VERY IMPORTANT POINT
Agricultural Market Committee estabilshed under the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 (hereinafter referred to as "the State Act") is an "industry" as contemplated under the Industrial Disputes Act, 1947.

Headnote:Industrial Disputes Act, 1947-Section 2(j)-Industry-Agricultural Produce Market Committee established under Karnataka Agricultural Produce Marketing (Regulation) Act-Whether industry?-Predominant object being regulation and control of trading of agricultural produce Market Committee including its functionaries cannot be said to be performing functions which are sovereign in character-Market would fall within definition of industry under Section 2(j).
       What is approved to be "Sovereign" is defence of the country, raising armed forces, making peace or war, foreign affairs, power to acquire and retain territory. These are not amenable to the jurisdiction of ordinary civil courts. The other functions of the State including welfare activity of State could not be construed as "sovereign" exercise of power. Hence, every governmental function need not be "sovereign". State activities are multifarious. From the primal sovereign power, which exclusively inalienably could be exercised by the Sovereign alone, which is not subject to challenge in any civil court to all the welfare activities, which would be undertaken by any private person. So merely one is employee of statutory bodies would not take it outside the Central Act. If that be then Section 2(a) of the Central Act read with Schedule I gives large number of statutory bodies should have been excluded, which is not. Even if a statute confers on any statutory body, any function which could be construed to be "sovereign" in nature would not mean every other functions under the same statute to be also sovereign. The court should examine the statute to severe one from the other by comprehensively examining various provisions of that statute. In interpreting any statute to find it is "industry" or not we have to find its pith and substance. The Central Act is enacted to maintain harmony between employer and employee which brings peace and amity in its functioning. This peace and amity should be the objective in the functioning of all enterprises. This is to the benefit of both, employer and employee. Misuse of rights and obligations by either or stretching it beyond permissible limits have to be dealt with within the frame work of the law but endeavor should not be in all circumstances to exclude any enterprise from its ambit. That is why courts have been defining "industry" in the widest permissible limits and "sovereign" functioning within its limited orbit. (Para 20)
       After scanning the whole Karnataka Agricultural Produce Marketing Act and perusing the preamble and Statement of Objects and Reasons of the Act, it reveals that this Act deals with various facets of regulating activities within the market area with respect to the trading in agricultural produce. It includes establishment of various committees including charging of fees for service rendered to the traders of agricultural producers. Any enactment, scheme or project which sponsors helps in the trading activity is one of the State s essential functions towards welfare activities for the benefit of its subject. Such activities can be undertaken even by any non-governmental organisation or a private person, corporate or company. In fact, prior to the abolition of Zamindari, the Hats and Bazars (Markets) held on Zaindar s (Landowner) land, the Zamindar used to charge fees for rendering service for holding such market, by providing land and facilities to the participants of such market. By this it helped producers, sellers and public at large through such trading. This is similar, in a nature and form to what is being done now under the State Act through statutory functionaries. Thus none of these functions could be construed to be sovereign in nature or inalienable in character. (Para 24)
       It is true various functionaries under this Act are creature of statute. But creation as such, by itself, cannot confer it the status of performing inalienable functions of the State. The main controlling functions and power is conferred on the market committee whose constitution itself reveals, except one or two rests are all are elected members representing some on other class from the public. In fact, all governmental functions cannot be construed either primary or inalienable sovereign function. Hence even if some of the functionaries under the State Act could be said to be performing sovereign functions of the State Government that by itself would not make the dominant object to be sovereign in nature or take the aforesaid Act out of the purview of the Central Act. (Para 25)
       Thus merely an enterprise being statutory corporation, creature under a statute, would not take it outside the ambit of "industry" as defined under the Central Act. We do not find the present case falling under any exception laid down in the Bangalore Sewerage Board case. The mere fact that some employees of the appellant are government servants would make no difference as the true test to find - has to be gathered from the dominant object for which functionaries are working. It cannot be doubted that the appellant is an undertaking performing its duties in a systematic and organised manner, regulating the marketing and trading of agricultural produce, rendering services to the community. In the present case, as we have recorded earlier, we are concerned only with those employees who are not government servants. Testing the dominant object as laid down in Bangalore Sewerage Board case, we reach to inescapable conclusion that none of the activities of the Agriculture Produce Market Committee could be construed to be sovereign in nature. Hence we have no hesitation to hold that this corporation falls within the definition of "industry" under Section 2(j) of the Central Act. (Para 26)
       Sovereign function in the new sense may have very wide ramification but essentially sovereign functions are primary inalienable functions which only State could exercise. Thus, various functions of the State, may be ramifications of sovereignty but they all cannot be construed as primary inalienable functions. Broadly it is taxation, eminent domain and police power which covers its field. It may cover its legislative functions, administration of law, eminent domain, maintenance of law and order, internal and external security, grant of pardon. So, the dichotomy between sovereign and non-sovereign function could be found by finding which of the functions of the State could be undertaken by any private person or body. The one which could be undertaken cannot be sovereign function. In a given case even in subject on which the State has the monopoly may also be non-sovereign in nature. Mere dealing in subject of monopoly of the State would not make any such enterprise sovereign in nature. Absence of profit making or mere quid pro would also not make such enterprise to be outside the ambit of "industry" as also in State of Bombay & Ors. case. (Para 30)
       In view of the aforesaid settled legal principle the width of "industry" being of widest amplitude and testing it in the present case, in view of the preamble, Objects and Reasons and the scheme of the Act, the pre-dominant object clearly being regulation and control of trading of agricultural produce, thus appellant-committee including its functionaries cannot be said to be performing functions which are sovereign in character. Most of its functions could be undertaken even by private persons. Thus the appellant would fall within the definition of "industry" under Section 2(j) of the Central Act. (Para 33)

