# Arun Vihar Residents Welfare Association G.B. Nagar v. State of U.P. And Ors

- **Citation:** (2019) 3 ILRA 1426
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019
- **Case number:** Writ C No. 51047 of 2017
- **Bench:** Dr. Yogendra Kumar Srivastava
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/arun-vihar-residents-welfare-association-g-b-nagar-v-state-of-u-p-and-ors-44763
- **Pages:** 17

## Headnote

A. Civil Law-Industrial Dispute Act, 1947 -
Preamble, Section 2(j), 6N - Ambit and
meaning of industry - In order for an
activity to be held to be covered within the
ambit of the term 'industry', the activitiy
should be an organized one and not that
which pertains to private or personal
employment
-
Held,
when
personal
services are rendered to the members of a
society and the society is constituted only
for the purpose of those members and; the
engagement of the employees is to
provide such services, that activity cannot
be treated to be covered within the
purview of the term 'industry', nor such
employees can be held to be 'workmen'.
(Para 23 & 24)

B. Civil Law- Industrial Dispute Act, 1947
- Section 2(J) - Scope of Industry - Cooperative Housing Society is not an
industry as defined under section 2(j) of
the Act, 1947 and the employees, who
were engaged to provide services to the
members
of
a
co-operative
society
cannot be treated as workman. (Para 18)

C.
Triple
Test
-
Determination
of
Industry - To determine whether and
activity would fall within a purview of
definition of industry are - (i) systematic
activity (ii) organised by cooperation
between employer and employee (iii) for
the production and/or distribution of
goods and services calculated to satisfy
human wants and wishes. (Para 14)

D. Application of 'Dominant Nature Test'
- Any ancillary activities, which may be
carried on by a housing society, would
be treated to be merely an adjunct and
applying the 'dominant nature test' the
same would not change the nature of
activity so as to bring it within the
purview of the term 'industry' (Para 25)

E. Writ of Certiorari - Jurisdictional fact -
is a fact, on the existence of which
jurisdiction of a Court or a Tribunal or
an
authority,
may
arise.
If
the
jurisdictional fact does not exist, the
Court or Tribunal or authority cannot
act. If an inferior Court or Tribunal or
authority wrongly assumes the existence
of such fact, a writ of Certiorari would lie
- Existence of jurisdictional fact is a sine
qua non or condition precedent before
any Court may assume jurisdiction to
decide the lis on merits. (Para 31 & 34)

Writ Petition allowed (E-1)
Case law relied: -

## Text

_Characters 0–39,985 of 56,027. This is a partial read: ask again with offset=39985 for what follows._

1426 INDIAN LAW REPORTS ALLAHABAD SERIES
termination of the workman's services from
the fact that in answer to a letter from the
workman's counsel to the Employers/
Executive Engineer, Chandausi, Moradabad,
about
reinstatement
of
similarly
circumstanced
named
workmen,
the
Employers have acknowledged through a
memo dated 17.08.2004, that they have been
reinstated. Now, about this finding, it has been
pointed out that the workmen under reference
have been reinstated under a judicial order,
being an interim order passed by this Court,
dated 17.12.2003 in Civil Misc. Writ Petition
no.55554 of 2003. This fact has been
specifically mentioned in paragraph 25 of the
writ petition, about which there is an evasive
denial in paragraph 16 of the counter affidavit,
which reads thus:

"16. That
the
contents of
paragraphs 25 and 26 of the writ petition
are not correct, hence denied."

The finding of the Labour,
therefore, that similarly circumstanced
workmen have been reinstated in service,
is absolutely without basis, inasmuch as,
reinstatement in that case is founded on a
judicial order passed by this Court in a
wriit petition. No plea of discrimination
or differential treatment by the workman
can be raised where the Employers have
acted to reinstate some other workmen,
claimed to be similarly situate, in
compliance of a judicial order. That is no
act of the Employers. The case of the
workman is inherently unbelievable and
incredible which the Labour Court ought
to have noticed.

33. It is well settled that an award of
the Labour Court, that is perverse or
manifestly illegal, ought to be quashed by
this Court in exercise of its jurisdiction
under Article 226 of the Constitution.

34. The present case squarely falls
in the category where the award has been
rendered drawing perverse conclusions
from
evidence
on
record,
ignoring
material evidence and looking into
irrelevant evidence. In the background
also, there is this unignoreable plea of a
stale claim, that has been raised after 21
years with no explanation forthcoming on
the workman's part. The explanation, if at
all there is one, is all about the workman
invoking remedies earlier to the same end
unsuccessfully; a fact that he has
suppressed from the inception of these
proceedings.

35. Under the circumstances, the
award apart from being manifestly illegal,
is also liable to be quashed in the interest
of justice.

