SECRETARY, MADRAS GYMKHANA CLUB EMPLOYEES' UNION versus MANAGEMENT OF THE GYMKHANA CLUB

A SECRETARY; MADRAS GYMKHANA CLUB EMPLOYEES'

UNION v. MANAGEMENT OF THE GYMKHANA CLUB

October 3, 1967

B

[M. HIDAYATULLA\f, V. BHARGAVA AND C. A. VAIDIALINGAM, JI.) Industrial Disputes Act (14 of 1947), s. 2(j)-'Industry', what ia Meaning of the word 'undertaking' in the definition of 'indtlStTfl' - Members' Club, if industl'y.

The respondent is a non-proprietary members' club. It Is oreani. C ed on a vast scale with multifarious activities providing a venue for sports and games, and facilities for recreation, entertainment and for catering of food and refreshment. Guests are admitted but on the invitatipn of members. It has 194 employees with a wage bill between one lakh and two laks rupees. For the year 1962, the em ployees claimed bonus but the Industrial Tribunal held that the club was not an 'industry' within the meaning of the Industrial

D Disputes Act, 1947, and rejected the claim of the employees.

In appeal to this Court. Held: (1) The definitions of industrial dispute 'employer' and 'workman' show that an industrial dispute can only arise In relation to an 'industry'. The definition of 'industry' is !n two parts, the first, from the point of view of employers and the second, from the angle of employees. In its first part it means any 'trade, business, under- !! taking. manufacture or calling of employers'. This part detertl)ines

an industry by reference to occupation of employers in reopect of · those activities specified by the five words and they_ determine what an 'industry' is, and what the cognate expression 'industrial' Is In tended to convey .. But the second part standing alone cannot define 'industry'. If the existence of an industry viewed from the angle of what the employer is doing is established, all who render service F and fall within the definition of 'workman' come within the fold of industry, irrespective of what they do. Thus, the cardinal teet is to find out whether there is an industry according to the denotation of the word in the first part. (753 A-754 HJ.

Taking the words in the definition of 'industry' the word 'trade' for money, or, any means exchange of goods for goods or goods bus_iness carried on with a view to profit, whether manual or mer- G canti!e as distinguished from the liberal arts or learned professit>ns and from agriculture. The word 'business' means an enterPl'ile which is an occupation as distinguished from pleasure. and 'manu facture' 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. The word 'calling' denotes the following of a pro ·fess;on or trade. [756 F-H].

The word 'undertaking' has figured In the cases of this Court. H In D. N. Banerjee v. P. R. Mukherjee, (1953] S.C.R. 302 it was observ ed that the word is not to be Interpreted by association with the words that precede or follow it in· the definition of 'industry', But the settled view of this Court is: that primarily Industrial disputes occur, when the operation undertaken rests upon cooperation bet ween employers and employees with a. view to production and dis tribution of material goods, in other words, wealth, but they may

742

GYlfKllANA CLUB UNION 11,· MANAGJIMENT (Hidayatullah, J,)

748

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arise also in cases where the cooperation is to produce material aer- A vices. For an ·undertaking' to be an industry, it is not necessary that it must be carr;ed on with capital by private enterprise or that it must be commercial or result in profit but there must be systema- tic activity and it must be analogous to the carrying on of a trade or business involving co-operation between employers and em ployees. But every human activity in which the relationship of em ployers and employees enters, is not necessarily creative of an indus try. Personal se.rvices rendered by domestic and other servants, ad ministrative services of public officials, services in aid of occupa tions of professional men such as doctors and lawyers etc., employ ment of teachers and so on, may result in relationships in which there are employers on the one side and employees on the other, but they have been excluded because they do not come within the con notation of the term 'industry' as the service rendered is liot a material service. Therefore, the word 'undertaking', though elastic, must take its colour from other expressions used in the definition of 'industry', and must be defined as any business or any work or project resulting in material goods or material services and which one engages in or attempts as an enterprise analogous to busin.c.~s tJr trade. L 740 D; 756 D-F; 758 D-E; 757 JH:; 758 IH:J.

In the present case, the activity of the club is conducted with the aid of employees who follow callings or avocations. But taking the D first part of the definition and the essential character of the club, the activity of the club cannot be described as a 'trade' business or manu facture' and the running of clubs is not the 'calling' of the respon dent club or its managing committee. Also, the club has no existence aPart from its members. It exists for its members though occasionally strangers also take benefit from its services. Even with the admis'o sion of guests, the club remains .a members' self-serving inStitution. E Though the material needs or wants of a section of the community is catered for it is not done as part of trade or business or as an undertaking analogous to trade or business. Therefore, the Tribunal was right in holding that the respondent club was not an industry. [760 A-H].

Barodo Borough Municipalitv v. Workmen [1957] 1 L.L.J. 8, re

ferred to

Observations contra in Bengal Club Ltd. v. Shantiranjan Som- maddar & Anr. A.I.R 1956 Cal. 545 and Royal Calcutta Golf Ma"door U.llion v. State of We•t Bengal, A.I.R. 1956 Cal. 550, disapproved.

