Holding

The Court held that the clinic was not an independent undertaking but an integral part of Bhilai Steel Plant, so its employees are deemed employees of the plant and the Labour Court’s decision granting them continuous service is correct.

Summary

The Supreme Court examined whether the Urban Family Planning Clinic set up by the Government of India at Bhilai Steel Plant was an independent undertaking or an integral part of the plant. The petitioners, who were attendants at the clinic, claimed continuous service from 1964 for purposes of gratuity, retrenchment and leave, arguing that they had been absorbed into the plant in 1976. The plant management contended that the clinic was a separate entity and the employees' prior service should not count. The Labour Court held the clinic had no independent existence and treated its staff as plant employees, granting the petitioners relief. The Industrial Court reversed this, deeming the application non‑maintainable, but the Supreme Court set aside that decision, restoring the Labour Court’s view and allowing the appeal.

Issues considered

Whether the Urban Family Planning Clinic constitutes an "industry" within the meaning of the Industrial Disputes Act, 1947.
Whether the employees of the clinic are to be deemed employees of Bhilai Steel Plant for purposes of service continuity, gratuity, retrenchment and leave.
Whether the petition filed before the Labour Court was maintainable within its jurisdiction.
Whether the Industrial Court erred in holding the application non‑maintainable.

Legislation cited

Industrial Disputes Act, 1947

Subjects

industrial disputefamily planning clinicemployee absorptionservice continuitygratuityIndustrial Disputes Actpublic sector undertakingLabour CourtIndustrial Courtjurisdictionmaintainability

Judgment

;
1049
29

SMT. USHA RANI DATTA, AAYA/ATTENDANT
AND OTHERS
B
v.

• STATE INDUSTRIAL COURT, INDORE & ORS .
. April 30, .1985

[D.A. DESAI AND V. KHALID, JJ.]
c
Industrial Dispute.~ Act :

Family Planning Clinic-Finizncial Expenditure irJcurred by Central
Government-Taken over by Public Sector Undertaking Steel Plant-E1nployees of
Clinic-Whether employees of Steel Plant. D

Urban Family Clinic was set up by a.S~cel Plant for imP.lement'!:.tion of
family· welfare schemes. The Chief M~dicaI O~~er of ~he Plant' was ,lhe adJ?1inis·
trative officer for the Clinic. The financi<i:l,e~.penditure of ,the Clinic was bOrne
by the.Government of Indi:i. Subsequently t~e Clinic Was treated .as an integral
part of the administration of the Plant an~ its employees were .ibsorbed wilh
effect from February 4, 1976. · E

The appellants who were serving as Aaya/ Attendants moved an applica-
\
tion before the Labour Court for a relief that they are being wrongly treated as
fre~h employees from the date of absorption and that their services si~ce the
commencemeDt of employment be treated as continuoUs for the purpo'se of
gratutity, retrenchment and leave. etc. J. . F
The management of the Plant contested the application contending tha't
the Clinic was nn independent unit set up by. the Government Of 1ddia and .that
it was not an integral part of the administration and, therefore, the services
rendered prior to the absorption could not be treated as service under the Plant
1
and, therefore_, the application deserves to be dismissed. · .. '
G
The Labour Court allowing the app1ication held· that the Clinic had bard·
ly any independent existence and that the .employees of the Clinic were in reality
and for all practical purposes the employees of the Plant.

Two revision petitions were filed before the Industrial Court-one on be-
half of -the Plant, and the other on behalf of the appellants. The Industrial
Court dismissed the revision petitio'n of-the appellants with a further direction
H
1050 SUPREME COURT REPORTS [1985] 3 S.C.R·

A that the appli~ation before the Labour Court was liable to. be dismissed. While
allowing the fevision petition of the tnana~ement, th~ Industrial Court held that
family planning: centres were run by different public undertakings and it was
started as part of the general policy of the Government of India and even
though the expenditure of the centre was reimbursed by the Government, the
Clinic of the centre could not be said to be an irn.lustry within the meaning of
expression in the Act nor could it be said to be iacidental to the main business
B
of the Plant. The prayer in the application before the Labollr Court that the
appellants should be given additional and better wages and service conditions
was beyond the competence of the Labour Court and conseq~eritly the applica-
tion was not maintainable.