36. In the result, the writ petition
succeeds and is allowed with costs. The
impugned
award
dated
25.09.2013
(published on 15.04.2014) passed in
Adjudication Case No.57 of 2011 by the
Presiding Officer, Labour Court, Uttar
Pradesh, Rampur, is hereby quashed.
----------
(2019)11ILR A1426

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 13.09.2019

BEFORE
THE HON'BLE DR. YOGENDRA KUMAR
SRIVASTAVA, J.

Writ C No. 51047 of 2017

Arun
Vihar
Residents
Welfare
Association G.B. Nagar ...Petitioner
Versus
State of U.P. And Ors. ...Respondents

Counsel
for
the
Petitioner:
3 All. Arun Vihar Residents Welfare Association G.B. Nagar Vs. State of U.P. And Ors. 1427
Sri Diptiman Singh

Counsel for the Respondents:
C.S.C., Sri Radhey Shyam Dwivedi, Sri
Shekhar Srivastava

A. Civil Law-Industrial Dispute Act, 1947 -
Preamble, Section 2(j), 6N - Ambit and
meaning of industry - In order for an
activity to be held to be covered within the
ambit of the term 'industry', the activitiy
should be an organized one and not that
which pertains to private or personal
employment
-
Held,
when
personal
services are rendered to the members of a
society and the society is constituted only
for the purpose of those members and; the
engagement of the employees is to
provide such services, that activity cannot
be treated to be covered within the
purview of the term 'industry', nor such
employees can be held to be 'workmen'.
(Para 23 & 24)

B. Civil Law- Industrial Dispute Act, 1947
- Section 2(J) - Scope of Industry - Cooperative Housing Society is not an
industry as defined under section 2(j) of
the Act, 1947 and the employees, who
were engaged to provide services to the
members
of
a
co-operative
society
cannot be treated as workman. (Para 18)

C.
Triple
Test
-
Determination
of
Industry - To determine whether and
activity would fall within a purview of
definition of industry are - (i) systematic
activity (ii) organised by cooperation
between employer and employee (iii) for
the production and/or distribution of
goods and services calculated to satisfy
human wants and wishes. (Para 14)

D. Application of 'Dominant Nature Test'
- Any ancillary activities, which may be
carried on by a housing society, would
be treated to be merely an adjunct and
applying the 'dominant nature test' the
same would not change the nature of
activity so as to bring it within the
purview of the term 'industry' (Para 25)

E. Writ of Certiorari - Jurisdictional fact -
is a fact, on the existence of which
jurisdiction of a Court or a Tribunal or
an
authority,
may
arise.
If
the
jurisdictional fact does not exist, the
Court or Tribunal or authority cannot
act. If an inferior Court or Tribunal or
authority wrongly assumes the existence
of such fact, a writ of Certiorari would lie
- Existence of jurisdictional fact is a sine
qua non or condition precedent before
any Court may assume jurisdiction to
decide the lis on merits. (Para 31 & 34)

Writ Petition allowed (E-1)
Case law relied: -
1. Som Vihar Apartment Owners Housing
Maintenance Ltd. Vs Workmen (2002) 9 SCC
652.

2. Bangalore Water Supply & Sewerage Board
Vs A. Rajappa (1978) 2 SCC 213.
3. Karnani Properties Ltd. Vs St. of WB & ors.
(1990) 4 SCC 472.
4. M.D. Manjur & ors. Vs Shyam Kunj
Occupants Society & ors. AIR 2005 SC 1501.
5. Reg. Dir., E.S.I.C. Vs Tulsiani Chambers
Premises Cooperative Society 2008 (116) FLR
656.
6. Smt. Jagvatibai S. Taak Vs. S.D. Paithane,
P.O., VIII Labour Court Mumbai & anr. 2008
(119) FLR 234.
7. Smt. Rachana Gopinath & anr. Vs St. of
Karnataka 2016 (150) FLR 1052.
8. M/s Arihant Siddhi Cooperative Housing
Society Ltd. Vs Pushpa Vishnu More & ors.
2018 (159) FLR 271.
9. M/s Shantivan II Cooperative Housing
Society Vs Smt. Manjula Govind Mahida & anr.
2019 LLR 601.

10. Arun Kumar & ors. Vs Union of India &
ors. (2007) 1 SCC 732.
1428 INDIAN LAW REPORTS ALLAHABAD SERIES
11. Ramesh Chandra Sankla & ors. Vs Vikram
Cement & ors. (2008) 14 SCC 58.
12. Smt. Shrisht Dhawan Vs M/s Shaw
Brothers (1992) 1 SCC 534.
13. Raza Textiles Ltd. v. I.T.O. (1973) 1 SCC
633 : 1973 SCC (Tax) 327 : AIR 1973 SC
1362.
14. Carona Ltd. Vs Parvathy Swaminathan &
Sons (2007) 8 SCC 559

(Delivered by Hon'ble Dr. Yogendra
Kumar Srivastava, J.)

