A housing society formed by and for individual flat owners, who in real terms own the property and who form themselves into a society so that services for maintenance and upkeep of the property, etc., could be availed of by them in a more systematic manner. Such society, in an ordinary case, can never be termed as an industry.
The Allahabad high Court in the matter of Arun Vihar Residents Welfare Association G.B. Nagar vs. State of UP (WP [C] 51047/2012), published on 16.09.2019, held that when personal services are rendered to members of a society and the society is constituted only for the purposes of those members and the engagement of the employees is for providing such services, these activities could not be treated to be covered within the purview of the term “industry”, nor the employees could be held to be “workmen”.
Challenges:
The main question arises in the present was whether an association or society of apartment owners employing persons for rendering personal services to its members can be held to be an “industry” and its employees can be held to be “workmen” under the provisions of the Industrial Disputes Act, 19471 or under the U.P. Industrial Disputes Act, 1972.
Held:
Applying the triple test laid by the Apex Court in Bangalore Water Supply and Sewerage Board vs. A. Rajappa (1978 AIR 548), the High Court observed that whether an activity would fall within a purview of the definition of industry, would be decided upon the conditions and based on dominant nature test. The following conditions were laid down in Bangalore Water Supply case:
- systematic activity;
- organized by co-operation between employer and employee;
- for the production and/or distribution of goods and services calculated to satisfy human wants and wishes.
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’ 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 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.
The Court while referring the other precedents reiterated that the housing co-operative society is not an industry and its employees cannot be treated to be “workmen” as defined under Section 2(s) of the Industry Dispute Act, 1947. The status of a housing co-operative society under various statutory enactments was considered and it was held that the society could not be said to be carrying out commercial or trading activities. When personal services are rendered to members of a society which is constituted only for the purposes of those members, the activity would not be treated as an industry nor the employees would be treated as workmen.
Therefore, activities of the petitioner-society and the nature of the services rendered by it to its members who are the apartment owners and applying the “dominant nature test” laid down in the case of Bangalore Water Supply and Sewerage Board, the Court reached the conclusion that the petitioner-society cannot be held to be carrying out activities which may bring it within the purview of the expression “industry”, and its employees within the ambit of the term “workmen”.