, apart  from Bombay  at  three  other places.   The  expansion  of  these activities resulted in its selling milk on a large scale and earning huge profits.  While no doubt none of the cattle was sold  and  except  perhaps a stud bull  or  two,  none  were purchased.   Nevertheless  it  was held  that  the  Managing Committee  of  the Trustees had decided  sometime  early  to upgrade the infirm cattle and rear them into good animals so as  to  get  good  and pure milk  for  the  inmates  of  the Panjrapole.   In  fact the upgrading was to such  an  extent

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that the milk yielded was, far in excess for the inmates  of the Panjrapole.  Although The sale proceeds of the milk were never  utilised nor meant for the benefit of the  donors  or trustees,  the  very  production of it in  such  large  bulk wholly unrelated to the needs of the sick cattle showed that the  institution was pursuing an activity with  the  central idea of obtaining a steady income therefrom.  Mitter, J. who spoke for the Court observed               "In  our view, the facts justifiably  lead  to                             the    conclusion    that    the    in stitution               deliberately diversified its objects from only               tending to the sick, infirm or unwanted cattle               by  adopting the policy of keeping cattle  not               merely for their own sake but for the sake  of               improving  the cattle population committed  to               its care with an eye to serve human beings  by               making large quantities of good milk available               to  them and thereby getting an  income  which               would  augment its resources.  It pursued  its               policy just as any diary owner would by having               a  few  good quality bulls to  impregnate  the               cows and thereby ensuring a steady  production               of  milk  and  also  improve  the  quality  of               progeny". (1) C. A. No. 1331 of 1966 decided on 16-8-71.. 376 On  these facts and after considering the several  decisions referred  to  by a earlier as also the cases of  Lalit  Hari Ayurvedic  ,College  Pharmacy v. Its Workers  Union(1),  The Workmen   employed  in  the  Madras  Pinjrapole  v.   Madras Pinjrapole(2),  it was held that it was an industry,  having regard  to  the  various activities  which  it  carried  out particularly having regard to the fact (a) that the value of the  milk  supplied  to  the  sick  and  infirm  cattle  was infinitesimal  compared to that sold in the market. (b)  The expenses  incurred in connection with the treatment of  sick and infirm animals was also negligible compared to the total expenses of the institution. (c) The number of men  employed for  such treatment was very small at all times.   The  fact therefore  ,that the Pinjrapole never purchased  milch  cows and  never  purchased  stud bulls except  for  one  made  no difference  to the question as to whether their activity  of maintaining  cows and bulls could only be considered  as  an investment. A  reference was also given to Sec. 32(5) of the Payment  of Bonus  Act in which Chambers of Commerce and  certain  Other organisations  with  charitable  purpose  were  excluded  as showing that the legislature wanted to exempt them and  this indicated that they are not industries.  We do not think any such inference would arise nor can this provision be of help in  the construction of Sec. 2(j) of the Act.  There  is  in our view force in the contention of the learned Advocate for the  Respondent that the exclusion of  certain  undertakings was a legislative policy either because they would have been included otherwise by the application of that Act to them or by way of abundant caution. It  appears to us that the tests for determining  whether  a dispute   is  an  industrial  dispute,  or  not  have   been enunciated  and the principles crystallised as a  result  of the  several  decisions  of this Court  which  is  what  are applicable  to this case.  There is therefore no warrant  to allow  any  other element to be added to the  criteria  laid down  for determining what an industry is.  In our view  the linch-pin of the definition of industry is to ascertain  the