F

(2) The case of State of Bombay v. Hospital Mazdaor Sabha, [1960] 2 S.C.ll 866-in so far as it relied on the test, namely; could the acti vity· be carried on by a private individual or group of Individuals for .the purpose of holding that running a Government hospital was G an mdustry-must be held to have taken an extreme view of what is an industry. This test is not enlightening because there is hardly any activity which private enterprise cannot carry on [751 D-E· ' · . 761 A; 750 E-F). (3). In Corpora~on of City of Nagpur v. Employees, p9601 .. 2 S.C.R. 942, this Court relied upon the same test with an unfortunate result The ,Court h~ld that ,the municipal functions of the Corporation, in: cludmg !Wlll,1~g a pnmary school, were covered by the words 'trade B and bl!smess m C.P. ~ Berar Industrial Disputes Settlement Act, 1947, Sl~ce those functions were not regal, the activity was organis- ed, se~c~ i:vas rendered, and the functions could not be performed by a~ md1v1dual or firm for remuneration, while, in Univerrity of f!elh.1 . v .. Ra!71nath, P9641 ~ S.C.R. 703, this Court held that educa tional mstitutions were not 'mdustry'. [750 B-G; 758 A-Bl.

BUPUJIB COUllT UPOJITS

[1968] 1 e.c.B.

A

(4) The fresh teat laid down In Ahmedabad Textile lndUltl'll Re· aearch Aasocicition v. State of Bomba11, [1961] 2 S.C.R. 480 that, to be an ·industry', the employees therein must not share In the proouct of there are their labour cannot be regarded as univenal, because, occasions w11en the workmen receive a share of the produce as part of their wages or as bonus or as a benefit. [759 CJ.

B

(5) The additional test laid down In National Union of Comlll8t'· cia! Emp!o11ees v. Meher (Tbe Solicitor case) [1962] Supp. 3 S.C.R. 157, that, to be an 'Industry' the aS10Ciation of capital and labour must Ile direct and essential, cannot also be regarded as univenal, because, what partnership can exist between the Board of Directors of a Company on the one hand and the menial staff employed to sweep floors on the other? [753 A].

(6) In Hari!llJ{lar Cane Fanri v. State of Bihar, [1964] 2 S.C.R. O 458 and In the UnitJet"situ case this Court observed that It must ref. rain from laying down unduly broad or categorical propositions. But the attempt to avoid generalizations has one disadvantage, because, taking each operation by itself and determining on the basis of facts whether it is an industry without attempting to pin point whether it is a 'business, or a trade, or an undertaking or manufacture. or calling of employers' is to Ignore the guidance afforded by the sta- D tute through its dictionary and to rely upon decisions dealing with

the problem without a definition. [755 H; 756 A-CJ.

CIVIL APPELLATE JURISOJcnON: Civil Appeal No. 572of1966.

Appeal by special leave from the Award dated ~ptember • 2, I 964 of the Industrial Tribunal, Madras in Industrial Dispute

No. 19 of 1964.

B. R. Dolai, E. C. Agarwala, Champat Rai, Kartar Singh Suri,

Ambrish Kumar and P.C. Agrawala, for the appellant.

H. R. Gokhale, M.R. Narayanaswamy Iyer and R. Ganapathy

r Iver, for the respondent

The Judgment of the Court was delivered by Hlda,......., 1..-The. Industrial Tribunal, Madras by its award. September 2, 1964, has held that the management of the Gymkhana Club, Madras is not liable to pay bonus to its work· men for the year 1962 as the Club is not 'an industry'. The Mildras G Gymkhana Club Employees Union now appeals to this Court by

special leave.

The Madras Gymkhana Club is admittedly a members' club and not a proprietary club. On December 31, 1962 its membership was about 1200 with 800 active members. The object Of the club IS 11 to provide a venue for sports and games and facilities for recrea tion and entertainment. For the former, it maintains a golf course, tennis courts. rugby and football grounds and has made arrange ment for billiards, pingpong and other indoor games. As part of the latter activities it arianges dance, dinner and other parties and runs a catering department, which provides food and refreshments n1>t

.. .

GYMKHANA CLUB UNION V, MANAGEMENT (Hidayatu/lak, J,)

'f(ll

only generally but also for dinners and parties on special occasiom. A The club employs six officers (a Secretary, a Superintendent and four Accountants and Cashiers), twenty clerks and a large num· ber of peons, stewards, butlers, gate-attendants, etc. Its catering department has a separate managerial, clerical and other stall. Altogether there are 194 emploYees. The affairs of the club are managed by a Committee elected annually. Two of the members of the Committee work as Hony. Secretary and Hony. Treasurer res- B pectively.

The membership of the club is varied. There are residentmem bers, non-resident members, temporary members, garrison members, independent lady members, etc. The resident members pay an en· trance fee of Rs. 300 and Rs. 20 per month as subscription. Gar- 0 r'ison members and independent lady members do not pay any en trance fee and their subscription is Rs .. 10 per month. Guests, both local and from outside, are admitted subject to certain restrictions as to the number of days on which they can be invited to the club. The club runs tournaments for the benefit of members and for ex hibition to non-members. The income and expenditure of the club D are of the order of four and a quarter lakh rupees, its movable and immovable properties are worth several lakh rupees and its wage bill is between one and two lakh rupees. The question in this ap peal is whether the respondent club can be said to be an industry for the application of the Industrial Disputes Act, 1947. The Tri· bunal, after considering many decisions rendered by this Court and also by the High Courts m India, came to the conclusion that I the club was not an industry and the claim for bonus on behalf of its employees was therefare unsustainable. The appellant union contends that the decision of the Tribunal is not correct and that the club must be treated as an industry for the application of the Act.

r

As we are concerned primarily with the question whether the club comes within the definition of 'industry' as given in the In· dustrial Disputes Act, we may begin by reading that definition and other provisions which have a bearing upon the question. The Industrial Disputes Act was passed to make provision for the in- G vestigation and settlement of industrial disputes and for certain other purposes appearing in the Act. The emphasis in the Act is primarily upon the investigation and settlement of industrial dil putes. The expression "industrial dispute" is defined by s. 2(k) as follows:-

"industrial dispute" means any dispute or difference bet- ween 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".

