# CRICKET CLUB OF INDIA LTD v. THE BOMBAY LABOUR UNION & ANOTHER

- **Citation:** [1969] 1 S.C.R. 600
- **Court:** Supreme Court of India
- **Decided:** 1968-08-07
- **Bench:** J. M. Shelat, V. Bhargava, C. A. Vaidialingam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/cricket-club-of-india-ltd-v-the-bombay-labour-union-another-4455
- **Pages:** 15

## Headnote

Industrial Disputes Act, 1947, ss. 2(i) and 10(2)-Cricket Club of
India Ltd. at Bombay-organised with the primary object of promoting
and encouraging sports end ga~s-havinR various activitic.r
bringing
income including letting building.r on rent for commercial and residential
purposes-if industry within s. 2(j).
The Deputy Commis•ioner of Bombay made a rcfeirenoe under s.
10(2) of the Industrial Disputes Act, 1947, to the lndust1ial
Tribunal,
Maharashtra, of a dispute between the appellant Cricket Club of India
Ltd. and the workmen employed by it in respect of various demands made
by the workmen.
A preliminary objection was taken on behalf of the
Club that it "-'as not an 'industry', and, the provisions of the Act were not
applicable to it, so that a refcrenee under s. 10(2) was DOI competenl
The Tribunal rejected this preliminary objection holding that the club
came within the definition of "industry" in s. 2(j) of the Aot and set down
tbe case for hearini:.
In appeal to this Court by special leave, it was contended
inter alia
on behalf of the respondents, that the objects and other facts on the record
showed the Club was an "industry" as it was carrying on various activittcs
in the nature of trade or business, such as constructing buildings for the
purpose of earning income from the rents payable by business concem1,
letting out residential accommodation in the club premi5es to members
some o'f whom lived there more or less permanently, undertaking catering
activities through maintaining: stalls and otherwise \\'here various thini;?S
were sold not only to members but outsiders also, providing catering for
large parties on a systematic basis, deriving large income from holding
cricket rest matches and other games at its Stadium and the club premises;
it was further contended that the club was incorporated as a limited company under the Companie! Act and the effect of this in law was that the
duh became
an entity separate and distinct from its members so that,
in providing catering facilities, the club ac; a separate legal entity, was
entering into tran~actions with the members who were distinct from the
club itself.
HELD : The order made hy the Tribunal holding that the cluh was
an .. industry'' was incorrect and must be set aside.
The appellant was a club of. members or!?llnised with the primary
object of encouraging and promoung sport• and games .. The activity of
promotion of sports and games by a set of people combmmg together to
focm a club cannot be said to he an undertaking in the nature of a trade
or business in '1r·hicb matecial goods or material services are provided
with the aid of the employees. [607 C-DJ
The Secretary. Mcdras G,vmkhana Club Emp/ayees' Union v.
The
Management uf the Gymkhana Club, [1968] 1 S.C.R. 742; followed.
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CRICKET CLUB V. LABOUR UNION
601
(i) The Tribunal fell into an error in ignorin_g the circumst_ilnces that
the income, which was earned by the club from mvestment. of ~movab!e
properties, could not be held to be income that a"."rued t? It with the aid
and cooperation of the employees.
From the evidence 1t v:as cleai; that
in effect no employees of tho club were engaged in looking after the
buildings which were let out for use as shops and offices. [608 C, D-EJ
(ii) The facility of residential accommo_dation provided. by ~e club
could not be said to be in the nature of keepmg a hotel as this facility was
provided exclusively for members of the c~ub at much lower charges ~
those prevailing at hotels in the . city with comparable a~odati~n.
It was in the nature of a self-service by the club organised for Its
members. [609 BJ
(iii) The catering provided in the refreshment room Of ·the club was
also clearly provided only for tho members and the bye-laws of the Council Jay down that even if a guest was introduced by a '?ember, the guest
was not entitled to pay for any refreshment served to him. "fl!e transaction continued to be confur-..d to the members of the c

## Text

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600
CRICKET CLUB OF INDIA LTD.
v.
THE BOMBAY LABOUR UNION & ANOTHER
August 7, 1968
[J. M. SHELAT, V. BHARGAVA AND C. A. VAIDIALINGAM, JJ.)
Industrial Disputes Act, 1947, ss. 2(i) and 10(2)-Cricket Club of
India Ltd. at Bombay-organised with the primary object of promoting
and encouraging sports end ga~s-havinR various activitic.r
bringing
income including letting building.r on rent for commercial and residential
purposes-if industry within s. 2(j).
The Deputy Commis•ioner of Bombay made a rcfeirenoe under s.
