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Tantrik Shikshan Kar... v. Assistant Commission...

Bombay High Court

Sep 16, 2016

Judgment

Subsequent
References

CaseIQ

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Structured Summary of the Opinion by A.S. Chandurkar, J.

Factual and Procedural Background

The petitioner (a Society registered under the Maharashtra Co-operative Societies Act, 1960) filed a Writ Petition challenging an order dated 3 December 2014 passed by the Assistant Commissioner of Labour under the Minimum Wages Act, 1948. The impugned order directed the petitioner to pay minimum wages (and compensation) to respondent nos. 3 and 4.

Respondent nos. 3 and 4 claimed to be employed by the petitioner and alleged they were not being paid wages in accordance with the Minimum Wages Act. They filed an application under Section 20(1) of the Act of 1948 on 8 January 2013 before the Assistant Commissioner of Labour seeking wages under that Act.

The petitioner contended before the Assistant Commissioner (and again before this Court) that it was not a "commercial establishment" as defined by Section 2(4) of the Maharashtra Shops & Establishments Act and therefore the Minimum Wages Act did not apply; the petitioner described itself as operating on a "No profit; No loss" basis and that its object was to advance loans to its members (who were employees of Industrial Training Institutes). The Assistant Commissioner found the petitioner to be a commercial establishment (relying in part on receipts exceeding expenditure) and allowed the respondents' claim. The petitioner sought judicial review of that order.

Legal Issues Presented

Whether the Assistant Commissioner of Labour had jurisdiction under the Minimum Wages Act, 1948 to entertain and decide the claim for payment of minimum wages made by respondent nos. 3 and 4 against the petitioner-society—i.e., whether the petitioner qualifies as a "commercial establishment" or an "industry" within the meaning of the Act and its Schedule.
Whether the direction to pay compensation (in addition to minimum wages) was justified in the facts of the case.

Arguments of the Parties

Petitioner (Writ Petitioner) — Principal Arguments

The petitioner is not a "commercial establishment" under Section 2(4) of the Maharashtra Shops & Establishments Act and therefore the Minimum Wages Act, 1948 is not applicable to it.
The Society operates on a "No profit; No loss" basis and its activities (advancing loans to members who are employees of Industrial Training Institutes) do not amount to the activities of an "industry".
The test of receipts exceeding expenditure cannot, by itself, convert such a Society into a commercial establishment attracting the Minimum Wages Act.
The Assistant Commissioner failed to consider these legal positions; therefore the impugned order is unsustainable. As an alternative, respondents had remedies before the Co-operative Court under the Maharashtra Cooperative Societies Act, 1960.
The petitioner challenged both the order directing payment of minimum wages and the separate direction to pay compensation as unjustified.
The petitioner relied on several precedents (listed in the opinion) to support the contention that a Co-operative Society constituted for rendering services to its members does not constitute an "industry" or "commercial establishment" for the purposes of labour statutes.

