# CHIEF COMMISSIONER, DELHI AND ORS v. FEDERATION OF INDIAN CHAMBERS OF COMMERCE AND INDUSTRY, NEW DELHI & ORS

- **Citation:** [1975] 1 S.C.R. 348
- **Court:** Supreme Court of India
- **Decided:** 1974-04-30
- **Case number:** Civil Writ No. 531-D of 1964
- **Bench:** Y. V. Chandrachud, Goswami, R. S. Sarkaria
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/chief-commissioner-delhi-and-ors-v-federation-of-indian-chambers-of-commerce-6336
- **Pages:** 10

## Headnote

Delhi Shops and Establishments Act, (7 of 1954), s. 2(5) mid (21)-
'Sliop' and 'Co1n1nercial esrablishment' scope of.
The respondent was required by the Chief Inspector of Shops and Establishments to register its 'e·stablishment• under the Delhi Shops and Establishments Act, 1954. The respondent contended that it was not an 'establishment' which is defined in s. 2(9)' as meaning ·a shop or a c-omn1ercial establishment'_ and did not comply with the direction.
Proceedings for prosecution of its Secretary were instituted, where-upon the respondent filed a petition in the High Court for quashing the order of the appellant and for directing the Magistrate not to proceed with the complaint.
Before the High Court
the appellant contended that the respondent was a 'co1nn1ercial establishment'
because, the activity of the respondent amounted to a 'profession', and alternatively, that the case f·~ll within the latter part of the definition of 'com1nercial
cst4blishment' in s. 2(5), inasmuch a<; its activities were connected with trade
and business generally, but, it was not urged that the activity of the n~spon
dcnt an1ounted to carrying on ar.y 'business or trade' in its pren1iscs.
'I he writ petition was allowed by the High Court, holding that premises
of the respondent were not a 'commercial establishment'.
Jn appeal to this
Court it was. contended that the_ activities of the respondent an1ounted .to a
'trade or business', that therefore it was a 'commercial es1ablishment' and
that the matter
\Vas
(:overed
by
l\,Ja11agen1ent of the Federation o.f Indian
Cha111bers of Co111111erce and lnd11str)' v. Sri R. K. Mittal [1972] 2 S.C.R. 353 .
. Allowing the appeal.
HELD :-( 1) It is not proper to shut out the contentions of the appellant
now' raised about the activity of the respondent being a 'trade or business'
merely on the ground that the point was not properly put before the High
Court.
The question is only one of drawing a correct inference about the
point in issue from the material already on record and will not require any
additional material for decision.
[354E-F]
A
B
c
D
( 2) A place, in order to fall within the definition of 'commercial establishment' must, in the first instance, be 'premises'. and secondly, should be
F
premises wherein, (a) any trade, business or profession is carried on, or (b)
any work in connection \vith or incidental or ancillary thereto is carried on.
[353C-Dl
(3) The registered office of the respondent is 'premises'.
[353D]
( 4) All the activities of the respondent are business activities and are
carried on systematically.
Though the profit made by it is ploughed back for
ils purposes as set out in its Memorandum of Association and is nor distributed among its members. T'heref-i;>re, the decision in }vfittal's case [1972]
2 S.C.R. 353 that the activity of the respondent is in the nature of 'business
or trade' is correct and that case does not require reconsideration. [356A-E.
3570-E]
(5) A· systematic activity can be a business activity even if no dividends
are declared or profits shrtred. [356F-GJ
G
Jn the niatter of Incorporated Council of Law Repurting for England and
Wales [1889] 2 Q.B.D. 279, applied.
H
(6) The pren1ises of th~ re·spondent, !herefore, are a 'comn1crciaf e~tablishment. [357E]
•
A
B
CHIEF COMMR. DELHI v. FICCI
(Sar~aria, J.)
349
(7) For the application of the Act to the respondent it is immaterial
V<hether its activities bring its premises within the ambit of a 'shop' or 'rommercial establishment' within the meaning of the Act.
In Mittal's case it
was held that the activities of the respondent are also in the nature of material services within the wider definition of 'industry' and, any premises where
services are rendered to customers fall within the definition of a 'shop'.
l356E-Fl

## Text

348
CHIEF COMMISSIONER, DELHI AND ORS.
v.