10(2) of the Industrial Disputes Act, 1947, to the lndust1ial
Tribunal,
Maharashtra, of a dispute between the appellant Cricket Club of India
Ltd. and the workmen employed by it in respect of various demands made
by the workmen.
A preliminary objection was taken on behalf of the
Club that it "-'as not an 'industry', and, the provisions of the Act were not
applicable to it, so that a refcrenee under s. 10(2) was DOI competenl
The Tribunal rejected this preliminary objection holding that the club
came within the definition of "industry" in s. 2(j) of the Aot and set down
tbe case for hearini:.
In appeal to this Court by special leave, it was contended
inter alia
on behalf of the respondents, that the objects and other facts on the record
showed the Club was an "industry" as it was carrying on various activittcs
in the nature of trade or business, such as constructing buildings for the
purpose of earning income from the rents payable by business concem1,
letting out residential accommodation in the club premi5es to members
some o'f whom lived there more or less permanently, undertaking catering
activities through maintaining: stalls and otherwise \\'here various thini;?S
were sold not only to members but outsiders also, providing catering for
large parties on a systematic basis, deriving large income from holding
cricket rest matches and other games at its Stadium and the club premises;
it was further contended that the club was incorporated as a limited company under the Companie! Act and the effect of this in law was that the
duh became
an entity separate and distinct from its members so that,
in providing catering facilities, the club ac; a separate legal entity, was
entering into tran~actions with the members who were distinct from the
club itself.
HELD : The order made hy the Tribunal holding that the cluh was
an .. industry'' was incorrect and must be set aside.
The appellant was a club of. members or!?llnised with the primary
object of encouraging and promoung sport• and games .. The activity of
promotion of sports and games by a set of people combmmg together to
focm a club cannot be said to he an undertaking in the nature of a trade
or business in '1r·hicb matecial goods or material services are provided
with the aid of the employees. [607 C-DJ
The Secretary. Mcdras G,vmkhana Club Emp/ayees' Union v.
The
Management uf the Gymkhana Club, [1968] 1 S.C.R. 742; followed.
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CRICKET CLUB V. LABOUR UNION
601
(i) The Tribunal fell into an error in ignorin_g the circumst_ilnces that
the income, which was earned by the club from mvestment. of ~movab!e
properties, could not be held to be income that a"."rued t? It with the aid
and cooperation of the employees.
From the evidence 1t v:as cleai; that
in effect no employees of tho club were engaged in looking after the
buildings which were let out for use as shops and offices. [608 C, D-EJ
(ii) The facility of residential accommo_dation provided. by ~e club
could not be said to be in the nature of keepmg a hotel as this facility was
provided exclusively for members of the c~ub at much lower charges ~
those prevailing at hotels in the . city with comparable a~odati~n.
It was in the nature of a self-service by the club organised for Its
members. [609 BJ
(iii) The catering provided in the refreshment room Of ·the club was
also clearly provided only for tho members and the bye-laws of the Council Jay down that even if a guest was introduced by a '?ember, the guest
was not entitled to pay for any refreshment served to him. "fl!e transaction continued to be confur-..d to the members of the club who mtroduced
the guest. [609 GJ
(iv) The catering facilities provided to members and outside!"' at
stalls at the time of sports tou'rnarnents were only so provided twice a
year and at concessional rates. The provision .of these stalls ~d not
therefore be said to be for the ·purpose of carrymg, on an actmty of
selling snacks and soft drinks to outsiders but was really intended as provision of a facility to persons participating in or coming to watch the
tournaments in order that these may be run successfully.
These stalls
were thus brought into existence as a part of the activity of promotion
of games and was not as a systematic activity for the purpose of carrying
on transactions of sale of snacks and soft drinks to outsiders. [610 C-D]
( v) Although large parties were held at the club where catering was
provided by the club and non-members attended such parties, these facilities were in fact provided at the in.stance of the members of the club.
The privity of contract was between the member concerned and the club
and the dues for such functions were realised from the members only. The
club was thus in fact catering only for its members. Furthermore, in the
absence of any evidence that a large number of such paXties were held,
no inference could follow that holding such parties was a systematic
arrangement by which the club was attemptjng to make profits. [611 D-FJ
(vi) The pHmary object with which the club entered into contracts
with certain organisations whereby a certain nu.mbe!r of seats in the
Stadium were given exclusively for the use of such organisations whenever any test matches were held, was to encourage persons who were
interested in the game of cricket, even though at the disadvantage of
having to charge lower rates for such seats. Furthermore, charges from
other spectators by selling tickets to them when test matches were held
\Vere obviously realised in order to ensure that the club could carry on
its activity of the promotion of the game of cricket and also make .UP
losses for purposes of providing other facilities and
amenities to the
members of the club.