B

146

SUPRSMB COURT REPORTS

(1968] 1 s.c.n.

A "Industry" is defined in cl. ij) as follows:-

"industry" means any business, trade, undertaking, manu facture or calling of employers and includes any calling, industrial occupa service, employment. handicraft, or tion or avocation of workmen".

The word "employer" is defined by cl. (g) of the section as: -

B

"employer means--

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(i) in relation to an industry carried on by or under the authority of any department of the Central Govern ment or a State Government, the wthority prescribed in this behalf, or where no authority is prescribed, the, head of the department;

(ii) in relation to any industry carried on by or on behalf of a local authority, the chief executive officer t>f that a<Uthority;" "Workman" is defined by cl. (s) of the section and "means any person (including an apprentice) employed in any industry to do any skilled or unskilled manual super visory, technical or clerical, work for hire or reward. whether the terms of employment be expressed or implied, and for the purpose of any proceeding under this Act in relation to an industrial dispute, includes any person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dis missal, 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 ad

ministrative capacity; or

(iv) who, being employed in a supj:l'Visorv cari•city, draws wages exceeding five hundred rupees per mensem or exercises, either by the na.u • ., 01 the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature."

These definitions have been before this Court on many occa sions and we have reached a point when one can say that at least some attributes of "industry" and "industrial disputes" may be taken as well-established. These cases concerned such diverse in stituti~ and establishments as municipalities, hospitals, solicitor's.

GYJIKllANA CLUB l'NION v. MANAGEMENT (Hidayatullah, ,/,)

747

firm and university. Any enquiry to determine the application of A the definitions to new establishments cannot overlook the settled view. We find it convenient to say a few words about the earlier decisions of this Court, before embarking upon 1111 analysis of the defimtions in relation to a members' club.

The earliest case in this Court involved a dispute between a Municipality and its employees (D.N. Banerjee v. P.R. Mukherjee 8 & Ors.)('). The Municipality was held to be an industry and the dispute was held to be an industrial dispute. This Court observes that the non-technical or ordinary meaning of 'industry' is "an un dertaking where capital and labour co-operate with each other for the purpose of producing wealth in the shape of goods, machines, tools, etc." and for making profits, and an industry in this sense 0 includes agriculture, horticulture etc. The Court points out that this is too wide and that every aspect of employer-employee con nection does not result in an industry. Holding, however, that muni cipal activity cannot be truly regarded as business or trade, this Court cbnsiders whether it can be an 'undertaking'. The sugges tion that the word 'undertaking' takes its colour from the other D four words in the first part of the definition is not accepted. It is said that this interpretation renders the word superfluous and the latter part of the definition unnecessary. Therefore, this Court in cludes non-profit undertakings in the concept of industry even if there is no private enterprise. Referring to the inclusion of public ut!lity services in the scheme of the Act it is held that a: dispute in a E public utility service is an industrial dispute, and the fact that the enterprise is financed by taxation and not by cap1tal is considered irrelevant In formulating these dicta the Court is obviously influ· enced by the analysis of an industrial dispute by Isaacs 1md Rich, in Federated Municipal & Shire Council Employees of JJ. Australia v. Melbourne Corporation(').

F

"Industrial disputes occur when, in relation to operations in which capital and labour are contributed in co-opera- tion for the satisfaction of human wants and desires, those engaged in co-operation dispute as to the basis to be ob- served, by the parties engaged, respecting either a share of the produce or any other terms and conditions of their cooperation . The question of profit. making may be important from an income-tax point of v'ew, as.in many municipal cases in England; but, from an industrial dispute point of view, it cannot matter whether the expenditure is met by fares from passengers or from rates."

.

.

.

In the second case (Baroda Borough Municipality v. Work- men(') a cla'm for bonus by municipal employees was rejected on

(') [1953) s.c R. 302. (') 26 C.L.R. 508. (') [1957) I L.L.J .. 8.

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ilUPRIJIJI COUllT l\JIPOBTS

[1968] 1 s.0.11.

the ground that the bonus fonnula was inapplicable. The Court, however, went on to observe :

"It is now finally settled by the decision of this Court in 1953 S.C.R. 302, that a municipal undertaking of the nature we have under consideration is an "industry" with· in the meaning of the word in s. 2(j) of the Industrial Disputes Act and that the expression "industrial dispute" in that Act includes disputes between the municipality and their employees in branches of work that can be regarded as analogous to the carrying 011 of a trade or business."

(emphasis added).

These two cases lay down that for an activity to be an in- dustry it is not necessary that it must be carried on by private en terprise or must be commercial or result in profit. It is sufficient 1f the activity is analogous to the carrying on of a trade or busi· ness and involves cooperation between employers and employees. This result is reached by extending the meaning of 'undertaking' to cover adventures not strictly trade or business but objects very similar.

