Absence of profit motive or gainful objective in an organisation is irrelevant to be under Industrial Disputes Act

Cause Title : National Institute Of Immunology vs Vinod Kumar Gupta, W.P.(C) 5016/2003, Delhi HigCourt

Date of Judgment/Order : 02.06.2023

Corum : GAURANG KANTH, J.

Citied: 

1. Bangalore Water Supply and Sewerage Board etc. Vs. R.Rajappa & Ors reported as 1978 (3) SCR 207
2. Physical Research Laboratory v. K.G. Sharma, reported as (1997) 4 SCC 257
3. Union of India v. Vartak Labour Union (2), reported as (2011) 4 SCC 200 
4. State of Karnataka v. Umadevi (3), reported as (2006) 4 SCC 1
5. Haryana State F.C.C.W. Store Ltd. v. Ram Niwas, reported as (2002) 5 SCC 654
6. Workmen v. Indian Standards Institution, reported as (1975) 2 SCC 847
7. Indian Medical Association v. PO Labour Court-I, reported as 2012 SCC OnLine Del 4852
8. S.M. Nilajkar v. Telecom District Manager, reported as (2003) 4 SCC 27

Background

An industrial dispute was raised by the workman against the management, which was subsequently referred by the Secretary (Labour), Govt. of Delhi to the learned Labour court in exercise of the power conferred by the Section 10(1)(c) and Section 12(5) of the Industrial Disputes Act,1947 (“I.D. Act”).

The workman claimed working with the management w.e.f. 05.07.1990 with the designation of Store Assistant, performing various duties but his services were terminated illegally w.e.f. 26.11.1991 without assigning any reason, while his junior was retained in service. It was alleged that the services were terminated in violation of the Section 25-F of the I.D. Act, and therefore, an award be passed in favour of the workman awarding reinstatement along with full back wages and continuity of service.

The management however outrightly denied that the Management is an industry within the meaning of Section 2(j) of the I.D. Act., hence averred that the claim of workman is not maintainable and is liable to be dismissed. They also claimed that the workman stopped attending the work on his own and therefore no question of payment of one month‟s salary to workman arises.

The Labour Court relying on Bangalore Water Supply (supra) concluded that the management qualifies as an "industry‟ under the I.D. Act and in the absence of any charge and enquiry conducted by the management against the workman, it cannot be presumed that workman abandoned duty on his own accord and the services were illegally terminated but did not order reinstatement.

The Management preferred this appeal against the said order. The workman also filed a separate appeal against the non-reinstatement.

Judgment

Before the HC, the workman argued that the order of reinstatement with full back wages is a natural consequence of illegal termination under Section 25 of the I.D. Act and the management nowhere proved that the workman was appointed against the post for a specific project and in absence of any such  evidence, the management's plea that workman's tenure was co-terminus with that of the project is not sustainable.

The management countered that the management is an autonomous research institution working under the aegis of the Department of Biotechnology, Ministry of Science and Technology. It is engaged purely in research work in applied immunology and disseminates scientific research to the public at large. The institute during the pandemic has worked alongside the ICMR to develop vaccine for the COVID-19. There exists no element of an industry, as envisaged under the I.D. Act, as the scientific result of the high calibre research is not commercially exploited for gaining profits out of it. The management functions on basis of the grant-in-aid received from the Government of India and other organisations, therefore it does not operate itself on basis of the commercial motives and is not involved in production of goods and services to satisfy human wants.

Referring to the definitions of "industry" under Section 2(j) of I.D. Act, the Memorandum of Association (MoA) of the Institute, the HC declared that elaborate guidelines/test with respect to the definition of "industry‟ under the I.D. Act as laid down in the judgment of Bangalore Water Supply case (Supra) should act as a North star for the courts to reach the conclusion regarding applicability of the I.D. Act to an organization.

In the Bangalore Water supply case (Supra), the Apex Court propounded a "triple test‟, under which any activity will be considered an industry if it fulfils the three-pronged test, as under:

i. Systematic and organized activity has been carried out;

ii. With the cooperation between Employers and employees;

iii. For the production and distribution of good and services irrespective of the fact whether the capital has been invested for this activity.

The HC observed that the Co-ordinate Bench of this Hon'ble Court in Indian Medical Association (supra), presented some insights regarding "industry‟ under the I.D. Act and on conjoint reading of the objectives of the management and the law laid down in Bangalore Water supply case (Supra), Indian Standards Institution (Supra) and Indian Medical Association (Supra), this Court is of the opinion that the management is indeed engaged in a systematic activity of conducting advanced research and educational training. It is not solely undertaking scientific research as contended by the management, but is also proactively engaged in other activities. It is clear that the management for the purpose of achieving their objectives have been involved in organising advanced research by establishing labs and stores, providing consultation services to the public health institutions and veterinary institutes, conducting educational courses by instituting professorship and offering Ph.D. programmes. The management is also operating different laboratories by the name of Immuno-Chemistry, Small Animal facility, Immuno- Endocrinology, Embryo Biotechnology etc. All these activities require a synchronization between all the departments and the employees for smooth functioning of the organisation's machinery. There exists not only systematic activity being carried out by the management, but also an element of cooperation between the employee and the employer. The consultative services and the research publication offered by the management can be classified as production of services, intended to satisfy human needs and wishes i.e. development and improvement of the immunology research for developing effective immune response.

Ergo, on the anvil of test laid down by the Apex Court, the court held that the management is an industry under Section 2(j) of the I.D. Act and provisions of the said legislation is appliable to the present case.

It is an admitted fact that the workman was not informed at the very time of his appointment that his services will be utilised for the specific project, and his service tenure will be co-terminus with that of the project. In such scenario, it cannot be presumed on its own that the workman signed up for a limited term employment with his full consent.