In these circumstances, it could not be said that
these activities, including the holding of cricket test matches, were in the
nature.. of carrying on trade or business, but were activities in the course
of promotion Of the game of cricket and it was incidental that the club
was able to delrive an income from such activities which income was later
utilised for the purpose of fulfilling its other objects as incorporated in
the Memorandum df Association. [613 D, HJ
602
SUPRE~IE COURT REPORTS
(l 969] I S.C.R.
(vii) Though the club was incorporated as a Company, it was not like
an ordinary Company constituted for the purpose of carrying on business.
There were no shareholders.
No dividends were ever declared and no
di<tribution of profits took place. Admission to the club was by payment
of admission fee and not by purchase of shares.
The membership was
not
tran.~fcrable like the right of shareholders.
There was provision for
expulsion of a member under certain circums~anccs which feature never
c<ists in the ca.<e of a shareholder holding shares in a Limited Company.
In view of these and other distinguishing features, the club cannot be
treated
a..~ a separate legal entity of the nature of a limited company
carrying on business. l614 D-FJ
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C1v1L APPELLATE JURISDICTION :
Civil Appeal No. 833 of
1966.
B
Appeal by special leave from the order dated June 30, 1965
of the Industrial Tribunal, Maharashtra in Reference (IT) No.
C
347 of 1964.
S. D. Vimadlal, C. M. Mehta and B. R. A1:anvala,
for
the
appellant.
S. B. Naik, K. Rajendra Chaudhuri,
K. R. Chaudhuri and
C. S. Srinivasa Rao, for respondent No. 1.
D
The Judgment of the Court was delivered by
Bhargava, J. The Deputy Commissioner of Labour, Bombay,
referred for adjudication by the Industrial Tribunal, Maharashtra,
Bombay (hereinafter referred to as "the Tribunal"), under section
10(2) of the Industrial Disputes Act (hereinafter referred to as
"the Act"), a dispute between the Cricket
Club of India Ltd.
(hereinafter referred to as "the Club") and the workmen employed
by it in respect of various demands made by the workmen relating
to classification of employees, dearness allowance, leave facilities,
payment for overtime, permanency, shift allowance, etc.
A preliminary objection was taken on behalf of the Club that it is not an
industry and, consequently, the provisions of the Act
were
inapplicable and no reference could be competently made under
s. 10(2) of the Act.
The Tribunal rejected
ihis
preliminary
objection holding that the Club came within the definition of
"industry" in s. 2 (j) of the Act and made a direction that the
case be set down for hearing on merit~. The Club has appealed
against this interim award of the Tribunal on tbe preliminary
question, by special leave.
The Club is admittedly a Members' Club and is. not a proprietary Club, though it is incorporated
as a Company under the
Indian Companies Act.
At the relevant time, the Club had a
membership of about 4800 and was employing 397 employees
who claimed to be workmen. The principal objects of the Club
arc to encourage and promote various sports, particularly
the
game of cricket in India and elsewhere, to lay out grounds for the
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CRICKET CLUB v. LABOUR UNION (Bhargava, J.)
60.3
game of cricket, and also to finance and assist in financing cricket
matches and tournaments.
In addition, it provides a venue ~or
sports and games as well as facilities for recreation ~d entertamment for the Members
It maintains Tennis Courts m pursuance ·
of another outdoor activity.
The indoor games for which provision is made include Billiards, Table Tennis, Badminton and
Squash. It also maintains a swimming po.oL The Cl1;1b has also
provision for residence of members, for which purpose 1t has constructed 48 residential flats and 40 residential rooms, some of which
are air-conditioned.
Persons occupying these residential flats and
rooms are charged at different rates according to the accommodation provided.
There is also a Catering Department which provides food and refreshments for the members coming to the Club
as well as those residing in the residential portion,
and it also
makes arrangements for dinners and parties on special occasions
at the request of Members. The affairs of the Club are managed
by an Executive Committee and various honorary office bearers.
As is usual in most Clubs, the membership is varied. There
are life members, ordinary members, temporary members, service
members and honorary members.
Guests, both local and from
outstation, are admitted, but subject to certain restrictions and
only when they are introduced by a member.
The Club owns
immovable properties of the value of about Rs. 67 laldis from
which an income in the range of about Rs. 4 Jakhs a year accrues
E · to the Club. The other regular source of income is the subscription paid by each member. Entrance paid by the Members is
treated as a contribution to the capital of the Club.
There are
regular games for members of the Club; but, apart from those
games, in the cricket ground, which has a Stadium attached to it,
matches and various tournaments are held, including Test Matches
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between the Indian teams and foreign teams visiting India.