The writ petition filed ~y the appellants \Vas distnissed by the lligh Court,
c
Allowing the Appeal,

HELD : I. The findings of facts as recorded by the Labour Court and
·which have neither been departed from nor questioned by the High Court
clearly point to the inescapable conclusion that the Clinic had no independent
existence of its own and that for all practical purposes it was under the adminis·
D trative control of the Plant. (1053 E]

2. The Clinic had no·independent existence. In fact it was an euphemism
to call it an independent undeftaking. It was part arid parcel of the adminis-
trative set up. The Clinic was managed by the Chief Medical Officer of the
Plant with a designation of Administrative Officer, and was accountable for the
money received fronl the Government of India. The Jabour Court was perfectly
E justified in holding that the employees of the Clinic were the employees of the
Plant working in a department tinder the administrative control of Chief Medi·
cal Officer who was under the overall administrative control of the management
of the Plant. The Labour Court was perfectly justified in holding that since
the inception of the Clinic the employees were the employees of the Plant .and
tha\the absorption was an acceptance of reality avoiding the pretence.
(1054 E; G-H; 1055 A-BJ
E
3. The Industrial Court was in error in concluding that whether the (
application as made was not maintainable. The reasons which appealed to the i
Labour Court for holding that the application was maintainable are indispu ta· '
1
bly unquestionable and the view to the contrary is untenable. (1055 C]
4. The High Court has overlooked that Family Planning Scheme has to
G be implemented in larger national interest. Publi~ sector undertakings owned
by the Government ofl ndia may be directed to carry out the scheme. For this
purPose the Clinic was set up ~nder the ad1ni11istrative control of the Chief
Medical Officer of the Plant. If a hospital can be said to be run for the welfare
of the employees of the Plant how the Clinic which would also be described as a.
hospital for giving advice in family planning could be differentiated from a
H hospital. A modern hospital can as wen have a family planning clinic. The
'distinction drawn by the High Court lacks logic. The Clinic was an integral
USHA RANi v. INDUSTRiAL COURT (Desa.i, ),) · lOSi ·
depariment of the Plant aod had hardly any independent existence. The inde· A
pendent paper exiStence was found unworkab1.e in the IOng run and therefore the
Public Enterprises Committee directed to absorb the employees of the Clinic in
the establishment of the Plant. Accordingly no other view is possible than the
on taken by tho Labour Court. (1055 E-H]

Bangalore Water Supply & Sewerage Boarf! etc. v. R. Rajappa & others,
[1978] 3 SCR 207, referred to. B

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2231 of
1985. ..

From the Judgment and Order dated 8.3.1983 of the Madhya
Pradesh High Court in Misc. Petition No. 1124 of 1982. c
~
"· "' R. Salish for the Appellants.

S.K. Mehta for the Respondents.
D
The Judgment of the Court was delivered by

DESAI, J. · Special leave granted.

A trivial dispute disposed of by an eminently just and legally
correct order by the Labour Court was unnecessarily interfered with E
by the Jndnstrial Court, Madhya Pradesh which has forced emp·
loyees working in a comparatively lower grade to knock at the
doors of this Court.

Urban Family Planning Clinic ('Clinic' for short) was set up F
at Bhilai for implementation of family welfare schemes of the
· Government of India in accordance with approved pattern set out
·in the letter of Ministry cif Health dated May 16, 1963. The Chief
Medical Officer of the Bhilai Steel Plant was to be. the administra-
tive officer for the Clinic. The entire expenditure of the Clinic
was met by the Government of India by giving 100% grant though G
it was stated as a fact that this amount was not brought into the
bank account of Bhilai Steel Plant but was deposited in a separate
bank account in the State Bank of India under the name and style
of Bhilai Steel Plant Urban Family Planning Clinic Grant-in~aid
Account. Subsequently on the recommendation of Bureau oi'
Public Enterprises, the Clinic was treated as an integral part 6r the Ji
SUPREME COURT REPORTS . [1985] 3 s.c.il
A administration ofBhilai Steel Plant and the employees working in
the CliniC were· absorbed as employees of the Bhilai Steel Plant
efteC'tive frop1February 4, 1976.