E an

The defini~on of 'employer' in our Act clearly shows that 11 local authority may become an employer if it carries on an indus· try. This means that a municipality, if it indulges in an activity which may be properly described as industry, may be involved in industrial dispute. Local bodies are primarily subordinate branches of governmental activity. They function for public pur .. poses but some of their activities may come within the oalling of employers although the municipalities may not be trading corpora tions. Local authorities take away a part of the affairs of Govern ment in local areas and they exercise the powers of regulation taxation. They are political sub-divisions and agencies for the exercise of governmental functions. But if they indulge in municipal trading or business or have to assume the calling of employers they are employers whether they carry on or not business commercially for purposes of gain or profit.

r and subordinate

G

The activity of the municipality in the first two cases was not attempted to be brought within the expressions business and trade. The tenn 'undertaking' was held to cover it. In the third case (Corporation of City of Nagpur v. Employees(') the need to con sider 'trade and' business' arose directly. The question then was whether and to what extent the Corporation of Nagpur was an in dustry under the C.P. & Berar Industrial Disputes Settlement Act, B 1947? That Act included a definition of industry which was differ-

ent. It included

"(a) any business, trade, manufacturing or mining under taking or calling of employers

(1) [1960] 2 S.C.R. 942.

GYMKHANA CLUB UNION V, MANAGEMENT (Hidayatullah, J.)

749

(b) any calling. service, employment, handicraft t>r indus- trial occupation or avocation of employees and

A

(c) any branch of an industry or a· group of industries."

0

In this definition the qualifying words 'manufacturing or mini~g· limited the word 'undertaking' and it could not be given the wide meaning given earlier. This Court did not attempt to bring muni- B cipal activity within the word 'undertaking' but brought it within the expression 'trade and business'. The Court observed that there was nothing in the earlier cases to show that a municipal activity was held excluded from those words. As a matter of fact it did (see p. 308). Of course, there was nothing to show that this Court on the earlier two occasions thought it even remotely possible. In the Nagpur Corporation's(') case the Court proceeded to consider whether a corporation could be legitimately said to be carrying on business or trade or calling. It found the definition to be "very clear" and "not susceptible of any ambiguity", and observed that all the words were very wide and that even if the meaning could be cut down by the aiims and objects of the C.P. & Berar Act as disclosed in the preamble, the main object, namely, social justice D demanded a wide meaning. The Court distinguished between (a) regal and (b) municipal functions t>f the corporation and found the latter analogous to business or trade because they were not regal and the activity was organised and service was rendered. To distinguish• .:>etween a regal function and a• municipal function the E test applied was: Can the service be performed by an individual or firm for remuneration? This test was not applied in one later case but is not enlightening because there is hardly any activity which private enterprise cannot oarry on. As Mr. Gomme in bis Principles of Local Government (1897) observes: ."Any municipal service can be made to pay dividends on private capital if only I' the means of levying a revenue are granted to private owners." Even war can be financed and waged by commercial houses. They manu facture ammunition and war equipment and can carry t>n war with ~ercenaries: Even the i~a·structures of Adam Smith can be pro ~1ded by pnvate en~e.rpnse. The Eas~ India Company ~id both. It 1s not a little surpnsmg that except m one case m which there is a passing reference to it, the Corporation of City of Nagpur case(') G bas not been referred to in the later cases of this Court.

The later cases of this Court view the matter a little differently a~d formulate furt~er tests. <?f the tests, the first is that the acti vity ~ust be orgam8ed. as busmess. or trade is ordinarily organised ThlS IS to be taken with the earher test that 'undertaking' must be analogous to business, trade or calling. It will be seen that B these do not widen the meaning of 'undertaking' but tend to nar row it. The second is that the a~ivity need not necessarily be pre ceded by procurement of capital in the business sense nor must

(1) (1960] 2 $.C.R. 942.

'I .. ,

750

SUPBmO OOUJIT llJi:POBTS

(1968] l S.O.B.

A profit be a motive. So long as relationship of employer and work· men is established with a view to production of material goods or material services, the activity must be regarded as an undertak· ing analogous to trade or business. We shall now review the cases in which these tests are established'.

D

B

In the State of Bombay v. Hospital Mazdoor Sabha(') it is held that a hospital run by government is included in the defini- tion of 'industry'. It is recognised that the first part of the defini tion contains the statutory meaning and. the second part means "an enlargement of it by including other items of industry". As a matter of fact these are not other items of industry but aspects of occupation of employees which are intended to be an h;itegral part of an industry for purposes of industrial disputes. C It is, however, recognised in the case that a line must be drawn to exclude. some callings, services and undertakings. It is held that domestic, personal or casual services are not included and examples are given of such services. The meaning of industry a~ 'an economic activity' involving iuveslment of capital and systema tically carried on for profit for the production or sale of goods by the employment of labour is again discarded because profit motive and investment of capital are considered unessential. Another test reaffirmed is to enquire 'can such activity be carried on by pri· vate individual or group of individua'1s? Answering that a hospital can be run by a private party for profit, it is held that a hospital is an industry even if it is run bY. Government without profit Who E conducts the activity or whether. it is for profit, are considered ir relevant questions. It is, however, again emphasised that an under taking to be an industry must be analogous to trade or business. It is, therefore, laid down that an activity systematically or habi tually undertaken for the production or distribution of goods or for rendering material services to the community at large or a r part of such community with the help of employees is an under taking. In this way, the connection between trade and business on the one hand and undertaking on the other is established which seems to indicate that the expression 'undertaking' must take its colour from fhe other expressions. An industry is thus said to in volve cooperation between employer and employees for the object G of satisfymg material human needs but not for oneself nor for pleasure nor nect:ssarily for profit These dicta are based on the· observations of Isaacs, 1. quoted earlier and in a later case (The Federated State School Teachers' Association of Australia v. The State of Victoria and Others(').

ln the next case Ahmedabad Textile Industry Resear<!h As- R sociation v. State of Bombay(') the question was whether an Asso ciation for research maintained by the textile industry and· employ ing technical and other staff was industry. The case repeated the tests stated in the Hospital(') case and applied them. It was held

(') [1960] 2 S.C.R. 866. (') [1961] 2 S.C.R. 480.