On
these occasions, public are admitted to watch the matches on tickets sold by the Club.
In addition, it appears that four sports
organisations, amongst which mention may be made particularly
of the Catholic Gymkhana Ltd., have been given the right, under
agreements entered into with the Club, to exclusive use of a number of seats in the Stadium whenever there are official and/ or
unofficial test matches and/ or matches of similar status sponsored
by the Board of Control for Cricket in India, or when a fixture is
played. by a foreign team on the Club grounds, though not sponsored by the Board. Under these agreements, these organisations
make payment to the Club for the members' seats reserved at
prescribed rates and they are at liberty to charge whatever they
like from their own members who are admitted to those seats with
the f~rther facility that they can make their own
provisio~ for
catenng and supply of refreshments to their members over part of
the land made available to them by the Club. On the occasion of
604
SUPRE'.\o!E COURT REPORTS
(1969] I S.C.R.
annual Badminton and Table Tennis open tournaments, a stall is
run by the Club where both competitors and spectators arc allowed to buy snacks and soft drinks at concessional rates.
In the
Catering Department alone, the turnover of the Club is in the
region of Rs. 10 lakhs a year.
The Tribunal, after considering
these facts and the various decisiolls which were available to
i1
when it gave its award, has come to the conclusion that the Club
is an 'industry', so that !his reference under the Act is competent.
The Club, which has come up in appeal, contends that the decision
of the Tribunal is not correct and that, on the ratio of the decision
of this Court in The Secretary, Madras Gymkhana Club Emp/o.
yees' Union v. The Management of the Gymkhana Club('), this
Court should hold that the Club is not an industry.
Our task for the decision of this case has been
simplified,
because this Court, in the case of Madra' Gymkhana Club(').
has clearly laid down ~he principles of law which have to be applied in determining when a Club can be held to be an industry.
In that case, the entire previous case-law relating to various institutions was fully discussed.
After that discussion, the conclusion
of the Court was mainly expressed in the following word$ :-
"The principles so far settled come to this.
Every
human activity in which enters the relationship Of employers and employees, is not necessarily creative of an
industry.
Personal services rendered 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 rclationshio in which there are
employers on the one side and employees on the other,
but they must be excluded be<:ause they do not come
within the denotation of the term "industry". Primarily,
therefore, industrial disputes occur when the operation
undertaken rests upon cooperation between employers
and employees with a view to production and distribution of material goods. in other words. wealth, but they
may arise also in cases where 1hc co-operation
is
to
produce material services. The normal cases arc those
in which the production or distribution is of material
goods or wealth and they will fall within the expression
'trade, business and manufacture' ".
Further, it was held that :-
"before 1he work engaged in can be described as
an industry, it must bear the definite character of 'trade'
or 'business' or 'manufacture' or 'calling' o.r must
be
capable of being described as an undertaking in mateni [t968J 1 s.cR. 742.
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CRICKET CLUB v. LABOUR UNION (Bhargava, J.)
605
rial goods or material services.
Now, in the application of the Act, the undertaking may be an enterprise
of a private individual or individuals.
On the other
hand, it may not. It is not necessary that the. employer
must always be a private individual who carr~es on lh;e
operation with his own capital and with a view to his
own profit. The Act in terms contemplates cases of
industrial disputes where the Government or a local
authority or a public utility service may be the employer."
·
Dealing with the scope of the word "underlaking", it was held
that:-
"the word "undertaking" must be defined
as any
business or any work or project which one engages in or
attempts as an enterprise analogous to business or
trade."
Further essential features were indicated by laying down that :-
"where the activity is to be considered as an industry, it must not be casual but must be distinctly syst'?'"
matic.
The work for which labour of workmen
is
required, must be productive and the workmen must be
following an employment, calling or industrial avocation.
The salient fact in this context is that the WO'kmen are not their own masters but render service at 1he
behest of masters. This fo!lows from the second par' of
the definition of industry. 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 authori'ty enter upon business,
trade, manufacture or an
undertaking analogous to trade."
It was also decided by the Court that if a Club is a member's selfserving institution, it cannot be held to be an industry. These are
the main principles which have to be kept in view in arriving at
the decision whether the Club is an industry or not.
The principal argument of Mr. Vimedalal, learned counsel for
the Club, was that there is a basic and overall similarity between
the Club and the Madras Gymkhana Club, so that the decision
of this Court in the case of the latter is fully applicable. It was
pointed out that both Clubs are Members' Clubs and not proprietary Clubs. The primary objects of both the Clubs are to provide
venues for sports and games and facilities for recreation and entertainment of Members and guests introduced by Members.