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systematic  activity which the Organisation  is  discharging namely  whether  it part-takes the nature of a  business  or trade,  or  is an undertaking or manufacture or  calling  of employers.   If it is that and there is cooperation  of  the employer  and  the employee resulting in the  production  of material  services, it is an industry  notwithstanding  that its  objects are charitable or that it does not make  profit or  even  where profits are made, they are  not  distributed among the members. it  now  remains  to be seen whether the  Federation  is  an industry  within, the meaning of Sec. 2(j).  The objects  of the Federation (1) A.I.R. 1960 S.C. 1261. (2) [1962] 2 LLJ 472. 377 are  set  out  inter-alia  in clauses 3(a)  to  (k)  of  the Memorandum of Association of which the more significant  are Cl.  3  (a)  and (e) to (k).  These are  to  promote  Indian business in matters of inland and foreign trade,  transport, industry  and  manufacture, finance and all  other  economic subjects  and  to  encourage  Indian  Banking  shipping  and insurance; to promote support or oppose legislation or other action  effecting economic interests and in general to  take the  initiative  to assist and promote trade,  commerce  and industry, to provide for arbitration in respect of  disputes arising  in the course of trade, industry, or transport  and to secure the services of trained technical and other men to that  end, if necessary or desirable to  conduct,  undertake the conduct of and participate in national and international exhibitions,  to  set up museums or show rooms,  to  exhibit products  of India in other countries and to participate  in such  activities, and to attain those advantages  by  united action  which each member may not be able to  accomplish  in its separate capacity.  In furtherance of these objects  the Federation  publishes  a Fortnightly Review,  organised  two exhibitions in which huge profits were made, though no doubt in  collaboration with the Government.  It  has  constituted Tribunals  for Arbitration.  It is claimed in  the  Brochure issued  by the Federation under the title ’Organisation  and Functions’  that  the  membership  of  Fed,--ration  confers certain  rights  and  privileges, such as  for  instance  it "endeavours  to take up with the concerned  authorities  the specific difficulties experienced by members in their day to day  business".  It has entered into  arbitration  agreement with America, Russia, German Democratic Republic, Poland and Hungary  for the purposes of having the disputes  or  claims arising out of or relating to contracts between nationals of India  and  the  country  concerned  for  being  settled  by arbitration.   It  promotes  India’s  exports  and  economic development.   It undertakes publication of periodicals  for the benefit of the businessmen, big or small; it brings  out Fortnightly  Review  in which there is a Section  for  Trade enquiries  of special interest to importers  and  exporters. This facility is also thrown open to the non-members who can subscribe to the Bulletin though it is sent free to all  the constitutents of the Federation.  A cyclostyled  publication entitled  "Export News" is also issued every  fortnight  and gives  general  hints to the exports as to  how  to  promote their exports.  It appears from the report of Proceedings of the  Executive  Committee  for  the  year  1965,  that  more specific issues were taken up direct with the Department  of Government  concerned  relating to  export  performance  and shortages   of  imported  raw  materials,   components   and machinery with a view to alleviate difficulties in the  case of specific products.  It also takes up matters relating  to

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the grant 378 for more facilities abroad, introduction of concessions such as  Railway  freights etc.  Among important  ad-hoc  matters taken  up  were Cargo seized by Pakistan in  the  course  of hostilities during 1965.  It also facilitates the resolution of  various difficulties in respect of foreign exchange  and export  promotion which are being experienced by the  trade, in  respect  of  foreign  exchange  allocation  for   export promotion  purposes and made several  suggestions  regarding granting of foreign exchange for business facilities  abroad and the need to avoid delay in sanctioning foreign exchange, in   crease  in  existing  scales  of  allowances,   liberal allocation of the after sales service.  It took up the  case of  the established exporters other than  manufacturers  who were  barred from entering into export trade  in  ground-nut oil  cakes.   It  sponsored the cause of  the  exporters  of precious  stones to allow reasonable time for submission  of their  reports and calling back the consignments  if,  there was  no sale.  In Company Law matters also it sponsored  the cause  of  the various Companies and the  difficulties  that they were encountering.  It would appear that on the request of  Goa  Mineral Ore Exporters’ Association,  the  Committee requested  the  Government to give  the  matter  sympathetic consideration.   It  also took up cases of  the  contractors bills  where  there  was  inordinate  delay  in  payment  of contractors bills for lack of funds.  In the report for 1964 it  was stated that where in certain cases  import  licences were  issued subject to the condition that the  validity  of the  licences  depend on the production  of  the  Income-tax clearance  certificate  in  spite  of  the  fact  that   the applicant had quoted the registered number in his income-tax verification, the Federation requested the Chief  Controller of Imports & Exports to discontinue the practice in  future. Where  the  import policy for the year  1964-65  allowed  5% quota  for  silk  bolting cloth  to  established  importers, representation to the Chief Controller of Imports &  Exports was  made  for  this cloth to be granted  to  flour  millers direct whenever they apply for it, if necessary on an ad hoc basis.   The,  case  for freight  concession  for  iron  ore exported  from Rajasthan for extending it to high grade  ore as well, was also taken up. it was further pointed out  that the Company management and other concerned with the  Company law   have   frequently  complained’   of   many   Practical difficulties in complying with the provisions of the Company Act rules etc.  In order to help the Federation constituents in  such matters and provide necessary service to  them  the Federation  has been maintaining a separate division  namely the  Company  Division to which members  were  requested  to forward  their problems and difficulties.  Principal  bodies were  also requested to advise their constituents in  regard to the services offered by the Federation. These extracts have been given in some extenso to show  that the  Federation carries on systematic activities  to  assist its members 379 and  other businessmen and industrialists and even  to  non- members  as  for  instance  in  giving  them  the  right  to subscribe  to their bulletin;. in taking up their cases  and solving their difficulties and in obtaining concessions  and facilities  for them from the Government.  These  activities are business activities and material services which are  not necessarily   confined   to  the  illustrations   given   by Hidayatullah, C.J., in the Gymkhana(1) case by way of illus- tration   only,   rendered  to  businessmen,   traders   and