(') 41 C.LJt. l!eD.

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GYMKHANA CLUB UNION V. MANAGEMENT (HidayatuUah, J.)

751

that the Association was providing material services to a part of A the community, was carried on with the help of employees, was organised in a manner in which trade or business is organised and there was co-operation between employers and employees. For the first time a fresh test was added that as the employees had no rights in the results of t'beir labour or in the nature of business and trade the partnership is only as1ociation between the employer and employee.

B

However, in the next case of Nationar Union of Commercial Employees v. M. R. Meher(') where the employees of a firm of soli citors demanded bonus and the case satisfied the tests so far enu merated, a new test was added that the association of capital and labour must be direct and essential. The service of a ·solicitor was regarded as individual depending upon his personal qualifications C and ability. to which the employees did not contribute directly or essentially. Their contribution, it was held, had no direct or essen tial nexus with the advice or services. In this way learned profes sions were excluded.

In the next two cases the difficulty of laying down tests from D

case to case was felt. In Harinagar Cane Farm v. The Stale of Bilzar(') a cane farm was purchased by a suga'r factory and worked as a department for supply of sugar cane. The agricultural opera tions were held to be an industry on the facts but it was held that agriculture under all circumstances could not be called an industry. This Court reversed its method of looking for the tests from other E cases and referred to them only after it had reached its conclusion observing that the Court must refrain from laying down unduly broad or categorical propositions.

In the next case (University of Delhi and Anr. v. Ramnath('\ the question was whether bus drivers employed by the University F were workmen. The concept of service was narrowed and it was held that the educational institutions were not an industry. Their aim was education and the teachers' profession was not to be assimilated to industrial workers. This Court again stated that it must not be understood as laying down a general proposition.

The changes made in the meaning of the expressions used in G

the definition of industry in the Act. disclose a procrustean ap' proach to the problem. The words must mean something definite. but some of the tests were found unsatisfactory to cover new cases as ~e creation of new tests clearly shows. For example, the em phasis resulting from the extension of the definition in its latter part to include services of e~p~oyee~, received little recognition m the later cases. Too much ms1stence upon partnership between H employers and employees is evident in the Solicitor's(') case and

--------·- (') (1962] Supp. 3 S.C.R. 157. (') [1964] 2 S.C.R. 458. (') [1964] 2 S.C.R. 703.

752

SlJl>l\ElUI OOURT RBPORTS

[196b) I s.c.R.

the Company and I or Board of Directors on

A too little in the Association(') case. And yet it is impossible to think that this test is universal. What partnership can exist the between one hand and the menial staff employed to sweep floors on the other? What direct and essential nexus is there between such em· ployees and production? This proves that what must be established is the existence of an industry viewed from the angle of what the B employer is doing and if the definition from the angle of the em ployer's occupation is satisfied, all who render service and fall within the definition of workman come within the fold of industry irrespective of what they do. There is then no need to establish a partnership as such in the production of material goods or material services. Each person doing his appointed task in an organisation C will be a part of the industry whether he attends to a loom or mere ly polishes dopr handles. The fact of employment as envisaged in industry and the the second part is enough provided there is an employee is a workman. The learned professions are not industry not because there is absence of such partnership but because view ed from the angle of the employer's occupation, they do not satisfy D the test. A solicitor earns his livelihood by his own efforts. If his work requires him to take help from menials and other employees who carry out certain assigned duties, the character of the solici tor's work is not altered. What matters is not the nexus between the employee and the product of the employer's efforts but the nature of the employer's occupation. If his work cannot be describ- E ed as an industry his workmen are not industrial workmen and the disputes arising between them are not industrial disputes. The cardinal test is thus to find out whether there is an industry accord ing to the denotation of the word in the first part._ The second part will then show what will be included from the angle of employees. We shall now apply this approach to the definition in the light of F the earlier decisions of this Court in so far as they a~e consistent and then determine whether the club in this case can come within the meaning of 'industry' as determined by us.

The definitions have been set out by us ear)ier in this judg ment. The definitions are inter-related and are obviously knit to- G gether. Stated broadly the definition of 'industrial dispute' contains two limitations. Firstly, the adjective 'industrial' relates the dis pute to an industry as defined in the Act and, secondly, the defini tion 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. As such dispute may arise between different H parties, the Act equally contemplates disputes between employers and employers or between employers and workmen or between workmen and workmen. The definition of the expression 'indust· rial dispute' further shows ·that certain disputes can never be consi dered under the Act. For example, disputes between Government

(') [1961] 2 S.C.R. 480.

GYMKHANA CLUB UNION v. MANAGEMENT (HidayatuUah, J.)

753

and an industrial establishment or between workmen and non-work- A men are not the kind of disputes of which the Act take notice.