Respondent nos. 3 and 4 — Principal Arguments

The Assistant Commissioner correctly concluded that the petitioner is a commercial establishment and could therefore be directed to pay minimum wages under the Minimum Wages Act.
Documentary material indicated that the Society earned profits and the claim that it operated on a "No profit; No loss" basis was incorrect.
The respondents had demanded minimum wages since 2012 but the Society ignored those demands; the delay in payment justified a direction for compensation.
The judgments relied upon by the petitioner were distinguishable on facts; the challenge to the Assistant Commissioner's jurisdiction was being raised before this Court for the first time and should not succeed.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Management of SOM Vihar Apartment Owners Housing Maintenance Society Ltd. v. Workmen C/o Indian Engineering & General Mazdoor [2001-I-LLJ 1413] (Hon'ble Supreme Court)	The Court held that where a society renders personal services exclusively to its members and is constituted only for members' purposes, such services do not make the activity an "industry" and the persons engaged are not "workmen" under the Industrial Disputes Act.	The opinion relied on this decision as establishing that a society constituted to render services to members cannot be treated as an "industry"; this precedent influenced the conclusion that the petitioner was not an industry for purposes of labour legislation.
Kiran Industrial Premises Co-op. Society Ltd. v. Janata Kamgar Union [2001 I CLR 1046] (Single Judge)	Held that a Co-operative Society of members (owners of industrial units) employing clerks and watchmen could not be treated as a commercial establishment or industry attracting the Minimum Wages Act; receipts exceeding expenditure is not the test to declare a society a commercial establishment.	The Court treated the facts of this case as "somewhat identical" and relied on its ratio to conclude that the petitioner-society should not be classed as an industry or commercial establishment under the Act of 1948.
Shantaram Pandurang Jadhav v. Kiran Industrial Premises Co-op. Soc. Ltd. [2007 III CLR 418] (Division Bench)	Affirmed the Single Judge's view that employees engaged by a Co-operative Society to render personal services to members do not render the society an "industry".	The Division Bench's affirmation was expressly relied upon; the opinion treated this as reinforcing the settled legal position that such societies are not "industries."
Shamim Ahmed Siddique v. Society Ltd. (Single Judge, decided 11 Feb 2008)	This Single Judge decision applied the principle that a Co-operative Society rendering services to members is not an "industry".	The opinion states that this decision considered and applied the Division Bench's view; it was cited as a subsequent application of the settled principle supporting the petitioner's case on the legal position (that such societies are not industries).
Maharashtra State Electricity Board Karmachari Sah. Pat Sanstha v. Smt. Nanda Arvind Mutkure (Writ Petition No. 2457 of 2006; decided 20 Aug 2015)	This information was not available in the provided opinion.	The opinion does not describe how this decision's rule or principle was applied by the Court.

Court's Reasoning and Analysis

The court began by identifying the central contention—whether the Assistant Commissioner had jurisdiction under the Minimum Wages Act, 1948—then reviewed the statutory definitions and scheduling provisions relevant to that jurisdictional question.

Key statutory points the court set out (as stated in the opinion):

Section 2(g) of the Minimum Wages Act, 1948 defines "Scheduled Employment" by reference to the Schedule to that Act.
Section 27 empowers the State Government to include employments in the Schedule.
Part I of the Schedule (as applicable to Maharashtra), Entry No. 17, covers employment in any shop or commercial establishment (other than banks or entries specified elsewhere), and the Explanation thereto adopts the meanings of "shop" and "establishment" from the Maharashtra Shops & Establishments Act, 1948.
Section 2(4) of the Maharashtra Shops & Establishments Act defines "commercial establishment" and expressly includes societies registered under the Societies Registration Act, 1860.

The court then examined the pertinent case law (summarized above). The Supreme Court's decision in SOM Vihar established that societies formed solely to render personal services to their members are not "industries" and employees in such societies are not "workmen" for the purposes of the Industrial Disputes Act. This legal principle was followed and applied by the Single Judge in Kiran Industrial Premises Co-op. Society Ltd., and that view was affirmed by the Division Bench in Shantaram Pandurang Jadhav. Subsequent application of the same principle was noted in Shamim Ahmed Siddique.

Applying these precedents to the facts of the present case, the court observed:

The petitioner is a Co-operative Society registered under the Maharashtra Co-operative Societies Act, 1960, with members who are employees of Industrial Training Institutes and an object of advancing loans to its members.
Even if receipts exceeded expenditure, that fact alone is not a sufficient test to classify the Society as an "industry" or a "commercial establishment" attracting the Minimum Wages Act, as per the authorities cited.
The Assistant Commissioner based jurisdiction on receipts exceeding expenditure but did not consider the controlling legal position established by the authorities that societies constituted to serve their members are not industries.

Because the Assistant Commissioner failed to consider and apply this settled legal principle and therefore proceeded in matters over which he had no jurisdiction, the court found the impugned order to be clearly unsustainable in law and amenable to interference.

Holding and Implications

Holding: The writ petition was allowed and the impugned order dated 3 December 2014 passed by the Assistant Commissioner of Labour in Recovery Case No. 5 of 2013 was quashed and set aside on the ground that the Assistant Commissioner lacked jurisdiction to entertain the claim.

Consequential directions and implications (as stated in the opinion):

The respondents (nos. 3 and 4) remain free to pursue remedies available to them under the Maharashtra Cooperative Societies Act, 1960, if they so advise themselves (the Court specifically noted it had set aside the impugned order on jurisdictional grounds and had not examined the correctness of factual findings).
The amount deposited by the petitioner in the Court shall be repaid to the petitioner along with interest accrued thereon.
Rule is made absolute in the terms set out; parties were left to bear their own costs.