JUDGMENT

Misra, J.-Leave granted.

2. The question raised in this appeal is drawing attention of this Court since very inception when Industrial Disputes Act, 1947 was enacted and even after the passage of more than 50 years, issue remains in the fertile field of it yielding fresh crops time and again because of wide vaporous definition of the word "industry" under the said Act. We shall be referring about some of these cases in the later part of our judgment. This wide definition has given an opportunity to both employer and employee for raising issues, one trying to pull out of this definition, to be out of the clutches of the said Act, other bringing within it, to receive benefit under it. Because of width of the periphery of the word "industry" there is tug of war repeatedly between the two, in spite of various decisions of this Court. This situation has led this Court, in Bangalore Water-Supply & Sewerage Board, Etc. v. R. Rajappa & Ors.1 to record with anxiety and suggesting Legislature for bringing a comprehensive Bill to clear the fog. It records :

"In view of the difficulty experienced by all of us in defining the true denotation of the term "industry" and divergence of opinion in regard thereto-as has been the case with this bench also-we think, it is high time that the Legislature steps in with a comprehensive bill to clear up the fog and remove the doubts and set at rest once for all the controversy which crops up from time to time in relation to the meaning of the aforesaid term rendering it necessary for larger benches of this Court to be constituted which are driven to the necessity of evolving a working formula to cover particular cases."

3. This led the Legislature to amend the definition of the word "industry" in Section 2(j) of the aforesaid Act, through amending Act in 1982 but left the said amendment to be given effect from the date to be notified by the Government. Since thereafter with the passage of 18 years in spite of observations of this Court in some cases during this inter magnum, the said amendment has not seen the light of the day leaving the situation in doldrum for the Courts to continue to give its shape. Inter-linked with it is also the word "sovereign" which is equally fluid as the word "industry". The word "sovereign" changes its complexion with the type of sovereignty a country is structured also with the change of political structure in view of changing socio-cultural heritage of any country. So defining what is sovereign, the Courts not only of this country but other countries as well have been battling to comprehend it since 19th century. This has gained importance in the industrial law as what constitute to be a sovereign function excludes within its ambit "industry" hence industrial law would have no application over it.

4. The question raised in this Appeal is :

(a) Whether the appellant, an Agricultural Produce Market Committee (hereinafter referred to as "the Market Committee"), estabilshed under the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 (hereinafter referred to as "the State Act") is an "industry" as contemplated under the Industrial Disputes Act, 1947 (hereinafter referred to as "the Central Act")? If yes, Will not employee under the State Act would be governed by the Central Act?

(b) Will not the State Act over-ride the Central Act for the reason, the State Act received the assent of the President of India, hence the Central Act would be inapplicable to the employees governed by the State Act?

5. To properly appreciate the controversy, it is necessary to give short essential matrix of facts. The appellant is an Agricultural Produce Market Committee established under the State Act. It regulates the marketing of agricultural produce for the benefit of the agriculturist. This market committee is not intended to make any profit and the whole object is only to regulate the agricultural produce both for protecting the interest of ag

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2000 Supreme(SC) 1585

VERY IMPORTANT POINTAgricultural Market Committee estabilshed under the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 (hereinafter referred to as "the State Act") is an "industry" as contemplated under the Industrial Disputes Act, 1947.

Cases Referred (6)

VERY IMPORTANT POINT
Agricultural Market Committee estabilshed under the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 (hereinafter referred to as "the State Act") is an "industry" as contemplated under the Industrial Disputes Act, 1947.