1997 JTR(SC) 1477
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1997(9) Supreme 469
SUPREME COURT OF INDIA
(From Andhra Pradesh High Court)
J.S. Verma, CJI., B.N. Kirpal & V.N. Khare, JJ.
General Manager, Telecom -Appellant
versus
S. Srinivasa Rao & Ors. -Respondents
Civil Appeal No. 7845 of 1997
Arising out of Special Leave Petition (C) No. 8509 of 1997
Decided on 18-11-1997
Counsel for the Parties :
For the Appellant, N.N. Goswami, Sr. Advocate, Arvind Kumar Sharma, Ms. Anubha Jain, Ms. Kanupriya Mittal, Advocates.
For the Respondents, Rakesh Luthra, Ms. Pooja Dua, L.R. Singh, Advocates.
IMPORTANT POINT
The Telecommunication Department of the Union of India is an industry within its definition contained in the existing unamended Section 2(j) of the Industrial Disputes Act, because it is engaged in a commercial activity and the Department is not engaged in discharging any of the sovereign functions of the State.
Act Referred :INDUSTRIAL DISPUTES ACT : S.2(j)
(A) The Industrial Disputes Act, 1947, as applicable in its pre-amendment form, governs the determination of whether the Telecommunication Department of the Union of India constitutes an 'industry' under Section 2(j), a provision interpreted by the seven-Judge Bench in Bangalore Water Supply & Sewerage Board v. A. Rajappa & Ors. The reference under Section 10A concerning the competence of the Tribunal hinges on this definition, which remains unamended and unnotified by the Central Government at the time of adjudication. The earlier amendments of 1982 are yet to be enforced, rendering the pre-existing judicial interpretation on the concept of 'industry' the decisive legal yardstick.
(B) The dominant nature test, as enunciated in Bangalore Water Supply, is the governing principle to ascertain whether an entity falls within the definition of 'industry'. Under this test, an establishment engaged in commercial activity and not performing sovereign functions of the State is classified as an industry. The decisions in Theyyam Joseph and Bombay Telephone Canteen Employees Association, which relied on sovereign function exemptions, are overruled as being inconsistent with the binding precedent set by the seven-Judge Bench.
Facts of the case:
A reference was made by a two-Judge Bench to a three-Judge Bench doubting the correctness of prior decisions. The central issue was whether the Telecom Department of the Union of India is an industry under the existing definition of Section 2(j) of the Industrial Disputes Act, 1947, particularly in the context of a reference under Section 10A regarding trade disputes.
Findings of Court:
The Court held that the Telecommunication Department is an industry because it is engaged in commercial activity and does not perform sovereign functions. The prior decisions in Theyyam Joseph and Bombay Telephone Canteen Employees Association are inconsistent with the binding ruling in Bangalore Water Supply and are therefore set aside.
Issues:
Whether the Telecom Department of the Union of India constitutes an 'industry' within the meaning of Section 2(j) of the Industrial Disputes Act, 1947, and whether the reference under Section 10A was competent based on this determination.
Ratio Decidendi:
The test laid down in Bangalore Water Supply determines that any commercial undertaking not engaged in sovereign state functions qualifies as an industry. Applying this test, the Telecommunication Department is an industry, rendering the appeal incompetent and liable to be dismissed.
Result:
The appeal is dismissed with no costs awarded.
(A) The Industrial Disputes Act, 1947, as applicable in its pre-amendment form, governs the determination of whether the Telecommunication Department of the Union of India constitutes an 'industry' under Section 2(j), a provision interpreted by the seven-Judge Bench in Bangalore Water Supply & Sewerage Board v. A. Rajappa & Ors. The reference under Section 10A concerning the competence of the Tribunal hinges on this definition, which remains unamended and unnotified by the Central Government at the time of adjudication. The earlier amendments of 1982 are yet to be enforced, rendering the pre-existing judicial interpretation on the concept of 'industry' the decisive legal yardstick.
(B) The dominant nature test, as enunciated in Bangalore Water Supply, is the governing principle to ascertain whether an entity falls within the definition of 'industry'. Under this test, an establishment engaged in commercial activity and not performing sovereign functions of the State is classified as an industry. The decisions in Theyyam Joseph and Bombay Telephone Canteen Employees Association, which relied on sovereign function exemptions, are overruled as being inconsistent with the binding precedent set by the seven-Judge Bench.
Facts of the case:
A reference was made by a two-Judge Bench to a three-Judge Bench doubting the correctness of prior decisions. The central issue was whether the Telecom Department of the Union of India is an industry under the existing definition of Section 2(j) of the Industrial Disputes Act, 1947, particularly in the context of a reference under Section 10A regarding trade disputes.
Findings of Court:
The Court held that the Telecommunication Department is an industry because it is engaged in commercial activity and does not perform sovereign functions. The prior decisions in Theyyam Joseph and Bombay Telephone Canteen Employees Association are inconsistent with the binding ruling in Bangalore Water Supply and are therefore set aside.
Issues:
Whether the Telecom Department of the Union of India constitutes an 'industry' within the meaning of Section 2(j) of the Industrial Disputes Act, 1947, and whether the reference under Section 10A was competent based on this determination.