FEDERATION OF INDIAN CHAMBERS OF COMMERCE AND
INDUSTRY, NEW DELHI & ORS.
April 30, 1974
[Y. V. CHANDRACHUD, P. K, GOSWAMI AND R. S. SARKARIA, JJ.]
Delhi Shops and Establishments Act, (7 of 1954), s. 2(5) mid (21)-
'Sliop' and 'Co1n1nercial esrablishment' scope of.
The respondent was required by the Chief Inspector of Shops and Establishments to register its 'e·stablishment• under the Delhi Shops and Establishments Act, 1954. The respondent contended that it was not an 'establishment' which is defined in s. 2(9)' as meaning ·a shop or a c-omn1ercial establishment'_ and did not comply with the direction.
Proceedings for prosecution of its Secretary were instituted, where-upon the respondent filed a petition in the High Court for quashing the order of the appellant and for directing the Magistrate not to proceed with the complaint.
Before the High Court
the appellant contended that the respondent was a 'co1nn1ercial establishment'
because, the activity of the respondent amounted to a 'profession', and alternatively, that the case f·~ll within the latter part of the definition of 'com1nercial
cst4blishment' in s. 2(5), inasmuch a<; its activities were connected with trade
and business generally, but, it was not urged that the activity of the n~spon
dcnt an1ounted to carrying on ar.y 'business or trade' in its pren1iscs.
'I he writ petition was allowed by the High Court, holding that premises
of the respondent were not a 'commercial establishment'.
Jn appeal to this
Court it was. contended that the_ activities of the respondent an1ounted .to a
'trade or business', that therefore it was a 'commercial es1ablishment' and
that the matter
\Vas
(:overed
by
l\,Ja11agen1ent of the Federation o.f Indian
Cha111bers of Co111111erce and lnd11str)' v. Sri R. K. Mittal [1972] 2 S.C.R. 353 .
. Allowing the appeal.
HELD :-( 1) It is not proper to shut out the contentions of the appellant
now' raised about the activity of the respondent being a 'trade or business'
merely on the ground that the point was not properly put before the High
Court.
The question is only one of drawing a correct inference about the
point in issue from the material already on record and will not require any
additional material for decision.
[354E-F]
A
B
c
D
( 2) A place, in order to fall within the definition of 'commercial establishment' must, in the first instance, be 'premises'. and secondly, should be
F
premises wherein, (a) any trade, business or profession is carried on, or (b)
any work in connection \vith or incidental or ancillary thereto is carried on.
[353C-Dl
(3) The registered office of the respondent is 'premises'.
[353D]
( 4) All the activities of the respondent are business activities and are
carried on systematically.
Though the profit made by it is ploughed back for
ils purposes as set out in its Memorandum of Association and is nor distributed among its members. T'heref-i;>re, the decision in }vfittal's case [1972]
2 S.C.R. 353 that the activity of the respondent is in the nature of 'business
or trade' is correct and that case does not require reconsideration. [356A-E.
3570-E]
(5) A· systematic activity can be a business activity even if no dividends
are declared or profits shrtred. [356F-GJ
G
Jn the niatter of Incorporated Council of Law Repurting for England and
Wales [1889] 2 Q.B.D. 279, applied.
H
(6) The pren1ises of th~ re·spondent, !herefore, are a 'comn1crciaf e~tablishment. [357E]
•
A
B
CHIEF COMMR. DELHI v. FICCI
(Sar~aria, J.)
349
(7) For the application of the Act to the respondent it is immaterial
V<hether its activities bring its premises within the ambit of a 'shop' or 'rommercial establishment' within the meaning of the Act.
In Mittal's case it
was held that the activities of the respondent are also in the nature of material services within the wider definition of 'industry' and, any premises where
services are rendered to customers fall within the definition of a 'shop'.
l356E-Fl
CIVIL APPELLATE JURISDICTION: Civil Appeal
No.
1604 of
1%7.
From the judgmeut and order dated the 8th February, 1967 of the
Delhi High Court in Civil Writ No. 531-D of 1964.
P.P. Rao and R. N. Sachthey, for the appelrants.
c
G. P. Pai, P. C. Bhartari and 0. C. Mathur, for respondents nos.
D
1 & 2.
The Judgment of the Court was delivered bySARKARIA J.