The word 'employer' is not specifically defined but merely indicates who is to be considered an employer for purposes of an industry carried l>n by or under authority of a department of Gov ernment and by or on behalf of a local authority. This definition gives little assistance because it is intended to operate in relation B to an activity properly describable as an industry and this takes one back to the definition of 'industry'. The definition of 'workman' is a little better. Although it again refers one back to an industry, it gives some guidance. Workman means any person employed to do skilled or unskilled manual, supervisory, technical or clerical work for hire or reward. The expression, however, does not include C persons employed in some named services of Government. Even in an industry those employed mainly in a managerial or adminis trative capacity and supervisors drawing more than five hundred rupees as wages or exercising functions mainly of a managerial nature, are also to be left out of the definition. In this way the general nature of the dispute, the parties to the dispute and contents of the dispute are. therefore, reasonably clear. A dispute must however be an industrial dispute or, as the several definitions already noticed say, must arise in relation to an industry. This is where the difficulty begins because the statutory definition of 'in dustry' has led to some divergence of views in the Labour Tribu- nals, the High Courts and even in this Court.

the D

E

they deter- F

The definition of 'industry' is in two parts. In its first part it means any business, trade, undertaking, manufacture or calling of employers. This part of the definition determines an industry by reference to occupation of employers in respect of certain activi ties. These activities are specified by five words and mine what an industry is and what the cognate expression 'indus trial' is intended to convey. This is the denotation of the term or what the word denotes. We shall presently discuss what the words "business, trade, undertaking manufacture or calling" comprehend. The second part views the matter from the angle of employees and is designed to include something more in what the term primarily G denotes. By the second part of the definition any calling, service, employment, handicraft or industrial occupation or avocation of workmen is included in the ooncept of industry. This part gives the extended connotation. If the activity can be described as an the industry with reference to the occupation of the employers, ambit of the industry, under the force of the second part, takes in. the different kinds of activity of the employees mentioned in the H second part. But the second part standing alone cannot define 'in dustry'. An industry is not to be found in every case of employ ment or service. An individual who employs a cook gets service from his employee whose avocation is ti> serve as a cook but as the activity of the individual is neither business, nor trade, nor an

754

SUPllElll! COURT llJIPORTS

(1968] l 8.C.R.

A undertaking. nor manufacture, nor calling of an employer, there is no industry. By the inclusive part of the definition the- labour force employed in an industry is made an integral part of the in· dustry for purposes of industrial disputes although industry is ordi· narily something which employers create or undertake.

The definitions in the industrial Disputes Act are borrowed }I from other statutes. The definition of 'industrial dispute' is taken from an Act of 1906 (6 Edw. VII c. 47) and slightly modified. There the definition ran-

"any dispute between employers and workmen, which is connected with the employment, or non-employment, or the terms of the employment or with the conditions of labour, of any person".

0

Our definition only adds to the list of disputes one between em· ployers and employers. Similarly, the latter part of the definition :>f 'industry' which has caused us some trouble is taken from s. 4 of the Commonwealth Conciliation and Arbitration Act which inclu·

D des in the concept of industry-

"any calling, service, employment, handicraft or industrial occupation or avocation of employers on land and water."

Decisions rendered on these definitions (and some others very similar) have naurtally influenced opinion-making in this Court. E The Australian cases in particular have been subrosa all the time. The difficulty in using Australian cases with a text-book approach is perhaps not quite noticed. The term 'industrial dispute' which the Australian High Court was defining was from s. 51 (XXXV) of the Constitution Act. There was no definition of the expression and it was recognised that the co)Ilmon understanding of that expres· sion was not what was meant but something different. In a great body of cases the problem presented its many facets and the ap proach was prwgmatic. Higgins, J. in 26 Com. L. R. cautioned against giving a crystallised meaning to the expression. He observ· ed:

•

G

B

"It is not necessary'--Or, as I think, desirable-that we should, in answering the specific question asked of us, commit ourselves to a final, exhaustive definition of a popular phrase as that in question." (p. 574).

In the Harinagar Cane Farm(') and the University(') cases this Court also made a ,similar observation. In the former it was observed:

·

"We have referred to these decisions only to emphasise the point that this Court }las consistently refrained from laying down unduly broad or categorical propositions ... ".

(') [1964] 2 S.C.R. 458 (') 2 S.CR 703.

GYMKHANA CLUB UNION v. MANAGEMJliN'r (HiJayatullah, J.)

'

7M

The attempt to avoid generalisations (however commen<iable) A ·

has one disadvantage. In Australia the Courts wer~ dealing with the problem without a definition and thought that they should move cautiously to avoid hardening any particular view too far. We have all the terms except 'employer' defined by the statute. Our task is to give meanings to the words which are intended to lay down the full connotation. Taking each operation by itself and determining on the basis of facts whether it is an industry without B attempting to pin-point whether it is a business, or a trade, or an undertaking, or manufacture. or cal1¥tg of employers, is to ignore somewhat the guidance afforded by the statute through its own die> tionary. Therefore, while we a~cept the views expressed uniformly we think any view which seems contradicted by later decisions be cause it was unrelated to the words of the definitions should not C be allowed to harden. We also take the opportunity of relying a little more on the guidance frr,m the Act.