Smt. Usha Rani Datta and 11 others who were serving as
A,ay.af.Attend~i:its etc. (presumably Class IV employees) moved an
B application before the Labour Court for a relief that they are being
wrongly treated as fresh employees from the date of absorption and
t,hat, ~heir .~ervices since the commencement of employment some-
where i'n 1964 be treated as continuous for the purpose of gratuity,
retrenchment and leave etc. The application was moved in the
Labour Court, Durg but it came to be transferred to Labour Court
c at Raipur. ·

The management of the Bhilai Steel Plant contested the ,
application contending that the Clinic was an independent unit set
up by the Government of India and that it was not an integral part
of the administration of Bhilai Steel Plant and therefore the services
D
rendered prior to the absorption on February 4, 1976 could not be
treated as service under the Bhilai Steel Plant and therefore the
application deserves to be dismissed.

The learned Presiding Officer of the Labour Court after hear-
E ing both sides and taking into consideration the evidence produced
before it held that the Clinic had hardly any independent existence
and that the employees of the Clinic were in reality and for all
praCtical purposes the employees of the Steel Plant. Acc.ordingly
the application was allowed and the n,ecessary relief was given.

Two revision petitions came to be filed before the Industrial
F
Court at Madhya Pradesh set up unde.r the Madhya Pradesh Indus-
tri~l Relatious A~t. One Revision Petition being No. 10/MPIR/81
was filed by the 'Executive Director, Bhilai Steel Plant question-
ing the correctness of the decision of the Labour Court. Original
applicants before the Labour Court ~mt. Usha Rani Datta and
others filed a Revision Petition being No. 2/MPIR/81 praying for
G
relief not granted by the Labour Court.

Both the revision petitions were disposed of by a learned
Member of the Industrial Court by a common jndgment.

H Taking up the revision petition of the managemf:nt i\ was hetd
tlsliA RANI v. INDUSTRiAi. COURT (Desai, J.) io53
ramily planning centres were run by different public undertaking' A
and it was started as part of the general policy of the Government
of India and even _though the entire expenditure of the Centre was
reimbursed by the Government of India, the clinic of the centre
could not be said to be an industry withiil the meaning of the ex-
pression in the Act nor could' it be said to be iilcidental to the B
main business of the Bhilai Steel Plant. The learned Member
further held that the prayer in the application before the Labour
Court was that the petitioners before the Labour Court who w~re
formerly employed in the Family Planning Clinic· should be give~
additional and better wages and service conditions and this subject
was beyond the competence of the. Labour Couft, and for these c
"-( reasons the application was not maintainable. Accordingly the
""revision petition filed by the management was allowed anc:! the
·revision petition of the original petitioners was dismissed with
a further direction that the application before the Labour Court was
liable to be dismissed.
D
After an unsuccessful writ petition No. I 124/82 in the High
Court of Madhya Pradesh at Jabalpur, theoriginal applicants hav~
filed this appeal by special leave. ·

The findings of facts as recorded by the Labour Court and E
which have neither been departed from nor questioned by the High
Court clearly point to the inescapable conclusion that the Clinic
hao;I no independent existence of its own and that for all practical
purposes it was under the administrative control of the Bhilai _Steel
P.1.ant. Let us recapitulate those findings of facts. The Clinic was
set up at Bhilai somewhere in 1964. according to the approved• F
pattern set out in the letter of the Ministry of Health dated May
16, 1963. This letter was annexed as Annexure R-1 to the writ
petition, in the High Court. Bhilai Steel Plant is an wholly owned
Government of India undertaking.' It received grant to J]leet the
ent_i<e expenditure of the Clinic. After the independent existe~ce_
on paper from 1964 to 1976, the pretence was removed _and ,tp_e G
reality accepted in that all the employees of the Clinic were 1)-bs_or-
be~ as employees of the Bhilai Steel Plant. This .becomes clear
from the letter of the Senior Personnel Manager, Bhilai Steel Plant
dated February 4, 1976. It provides that the .General Manager has
approved absorption of Family Planning staff as reg1,1lar employees
of the Bhilai Steel Plant under Chief Medical Officer with imme-
..
' SUI'R.BME COURT REPORTS [1985) 3 s.c.R.
I
diate'effect, against posts and scales set out in the Jetter. It was
A
, further stated: that the' po'sts, designations and scales are personal
to the existing incumbents ·and on finalisation of standard manning
&'designations, the absorbed personnel would be suitably adjusted,
to'tbe.e'xtent feasible. Therefore till the absorption, the pretence
was ihafihe' Clinic even though it wholly under the administrative
B confroi 'of the Chief Medical Officer, Bhilai Steel Plant who was
none'other' than a full-time employee of the Bhilai Stee't Plant, was
treated independent. Absorption erased th~ pretence. These facts
are not in dispute and were not controverted befor~ us.