Whether the Federatiou of Indian Chambers
of
Commerce and Industry, New Delhi (Respondent 1) is a "commercial establishment" within the meaning of s.2(5) of the Delhi Shops
und Establishments Act, 1954 (for short the Act) is the sale question
that falls for determination in this appeal by certificate directed against
the judgment dated February 8, 1967 of the High Court of Delhi.
The facts bearing on this question may now be stated:
Respondent 1 (hereinaftor referred to as the Federation) is
a
Company registered under s. 26 of the Indian Companies Act, 1913.
·1 he primary objects of the Federation as given in the Memorandum of
*
E
1\ssociation are :
F
G
•
H
"(a) To promote Indian business in matters of inland and
foreign trade, transport, industry and manufactures,
finance and all other economic subjects and to encourage Indian banking, shipping and insurance.
(bl To encourage friendly feeling and unanimity among
business community and association on all subjects
connected with the common good of Indian business.·
(cl To secure organised action on all subjects mentioned
above.
(d) To collect and disseminate statistical and other information and to make effort for the spread of commercial and economic knowledge .
( e) To take all steps by lawful means which
may
be
necessary for promoting supporting
or opposing
legislation or other action affecting
the
aforesaid
economic interests and in general to take the initiative to assist and promote
trade
commerce
and
industry.
(f) To .provide for arbitration in respect of disputes
ansmg m the course of trade, industry or transport
or other business matters, and to sec11re the services
350
SUPREME COURT REPORTS
(1975! 1 S.C.R.
of expert technical and other men to that end if
necessary or desirable.
(g) To conduct undertake the conduct of and participate
in national' and international exhibitions.
(h) To set up museums or show-rooms, to exhibit the
products of India and other countries and to participate in such activities.
( i) To secure the interests and well-being of the Indian
business communities abroad.
(j)
(k)
(1)
(m)
(n)
(o)
(p)
(q)
(r)
To attain those advantages by united action which
each member may not be able to accomplish in its
separate capacity.
To help in the organisation of Chambers
merce or
Commercial
Associations in
commercial centres of the country.
of Comdifferent
A
B
c
D
(s)
E
(t)
(u)
(v)
(w)
(x)
(y) To sell or dispose of the undertaking of the Federation
F
or any part thereof for such consideration as the
Federation may think fit and in particular for shares,
debentures, or secnrities of any other association or
company having objects altogether or in similar to
those of the Federation.
(z) To take or otherwise acquire and hold shares in any
other association or company having objects
altogether or in part similar to those of the Federation.
(zl) To establish a Trust or Trusts
and/or
appoint
Trustees thereof from time to time and vest the funds
or the surplus income or any property of the Federation in the Trustees who shall hold and deal with
the funds, .surplus income or property in such manner
as the Committee may decide.
'
(z2)
G
H
•
i
B
c
D
E
F
•
G
H
CHIEF COMMR. DELHI v. FICCI (Sarkaria, J.)
351
(z3)
(z4)
(4)
To draw, make, accept, discount, exec~te and is~ue
bills of exchange, promissory notes, bills of ladmg,
warrants, debentures and other negotible instruments
or securities.
The income and property of the Federatiw, whencesoever derived, shall be applied solely towards the
promotion of the objects of the Federation as set f~rth
in the Memorandum of Association; and no port10n
thereof shall be paid or transferred directly or indirectly, by way of dividend, bonus, or otherwise by
way of profit to the members of the Federation .... "
The Articles of Association inter alia provide that a Chamber or
an Association can become an ordinary member of the Federation on
payment of annual subscription of Rs. 1,000/- or such higher amount
as may from time to time be fixed by the Federation in addition to the
admission fee of Rs. 500/-. The scales of subscription on the basis of
turnover, deposits or premia for associate members have also b.een
prescribed.
The Chief Inspector of Shops and Establishments. Ddhi (Appellant 2 herein) called upon the Federation to register its establishment
under the Act. The Federation failed to comply with fue direction and
contended that it was not an "establishment" as defiμed in s. 2(9) of
tho Act. This contention did not find favour with the Chief Inspector
who, in consequence, made a complaint under the Act for prosecution
of the Secretary of the Federation (Respondent 2 herein) under the
appropriate penal provisions of the Act in the Court of the Magistrate,
!st Class, Parliament Street, New Delhi. The Federation then moved
the High Court under Article 226 of the Constitution for bringing up
and quashing the order, dated February 4, 1964 passed by the Chief
Inspector (Appellant 2). They further prayed for a writ of Prohibition
directing the Magistrate not to proceed with the complaint.