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industrialists  who are members of the constituents  of  the Federation.   There  can in our view be no  doubt  that  the Federation  is an industry within the meaning of Sec. 2  (j) of the Act. Now  coming  to  the  merits of  the  case  we  find  little substance.  in  the contention of the  Federation  that  the Respondent  had  issued legal notices to  the  International Chamber  of Commerce with a view to bring discredit  to  the Federation-its employer.  The charge of misconduct that  was framed against the Respondent was that he having acted in  a manner  inconsistent  with his duties and obligation  as  an employee of the Federation he caused to be addressed without any justification copies of the letters to the International Chamber of Commerce "with a view to bring and or capable  of bringing  disrepute  to the Federation in the  eyes  of  the International  Chamber of Commerce.  The Enquiry Officer  in the domestic enquiry held that having regard to the emphatic assertion  of  the Respondent that he had  no  intention  to bring disrepute to the Federation in any way and that he was only trying to get his legitimate dues "it is not  necessary to  analyse the exact intention, but the effect has been  to convey  to  the  International Chamber  of  Commerce  a  low impression  about the Federation and thereby to  bring  down the   prestige  of  the  Federation  in  the  eyes  of   the International  Chamber  of  Commerce".   In  spite  of  this finding  the  Enquiry Officer found  that  the  Respondent’s action  was  clearly  subversive of discipline  and  in  his opinion deserved to be so treated.  The Tribunal as we  have noticed earlier found that this did not amount to misconduct which finding in our view is justified on the evidence.   It appears  from the statement of G.C. Das, Accountant  of  the Federation that it was the President of the Indian  National Committee who was incharge of organising the I.C.C. Congress and that all payments were made from the special account  of ’20th Congress of the I.C.C., F.I.C.C.I.’ It is,  therefore, clear  that  it  is not the Federation  that  conducted  the Congress  but  another Organisation which was  brought  into being  for  that purpose.  It is this Committee  namely  the Indian National Committee which employed the Respondent  and in  the  circumstances  there is  little  Justification  for taking umbrage when the Respondent in spite of his demand to settle  his claim was not given satisfaction if he issued  a notice to all the 3 organisations namely the (1) [1968] 1 S.C.R. 742. 11-L500 SupCI/72 380 Federation,   the   Indian  National   Committee   and   the International Chamber of Commerce and Industry.  At any rate the  fact  that the Respondent did not intend  to  cast  any aspersion  against the Federation became also  evident  from the manner in which he tendered his apology and said that he never  had any such intention Notwithstanding  this  apology the punishment of discharge for a workman who has served the Federation for 12 years without any cause for complaint  and had  worked for 40 days receiving overtime payment for  only seven days was far in excess of what he deserved--even if he was  considered to be guilty of any misconduct.  It  is  not denied  that  there are no standing  orders  specifying  the misconduct which would justify dismissal and what misconduct would  justify other disciplinary action.  In these  circum- stances  it is open to the Tribunal to go into the  question whether   ,the  punishment  was  disproportionate   to   the misconduct complained of as to amount to victimisation.   In W.  M.  Agnani v. Badri Dass & Ors. (1), it was so  held  by this  Court.   It  was  also held  in  Hind  Construction  &

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Engineering Co. Ltd. v. Their Workmen (2 )  that although it is  a  settled  rule  that  the  award  of  punishment   for misconduct  is a matter for the management to decide and  if there is justification for punishment imposed, the  Tribunal should  not  interfere;  but  where  the  punishment  is  so disproportionate that no reasonable employer would ever have imposed it in like circumstance, the Tribunal may treat  the imposition   of   such   punishment   as   itself    showing victimisation  or  unfair labour practice.  In view  of  the fact that the domestic tribunal acted on no ,evidence at all because  it  was  found that the intention  with  which  the Respondent had issued the notices to the International Cham- ber  of Commerce and Industry could not be ascertained,  the Tribunal was justified in allowing evidence to be led and on that evidence to come to the conclusion that the termination of  service  was  wrong.  We cannot help  feeling  that  the Federation bad made a mountain out of a mole hill and made a trivial  matter into one involving loss of its prestige  and reputation.   In  this view ’the appeal  is  dismissed  with costs. G.C.                        Appeal dismissed. (1)  [1965] (1) LLJ. 684. (2)  [1965] (2) S.C.R.85 381