1. Heard Sri Diptiman Singh,
learned counsel for the petitioner and Sri
Shekhar
Srivastava,
learned
counsel
appearing
on
behalf
of
the
third
respondent.

2. The core issue which arises in the
present petition is as to whether an
association or society of apartment
owners employing persons for rendering
personal services to its members can be
held to be an "industry" and its employees
can be held to be "workmen" under the
provisions of the Industrial Disputes Act,
19471 or under the U.P. Industrial
Disputes Act, 19472.

3. The petition arises out of an
award dated 22.07.2017 passed by the
Labour Court in Adjudication Case
No.1493 of 2008 whereby the reference
with regard to the legality/validity of the
termination of services of the third
respondent w.e.f. 04.12.2002 has been
answered by the Labour Court by holding
that the termination having been made
without following the provisions of
Section 6N of the U.P.I.D. Act, 1947, the
same would amount to an illegal
retrenchment, and in view thereof a
direction
has
been
issued
for
reinstatement of the the third respondent
in service with full back wages and all
consequential benefits.

4. The records of the case indicate
that upon an industrial dispute having
been raised by the third respondent, a
reference was made under Section 4K of
the U.P.I.D. Act, 1947, and the question
referred for adjudication was as follows:-

"D;k lsok;kstdksa }kjk vius Jfed
Jh jke ukjk;u feJk iq= Jh enu eksgu in
pijklh dh lsok;sa fnukad 04-12-2002 ls lekIRk
fd;k tkuk mfpr rFkk@vFkok oS/kkfud gS\
;fn gk¡ vFkok ugha rks Jfed vius lsok;kstdksa
ls D;k vuqrks"k izkIr djus dk vf/kdkjh gS vkSj
fdl lhek Rkd ,oa vU; fdl fooj.k lfgr\"

5. Apart from the written statements
being filed by the parties, preliminary
objections with regard to jurisdiction
were also raised by the petitioner
asserting that the petitioner being a
society of apartment owners which had
been
formed
for
looking
after
maintenance of the apartments, and the
same having not been formed for any
profit motive, the provisions of the
U.P.I.D. Act,
1947
would
not
be
applicable and the proceedings which had
been initiated were without jurisdiction.

6. Rejoinders were filed by the
parties,
and
documentary
and
oral
evidence
were
also
adduced
and
thereafter the Labour Court passed the
award which is sought to be challenged in
the present petition.

7. It has been submitted by the
counsel for the petitioner that the
petitioner-society was registered under
the U.P. Co-operative Societies Act, 1965,
and subsequently in the year 2000 the
society was registered under the Societies
3 All. Arun Vihar Residents Welfare Association G.B. Nagar Vs. State of U.P. And Ors. 1429
Registration Act, 1860. The society was
formed by resident members of Sectors
28, 29 and 37, Noida, and its main object
is to provide the necessary maintenance
facilities to the apartment owners who are
its members. It was submitted that the
residential area has been developed by
Army Welfare Housing Organization, and
the apartments were allotted to the
serving and retired defence personnel.
The object of the society is only to
provide services to its members who are
apartment owners and the society is not a
profit earning body and as such the same
cannot be held to be an industry and
would not be covered by the provisions of
the U.P.I.D. Act, 1947. It was further
contended
that
the
petitioner-society
being not an industry and the provisions
of the U.P.I.D. Act, 1947 being not
applicable there would be no question of
violation of provisions of Section 6N of
the U.P.I.D. Act, 1947 or any other
provisions of the said Act. Reliance in this
regard has been placed on the judgment in
the case of Som Vihar Apartment
Owners Housing Maintenance Ltd. Vs.
Workmen3.

8. Per contra, the counsel appeared
on behalf of the third respondent submits
that the services of the workman having
been terminated without any domestic
enquiry and without complying with the
provisions of Section 6N of the U.P.I.D.
Act, 1947, the Labour Court has rightly
answered the reference by holding the
termination to be illegal and invalid and
granting the relief of reinstatement with
full back wages. Reliance has been sought
to be placed upon the judgment in the
case of Bangalore Water Supply and
Sewerage Board Vs. A. Rajappa4 and
Karnani Properties Ltd. Vs. State of
West Bengal & Ors.5.

9. Based on the rival contentions,
the legal issue which arises in the present
petition is as to whether an association or
society of apartment owners, employing
persons for rendering personal services to
its members can be held to be an
"industry" and its employees can be held
to be "workmen" under the provisions of
the I.D. Act, 1947 or under the U.P.I.D.
Act, 1947.