Before the High Court, the contention oLthe Federation was that
the premises in which the registered office of the Federation is located
is not a "cc:mm~rcial establishment" within the meaning of s. 2(5) of
the Act which, m consequence had no application.
From the side of the present appellant, at first,
a half-hearted
a_ttempt ;-v~s i;i;ade to show '.hat the Federation is carrying on a profession as it is tendermg advice to all businessmen and traders". This
contention was negatived in these terms :
" .... that contention overlqoks the fact that the advice
in ques_tion is not tendered for any consideration. It is done
Ill t~e mte.rest of !rad~ and business of the country. The 1st
petitioner is no_t tende~mg any advice or giving any assistance
to any trader m particular. It deals with the trade or business in. general to se~ure the interest of the country. It is
predommantly a chantable organization and not a professional one."
352
SUPREME COURT REPORTS
· (1975] 1 s.c.R.
It was then contended that the activities of the Federation carried on
A
in the premises in question amounted to "work in connection with, or
incidental or ancillary" to trade or business in general within the latter
part of the definition of "commercial establishment". This contention
was also rejected with the observation that since the earlier part of
the definition refers to "some particular business or trade carried on
in a premises" the words "any work in connection with or incidental
or necessary thereto" obviously refer to such particular business or
B
trade and not to trade or business in general". In the result, it was held
that the premises of the Federation were not a commercial establishment, and the writ petition was allowed. A certificate, however, was
granted under Article 133 (1 )( c) of the Constitution that the case was
f
fit for appeal to this Court. Hence this appeal.
Before dealing with the contentions canvassed before us, it will
C
be useful to notice briefly, the scheme and the relevant provisions of
the Act.
The title of the Act is Delhi Shops and Establishments Act, 1954.
The main object of the Act as stated in its preamble is "regulation of
hours of work, payment of wages, leave, holiday, terms of service and
other conditions of work of persons employed in shop,
commercial
D
establishment, establishments for public entertainment or amusement
and other establishments and to provide for certain matters connected
therewith." Section 1 ( 4) indicates its extent and application. It shall
apply in the first instance, only to the municipal areas, notified areas
of Delhi and New Delhi etc., but Government may by notification
extend or apply it to shops and establishments in the other local area
or areas. The definitions of "commercial establishment", ''establishE
men!" and "shop" given in sub-sections (5), (9) and (27) of section
2 are material for our purpose. They read :
"Con1n1ercial establishment" means any premises wherein any trade, business or profession or any work in connection with, or incidental or ancillary thereto is carried on and
includes a society registered under the Societies Registration
Act, 1860, and charitable or other trust, whether registered
or not, which carries on any business, trade or profession or
work in connection with or incidental or ancillary thereto,
journalistic and printing est'!blishments, quarries and mines
not governed by the Mines Act 1952, educational or other
tastitutions run for private gain and premises in which busiJ!.¢-SS of banking, insurance. stocks and shares, brokerage or
produce exchange is carried on, but does not include a shop
or a factory registered under the Factories Act, 1948, or
theatres, cmemas, restaurants, eating houses residential hotels
clubs or other places of public amusement or entertainment."
"Establishment" means a shop, a commercial establishment, residential hotel, restaurant, eating house, theatre or
other places of public amusement or entertainment to which
this Act applies and includes such other establishment as
Government may by notification in the Official
Gazette,
F
G
H
B
c
D
E
CJUEF COMMR. DELHI v. FICCI (Sarkaria, J.)
declare to -be an establishment for the purposes of the
Act .. -"
"Shop" means any premises where goods are sold, either
by retail or wholesale or where services are rendered to
customers, and includes an office, a store-room, godown,
·warehouse or workhouse or work place, whether in the same
premises· or otherwise, used in or in connection '".ith su~h
trade or business but does not include a factory or commercial
establishment.''
