GOPAL v. M.P. KHADI VILLAGE BOARD (KHALID, J.)

' 641 ·GOPAL v. THE ALtlINIS'IRATIVE OFFICER, MADHYA PRADESH KllADI AND VILLAGE INDUSTRIES A ll - BOARD AND ORS. AUGUST 19, 1985 [V. l!ALAKRISHNA ERADI AND V. KHALID, JJ ·] Labour· and Service - Industrial Disputes Act, 1947 - M.P. c 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 Notific~tion No. 9952 - XVI dt. 31st December, 1960. The appellant was appointed as Store Keeper-cum-Accountant D in one of the branches of the Madhya Pradesh Khadi and Village Industries Board, a body corporate constituted under the M.P. Khadi aDd Village Industries Act, 1959. His' service& 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 had 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 falae aDd baseless grouruls aDd no enquiry was held prior to removal. The appellant claimed reinstatement with full wages. E The Respondent Board contested the application contending that F · the Board was not an industry aDd 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 aDd directed reinstatement with half salary from the G date of the Order till reinstatement. The Board preferred a revision. The Industrial Court affirmed the order of the Labour Court aDd dismissed the revision petition. H 642 - SUPP.EMF. COURT REPORTS [1985] SUPP.2 s.c.R. The Board filed a petition under Art. 226 and 227. The High Court allowed the writ petition, quashed the ordP.r 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, wMch set aside the - orders of· the Industrial Court and the Labour Court on the ground that they acted without jurisdi~tion. 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 J.t does not P.mploy 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 Pre.desh 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 s. (3) of s. 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 tlie Board employed more than 100 persons• [ 645 A-ii; 646 A-D; 647 CJ 3 •. One of the functions of the Board 'under s .• 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 ### • A B ## c D F G GOPAL v. M.P. KHADl VILLAGE BOARD [KHALID, J.] 643 A 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 B of sale would clearly cmne within the definition of the word 'trade' or 'business' as contemplated in Section 2(19) of the Act. The 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-BJ C 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. D M.K. Ramamurthy, Vineet Kumar and N.o.v. Raju for the Appellant. ### G.B. Pai, S.K. Gambhir, Ashok Mahajan and Ms. s. Kirp'1lani **for** **the** **Respondents.** E lhe 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 Bench of that Court setting aside the Order passed by the Labour Court, Ujjain,. F co1uirmed 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 l)e had chall.enged his tennina**tion** **which** **challenge** **was** **accepted** **and** **his** **reinstatement** **was** ordered. The facts in brief, necessary for disposal of this appeal are as follows: G **2.** **The** **appellant** **was appointed** **as** **Store** **Keeper** **Cum** **Accoun-** tant on 14.2.1957, in the Madhya Pradesh Khadi and Village **Industries** **Board, Budhwara, Bhopal.** **This** **Board** **is** **a** **body** **corpo-** **rate** **constituted** **under** **the** **M.-P.** **Khadi and** **Village** **Industries** **Act** **1959 and** **is** **engaged_ among** **others,** **in** **activities** **of** **encouraging** **H** **production** **of** **Khadi** **and** **helping** **other** **village** **industries.** **It** ha~ A B ## c D 644 SUPREME COURT REPORTS [1985] SUPP.2 s.c.R. 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 Cooperative Societies and after getting them woven by the societies into blankets, received back blankets as finished goods. The 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. 3. 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 from the date of the Order till **reinstatement.** 4. Aggrieved by this Order the Board preferred a revision E before the Industrial Court in Madhya Pradesh, Indore, repeating the contentions raised before the Labour Court. The 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 F 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 G 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 H ground that they acted without jurisdiction. However, since the GOPAL v. M'.P' KHADI VILLAGE BOARD [KHALID, J.] 645 High Court felt that the matter was not free from doubt and 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. This Act is called the Madhya Pradesh Industrial Relations Act, 1960. ·Section 2 (19) defines Industry **as** **under:** ~·Indus **try"** **means** (a) any business, trade, manufacture, underta~ or calling of employers; (b) any calling, service, employment, handicraft or industrial occupation or a vocation of employees; and includes (i) agriculture and agricultural operatioris; (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 nuniber 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 l of the Madhya Pradesh Industrial Rel.a- · tions Act 1960 (No. 27 of 1960), the State Goven:mient hereby directs that all the provisions of the said Act other than section l and 112 thereof shall come into A B ### c D E F G H 646 SUPREME COURT REPORTS [1985 j SUP_P.2 s.c.R. force . on Jlst December, 1%0, 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, artificlal silk staple fibre, jute and carpet. 2••••••••••••~•••••••••••e•••••••••••• •••••••••••••••••• Q •••••••••••••••• This notification, thus, makes the provisions of the Act applicable only ·to un,dertaking in the industries specified in the **schedule,** **where** th~ **number** **of** **employees, on** **the** **date** **mentioned** therein was or is wore 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 (o) to (m) are not necessary for the resolution of the dispute involved in this case and hence are omitted. "14. Functions of Boa~d. (1) It shi.11 be the duty of the Board to organise, develop and regulate Khadi and Village Industries and perform such functions as .the State Government ""1Y prescribe.