10. For the purposes of adjudicating
upon the aforementioned controversy it
would be necessary to advert to the
relevant statutory provisions under the
I.D. Act, 1947:-

"2. Definitions.--

(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 nonemployment or the term of employment
or with the conditions of labour, of any
person;

(s)
"workman"
means
any
person (including apprentice) employed
in any industry to do any manual,
unskilled, skilled, technical, operational,
clerical or supervisory 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, discharged or retrenched in
connection with, or as a consequence of,
1430 INDIAN LAW REPORTS ALLAHABAD SERIES
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 Air
Force Act, 1950 (45 of 1950), or the
Army Act, 1950 (46 of 1950), or the Navy
Act, 1957 (62 of 1957); 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,
draws
wages
exceeding
ten
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."

11. It may be noted that the
definitions
of
the
aforementioned
expressions
"industry",
"industrial
dispute" and "workman" are in similar
terms under the U.P.I.D. Act, 1947 also.

12. The I.D. Act, 1947 was enacted
to make provisions for the investigation
and settlement of industrial disputes and
for certain other purposes. The preamble
of the I.D. Act, 1947 also states the same
object, and in its terms the Act seeks to
achieve industrial peace and harmony and
settlement of industrial disputes.

13. The meaning and scope of the
term "industry" as defined under Section
2(j)
of
the
I.D.
Act,
1947
was
exhaustively discussed and analysed in
the judgment in the case of Bangalore
Water Supply and Sewerage Board
(supra). The conclusions recorded in the
judgment are being extracted below:-

"140. 'Industry', as defined in
Section 2(j) and explained in Banerji
(supra), has a wide import.

(a)
Where
(i)
systematic
activity, (ii) organized by co-operation
between employer and employee (the
direct
and
substantial
element
is
chimerical) (iii) for the production and/or
distribution
of
goods
and
services
calculated to satisfy human wants and
wishes (not spiritual or religious but
inclusive of material things or services
geared to celestial bliss e.g. making, on a
large scale prasad or food), prima facie,
there is an ''industry' in that enterprise.

(b) Absence of profit motive or
gainful objective is irrelevant, be the
venture in the public, joint, private or
other sector.

(c) The true focus is functional
and the decisive test is the nature of the
activity with special emphasis on the
employer-employee relations.

(d) If the organization is a trade
or business it does not cease to be one
because of philanthropy animating the
undertaking.

141. Although Section 2(j) uses
words of the widest amplitude in its two
limbs, their meaning cannot be magnified
to overreach itself.

(a) ''Undertaking' must suffer a
contextual and associational shrinkage as
explained in Banerji (supra) and in this
judgment ; so also, service, calling and
the like. This yields the inference that all
organized activity possessing the triple
elements in I (supra), although not trade
or business, may still be ''industry'
provided the nature of the activity, viz.
the
employer-employee
basis,
bears
resemblance to what we find in trade or
business. This takes into the fold of
3 All. Arun Vihar Residents Welfare Association G.B. Nagar Vs. State of U.P. And Ors. 1431
''industry'
undertakings,
callings
and
services, adventures ''analogous to the
carrying on the trade or business'. All
features, other than the methodology of
carrying on the activity viz. in organizing
the co-operation between employer and
employee, may be dissimilar. It does not
matter, if on the employment terms there
is analogy.

x x x x x

143. The dominant nature test :

(a)
Where
a
complex
of
activities, some of which qualify for
exemption,
others
not,
involves
employees on the total undertaking, some
of whom are not ''workmen' as in the
University of Delhi case (supra) or some
departments are not productive of goods
and services if isolated, even then, the
predominant nature of the services and
the integrated nature of the departments
as explained in the Corporation of Nagpur
(supra) will be the true test. The whole
undertaking will be ''industry' although
those
who
are
not
''workmen'
by
definition may not benefit by the status.

(b)
Notwithstanding
the
previous clauses, sovereign functions,
strictly understood, (alone) qualify for
exemption, not the welfare activities or
economic
adventures
undertaken
by
government or statutory bodies.

(c)
Even
in
departments
discharging sovereign functions, if there
are units which are industries and they are
substantially severable, then they can be
considered to come within Section 2(j).

(d)
Constitutional
and
competently
enacted
legislative
provisions may well remove from the
scope of the Act categories which
otherwise may be covered thereby."

14. The "triple test" laid down in the
aforementioned
judgment
for
determination as to whether an activity
would fall within a purview of the
definition of industry, is as follows:-

"...(i) systematic activity, (ii)
organized
by
co-operation
between
employer and employee (the direct and
substantial element is chimerical) (iii) for
the production and/or distribution of
goods and services calculated to satisfy
human wants and wishes..."