353It will be seen that while the definition of "establishment" includes.
a 'shop' and 'commercial establishment', the definitions of 'shop' and
'commercial establishment' are mu!Ually exclusive. Further, the definition of "commercial establishment" is wider than that oi "shop". A
place in .. order to faU within the definition of "commercial Establishment" must in the first instance be "premises". Secondly, it should be
premises wherein (a) any trade, business or profession is carried on,
or (b) any work in connection with or incidental or ancillary thereto
is carried on. Sulrclause (b) is only ancillary to (a). There is no
doubt that the registered office onhe Federation is premises. The con-
. troversy centres round the question, whether the activity of the Federation carried on in these premises is a "trade, business or profession"
within the meaning of part (a) of the definition.
This question is not res integra . .It came up for consideration before this Court in Management ·of the Federation of Indian Chambers ·
of Commerce and Industry v. Their Workman, Shri R. K. Mittal.(1)
After considering its Memorandum of Association, Articles of Association and other material, which was more or less. the same, as in ·the
present case, it was held by this Court that the activity of this Federation is in the nature of a business or trade.
'
Mr. Rao, learned Counsel for the appellants strongly relies. on thee
aforesaid decision.
·
" ,
Mr. - Pai, learned Counsel tor the Federation has firstly raised a
F
preliminary objection that before the High Court, at no stage, it was
urged on behalf of the Appellants that the activity of the Federation
·carried on in the premises -was a business or trade. It is added that a
half-hearted argument. was advanced that its activity was a 'profession'
a~d that,. too, was soon given up. In these. circumstances, it is submitted, the appellant& should not be allowed to commit a volte-face
and take. _up in this Court a· stand which was either not taken or was
G
given up in the High Court. In the alternative, learned Counsel con-
!< nds that even if this plea is allowed to be raised, then also the primary activity of the Federation cannot, by any stretch of reasoning;
be called a 'trade, business of profession' within the. definition of
"commercial establishment" given in the Act. According to Counsel
the activity ·of the Federation is one of general utility· the only sourc~
of its income is from subscriptions. The occasional' exhibitions or
ii · museums organised. by it are activit.ies which are only incidental 01
. ·ancillary to the p~
charitable dbject of the Federation. No divi- ,
(I) (1972] 2 S.C.R. 353.
'
:354
SUPREME COURT REPORTS
[1975] i S.C.R.
dends are declared; no profits are shared or divided amorig the, individual niembers, and no goods are sold or exchanged. In support of·
his contentions, learned Counsel has referred to · Commissioner ·of .
Income-tax v. Andhra Chamber of Commerce.(')
·
.
.
.
· Mr. Pai further maintains that the ratio in · R. K. Mitta/'s. case ·
(supra) is· not applicable to the instant case because the definition of
••industry" in s. 2(j) of the Industrial Disputes Act, 1947 is far wider.
than that of "commercial establishment" ins. 2(5) of the Act.
Mr. Pai furthe~ doubts the correctness of the dedsion in · R. · K.
B
Mittal's case (supra) inasmuch as it holds that the activity of. the
Federation partakes the character of trade or business. This finding, it
is urged, is based on a misapprehension of"filcts and requires reconsideration. It is pointed out.that it was wrongly assumed ip Mittal's.case
C
{supra) that the .Federation was systematically assisting not only its
members but also·· other business-men and. industrialists even if they
were not it! members. The fact of the matter is !hat the Respondent
is a Federation1 of Federations and not an association· of any jndlvidual: traders,~ industrialists or. businessmen.
· . ·.As regards the preliminary objection, it is tn,ie tliat .beforc .. ·the
D .·
. High Coqrt, it was not argued that the activity of the Federation
ainounts to. the carrying on of any biisiness or trade. in the premises
in question.· All that was attempted to argue there was, that its :icti-
" vity amounted to a•'profession'. · Alternatively, it was· contended that
. the ca~e fell within part (b) of the definition of "commercial establish-
·ment" inasmuch as its activities -were connected with trade. and business, generally.
E
.. '.We do' not ihink it proper to shut out th~ contentions no."v raised·
before us· aboutthe activity of the .Federation being a trade or- busi-
• ness; merely on the 'ground, that the point was ·not properly put before .
the llighCourt.. This point will not require: any. additi9nal material
for its decision; . The question is only of drawing a co:rrectinferenc~ ·
about the point in issue from the .material. already on record. ·we,. F.
therefore, overrule the prelin:iinary objection.