Both
Clubs are sports, social and recreational Clubs.
Grounds are
maintained by both Clubs for promotion of sports, with the slight
606
SUPREME. COURT REPORi'S
[ 1969] I S.C.R.
difference that, while in the Madras.Gymkhana Club the ouidoor
games promoted are Golf, Rugby, Foot-ball and Tennis, in the
Club the two outdoor games on which the Club concentrates arc
Cricket and Tennis. Both have indoor games, while the Club in
addition, maintains a Swimming Pool for the Members.
Both
Clubs run tournaments and matches for the benefit of members
and open tournaments are held for exhibition to members as well
as non-members.
Both Clubs are maintaining Catering Departments for the entertainment of members and their guests.
In both
Clubs guests are allowed only when introduced by members. The
annual turnover in both Clubs in the Caterin~ Department is in
the region of about Rs. 9 to I 0 lakhs.
Residential accommodation is maintained in both Clubs and is open only to Members.
Both Clubs have capital investments from which income accrues
to them, though the scale of investments by the Madras Gymkhana
Club is much smaller inasmuch as its total investment is of the
region of Rs. 4! lakhs, while the Club has investment of immovable property to the tune of about Rs. 67 lakhs. In both Clubs,
admission to outsiders is restricted
in
similar manner.
The
management in both cases is by Committees elected by Members
and annual accounts arc made up, audited and laid before and
adopted at tlie annual general meetings.
Even in other respects,
such as in the matter of admission of Members, relations between
members, .inter se, convening of meetings, and expulsion of members, the rules are similar.
In neither of the two Clubs are profits
distributed between members. It was, thus, urged that there is, in
fact, no substantial difference between the nature of the Club and
the Madras Gymkhana Club and, consequently, it should be held
that this Club is not an industry. It was further urged that a few
minor differences will not alter the legal inference and will not
make the ratio of the Madras Gymkhana Club(') case inapplicable.
Mr. S. B. Naik, counsel appcarin~ for the Union, however,
urged that the differences that exist are not minor and they are
such as should lead to the inference that this Club carries on its
activities in such a manner that it must be held to be an 'industry'
as explained in the Madras Gymkhana Club(') case.
The first point urged before us was that an examination of the
objects of the Club would show that it is not purely a social or
recreational Club confining its activities to Members like the Madras Gymkh3na Club. Our attention was drawn to objects of the
Club as given in paragraph 3, clauses (a), (c), (d), (g), (1) and
(na) of the Memorandum of Association of the Club.
It was
argued that the activity of encouraging and promoting the g3!Ile
of cricket in India arid elsewhere mentioned in cl. (a), financmg
and assisting in financing visits of foreign teams and of visits of
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607
Indian teams to foreign countries in cl. ( c), organising and. p~o
moting or assis'ting in the organisatio~ or promotion of .Provmc1al
Cricket Associations and Inter-Provimcal Tournaments m cl. (d),
buying, repairing, making, supplying, selling. and dealing
~. all
kinds of apparatus and appliances and all kmds of provisions,
liquid and solid, required by persons frequenting the Club build-.
ings or the cricket grounds or other premises of the Club in clause
(g) and paying all or any part of the expenses of any cricket
match tour or tournament, or any other sporting events or match
or co~petition in any other form of game, athletics, or sport and
any kind of entertainment, exhlbition or display in clause ( 1),
are not activities which should form part of a social and recreational Club. The argument ignores the. fact that the Club is not
only a social and recreational Club, but is a Club of Members
organised with one of the primary objects of encouraging and
promoting sports and games. The activity of promotion of sports
and games by a set of people combining together to form a Club
cannot be said to be an undertaking in the nature of a trade or
business in which material goods or material services are provided
with the aid of the employees.
In clause (na), the object mentioned is to construct on any premises of the Club buildings of any
kind for residential, commercial, sporting or other uses and to
repair, or alter or pull down, or demolish the same.
In this
clause, emphasis was laid on the word "commercial" and it was
urged that, if buildings are constructed for commercial purposes,
this object will make the Club an 'industry'. We do not·consider
it necessary to deal with this point at this stage, because the very
next point relating to investment of large sums of money in
immovable properties indicates how this object is being carried
out in practice and, when dealing with this point we shall indicate
that this activity is not of such a nature as to ~ake the Club an
'indUS'try'.
We have already mentioned earlier that the Club has acquired
immovable properties of the value of about Rs. 67 lakhs. Some
of these properties consist of buildings which are being used by the
Members of the Club. These are the main Club building iind the
residential fiats and rooms. In addition, there is a Stadium that is
use~ OJ?. occasions when Cricket Matches are held on the grounds
mamtamed by the Club. Apart from all these, there are a certain
number of buildings just outside the Stadium which are let out
for use as shops and omces by business concerns.