15. The question as to whether an
association or society of apartment
owners employing persons for rendering
personal services to its members would be
covered within the meaning of the term
"industry" for the purposes of Section 2(j)
of the I.D. Act, 1947 was considered in
the case of Som Vihar Apartment
Owners Housing Maintenance Ltd.
(supra) and referring to the judgment in
the case of Bangalore Water Supply and
Sewerage Board, it was held that when
personal
services
are
rendered
to
members of a society which is constituted
only for the purposes of those members,
the activity would not be treated as an
industry nor the employees would be
treated
as
workmen.
The
relevant
observations in the judgment are as
follows:-

"7. Indeed this Court in Rajappa
case [(1978) 2 SCC 213 : 1978 SCC
(L&S) 215 : (1978) 3 SCR 207] noticed
the distinction between such classes of
workmen as domestic servants who
render personal service to their masters
from those covered by the definition in
Section 2(j) of the Industrial Disputes
Act. It is made clear that if literally
interpreted these words are of very wide
1432 INDIAN LAW REPORTS ALLAHABAD SERIES
amplitude and it cannot be suggested that
in their sweep it is intended to include
service however rendered in whatsoever
capacity and for whatsoever reason. In
that context it was said that it should not
be understood that all services and
callings would come within the purview
of the definition; services rendered by a
domestic servant purely in a personal or
domestic matter or even in a casual way
would fall outside the definition. That is
how this Court dealt with this aspect of
the matter. The whole purpose of the
Industrial Disputes Act is to focus on
resolution of industrial disputes and the
regulation will not meddle with every
little carpenter or a blacksmith, a cobbler
or a cycle repairer who comes outside the
idea of industry and industrial dispute.
This rationale, which applies all along the
line to small professions like that of
domestic servants would apply to those
who are engaged by a group of flatowners for rendering personal services
even if that group is not amorphous but
crystallised into an association or a
society. The decision in Rajappa case
[(1978) 2 SCC 213 : 1978 SCC (L&S)
215 : (1978) 3 SCR 207] if correctly
understood is not an authority for the
proposition that domestic servants are
also to be treated to be workmen even
when they carry on work in respect of one
or many masters. It is clear when personal
services are rendered to the members of a
society and that society is constituted only
for the purposes of those members to
engage the services of such employees,
we do not think its activity should be
treated as an industry nor are they
workmen. In this view of the matter so far
as the appellant is concerned it must be
held not to be an "industry". Therefore,
the award made by the Tribunal cannot be
sustained. The same shall stand set aside."

16. The judgment in the case of
Som Vihar Apartment Owners Housing
Maintenance Ltd. was subsequently
followed in the case of M.D. Manjur &
Ors. Vs. Shyam Kunj Occupants'
Society & Ors.6 and it was reiterated that
the housing co-operative society is not an
industry and its employees cannot be
treated to be "workmen" as defined under
Section 2(s) of the I.D. Act, 1947.

17. Reference may also be had to
the
case
of
Regional
Director,
Employees'
State
Insurance
Corporation Vs. Tulsiani Chambers
Premises Co-operative Society7 wherein
while considering the applicability of the
Employees State Insurance Act, 19488 to
a co-operative housing society it was held
that the society could not be said to be
covered within the meaning of the word
"shop" so as to bring it within the ambit
of the E.S.I. Act, 1948. The status of a
housing
co-operative
society
under
various
statutory
enactments
was
considered and it was held that the society
could not be said to be carrying out
commercial or trading activities. The
relevant
observations
made
in
the
judgment are as follows:-

"49. In this background it is
material to consider such activities and
status of such society under other laws.

(A) Industrial Disputes Act,
1947 : The status of a Co-operative
society under Industrial Disputes Act,
1947 was subject-matter of decision of
the
Apex
Court
in
the
case
of
Management of SOM Vihar Apartment
Owners Housing Maintenance Society
Ltd. v. Workmen C/o. Indian Engineering
and General Mazdoor, 2001 LLR 599 =
2001 (3) LLN 815 (SC). The Honourable
Apex Court has held the society cannot be
3 All. Arun Vihar Residents Welfare Association G.B. Nagar Vs. State of U.P. And Ors. 1433
held to be Industry or shop and at the
highest it can be stated that employees of
the
society
are
rendering
personal
services to the members of the society.

(B) Minimum Wages Act, 1948
: A Single Bench of this High Court was
required to consider whether a Cooperative Society owning industrial units
or galas wherein members or shareholders
are carrying on commercial or trading
activities in the said units would make the
society amenable to Minimum Wages Act,
1948 insofar as employees of the Society
are concerned. This was considered in the
case of Kiran Industrial Premises Cooperative Society Ltd. v. Janata Kamgar
Union [2001 (89) FLR 707 (Bom.)], it has
been held that a society, in which its
members carry on commercial and
trading activities, cannot be treated or
said to be engaged in any commercial
venture or business, trade or profession
and does not even amount to "commercial
establishment" much less a "shop".