The opinion does not purport to create a new legal precedent; it applies and follows existing authority to conclude the Assistant Commissioner lacked jurisdiction in the circumstances of this case. The direct effect is to vacate the order against the petitioner and to permit the respondents to seek relief under the statutory framework governing co-operative societies.

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wp3239.15

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

NAGPUR BENCH : NAGPUR

Writ Petition No.3239 of 2015 Tantrik Shikshan Karmachari Sahakari Pat Sanstha Maryadit,

Regd. No. N.G.P./B.N.K./129/1966, Office : Industrial Training Institute, Shraddhanand Peth,

Nagpur, through its Secretary Purushottam Marotrao Milmile. ….. Petitioner. Versus

1. The Assistant Commissioner of Labour-cum-Authority

under the Minimum Wages Act,

1948,

O/o The Labour Commissioner, Civil Lines, Nagpur.

2. The Inspector,

Authority under the Minimum Wages Act, 1948, Shops & Establishments O/o the Labour

Commissioner, Civil Lines, Nagpur.

3. Vijay son of Ajabrao Falke,

aged about Major, occupation - service, resident of Industrial Training Institute, Shraddhanand Peth, Nagpur.

4. Prabhakar Rahate,

aged about Major, occupation - service, resident of Industrial Training Institute, Shraddhanand Peth, Nagpur. ..... Respondents.

***** Mr. V. P. Marpakwar, Adv., for the petitioners. Ms. Tajwar Khan, Asstt. Govt. Pleader for respondent nos.1 and

Mr. S.W. Sambre, Adv., for respondent no.3. *****

CORAM : A.S. CHANDURKAR, J.

Date when arguments were concluded : 12th August, 2016 Date when judgment

is pronounced : 16th September, 2016

J U D G M E N T:

01. Rule. Heard finally with consent of counsel for the parties.

02. The petitioner is aggrieved by the order dated 3rd December, 2014 passed by the Asstt. Commissioner of Labour in exercise of powers under the Minimum Wages Act, 1948 [for short "the Act of 1948"]. By the said order, the petitioner has been directed to pay minimum wages to the respondent nos. 3 and 4.

03. The facts giving rise to the present Writ Petition are that the petitioner-Society is duly registered under the provisions of the Maharashtra Co-operative Societies Act, 1960. This Society, as per its bye-laws, is functioning on 'No profit; No loss' basis. Its object is to advance loans to its members who comprise of employees working with the Industrial Training Institutes. The respondent nos. 3 and 4 claim to be in employment with the Society and, according to them, they were not being paid wages as per the Act of 1948. The said respondents, therefore, on 8th January, 2013 moved the Asstt. Commissioner of Labour under the provisions of Section 20 (1) of the Act of 1948 with a prayer that they be paid wages in accordance with the Act of 1948.

In response to the notice issued by the said authority, the petitioner took the stand that it was not a commercial establishment as defined by provisions of Section 2 (4) of the Maharashtra Shops & Establishments Act, 1948 [for short "the said Act"]. According to the petitioner, the provisions of the Act of 1948, therefore, were not applicable to it and the said authority had no jurisdiction to entertain the claim for payment of minimum wages. By the impugned order, the respondent no.1 allowed the application moved by the respondent nos. 3 and 4 and directed payment of minimum wages along with compensation. Being aggrieved, the present Writ Petition has been filed.

04. Shri V.P. Marpakwar, the learned counsel for the petitioner, submitted that the petitioner-Society was not a commercial establishment on the basis of which it could be directed to pay minimum wages under the Act of 1948 to the respondent nos. 3 and 4. He submitted that the Society was catering to the needs of its members who were employees of the Industrial Training Institutes. The Society was working on a 'No profit; No loss' basis. It was merely advancing loans to its members. The activities carried out by the Society could not be treated to be the activities of an industry and, therefore, no such direction could have been issued by the respondent

no.1. The learned counsel referred to the provisions of Section 2 (4) of the said Act as well as the provisions of Section 2 (g) so also the Schedule - Part-I, Item 17 of the Act of 1948, to support the stand as taken. According to him, though this plea was specifically raised in the reply filed before the respondent no.1, the same was not given its due consideration. Without prejudice, it was submitted that the direction to pay compensation was also unjustified in the facts of the present case. He, therefore, submitted that the impugned order was liable to be set aside, as the respondent nos. 3 and 4 had the remedy of approaching the Co-operative Court for redressal of their grievances. He sought to support his submissions by relying upon the judgment of the Hon'ble Supreme Court in Management of SOM Vihar Apartment Owners Housing Maintenance Society Ltd. Vs. Workmen C/o. Indian Engineering & General Mazdoor [2001-I-LLJ 1413], the judgment of learned Single Judge in Kiran Industrial Premises Co-op. Society Ltd., Vs. Janata Kamgar Union & others [2001 I CLR 1046], as affirmed by the Division Bench in