The income
that the Club earns is primarily from these last-mentioned constructions. It was urged that the Club in thus constructing building
for the purpose of earning income from rents payable by business
co~c~rns, t? w?o~ those premises are let out, is carrying on an
actmty which 1s m the nature of trade or business and
conse- .
quently, it should be held that the Club is an industry. The Tribunal accepted this submission and held :-
60 8
SUPREME COURT REPORTS
[ 1969 J I S.C.R.
"A company which has as its business acquiring of
immovable properties on a large scale and for making
profit out of the rents thereof would come within thll
definition of 'industry'.
The properties of the C.C.I.
which arc let. out, viz .. 48 residential flats, 40 ordinary
and air-conditioned rooms; and the premises let to shops
and ofliecs form a very large group of propenies; the
management of them as well as the earnings from them,
particularly in the case of the rooms which are let out
with compulsory boarding require co-operation between
capital and labour."
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In examining this aspect, the Tribunal appears to have fallen into
an error. in ignoring the circumstance that the income, which is
earned by the Club from investment on these immovable properties, cannot be held to be income that accrues to it with the aid
and co-operation of the employees.
The material on the record
shows t11at, out of 397 employees, only 14 attend the three immov-
. able properties consisting of the Club Chambers,
North Stand
Building, and Stadium House. It may be preswned that
t11c
buildings which arc let out for use as shops and offices arc part
of tlte Stadium House; but them is nothing to show how many of
these employees arc employed in the work connected with these
buildings.
In fact, on the face of it, it would appear that, once
those buildings have been let out to other persons for use as shops
and offices, there would he no need at all for the Club to maintain
an employee-staff in order to look after those buildings, so that it
is likely that all the 14 employees, who, it is admitted, attend the
immovable properties, must he doing so primarily in order to look
after tlte Club buildings and the residential accommodation.
It
has already been mentioned earlier that the income which the Club
is earning from tltese immovable properties is primarily from t11e
buildings let out for use as shops and offices and that income, in
the circumstances, cannot be held to have been earned as a result
of any co-operation between the Club and its
employees.
In
earning tltis income, tlte Cluh is not carrying on an activity as a
result of which material goods or material services are producc<l
witlt t1te co-operation of employees.
So far as the residential buildings are concerned,
where it
appears that some employees must be contributing their labour,
tlte principal consideration for holdi.ng that it does not amount to
an activity of tlte nature of an industry is tltat this residential
accommodation
is provided exclusively for the Members of the
Club.
It has been stated that it is meant primarily for outstation
Members of ilie Club who occupy this residential accommodation
when t1tey vLsit Bombay.
In addition, it seems that there are 11
Members of t11c Club who arc residing more or less pennanently
in 11 of these residential rooms.
It is also true that member'
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CRICKET CLUB v. LABOUR UNION (Bhargava, !.)
609
occupying the residential accommodation are required to take advantage of the catering facilities provided _by the Club. They are
charged consolidated amounts for occupation of the rooms as well
as for the food served to them. The Tribunal has held that this
activity is in the nature of keeping a Hotel.
The view taken by
the Tribuual is clearly incorrect, because it ignores the circumstance
that this facility is available only to Members of the Club and to
no outsider.
It is in the nature of a self-service by the Club
organised for i'ts Members. The rules which have been brou~t
to our notice make it clear that, apart from Members, no one is
allowed to stay in these residential rooms and that, ig. exceptional
cases where some inlportant visitors come to the Club or competitors taking part in tournaments visit this place, they are permitted to stay in these residential rooms, but, in such cases, they
are all made Honorary Members of the Club. The facility is thus
availed of by them in the capacity of ,Members of the Club, even
though that membership is honorary.
The principle of having
honorary members is quite common to most Clubs and existed
even in the Madras Gymkhana Club. Once a person becomes an
honorary member, provision of facilities of the Club for !rim partakes of the same nallire as for other members and, consequently,
such an activity by the Club continues to remain a part of it as a
self-serving institution. It is quite wrong to equate it with the
activity of a Hotel. It may also be mentioned that there is definite
evidence given on behalf of the Club that the charges for the residential accommodation with catering are much lower in the Club
than the charges made for siniilar facility in any decent Hotel in
Bombay where comparable accommodation may be provided. This
further clarifies the position that this is a facility _provided by the
Club at concessional rates exclusively for its Members.