The principles so far settled come to this. Every human acti vity in which enters the relationship of employers and employees, is not necessarily creative of an industry. Personal services ren- D dered by domestic and other servants. administrative services of public officials, service in aid of occupations of professional men, such as doctors and lawyers, etc. employment of teachers and so on may result in relation~hips in which there are employers on the one side and employees on the other but they must. be excluded because they do not come within the denotation of the term 'in- E the dustry'. Primarily, therefore, industrial disputes occur when operation undertaken rests upon cooperation between employers and employees with a view to production and distribution of mate- rial 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 production or distribution is of mate- F rial goods or wealth and they will fal! within the expressions trade, business and manufacture. The word 'trade' in this context bears the meaning which may be taken from HalsburY's Laws of England, Third Edn. Vol. 38 p. 8-

(a) exchange of goods for goods or goods for money;

(b) any business carried on with a view to profit, whether the manual, or mercantile, as distinguished liberal arts or learned professions and from agricul- ture;

from

G

a.nd ~usiness means an enterprise which is an occupation as dis tmgms~ed fr?m plcasur~. Manuf~cture is a kind of productiyc in dustry m which the makmg of articles or material (often on a large B scale) is by physical labour or mechanical power. Calling denotes the following of a profession or trade.

These .words have a clear signification and are intended to lay <lown definite tests. Therefore the principal question (and the only T.'1"(N)7SCI -V

756

8l1!llDll OOUBT BIPOBTS

[1968) 1 8.C.B

A

B Boner/i's case(1

categories legitimate method) is to see where under the several mentioned. a particular venture can be brought. Of these catego ries 'undertaking' is the most elastic. According to Webster's dic tionary, 'undertaking' means 'anything undertaken' or 'any busi ness, work or project which one engages in or attempts, as an en terprise'. It is this category which has figured in the ·cases of this Court. It may be stated that this Court began by stating in ) that the word 'undertaking' is not to be interpret ed by association with the words that precede or follow it, but after the Solicitor's(') and the University(') cases, it is obvious that liberal arts and learned professions, educational undertakings and professional services dependent on the personal qualifications and ability of the donor of services are not included. Although busi- 0 ness may result in service the service is not regarded as material. That is how the service of a Solicitor firm is distinguished from the service of a building corporation. Otherwise what is the diffe rence between the services of a typist in a factory and those of another typist in a Solicitor's office or the service of a bus driver in a municipality and of a bus driver in a University? The only D visible difference is that in the one case the operation is a part of u: C<Jmmercial establishment producing. material goods or material services and in the other there is a non-commercial undertaking. The distinction of an essential or direct connection does not ap pear to be so strong as the distinction that in the one case the result is the production of material goods or services and in the

B other not.

It is. therefore. clear that before the work engaged it can be described as an industry, it must bear the definite character of 'trade' or 'business' or 'manufacture' or 'calling' or must be cap able of being described as an undertaking resulting in material r goods or material services. Now in the application cit the Act, the undertaking may be an enterprise of a private individual or indi viduals. On the other hand, it may not. It is not necessary that the employer must always be a private individual who carries on the operation with his own capital and with a view to his own profit. The Act in terms contemplates cases of industrial disputes G where the Governmeiit or a local authority or a public utility service may be the employer. The expansion of Governmental or municipal activity in fields of productive industry is a feature of all developing welfare states. This is considered necessary because it leads to welfare without exploitation of workmen and makes the production of material goods and services cheaper by elimi nating profits. Government and local authorities act as indivi- B duals do and the policy of the Act is to put Government and local authorities on a par with private individuals. But Government

(') [1953] S.C.R. 302. (') (1962] Supp. 3 S.C.R. 157. (') [1964] 2 S.C.R. 703.

GYMKHAXA CLUB l'XION v. MANAGEMENT (Hidav"tuUah, J.)

757

cannot be regarded as an employer within the Act if the opera· A tions are governmental or administrative in character. The local authorities also cannot be regarded as industry unless they produce material goods or render material services and do not share by delegation in governmental functions or functions incidental there- to. There is no essential difference between educational institutions run by municipalities and those run by universities. And yet a dis tinction is sought to be made on the dichotomy or regal and muni- B cipal functions. Therefore, the word 'undertaking' must be defined as "any business or any work or project which one engage~ in or attempts as an enterprise analogous to business or trade." This is the test laid down in Banerji's case(') and followed in the Baroda Borough Municipality case('). Its extension in the Corporation case(') was unfortunate and contradicted the earlier cases.

C

Next where the activity is to be considered as an industry, it must not be casual but must be distinctly systematic. The work for which labour of workmen is required, must be productive and the workmen must be following an employment, calling or indus· trial avocation. The salient fact in this context is that the work· D men are not their own masters but render service at the behest of masters. This follows from the second part of the definition of in· dustry. Then again when private individuals are the employers, the industry is run with capital and with a view to profits. These two circumstances may not exist when Government or a local au thority enter upon business, trade. manufacture or an undertaking E analogous to trade.

The labour force includes not only manual or technical work· men but also those whose services are necessary or considered an· cillary to the productive Jabour of others but does not include any one who, in an industrial sense. will be regarded, by reason of his employment or duties, as ranged on the side of the .employers. F Such are persons working in a managerial capaelity or highly paid supervisors.

Further the words are 'industrial dispute' and not 'trade dis· pule'. Trade is only one aspect of industrial activity; business and manufacture are two others. The word also is not industry in the G abstract which means diligence or assiduity in any task or effort but a branch of productive labour. This requires cooperation in result is some form between employers and workmen and directly the product of this association but not necessarily com merical. The expressions 'terms of employment' and 'conditions of labour' indicate the kind of conflict between those engaged in in· dustry on opposite but cooperating sides. These words take in dis- H pule as to the share in which the receipts in a commercial venture

the

(') [1953] S.C.R. 302. (') [1960] 2 S.C.R. 942.