· . Thi! takes us t~ the merits of the case~ In R. K. Mittal's .c~se;·
·!his.Court was considering· the activity of this Federation· in the con-
. iext of 'industry' as defined in. s.2 (j) of the Industrial Dispμtes Act.
That definition reads:
.
·
. " •industry" means any business, trade, undertaking,
G .
. manufacture or calling of employers and includes any calling, service,. employment, handicraft or industrial occupa- ·
tion Or .evocation of workmen."
. _ -·
~
.I;·wfilbe seen that "any busii:tess, trade" is. an element commo!1 to
the d~tinitions of "commercial esl.'J.blishment" and "industry" . given
· in the 1respective statutes. That .·was why the questi?n, whethd~r ttlhe
H .
. activit}'.\ of .the Federaticom is a. business or trade actiVIty, was
rrec Y
(IJ (1965) l $.C.R. 565;
A
CHIEF COMMR; DELHI v. FICCI" (Sarkaria, J.)
355 -
and substantially in issue in R. K. Mittal's case. Therein,, the Memorar.dum of Association, Articles of Association and the other !ll'aterial
placed before the court were closely examined. The entire case law
was surveyed, _The contentio_ns now canvassed were also raised and -
· considered in that case.
Jagnmohan Reddy J. speaking·for the Court,.
pcsed the question for decision thus :
e·
' '.'In OU~ 'view the Unch-pin of the definition of ind~try'
is to •ascertain the systematic activity which the organization
is. tlischarging -namely,· whether it partakes the nature .of a
business or trade; . or is an· undertaking or manufacture or
calling of employers".
(emphasis added)
. C.
The answer given _to this question has 'been correctly summed up
in the head-note of the Report; as under:
_
_
·-
D
E
F
G
_-.
"The above being the position in lllw the were fact that
the appellant Federatio.n had charitable ainis and · objects
would not take it out of the definition of industry._
Ari
examination of the : activities of the Federation showed that
the Federation carried on systematic •activities to assist _its
members and other businessmen and. industrialists arid even
to non-members as for instance in giving them the right to
subscribe_ to their bulletin; in taking up their cases and sol- ·
ving their difficulties and in obtaining concessions and faci-
- lilies -from them from the Government..
These ac1ivities
were business activities and material services rendeltd to
. biisiiiessmen, 'traders .arid industrialists who are meiribers of
the constituents of the Federation: There could ~ no doubt
that' the Federation waS an. industry within the ineaning of
.. s.2(j) of the Act."
(The crucial words are those that have been unlferlined).
The case under the Income~tax Act· wherein the main ·object of
the or&-~nization was' charitable, were also considered 11nd fOun'd or
little assistance. _ It _was obsen'ed Chat:
-- "th~ object of an organisation may be charitable but never-
- .theless its activity may be commercial .so as to satisfy the_
definition of an industry as explained and illustl\lted by this
Court particularly in Safdarjanf/ .- Hospital's case.( 1) . . We
could therefore envisage an institution having its_ aims and
objects charitable and yet its activities could. bring it within
the definition of indu_stry"
-
' -
-
- 'The •above observations were.made in the context of the definition
of 'industry but. they are equally'applicabl~ in the. present case._ Th~
very definitio:i of "com?lercial e~tablishment" indicates. that the aci;-
\•ity -of a reg1s'.·~red society, chantable <;ir other trust will not take 1t -
out of the definition if the ttctivity carried on by it amounts to a busi-
(l) (1971] t,'s.C.R. tn.
356
SUPRE~OURT REPORTS
(1975] 1 S.C.R.
... iess, trade or profession or any work in collneCtion therewith or inci-
.d~ntal thereto.
·
·.
.
.
.
.. ·
A.