Ratio Decidendi:
The test laid down in Bangalore Water Supply determines that any commercial undertaking not engaged in sovereign state functions qualifies as an industry. Applying this test, the Telecommunication Department is an industry, rendering the appeal incompetent and liable to be dismissed.
Result:
The appeal is dismissed with no costs awarded.
JUDGMENT
Verma, CJI.-Delay condoned.
Leave granted.
2. This matter comes up before a three-Judge Bench because of a Reference made by a two-Judge Bench which doubted the correctness of an earlier two-Judge Bench decision of this Court in Sub-Divisional Inspector of Post, Vaikam & Ors. v. Theyyam Joseph & Ors.1. It was stated at the Bar that a later two-Judge Bench decision reported as Bombay Telephone Canteen Employees Association v. Union of India2, also takes the same view as in the case of Theyyam Joseph.
3. The only point for decision in this appeal is whether the Telecom Department of the Union of India is an industry within the meaning of the definition of industry in Section 2(j) of the Industrial Disputes Act, 1947. It may here be observed that the amendment made in that definition in 1982 has not been brought into force by the Central Government by issuance of notification required for the purpose. It is, therefore, not necessary for us to consider whether the Telecommunication Department of the Union of India would be an industry within the meaning thereof in the amended provision which is not yet brought into force. We are, in this matter, concerned with the earlier definition of industry which continues to be in force and which was subject of consideration by a seven Judge Bench in Bangalore Water Supply & Sewerage Board v. A. Rajappa & Ors.3.
4. The above point arises for consideration out of a Reference made under Section 10A of the Industrial Disputes Act, 1947, which matter is now pending in the High Court. The contention of the appellant throughout has been that the Reference was incompetent since the Telecommunication Department of the Union of India is not an industry within the meaning of its definition contained in the existing un-amended Section 2(j) of the Industrial Disputes Act, 1947. Admittedly, this question has to be answered according to the decision of this Court in Bangalore Water Supply (supra) which is a binding precedent. The dominant nature test for deciding whether the establishment is an industry or not is summarised in para 143 of the judgment of Justice Krishna Iyer in Bangalore Water Supply case (supra) which is as under :
143. The dominant nature test:
(a) Where a complex of activities, some of which qualify for exemption, others not, involves employees on the total undertaking, some of whom are not workmen as in the University of Delhi case (supra) or some departments are not productive of goods and services if isolated, even then, the predominant nature of the services and the integrated nature of the departments as explained in the Corporation of Nagpur (supra), will be the true test. The whole undertaking will be industry although those who are not workmen by definition may not benefit by the status.
(b) Notwithstanding the previous clauses, sovereign functions, strictly understood, (alone) qualify for exemption, not the welfare activities or economic adventures undertaken by government or statutory bodies.
(c) Even in departments discharging sovereign functions, if there are units which are industries and they are substantially severable, then they can be considered to come within Section 2(j).
(d) Constitutional and competently enacted legislative provisions may well remove from the scope of the Act categories which otherwise may be covered thereby."
5. It is rightly not disputed by the learned counsel for the appellant that according to this test the Telecommunication Department of the Union of India is an industry within that definition because it is engaged in a commercial activity and the Department is not engaged in discharging any of the sovereign functions of the State.
6. A two-Judge Bench of this Court in Theyyam Joseph s case (supra) held that the functions of the Postal Department are part of the sovereign functions of the State and it is, therefore, not an industry within the definition of Section 2(j) of the Industrial Disputes Act, 1947. Incidently, this decision was rendered without any reference to the seven-Judge Bench decision in Bangalore Water Supply (supra). In a later two-Judge Bench decision in Bombay Telephone Canteen Employees Association case (supra), this decision was followed for taking the view that the Telephone Nigam is not an industry . Reliance was placed in Theyyam Joseph s case (supra) for that view. However, in Bombay Telephone Canteen Employees Association case (i.e. the latter decision), we find a reference to the Bangalore Water Supply case. After referring to the decision in Bangalore Water Supply, it was observed that if the doctrine enunciated in Bangalore Water Supply is strictly applied, the consequence is catastrophic . With respect, we are able to subscribe to this view for the obvious reason that it is in direct conflict with the seven Judge Bench decision in Bangalore Water Supply case (supra) by which we are bound. It is needless to add that it is not permissible for us, or for that matter any Bench of lesser strength, to take a view contrary to that in Bangalore Water Supply (supra) or to by pass that decision so long as it holds the field. Moreover, that decision was rendered long back - nearly two decades earlier and we find no reason to think otherwise. Judicial discipline requires us to follow the decision in Bangalore Water Supply case (supra). We must, therefore, add that the decisions in Theyyam Joseph (supra) and Bombay Telephone Canteen Employees Association (supra) cannot be treated as laying down the correct law. This being the only point for decision in this appeal, it must fail.
7. Accordingly, the appeal is dismissed. No costs.
Appeal dismissed.
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Parallel Citations of other Journals :
General Manager, Telecom v. S. Srinivasa Rao & Ors., 1997(9) Supreme 469
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