· · (2) Without prejudice to the generality of the provisions q_f ttie sub section (1) the Board shall also in particular discharge and perform _all or any of the following duties . and fimcticns namely; (a) ·To ~tart, encourage,· assist, and carry on Khadi and ··v11iage, Indiistries and in the matters incidental **to** **such trade or** **business."** GOPAL v. M.P. KHADI VILL&<Jll BOARD (KHALID, J.] 647 With this background we will advert to the facts of the case. A 8. The Board resisted the appellant's case on two grdunds (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 B the Act. In was during the. course of argument that this plea abou~ **the** **number** **of** **appointees** **was** **urged** **by** **the** **Board. However,** both the Labour Court and the Industrial Court consider~d 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** **eyidence** **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 ## c **more** **than** **100** **persoiis. For** **this** **purpose,** **we** **content** **ourselves** **bJ** **D** extracting the following paragraph from the order of the Labour Court while considering the first point namely.whether tµa provi.• sions of the Act are applicable to the Board. **"Thus** **the** **applicant' 5** **contention** **that** **the** **parishad** •·s **cloth** **·weaving** **centres. were** **in** **erlstence** **till** **2** **years** **E** - **before** **and** **his** **contention** **in** **respect** **of** **the** **number** **of** **workers engaged** **at** **Mandsaur, Gwalior, Anjad** **entries** etc. have not been refuted by the no" 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 F **weaving** **centres.** **The** **non** **applicant** **who** **is** **ip** **posses-** **sion** **of** **the** **records** **of** **appointment** **and** **who** **is** **also** **not** disclosing the exact figures (of the workers),there**fore** **the** **conclu'sions** **go** **agai'Ilst** **the** **non** **applicant."** ## 10. This finding on the appreciation of the evidence given c **by** **the** **witnesses** **concludes** **the** **parties** **acco'rding** **to** **us,** **regarding** the number of the employees employed by th~ Board. Even so, when. the matter went before the High Court, the High Court felc that **the** **jur.isdictional** **question** **was·** **not** **properly, considered** **by** **the** **Labour Court.' Therefore,** **in** **the** **first** **roUnd** **the** **matter** **was** **reman-** d<id by the High Coutt, and the High Court made the following **obs·ervations:** **H** A B ### c .D 648 SUPKEME COURT REPORTS [1985] SUPP.2 s.c.R. "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 appli cation to smaller establishments of notified industries that employed less than 100 persons. That being ### so, it is plain enough that the Courts below misdirec tP.d 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 afesh 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 E 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. F 12. After remand, the Industrial Court considered the question again. The Indus~rial Court understood the remand order and, according to us, rightly, as follows: G !I "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** **nmnber** **of** employe~s employed by the parishad in its textiles activity and **not** **all** **other** **activities** **such as** **Oil,** **Paper Carpentry,** Gur Tannery, Pottery etc. The 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." GOPAL v. M.P. KHADI VILLAGE BOAR.') [KHALID, J. J 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/l 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** **nlllllber** **was** **more** **than 100.** The witness further stated that there are 16 indust**r.ies under** **the** **Board, such** **as** **Paper** **Industry,** **Soap** **Industry,** **Khadi** **Industry,** **Wool** **Industry and** s~ **on.** 8imilarly, in the connected case, namely M.P. No. 713 **of** ~971, **in** **pursuance** **of** **the** **remand** **order,** **the** **state-** **ment** **of** **Gunadeo** **Patil** **(Petitioner's** **Annexure-F) and** **the** **other** **witness,** **· Sadashiv** **Patil** **(Petitioner's** **Annexure-f/l)** **·were** **recorded.** **The** **statements** **of** **these** two witnesses were similar to 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** A B ### c D E F G H A B ## c D E F G H 650 SUPREME COURT REPORTS [1985] SUPP.2 S.C.R. 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** **c.an** **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** **Viilage** Industries and in the matters incidental to such trade or **business."** **What** **the** **Board does** **is** **to** **supply** **raw** **wool** **to** **Coopera-** **tive** **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. lhis 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 neit witness, admitted that. **the** **spinning** **and** **weaving** **work** **of** **cotton** **and** **woollen** **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** **exten-** ded 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 ### GOPAL v. M.~. KHADI VILLAGE JlOARD [KHALID, J.J 651 **prepared** **out** **of** **the** ~"Ool **supplied** **by** **the** **&>ard** **to** **any** **one** **else.** **No** **argument** **is** **necessary** **to** **hold** **that** **the** **blankets** **received** **by** **the. Joard from** **various** **centres** **have** **only** **to** **be** **sold** **and** **rtot used** **by** **the** **Board** **for** **its** **own** **purpose.** **On** **this** **evidence the conclusion** is irresistible that the Board engages itself in the ousiness of selling blankets. It has therefor<> to be h~ld that the Board is an industry within the meaning of the Act. 18. The appellant is ~ntitled' to succeed en hoth the grounds. We set aside the order pessed by the High Court and **restore** **.the. orders** **passed.** **by.** **t:1e** **Lc.bou:** **Cqtirt** **and** **the** **Industr.ial** Cou<·t. The appellant will get. his cost from the first respondent quantifJ.ed at Rs. 2,500. A.P.J. Appeal allo.wed •. A E c