L l'(N)7Sn-.9(•)

(') [1957] I L.L.J. 8,

758

llUPllPll OOUllT BBPOBTS

[1968] I s.c.a.

A shall be divided' and generally cover hours of work and rest, re cognition of representative bodies of workmen, payment for piece work, wages-ordinary and overtime, benefits, holidays, etc. The definition takes in disputes between employees and employees such as demarcation disputes and disputes between employers and em· ployers such as wage warfare in an area where labour is scarce and disputes of a like character. The whole paraphernalia of settlement, B conciliation, arbitration (voluntary as well as compulsory) agree ments, awards etc. shows that human labour has value beyond what the wages represent and therefore is entitled to corresponding rights in an industry and . employers must give them their due. In· dustry is the nexus between employers and employees and it is this nexus which brings two distinct bodies together to produce a result. C We do not think that the test that the workmen must not share in the product of their labours adopted in one case can be regard· ed as universal. There may be occasions when the workmen may receive a share of the produce either as part of their wages or as bonus or as a benefit.

D

This ends discussion of what is an industry. We are now in a pl:lsition to considet whether the Madras Gymkhana Club fulfils the tests laid down by this Court and accepted here by us. In sup port of the claim on behalf of the Employees Union, our attention was drawn to two decisions of the Calcutta High Court relating to the Bengal Club Ltd.(') and Royal Calcutta Golf Club('). Both B decisibns are by a learned single Judge. They were cases of incor porated companies running clubs for profit and as business. There are, however, observations which are clearly obiter, that even a non-proprietaJr members' club is an industry. Founding itself on those observations the Union contends that the club m the present case must also be treated as an industry. In fine the claim is based

r on the following considerations:-

(a) that the club is organised as an industry is organised on a vast scale with multifarious activities, (b) that facilities of ac> commodation, catering, sale of alcoholic and non-alcoholic bever ages. games etc. are provided, (c) that the club runs parties at which guests are freely entertained and (d) that the club has G established reciprocal arrangements with other clubs for its mem bers. In our opinion none Of these considerations is sufficient to establish that the club is an industry within the Industrial Disputes Act.

Wo cannot go by the size of the club or the largeness of Its membership or the number or extent of these activities. We have B to consider the essential character of the Club activity in relation to the definition of industry. As we said before, the definition Is in two parts. The first part which we dalled the denotation or the industry really is and the meaning of the word shows what an

(') AI.R. 1956. Cal. 545.

('l A.I.R. Cal. 550.

GYMKHl~A OLUB U~ION" v. >IAOIAG;JM~N'r 1H·i'1ayat1d1'Jh, .].)

;.;9

second part contains the extended connotation to indicate who A will be considered an integral part of the industry on the side of employees. Beginning with the second part, it may at once be con· ceded that the activity of the club is conducted with the aicl of employees who follow callings or avocations. Therefore if the acti vity of the employers is within the realm of industry, !lie answer must be in favour of the Union. But taking the first part of the definition it may also be said that the club does not follow a trade B or business. Its activity cannot be described as manufacture and the running of clubs is not the calling of the members or i1B managing committee. The only question is, is it an undertaking?

Here the appearances are somewhat against the club. It is not of any consequence that there is no profit motive bcca'USe that is C considered immaterial. It is also true that the affairs of the club are organised in the way business is organised, and that there is production of material and other services and in a limitccl way pro duction of material goods mainly in the catering department But these circumstances are not truly representative in the case of the club because the services are to the members themselves for their D own pleasure and amusement and the material goods are for their consumption. In other words. the club exists fur its members. No doubt occasionally strangers also take benefit from its services but they can only do so on invitation of members. No one outside the list of members has the advantage of these services as of right. Nor E can these privileges be bought. In fm:t they are available only to members or through members.

If today the club were to stop entry of outsiders, no essential change in its character vis-a·vis the members would take place. In other words, the circumstance that guests arc admitted is irrclc- F vant to determine if the club is an industry. Even with the admis sion of guests being open the club remains the same. that is to say, a member's self-serving institution. No doubt the material needs or wants of a section of the community is catered for bu~ that is not enough. This must be done as part of trade or business or as an undertaking analogous to trade or business. This clement G ~ completely missing in a members' club.

It is contended that, although there is no incorporation as such, the club has attained an existenoe distinct from its members. It may be said that members come and members go but the club goes on for ever. That is true in a sense. We arc not concerned with members who go out. The club belongs to members for the B time being on its list of members and that is what matters. Those members can deal with the club as they like. Therefore, the club is identified with its members at a given point of time. Thus it cannot be said that the club has an existence apart from the members.

'

760

A

SuPRBJll! COURT RBPORTS

[196/<) ] S.C.R.

It is said that the case of the club is indistinguishable !rom the Hospital(') case. That case is one which may be said to be on the verge. There are reasons to think that it tt>ok the extreme view of an industry. We need not pause to consider the Hospital(') ca~e because the case of a members' club is beyond even the confines established by that case. In our judgment the Madras Gymkhana Club being a members' club is not an industry and the Tribunal

B was right in so declaring.

The appeal fails and is dismissed but we make no order about

costs.

G. C.

Appeal dismissed.

(') (1960] 2 S.C.R. 866.