.No doubt, !he effectiv~ memb7rship-as distinguishe~ni Honorary mem)Jership-<>f the Federat10n 1s open only to
Chan~ -0f ·•
Commerce or Commercial Associations of requisite strength and stanol; '
ing, but the fact reniains that it carries on systematic activities not only
to assist its members but also other traders or busi.-:te>S'lllen members
Ir
c,f the constituents of the Federation. · It ha3 set up Tribunals for
arbitration in disputes arising between individual. traders. or· bU3iness ·
concerns in the course of trade; industry· or other bU3iness matters.:-:
.It takes up with the concerned authorities the specific difficulties experienced by the trade in the day today business and ·endeavours to
attain for the tmders and industrialists those material advantages by
unified action which they may not be able to achieve in· their indiviC ·
.dual capacity. It helps businessmen and industrialists by securing
for them the services of expert technical men (vide clauses (f) and
(k) of.the Memorandum of Association). It undertakes regular publication of periodioals, bulletins, .Reviews etc. for the benefit of ~usi-
. nessmen, big or small and whether. or not they are members of the
.. Federation. These publications are available on payment of subscription or price even to individual businessmen or traders who are not
D
members of the Federation. . All these are business
activities
are.
<:arried on systematically.
We therefore do not thllik that R. K.
Mittal's case (supra) was incorrectly decided and needs reconsideration.
It is true that in R. K. Mitta/'s case (supra) it was held that these
activities o(tlle Federation are. also in the nature of material services
E
.within the wider definition of 'industry'. Though th~ rcnderin;:i o( ser-·
vices is not specifically mentioned as an element·of the definition.of
"'commercial establishment", yet this very element appears in th~ ~fi
nition of 'shop' ins. 2(27) of the Act: Any l?remises where services are
rendered to customers fall within the defin1tion of a "shop". Thes;::
·services are mat<;rial services. · For the application of the Act to the
Federation, it is immaterial whether its activities bring its premises
F
°\Vithin the ambit_ of a "shop" or a "commerctal establishment".
It is well settled that a systematic activity cen be a busine'5 actiyity
.even if no dividends are declared or profits shared.
·
.
.
- .
.
.
In the matter of Incorporated Council of Law Reporting for Eng~· ·
land and Wales,(') the Queens Bench was considering the interpretation of the expression "trade or business" in s. 11 of the English . G ..
Customs and Inland Revenu~ Act 1885 witll reference to the activity of
the lnc6rp.-rated Council of Law Reporting for England and Wales. The ·
association was established for the objects of preparing and publishing
under gratuitous. professional control, reports of judical decisions; of
issuing digests and other publications relating . to legal subjects.
In
. -carrying tllem out the association employed editors, reporters, printers,
and publishers and supplied its publications to subscribers and others
H
for p<lyment.
It was condended that the activity of the Association
'Was not "a business or trade" because by the Memorandum of Associ·
(I) [1889] 2 Q. B. D. 27J.
·A
I
B
c
D
E
CHIEF COMMR. DELHI v. F!CCI (Sarkaria, J.)
357
alion all the property and income of the association were applic:ilile- ·
solely to the promotion of the above objects, and no part thereof
could be paid as dividend or otherwise; to any member.
Holding that the association was established for a "trade or business", Lord Coleridge C. J. repelled the contention in these terms:
"Though it m_ay b_e true that in the great majority of·
. cases the carrying on of a trade does, in fact, include the
idea of profit, yet the definition of the mere word 'trade' does
not necessarily mmn something by which a profit. is made.
But putting aside the' question whether they carry on a trade,
how can it be denied that the Council carry on. a business?
They ure incorporated; they have a secretary; they emplo:roditors, reporters, and· printers; they print books, they sell
those. books, they do all that is ordinarily done in carrying
on the business of a bookseller."
The above observations apply mutatis mutandis to the· activity of
. the Federation. It will bear repetition that the Fede.ration also publishes periodicals, bulletins etc .. and issues the same to members free
cf this Court in R. K. Mittal"s case (supra) we would hold that the
commercial or· industrial exhibitions, runs museums and makes profits. ·
Oi course, that profit is ploughed back for the purposes of the Federation as set out in its. Memorandum of Association, and is not distributed among its members .. But that does not "alter the fact tlrat its
activity is a trading or business activity.
·
For all the foregoing reasons, particularly in view of the c;leeision
of this Court in R. K. Miltars case, ("supra) we would hold that the pre·
· premises· of the· Federation are a '"commercial estab!ishm"nt" ·within
the meaning _of s. 2(5j of the Act.
·
In the· result we allow this appeal, set aside the judgment of the
High Court and dismiss the writ petition. In the circumstances of the
case we make no order as to costs.
V.P.S.
Appeal allowed.
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