c
-
'' Member of the Industrial Court with whom High
. The learned
Court appears to have agreed, was of the opinion that when the
'

;-~
Clinic bad its separate existence it was not covered in the expres- .
sion 'industry' and that even though Bbilai Steel Plant is an. in-
dustry, the Clinic could not be styled as industry. In our opinion
tJ this distinction drawn is entirely meaningless. lf Bhilai Steel Plant
is an industry and if under the decision of this Court in Bangalore
D Water Supply & Sewerage Board etc. v R. Rajappa & others (1) an
hospital is an industry, this distinction drawn between two branches
· of administration of Bhilai Steel Plant attaches importance to a
shadow without substanci and substance without significance. ,The
Clinic had no ind·ependent existence. In fact it was an euphimism
fo'call it an independent undertaking. It was part and parcel of
E Bhiiai Steel Plant administrative set-up. May be for purpose of
.i~cohriting 100% grant received from the Government of India was
kept in a separate account but that does not clothe the Clinic'··with
. any independent existence. It was nowhere suggested that the
e'mployees of the Clinic were employees of the Government of India.
Tliis aspect did agitate the mind of the High Court when it obser- ·
F
~ed'that : 'it is a moot question whether the employees in the Clinic
were emplbyees of the Government of India or of the Plant.' The
uO'disputed fact is that the Clinic was managed by Chief Medical
offi'cef' of Bhilai Steel Plant with a designation of Administrative
Officer of the Clinic and .was accountable for the money received
G frcim'the'Government of India as grant to the Undertaking called
Bhilai Steel Plant and if it was never contended that the emplo-
yees' of the Clinic were the employees of the Government of India,
indisputably the Labour Court was perfectly justified in·holding that
the 'employees of the Clinic were the employees of the Bhilai Steel ·
~' ':h·' :0<
lJ
H ti) (1978) 3 SCR, 29'1.

•
tlsitA RM-ii v. INDUSTRIAL COURT (Desai, J.) toss'
· Plant working in a department called Clinic under the administra- A
tive control of Chief Medical Officer who was under the overall
administrative control. of the management of Bhilai Steel Plant ln
our opinion, therefore the Labour Co.urt was perfectly justified in
holding that since the inception of the Clinic the 'employees were
the employees of the Bhilai Steel Plant and that the absorption was
an acceptance of reality avoiding the pretence.
B
The learned Member of the Industrial. Court was in error in
concluding that whether the application as made. was not maintain~
able. The reasons which appealed to the Labour Court for hold-
ing that the application was maintainable are indisputably unques-
tionable and the view to the contrary does not commend to. us.
c
Lastly. we may refer to one observation of the High Court
which may create confusion in futUre and therefore requires to be
properly understood. Says the High Court that the Clinic. was
not a canteen or a hospital run for the welfare of the employees in
the main industry.and it was not opened as an operation inciden- D
ta\to the main industry. The High Court 'concluded th>tt for this
reason the employees working in the Clinic, could not be taken to
be the employees employed in the Iron and Steel Industry carried
on by the Plant. Unfortunately the High Court overlooked E
that family planning scheme has to be implemented in larger
national interest. Public Sector undertakings owned : by the
Government of India may be directe.d to carry · out tbis
scheme. Probably imbued with this idea, the Clinic was
set up under the administrative control of the Chief Medical
Officer of the Plant If a hospital can be said to be run for the F
welfare of the· employees of the plant as observed by the High
Court one fails to understand, how a clinic which could also be
described as a hospital for giving advice in family plam1ing could be·
differentiated from a hospital. A modern hospital can as well have
a family planning clinic. The distinction drawn by the High .court
lacks logic. Therefore also one can safely conclude that the G
clinic was an integral department of the Plant and had hardly any
independent existence. The independent paper existence was found .
unworkable in the long run and therefore the h.blic Enterprises
Committee directed public enterprise to a.bsorb the employees of
the Clinic in the establishment of the Plant. · Accordingly no other
view is possible than the one taken by the Labour Court,
H
1056 SUPRllMll coti!l'i' REPORTS [19ssj 3 s.c.a.
A Acc9rdingly this appeal is allowed and the decision of the
learned Member of the Industrial Tribunal as well as the judgment
of the High Court are set aside and the one given by the Labour
Court is restored with costs throughout. The total costs is quanti·
tied at Rs. 5,000 ·

B

A.P.J. Appeal allowed.

/