(C) Security Guards Act : In the
case of - Maharashtra Rajya Suraksha
Rakshak and Gen. Kamgar Union v.
Security Guards Board for Greater
Bombay and Thane District [2007 (2)
AIR Bom. R. 146 (DB)], it has been held
that a Co-operative Housing Society
having
residential
and
commercial
tenements is not an establishment if it is
not carrying on business, trade or
profession even though some of its
members are carrying on business, trade
or profession in their premises. Relevant
test is whether the society is carrying on
business, trade or profession. Mere
rendering of service by Society to its
members, cannot be said to be either
business or trade or commercial activity.

(D) Provident Fund and Misc.
Provisions Act, 1952 : In the case of
Backbay Premises Co-operative Society
Ltd. v. Union of India [1997 (2) CLR
1075], it was held that the petitioner
society consisting of various premises,
which are used for business purpose by
the members, are required to collect
maintenance
charges
and
statutory
charges from its members under the
provisions of Co-operative Societies Act
and the Bye-laws. Such activity of the
society would not amount to commercial
or business activity. The petitioner society
was hence not covered by the Act even
under Section 1(3)(b) of the PF Act.

(E)
Bombay
Shops
and
Establishments Act, 1948 : A demi official
letter of Under Secretary to Government
of Maharashtra addressed to the Mumbai
District Co-operative Housing Federation
Ltd.
(page
50
of
respondent's
compilation) clearly states that a Cooperative
society
is
neither
an
establishment which carries on any
business, trade or profession nor a society
registered under Societies Registration
Act. It is, therefore, not a commercial
establishment as defined under the
Bombay Shops and Establishments Act
and hence it will not come within the
purview of the Bombay Shops and
Establishment Act.

50. The respondents-societies
render services to the members are
domestic in nature like operating lifts,
water
supply,
electricity,
cleaning,
sweeping and security. These services are
essential for the very existence and
security of its members and society
building. These services therefore are in
the nature of personal services and cannot
be said to be economic activity. Therefore
such services as contended by itself
would not make the respondents-societies
a "shop"."
1434 INDIAN LAW REPORTS ALLAHABAD SERIES

18. In Smt. Jagvatibai S. Taak Vs.
S.D. Paithane Presiding Officer, VIII
Labour
Court
Mumbai
& Anr.9
referring to the judgment of Bangalore
Water Supply and Sewerage Board, it
was reiterated that a co-operative housing
society is not an "industry" as defined
under Section 2(j) of the I.D. Act, 1947,
and the employees who were engaged to
provide services to the members of the
society cannot be treated as "workmen".
The observations made in the judgment
are as follows:-

"3. It is now well settled by a
catena of judgment that a co-operative
housing society is not an industry. In the
case of Management of SOM Vihar
Apartment Owners Housing Maintenance
Society Ltd. v. Workmen C/o. Indian
Engineering
and
General
Mazdoor
[(2002) 9 SCC 652], the Supreme Court,
after considering its judgment in the cas
of
Bangalore
Water
Supply
and
Sewerage Board Vs. S.A. Rajappa [1978
(36) FLR 266 (SC) = 1978 LIC 467], has
observed that workmen engaged to
provide service for members of a Society
cannot be treated as "workmen" of the
housing society, as a housing society is
not an "industry" as defined under section
2(j) of the I.D. Act."

19. The question of applicability of
the provisions of the Contract Labour
(Regulation and Abolition) Act, 197010 to
an apartment owners association came up
for consideration in the case of Smt.
Rachana Gopinath & Anr. Vs. State of
Karnataka11, and upon examining its
activities it was held that the same could
not be said to be concerning any industry,
trade,
business,
manufacture
or
occupation
and
accordingly
the
association could not be construed to be
an "establishment" under Section 2(e) of
the C.L.R.A. Act, 1970. The judgment in
the case of Bangalore Water Supply and
Sewerage Board and also Som Vihar
Apartment
Owners
Housing
Maintenance Ltd. were considered and it
was stated as follows:-