Shantaram Pandurang Jadhav & others Vs. Kiran Industrial Premises Co-op. Soc. Ltd. [2007 III CLR 418], the Judgment of learned Single Judge in the case of Shamim Ahmed Siddique Vs. Society Ltd. & others, decided at the Principal Seat on 11th February, 2008 and the Judgment in Writ Petition No. 2457 of 2006

[Maharashtra State Electricity Board Karmachari Sah. Pat Sanstha & another Vs. Smt. Nanda Arvind Mutkure]; decided on 20th August, 2015.

05. On the other hand, Shri S.W. Sambre, the learned counsel for the respondent nos. 3 and 4 vehemently opposed the aforesaid submissions. According to him, the respondent no.1, after considering the entire controversy, had rightly come to the conclusion that the petitioner-Society was a commercial establishment and hence could be directed to pay minimum wages to the said respondents. According to him, the documents on record indicate that the petitioner-Society was earning profits and the claim made on behalf of the petitioner that it was running on 'No profit; No loss' basis was not correct. He submitted that since the year 2012, the demand for minimum wages was being made by the respondent nos. 3 and 4; but this demand was ignored by the Society. He sought to distinguish the judgments relied upon by the learned counsel for the petitioner, on the ground that the facts of those cases were distinct from the facts of the present case. In fact, he submitted that the jurisdiction of the respondent no.1 was being sought to be challenged for the first time before this Court in the present proceedings. He also justified the direction to pay compensation considering the delay on the part of the petitioner in

paying the amount of minimum wages. He, therefore, submitted that the Writ Petition was liable to be dismissed. Ms. Tajwar Khan, learned Asstt. Govt. Pleader appeared for respondent nos. 1 and 2.

06. I have heard the learned counsel for the parties at length and I have given due consideration to their respective submissions.

07. Since the principal challenge raised on behalf of the petitioner is to the jurisdiction of the Asstt. Commissioner of Labour to entertain the claim for payment of minimum wages, as made by the respondent nos. 3 and 4, it would be necessary to consider the relevant statutory provisions at the inception. Section 2 (g) of the Act of 1948 defines "Scheduled Employment" to mean an employment specified in the Schedule to the Act of 1948. Section 27 of the Act of 1948 empowers the State Govt. to include any employment in either Part of the Schedule. Part-I of the Schedule to the Act of 1948, in so far as the same is applicable to the State of Maharashtra, indicates, as per Entry No.17, the employment in any shop or commercial establishment other than an employment in any bank or an employment included in any other entries. As per the Explanation thereto, the expressions "shop" and "establishment" would have the

meanings assigned to them in the Maharashtra Shops & Establishments Act, 1948.

As per provisions of Section 2 (4) of the said Act, a commercial establishment has been defined. In so far as Societies are concerned, a Society registered under the Societies Registration Act, 1860, has been included therein.

08. Reference can now be made to the ratio of the decisions relied upon by the learned counsel for the petitioner, as the same take into consideration the aspect of a Co-operative Society being an industry. In Management of SOM Vihar Apartment Owners Housing Maintenance Society Ltd. [supra], the question that arose for consideration was whether the workmen engaged with the housing Society could be treated as workmen under the Industrial Disputes Act, 1947. The Hon'ble Supreme Court held that a Society wherein personal services are rendered to its members and such society is constituted only for the purposes of such members, services of persons engaged by the society would not make the activity an industry or such persons workmen. On that count, the Award made by the Industrial Tribunal came to be set aside. In Kiran Industrial Premises Co-operative Society Ltd. [supra], a Society registered under the provisions of the Maharashtra Co-operative Societies Act, 1960, had

