Personal Services Lacking Commercial Activity Do Not Qualify As Industrial Work For Purposes Of Industrial Disputes Act: Gujarat High Court

The bench noted that services rendered to the members of a society, formed solely for their benefit, do not qualify as industrial activities.

Brief Facts:

Adinath Owners Association (“Association”) was constituted to provide basic amenities to the flat owners of Shalibhadra Apartment. The Chowkidar (“Workman”) who was employed by the Management was terminated from his employment. He raised a dispute before the Assistant Labour Commissioner. Upon conciliation being failed, the dispute was referred to the Labour Court.

The Association contended that it does not engage in trade, business, or commerce, thus falls outside the scope of the Industrial Disputes Act, of 1947. The Workman, however, argued that he was employed as a Chowkidar by the Association and argued that the Association's activities, including commercial undertakings, render it an industry under the ID Act. The Labour Court directed the Association to reinstate the Workman to his former position with continuity and 10% back wages. Feeling aggrieved, the Association approached the Gujarat High Court (“High Court”) and filed an appeal challenging the decision of the Labour Court.

The Association emphasized its non-trading nature, stating the provisions of the deed of conveyance and the Workman's acknowledgement of his role within the flats but not commercial units.

Conversely, the Workman argued that the Association encompasses both residential and commercial units and engages in commercial activities. He argued that it meets the criteria of an industry.

Observations by the High Court:

The High Court referenced the decision of the Supreme Court in Management of Som Vihar Apartment Owners Housing Maintenance Society vs Workmen C/o Indian Engineering and General Madoor [2002(9) SCC 652] and highlighted the distinction between personal services and industrial work under the ID Act. It noted that services rendered to the members of a society, formed solely for their benefit, do not qualify as industrial activities. The High Court held that the Workman was appointed by the developer, Adinath Enterprises, to provide personal services to the non-trading Association's members. Therefore, it held that the activities of the non-trading Association, towards its members' needs, did not constitute an industry under the ID Act.

Furthermore, the High Court referred to the Bombay High Court's decision in the case of Arihant Siddhi Co-operative Housing Society Ltd. Vs. Pushpa Vishnu More [2018(0) AIJ-MH 181736], which stressed the importance of determining the dominant function of an establishment. The High Court held that dominantly, the Association was not involved in a commercial activity. Therefore, it was outside the ambit of the definition of 'industry', provided in Section 2(j) of the ID Act.

Therefore, the High Court held that the Labour Court's award was erroneous. It held that the personal services served by the Workman within the residential complex attached to the commercial units did not constitute industrial work. Consequently, the High Court allowed the Association's appeal, quashing and setting aside the Labour Court's award.

Case Title: Shalibhadra Adinath Enterprise and Shalibhadra Apartment Through Member Versus Kanan Maruday Padaram

LL Citation: 2024 LiveLaw (Guj) 59

Case Number: R/Special Civil Application No. 13526 of 2021

Advocate for the Petitioner: Mr DG Shukla and Mr Harsheel D Shukla

Advocate for the Respondent: Shrijit G Pillai

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