"10. At this juncture, it would
be apt to refer to the judgment of the
Apex Court in the case of 'Management
of Som Vihar Apartment Owners Housing
Maintenance Society Ltd. v. Workmen
C/o. Indian Engineering and General
Mazdoor,' [2001 (1) LLJ 1413] wherein
the Apex Court while considering the
applicability of the Industrial Disputes
Act, 1947 to the Apartment Owners
Housing
Society
formed
by
the
Apartment Owners, has held that when
personal services are rendered to the
Members of a Society and that Society is
constituted only for the purposes of those
Members to engage the services of such
employees, its activity should not be
treated as an industry nor are they
workmen. In that context, it is held that
the
Apartment
Owners
Housing
Maintenance Society is not an Industry.
The Constitution Bench Judgment of the
Apex Court in the case of Bangalore
Water Supply and Sewerage Board v.
R. Rajappa & Others, [1978 (36) FLR
266 (SC)] was considered while arriving
at the said conclusion. It is held that the
rationale which applies all along the line
to small professions like that of domestic
servants would apply to those who are
engaged by a group of flat owners for
rendering personal services even if that
group is not amorphous but crystallized
into an Association or a society. The
proposition that domestic servants are
also to be treated as workmen even when
they carry on work in respect of one or
3 All. Arun Vihar Residents Welfare Association G.B. Nagar Vs. State of U.P. And Ors. 1435
many masters is negated by the Apex
Court in Management of SOM Vihar
Apartment Owners Housing Maintenance
Society Ltd. case. This judgment is
squarely applicable to the facts of the
present case. The Apartment Owners
Association is an Association created for
the benefit of the Members of the
Association and the so called workmen
employed
by
the
Association
are
rendering only personal services to the
Members
of
the
Association.
As
aforesaid, to attract the provisions of the
Act, the essential ingredients of an
'establishment' as set out in Section 2(e)
of the Act which contemplates that the
activities must be commercial in nature,
carried on by the office or Department of
the Government or the Local Authority
must be satisfied. In the absence of such
satisfaction,
respondent
insisting
for
compliance of the procedures prescribed
under the Act is wholly unsustainable."

20. In a similar set of facts, as in the
present case, in M/s Arihant Siddhi Cooperative Housing Society Ltd. Vs. Pushpa
Vishnu More & Ors.12 where the
termination of services of a watchman
engaged by a co-operative housing society
was subject matter of an industrial dispute and
the Labour Court had answered the reference
by
making
an
award
and
directing
reinstatement with full back wages and
continuity of services, upon a challenge being
raised to the award, it was held that where the
predominant nature of the activity of the cooperative housing society was to render
services to its own members, even if it carries
on any commercial activity as an adjunct to its
main activity it could not be termed as an
industry within the meaning of Section 2(j) of
the I.D. Act, 1947. The relevant extracts from
the judgment are as follows:-

"2. The petition challenges an
award passed by the Labour Court at
Mumbai in a reference made to it under
the
Industrial
Disputes
Act.
The
controversy
concerns
the
claim
of
reinstatement with full back wages and
continuity
of
service
of
original
respondent No.1. By the impugned award,
the
reference
was
allowed
and
reinstatement with full back wages and
continuity in service was ordered. That
order was challenged in the present
petition chiefly on the ground that the
Petitioner, against whom the award was
passed, is not an 'industry' within the
meaning of Section 2(j) of the Industrial
Disputes Act.

3. The Petitioner is a Cooperative Housing Society. It had engaged
respondent No.1 as a watchman. Upon his
completion of 60 years of age, his
services were terminated with effect from
1 November 2000. It is the petitioner's
case that the termination was with mutual
consent. That is a matter of dispute.
Respondent
No.1
was
paid
ex-
gratia/retirement
benefit,
which
was
accepted by him. He, thereafter, raised a
demand for reinstatement. It was his case
that he was a permanent employee of the
Petitioner and was terminated without any
enquiry or offering proper retrenchment
compensation. The reference was resisted
by the petitioner herein on the ground that
the Petitioner was a housing society; that
the services rendered by respondent No.1
were personal services; and that the
society
not
being
an
industry
or
respondent No.1 its workman within the
meaning of the term under the Industrial
Disputes Act, the reference was not
maintainable. By its impugned award, the
Labour Court held that though the society
was a co-operative housing society, it
earned profits by way of additional
1436 INDIAN LAW REPORTS ALLAHABAD SERIES
income
from
its
members
and
accordingly, fell within the definition of
industry. The Court held that the profit
motive was proved and that the society
could not be termed merely as a housing
society. It, accordingly, held the reference
to be maintainable and then proceeded to
decide
the
other
issues
concerning
legality of the termination and the reliefs
to be granted to respondent No.1.

4. This Court, in its judgment in
the case of M/s. Shantivan-II Co. Op.
Hsg. Society v. Smt. Manjula Govind
Mahida, W.P. No.360 of 2007 dated 21
June, 2018 has considered whether a cooperative housing society can be termed
as an industry within the meaning of
Section 2(j) of the Industrial Disputes Act
merely because it carries on some
commercial
activity,
not
as
its
predominant activity, but as an adjunct to
its main activity. This Court has held that
such society is not an industry. In a case
like this, that is to say, where there is a
complex of activities, some of which may
qualify the undertaking as an industry and
some would not, what one has to consider
is the predominant nature of services or
activities. If the predominant nature is to
render services to its own members and
the other activities are merely an adjunct,
by the true test laid down in the case of
Bangalore Water Supply and Sewerage
Board v. A. Rajappa [(1978) 2 SCC 213]
the undertaking is not an industry.