employed two clerks and four watchmen. This Society had two hundred members who were owners of industrial units. The concerned workmen alleging that they were not getting wages as per the Act of 1948 approached the Industrial Court by filing a Complaint invoking the provisions of Schedule-IV, Item 9 under the Maharashtra Recognition of Trade Unions & Prevention of Unfair Labour Practices Act, 1971. The prayer was to pay minimum wages as per the Act of 1948. After considering Item 17 of Part-I to the Schedule to the Act of 1948, it was observed that such a Co-operative Society in which the workmen were employed could not be treated to be a commercial establishment or an industry to attract the provisions of the Act of 1948. It was noted that the receipts of the Society could be in excess of its expenditure, but that was not the test to hold that such Society was a commercial establishment. On that count, the Complaint came to be dismissed.

This Judgment of learned Single Judge was challenged in an appeal before the Division Bench. The Division Bench in Shantaram Pandurang Jadhav & others [supra], after referring to the judgment of the Hon'ble Supreme Court in Management of SOM Vihar Apartment Owners Housing Maintenance Society Ltd. [supra], affirmed the view of the learned Single Judge and observed that when employees were engaged by a Co-operative Society for the purpose of rendering

personal service to the members of the Society, its activities could not be termed as an industry. This decision of the Division Bench was thereafter considered and applied by another learned Single Judge in Shamim Ahmed Siddique [supra].

From the aforesaid decisions, it can be seen that the Hon'ble Supreme Court as well as the Division Bench of this Court have held in clear terms that in case of a Society that is constituted only for the purposes of rendering services to its members, its activities could not be treated to be the activities of an industry and the employees therein cannot be treated as workmen. The facts in Kiran Industrial Premises Co-op. Society Ltd. [supra] are somewhat identical, as in said case also, there was a prayer for grant of wages as per the provisions of the Act of 1948. The legal position, therefore, stands settled that a Co-operative Society formed for rendering services to its members could not be said to be conducting an activity having the character of

"industry."

09. If the aforesaid legal position is applied to the facts of the present case, it can be seen that the petitioner-Society, which is registered under the provisions of the Maharashtra Co-operative Societies Act, 1960, comprises of members who are employees of Industrial Training Institutes. Its object is merely to advance loans to

its members. Even if it is assumed that its receipts exceed its expenditure, that by itself would not bring the Society within the purview of the expression "industry". Moreover, the same cannot be a commercial establishment as defined by the provisions of Section 2 (4) of the said Act.

In fact, learned Single Judge in Kiran Industrial Premises Co- op. Soc. Ltd. [supra] had found it appropriate to direct the State Govt., to consider the issue of such employees of Co-operative Societies and to amend the statutory provisions so as to include them within the expression "Commercial Establishments." However, the Division Bench in appeal set aside this direction, on the ground that there was no such jurisdiction with the Court to issue the same.

10. The petitioner-Society in its reply to the proceedings initiated by the respondent nos. 3 and 4 had taken a specific stand that it was not a "commercial establishment" under Section 2 (4) of the said Act. The respondent no.1 proceeded to exercise jurisdiction on the ground that the receipts of the petitioner-Society exceeded its expenditure and, therefore, it was a "commercial establishment" as per the provisions of the said Act. The respondent no.1 in the impugned order, however, has failed to take into consideration the aforesaid legal position. In that view of the matter, it will have to be

held that the impugned order has been passed by the respondent no.1 in proceedings over which it had no jurisdiction to entertain, thus, making out a case for interference. The impugned order is, therefore, clearly unsustainable in law and is liable to be set aside.

11. As a sequel to aforesaid discussion, the following order is passed:-

O R D E R

[a] The order passed by the respondent no.1 dated 03rd December, 2014 in Recovery Case No. 5 of 2013 is quashed and set aside. It would be open for the respondent nos. 3 and 4 to avail the remedy available under the Maharashtra Co- operative Societies Act, 1960, if so advised. Needless to state that the impugned order has been set aside on account of lack of jurisdiction of the respondent no.1 and this Court has not examined the correctness of the findings recorded on the facts of the case.

[b] The amount deposited by the petitioner-Society in this Court shall be repaid back to it along with

interest accrued thereon.

[c] Rule is made absolute in aforesaid terms, leaving the parties to bear their own costs.

Judge

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C E R T I F I C A T E

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