We may at this stage also deal with the argument advanced
~n behalf of the Union in respect of the nature of catering activities. of !he Club. So far as the catering in the Refreshment Room
marntamed by the Club and for persons occupying the residential
accommodation is concerned, it is confined to Members of the
Club only. No outsider is allowed to take advantage of this
facility.
In fa~t,. the bye-laws of the Club clearly lay down that,
even 1f a guest is mtroduced by a Member, the guest is not entitled
to pay for any refreshment served to him. The transaction continues to be confined to the Member of the Club who introduces
the guest.
The Club is, of course, not open to public in general
and, even when non-members are admitted in the Club, they are
only allowed as guests of memjJers with certain restrictions.
Such
guests cannot enter into any transaction with tile Catering Department of the Club.
Consequently, this catering activity is also in
the nature of a self-service by the Club for its members.
In connection with this activity of catering, reliance was, however, placed by the respondent Union on two aspects. One is that
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SUPREME COURT RF.PORTS
[1969] I S.C.R.
it has been admitted that, on occasions when Badminton and Table
Tennis open toW1Jaments are held, a stall is kept by
the Club
where, apart from Members, competitors and spectators can also
buy snacks and soft drinks; and it was urged that this sale of snacks
and soft drinks to non-members is clearly an activity in the nature
of business or trade.
It appears, however, that
these stalls are
opened as a rare feature only on occasions when annual Badminton and Table Tennis open tournaments are held.
We have been
informed that there is only one Badminton and one Table Tennis
open tournament every year, so that these stalls arc run only twice
a year.
Further, there is a clear statement that the snacks and
soft drinks are provided to competitors and spectators at concessional rates. This indicates that the provision of these stalls is not
for the purpose of carrying on an activity of selling snacks and
soft drinks to outsiders, but is really intende:J as provision of a
facility to persons participating in or coming lo watch the tournament in order that the tournaments may be run successfully.
These stalls are thus brought into existence as a part of the activity
of promotion of games and is not a systematic activity for the
purpose of carrying on tr;msactions of sale of snacks
and so'.t
drinks to outsiders.
The opening of stalls on two such occasions
in a year with this limited object cannot be held to be an undertaking of the nature of business or trade.
It was then pointed out that there have been occasions when
very big parties have been held in this Club where catering has
been provided by the Club and, at these
parties,
non-members
have attended in large numbers.
On behalf of the respondent
Union, an example was cited of an occasion when a function was
held to celebrate the Golden Jubilee of the Bank of India and
catering was provided for a large number of guests at the Club.
Jn answer to interrogatories served hy the workmen, it wa' admitted by the Secretary of the Club that the'e \\"<LS also another function of celebration of the silver Jubilee of the Bombay Mercan- ·
tile Co-operative Bank Ltd. when also catering was provided by
the Club. It was stated on behalf of the workmen that. on these
occasions, the invitations were issued not in the name of any Member of the Club, but in the name of the organisations which held
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The affidavit filed by the Secretary of the Club,
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however, shows that in these two ca'es or in other cases where
parties or functions are held in the Club, the Club never enters
into any contract with any outsider.
The Club. in fact. provides
the catering at the instance of a Member of the Club. It appears
that some Members of the Club are connected with orμanisations
like the Bank of India or the Bombay Mercantile Co-operati,·e
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Bank Ltd., and they adopted the course of arranging the function
with the Club in their capacity as Members. The privily of contract was between them and the Club, and the Club it;;cl! had
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CRICKET CLUB v. LABOUR UNION (Bhargava, !.)
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nothing to do with the two organisations. May be that, in arranging such functions, the Members of the Club, to some extent,
abused their privilege of having functions arranged by the Club,
but it cannot be held that the Club, in agreeing to cater at such
functions, was really intending to sell its goods to persons other
than Members.
The Club, in fact, realised the dues for such
functions from the Members only. The Members were responsible
for payment to the Club and did, in fact, make the payments.
The Club, in thus catering for such functions, was in fact cat~r~g
for its Members and was not at all intending lo carry on an actlVIty
of providing the facility of catering at the instance . of outsider~.
On behalf of the workmen it was urged that functions
of this
nature are numerous and a' regular feature in this Club.
In fact,
the Tribunal in its order has held that :-
"a systematic arrangement by which Companies and
other institutions book the grounds through members,
whereby the Club makes profit by charging refreshments
per head would bring a· Club on the other side of the
border line so as to make it an industry."
ln accepting this view, the Tribunal again fell into an error for
two reasons .. The first was that the Tribunal did not attach due
importance to the circumstances that the functions were arranged
by the Club only because of the request of a Member and the Club
confined its contract with the Member without in any way dealing
with outside organisations.