5. The Labour Court appears to
have been swayed by the fact that a few
members of the society were carrying on
business such as coaching classes and
dispensary and the society was charging
advertisement charges for the neon signs
put up by the members. The Court was of
the view that the society was thereby
earning income and, in the premises,
could not be termed as a mere housing
society. The Court also observed that in
the premises the services rendered by
respondent No.1 to the society and its
members could not be termed as personal
services. The Court observed that the
judgment of Som Vihar Apartment
Owners' Housing Maintenance Society's
case accordingly had no application to the
facts of the present case. There is a
fundamental fallacy in this reasoning. As
held by the Supreme Court in Bangalore
Water Supply case when there are
multiple activities carried on by an
establishment, what is to be considered is
the dominant function. In the present
case, merely because the society charged
some extra charges from a few of its
members for display of neon signs, the
society cannot be treated as an industry
carrying on business of hiring out of neon
signs
or
allowing
display
of
advertisements. In the premises, the
impugned award of the Labour Court
suffers
from
a
serious
error
of
jurisdiction.

6. Rule is, accordingly, made
absolute and the petition allowed. The
reference before the Labour Court is held
to be not maintainable and the order of
reinstatement with continuity of service
and full back wages passed by the Labour
Court is quashed and set aside."

21. Again, in a similar case, in M/s
Shantivan-II
Co-operative
Housing
Society Vs. Smt. Manjula Govind
Mahida & Anr.13 the services of several
persons engaged as sweepers were
terminated by the housing co-operative
society and upon an industrial dispute
being raised references were made under
Section 10 of the I.D. Act, 1947 and
awards were passed by the Labour Court
holding that since the housing society had
indulged in a commercial activity of
3 All. Arun Vihar Residents Welfare Association G.B. Nagar Vs. State of U.P. And Ors. 1437
letting out its premises to outsiders for
services to be rendered for parking of
vehicles etc., this activity made the
housing society an industry within the
meaning of Section 2(j). The awards of
the Labour Court upon being challenged
by filing writ petitions, the High Court
placing reliance upon the judgment in the
case of Bangalore Water Supply and
Sewerage
Board
and
Som
Vihar
Apartment
Owners
Housing
Maintenance Society Ltd. reiterated that
the housing society which had been
formed by individual flat owners for
providing services, maintenance
and
upkeep of the apartments could never be
termed
as
an
"industry"
and
the
predominant nature of such society being
to render services to its members the
other commercial activities were merely
an adjunct and on the basis of the same its
activities could not be brought under the
ambit of the term "industry". The
observations made in the judgment are as
follows:-

"6. These broad principles laid
down by the Supreme Court in Banglore
Water Supply case were applied by it to
the particular case of a housing society in
Som Vihar Apartment Owners' Housing
Maintenance Society Ltd. Vs. Workmen
C/o Indian Engg. & Genl. Mazdoor
[(2002) 9 SCC 652]. That was a case
where the appellant before the court was
an entity which was said to be an
association
of
apartment
owners,
rendering services to the latter. It was
contended before the Court that the
employees were not rendering personal
services to the apartment owners directly
but through the society; that they received
salary and emoluments from the society;
that they worked under the direct control
and supervision of the society; and
therefore, the society's activities must be
characterized as activities of an industry.
It would, accordingly, constitute an
industry as understood by the Supreme
Court in Banglore Water Supply case. The
Supreme Court noticed the distinction
between such classes of workmen as
domestic servants who render personal
service to their masters and those covered
under the definition under Section 2(j) of
the Industrial Disputes Act, 1947 as
considered in Banglore Water Supply
case. The court noticed that services
rendered by domestic servants purely in a
personal or domestic matter or in a casual
way would fall outside the definition. The
whole purpose of the Industrial Disputes
Act is to focus on resolution of industrial
disputes and such resolution is not meant
to meddle with every carpenter or
blacksmith or cobbler or cycle repairer
who comes outside the idea of industry
and industrial dispute. The court noticed
that this rationale, which applied all along
the line to small professions like that of
domestic servants, would also apply to
those who were engaged by a group of
flat owners for rendering services, even if
that group was not amorphous but
crystallized into an association or a
society. The court held that when personal
services are rendered to members of a
society and the society is constituted only
for the purposes of those members so as
to engage employees for such services, its
activities should not be treated as industry
nor are the employees to be termed as
workmen. The court, in the premises, held
that the apartment owners' housing
society, who was the appellant before it,
was not an industry.

7.
This
law
should
have
ordinarily put an end to any speculation
whether or not a co-operative housing
society like the one we are concerned
1438 INDIAN LAW REPORTS ALLAHABAD SERIES
with in the present petition is an industry.
A housing society, after all, is a society
formed by and for individual flat owners,
who in real terms own the property and
who form themselves into a society so
that services for maintenance and upkeep
of the property, etc. could be availed of by
them in a more systematic manner.