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1974 Supreme(P&H) 121
PUNJAB & HARYANA HIGH COURT
R.S.Narula, C.J. and M.R.Sharma JJ.
S Herbert
Versus
Punjab Synod Board Of Medical Works
Decided On : SEPTEMBER 2, 1974
A hospital can be considered an industry under the Industrial Disputes Act, 1947, even if it is run on charitable grounds, provided that it is a systematic activity which partakes the nature of a business or trade, and there is cooperation between the employer and the employees resulting in the production of material services.
Headnote:
INDUSTRIAL DISPUTES ACT, 1947 - SECTION 2(J) AND 2(K) - HOSPITAL - INDUSTRY - WHETHER CHRISTIAN HOSPITAL, JAGADHRI, WAS AN INDUSTRY - CRITERIA FOR DETERMINING WHETHER A HOSPITAL IS AN INDUSTRY - FACTORS CONSIDERED - HELD, CHRISTIAN HOSPITAL, JAGADHRI, WAS AN INDUSTRY.
Fact of the Case:
Dr. S. Herbert was employed at the Christian Hospital, Jagadhri, Ambala district, Ambala. On 31st August, 1970, he served a demand notice on the Chairman, Punjab Synod Medical Board, Francis Newton Hospital, Ferozepur, alleging that his services had been terminated without any notice or reason. The Labour Court, Haryana at Rohtak, to which the dispute was referred, held that the hospital was an industry and awarded compensation to Dr. Herbert. The hospital challenged the award in the High Court, which allowed the writ petition and set aside the award on the ground that the hospital was not an industry.
Finding of the Court:
The High Court held that the Christian Hospital, Jagadhri, was an industry within the meaning of Section 2(j) of the Industrial Disputes Act, 1947. The Court relied on the following factors in reaching its decision: * The hospital received no grant or charity and its expenses were met from its earnings. * The annual expenditure and earnings of the hospital were approximately the same. * The annual grant received from the Mission was wholly utilized for running the nurses school, which was managed independently of the hospital. * Only about 5% of the patients were treated free, while the rest had to pay for their treatment, food, and lodging. * Medicines were sold to patients at a profit of 50%. * If the expenditure of the hospital exceeded the income in any year, the deficit was made up from the earnings of the following year.
Issues: Whether the Christian Hospital, Jagadhri, was an industry within the meaning of Section 2(j) of the Industrial Disputes Act, 1947.
Ratio Decidendi: The Court held that the Christian Hospital, Jagadhri, was an industry because it was a systematic activity which partook the nature of a business or trade, and there was cooperation between the employer and the employees resulting in the production of material services. The Court further held that the fact that the hospital was run on charitable grounds did not prevent it from being considered an industry.
Final Decision: The High Court allowed the appeal, set aside the judgment of the single Judge, and remanded the case for decision on the remaining issues.
S. Herbert, J.
1. Dr. S. Herbert was employed at the Christian Hospital, Jagadhri, Ambala district, Ambala. On 31st August, 1970, be served the following demand notice on the Chairman. Punjab Synod Medical Board, Francis Newton Hospital, Ferozepur, respondent No.1: Since I have not been taken on duty despite my personal protest and justified approaches it is, therefore, presumed that you have terminated my services without any notice and without assigning any reason. I am, therefore, constrained to serve upon you with this demand notice that I should be immediately reinstated, otherwise the Board will be responsible for further legal action. Five copies of this demand notice were also sent to the Labour and Conciliation Officer, Yamuna Nagar, who initiated conciliation proceedings which proved abortive. Consequently, the State of Haryana referred the following dispute for adjudication by the Presiding Officer of the Labour Court, Haryana at Rohtak: Whether the termination of services of Dr. S. Herbert was justified and in order? If not, to what relief is he entitled? The Labour Court sent a notice regarding this reference to respondent No.1 on the address given in the order of reference. A controversy was raised before it that the said notice had not been sent on the proper address. The Court, however, rejected this contention and directed respondent No.1 to file its rejoinder at a date not later than November 15, 1971, and to send a copy of the same to the workman. The case was ordered to be taken up on December 16, 1971, at the Canal Rest House, Yamuna Nagar. On that date, no one appeared on behalf of the management and the case was decided on the basis of ex parte evidence produced by the appellant. The facts contained in the affidavit filed by him were accepted and it was observed as under: Dr. S. Herbert has filed an affidavit in which a number of facts and figures have been given to prove that the respondent-society is an industry and that he is a workman. He has alleged that the respondent hospital received absolutely no grant or charity and the expenses for running the hospital have to be met from its earning. He has stated that the N. L. Z. P. Mission which started and maintains this Hospital and a number of other activities gives only an annual block grant of Rs.41.000.00 for the purpose of running the hospital and the nurses school and in his affidavit he has stated that the total annual expenditure for running the hospital normally comes to approximately one lakh and the annual earnings from fees, charges for food, bed and laboratory tests, etc. also come to approximately rupees one lakh. He has affirmed that the annual block grant of Rs.41,000 which is received from the Mission is wholly utilised in running the nurses school and that the management of the nurses school is entirely separate and independent of management of the hospital. He has pointed out that out of total number of patients treated in the hospital only about 5% of the patients are treated free and the rest have to pay for their treatment as also for their food and lodging and that the medicines are sold to the patients at a profit of 50%. He also stated that if in any year the expenditure of the hospital exceeds the income then the deficit is made up from the earning of the following year. In view of these facts it has to be held that the respondent is not a charitable hospital but an industry because all that can be said is that the management have no profit motive as the income and expenditure approximately remains the same. After coming to this conclusion the learned labour Court adverted to the observations made by their Lordships of the Supreme Court in Safdarjung Hospital, New Delhi V/s. Kuldip Singh Sethi 1970-II L. L. J.266 and held that the hospital in which the appellant had been engaged was an industry. Instead of ordering the reinstatement of the appellant the Court considered it proper to award him compensation calculated on t