The second point is that there was
no material to show that such functions form a systematic arrangement. In fact, only two instances were put forward on behalf of
the workmen where functions were arranged for purposes of celebrating the Jubilee functions of two Banks.
Further, the affidavit
of K. K. Tarapor filed on behalf of the Club shows that, during
the four years 1961-62, 1962-63, 1963-64 and 1964-65, the total
number of functions at which the attendance was 800 and more,
including Members of the Club, was 28. We were told that the
Tribunal had asked for the figures of functions held dJiring these
four years at which the attendance was 800 or more, and, there.
upon, this information was supplied in the affidavit of Tarapor.
There is no material to show how many of these 28 functions
were of the nature of the two functions held for celebration of
Jubilees of the two Banks.
It is quite likely that' a large number
of these parties at which the attendance was 800 or more may
have been given personally by Members of the Club on their own
account in order to entertain people for their own personal celebrations on occasions such as marriages of sons or daughters.
In
fact, the evidence given before the Tribunal was limited to only
two specific instances where functions were held for celebration by
organisations and not by Members of the Club themselves.
In
the absence of any material showing that a large number of parties
were of that nature, no inference could follow that this was a sysL!JSup.C.L/68-8
612
Sl:l'RE'.\-IE COURT REPORTS
[ l 969] I S.C.R.
tematic arrangement by which the Club was attempting to make
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profit; and the Tribunal, in pha,ing iL' decision on IJ1is ground,
was not correct. The few instances cited do not, in our opinion,
indicate that the Club is carrying on this activity in such a manner
that it must be held to be an industry.
Very great reliance was placed in support of the decision of
the Tribunal on the fact that the Club has erected a Stadium at
the Cricket field where matches arc held and makes an income of
about Rs. 2 lakhs on each occasion when a Test Match is held
on the Cricket ground by charging for admission tickets sold to
persons who come as spectators to watch the Test Matches.
It
was further pointed out that, apart from charging for admission
to the Stadium from spectators by selling tickets to
them,
the
· Club has also entered into agreements with
four organisations
under which a number of seals in the Stadium are given exclusively
for the use of those organisations. We have already had occasion
to mention earlier one such organisation, viz., the Catholic Gymkhana Ltd.
The nature of these agreements is clear from
the
copy of the Agreement filed before the Tribunal which was entered
into between the Club and the Catholic Gymkhana Ltd.
Under
that Agreement, the Club allotted for seating accommodation to
the Gymkhana 831 scats in the North Stand for a period of 12
years.
The allotment was for use by the Gymkhana on all occasions when official and/or unofficial Test Matches and/or matches
of similar status sponsored by the Board of Control for Cricket
in India were held, or a fixture played by a foreign touring team
not sponsored by the said Board.
Under the Agreement, the
Gymkhana had to pay Rs. 5 I - per scat for the first fixture; Rs.
5 per seat fpr the second fixture; Rs. 4 per seat for the third
fixture and Rs. 4/- per seat for the fourth fixture.
The question
that arises is whether these charges made by the Club from these
organisations, like the Catholic Gymkhana Ltd., or from spectators to whom tickets are sold, bring into existence an activity of
the nature of business or trade so as to convert it into an industry.
It is to be noted that one of the principal objects of the Club is the
promotion of the game of cricket.
Jn fact, the very first object
mentioned in the Memorandum of Association is to encourage
and· promote the game of cricket in India and elsewhere.
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second object is of laying down grounds for playing the game of
<:rickct, and the third object is clearly for the purpose of encouraging matches between Indian and foreign teams.
It is clear that
the Cricket grounds arc being maintained by the Club in pursuance of these objectives. The game of cricket can only be promoted and encouraged if, when matches are held, facilities are
provided not merely for holding the matches. but also for people
to watch the matches and to create interest in the public in general
in the game of cricket. It was obviously with this object that
the Stadium was constructed.
Its use by spectators interested in
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CRICKET CLUB V. LABOUR UNION (Bhargava, J.)
613
the matches or by members of other organisations interested in
the game of cricket is purely for the purpose of encouraging and
promoting the game of cricket in pursuance of that primary object
of forming the Club. It is true that, in carrying on this object. of
the Club, the Club has been charging the spectators by sellrng
tickets to them and also charging organisations to whom seats are
specially allotted.
So far as seats allotted to those organisations
are concerned, we are inclined to accept the argument ad".anccd
by Mr. Vimedalal that this arrangement, instead of enurmg to
the benefit of the Club, in fact is to its disadvantage.
We have
already indicated ·that at least in one case of the Catholic Gymkhana Ltd., the charge that is made from the Gymkhana is at a
very low rate of Rs. 5 or Rs. 4 per seat.