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AIR 1960 SC 1213 : (1960) 1 LLJ 497
In the Supreme Court of India
(BEFORE P.B. GAJENDRAGADKAR, K. SUBBA RAO AND K.C. DAS GUPTA, JJ.)
MANAGEMENT OF PRATAP PRESS, NEW DELHI (IN BOTH THE
APPEALS) … Appellant;
Versus
1. SECRETARY, DELHI PRESS WORKERS' UNION DELHI (IN CA NO.
282 OF 1958) AND
2. WORKMEN (IN CA NO. 189 OF 1959) … Respondents.
Civil Appeals Nos. 482 of 1958 and 189 of 1959* , decided on February 23, 1960
Advocates who appeared in this case :
M.C. Setalvad, Attorney-General for India (Naunit Lal, Advocate, with him), for the
Appellant (In both the Appeals);
Ajit Das Gupta, President of the Delhi Press Workers' Union, for the Respondents (In
both the Appeals).
The Judgment of the Court was delivered by
K.C. DAS GUPTA, J.— When an entrepreneur — whether an individual proprietor or a
partnership firm, or an incorporated Company — is engaged in several activities each
of which comes within the definition of “industry” in the Industrial Disputes Act, the
question often arises whether these several activities together form one industrial unit
or are distinct separate industrial units. It seldom happens that the several ventures
can show in every year equally successful results and so when a dispute arises
between such an owner and the workmen engaged in one of the ventures over bonus,
not only the quantum of the bonus which may be reasonably payable to workmen, but
the very question whether any sum will be payable at all or not, may well depend, on
whether the overall results, or the results of the particular venture where the workmen
with whom the dispute has arisen are employed are taken into consideration. A proper
decision of such a dispute therefore requires in the first place a determination of the
question whether the several ventures in which the employer of these workmen are
engaged form one industrial unit with the particular venture in which these workmen
are employed. That precisely is the question which has arisen in these two appeals
between the management of the Pratap Press and its workmen. This Press was started
by its proprietor Shri Narendra in 1951. He started the publication of the paper Vir
Arjun in April 1954. He was also one of the partners of the firm which owned another
paper the Daily Pratap. A dispute over a claim of bonus raised by the workmen of the
Press having been referred to the Industrial Tribunal, the workmen contended in the
first place that the three activities — the Press, the Vir Arjun as also the Daily Pratap
— were in reality the industrial ventures of one family consisting of Shri Narendra and
his sons and the working results — whether profit or loss of these three concerns
should be pooled together for the decision of the question what bonus, if any, should
be paid. Their alternative contention was that the results of the Press only should be
considered. The employer contended that the workmen's contention that the three
concerns should be treated as one could not be accepted inasmuch as the ownership
of the Daily Pratap was a partnership firm of which he was only one of the partners
while the other two viz. the Press and the Vir Arjun, were owned by him. His case was
that these two, the Press and the Vir Arjun, were parts of one single industry and the
total results of these two have to be considered in deciding whether bonus should be
allowed or not. The Industrial Tribunal accepted the employer's contention that the
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results of the Daily Pratap could not be taken into consideration for the simple reason
that the ownership of the Daily Pratap was different from the ownership of the Pratap
Press and the Vir Arjun paper. On the next question whether the Pratap Press and the
Vir Arjun form one industrial unit or two distinct industrial units its decision was
however against the employer's contention. On a consideration of the materials before
it it held that the Vir Arjun was a distinct and separate industrial entity from the
Pratap Press and so the results of the Vir Arjun could not be taken into consideration in
deciding the question of bonus. It may be mentioned here that the question is of
considerable importance in the facts of these appeals as admittedly if the working
results of Vir Arjun are taken into consideration the position would be that Vir Arjun
having incurred losses in each of these years these would wipe out the profits made by
the Pratap Press in those years and no surplus profits would remain for distribution as
bonus.
2. The question whether the two activities in which the single owner is engaged are
one industrial unit or two distinct industrial units is not always easy of solution. No
hard and fast rule can be laid down for the decision of the question and each case has
to be decided on its own peculiar facts. In some cases the two activities each of which
by itself comes within the definition of industry are so closely linked together that no
reasonable man would consider them as independent industries. There may be other
cases where the connection between the two activities is not by itself sufficient to
justify an answer one way or the other, but the employer's own conduct in mixing up
or not mixing up the capital, staff and management may often provide a certain
answer.
3. An instance in the first class of cases is furnished by the case of Hindi Prachar
Press Case1 where the question was whether the workmen of the Press were entitled to
a bonus. The Tribunal found that the press was only a department or a section of the
activities of an organization or an institution known as Dakshina Bharat Hindi Prachar
Sabha. The main object of that institution was the propagation of knowledge of Hindi
in South India. For that purpose there were several sections like library section,
publicity section, book sales section, training centres for teachers who are paid
stipends and are given free lodging etc. It was held that the various connected
activities of the institution were carried on through various departments which are
inter-dependent on one another and the income and expenditure of the institution as a
whole must be taken into consideration for the purpose of ascertaining the available
surplus to meet the demand for bonus made by workmen employed in one of such
departments. G.G. Industries Mazdoor Union v. G.G. Tin Factory, Agra2 on the other
hand is a case where a decision was based on the employer's conduct. The employer
was the sole proprietor of the G.G. Tin Factory. He was also the sole proprietor of the
G.G. Chocolate Factory, the G.G. Toy Factory, the G.G. Fruit Factory and the Krishna
Ice Factory. The dispute before the Tribunal was as regards the increments in the
wages of the workmen employed in the G.G. Tin factory and bonus claimed by the
workmen of the said factory for the year 1949. If all the factories of which he was the
sole proprietor, were to be regarded as units of the one and the same industry, the
overall picture was a net loss of about Rs 1,25,000. The Labour Appellate Tribunal
however found that for each factory separate accounts were kept and separate balance
-sheets prepared. The capital invested by the proprietor in respect of each of those
factories had been kept distinct. In deciding that the G.G. Tin Factory should be
considered a separate and distinct industrial unit the Tribunal observed: “The
proprietor himself is treating each Factory as a distinct undertaking and the several
factories as independent of each other.”
4. In Pipe Mill Mazdoor Union, Lucknow v. Indian Hume Pipe Co. Ltd.3 the question
arose whether the industry carried on by the Lucknow Branch of the Company was a
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separate entity from the several other branches. The company had supplied some
written information with regard to the Lucknow branch at the request of the regional
Conciliation Board. This information showed that the accounts of the Lucknow branch
were kept separately, that the amount of capital employed in the factory at Lucknow
was also separately shown in 1947-48 and again in 1948-49. The Appellate Tribunal
observed: “This paper, therefore, in our opinion, establishes the fact that the company
kept accounts of the Lucknow branch both as regards capital and profit and loss
separately as if it was an independent unit”. The Tribunal decided to consider on that
basis whether any bonus could be awarded to the workmen of the Lucknow branch.
5. In Associated Cement Co. v. Workmen4 this Court had to consider the question
whether the employer's defence to a claim for lay-off compensation by the workers of
the Chaibasa Cement Works that the laying off was due to a strike in another part of
the establishment viz. limestone quarry at Rajanka was good. In other words the
question was whether the limestone quarry of Rajanka formed part of the
establishment known as the Chaibasa Cement Works within the meaning of Section 25
-E(iii) of the Industrial Disputes Act. While pointing out that it was impossible to lay
down any one test as an absolute and invariable test for all cases it observed that the
real purpose of these tests would be to find out the true relation between the parts,
branches, units etc. This Court however mentioned certain tests which might be useful
in deciding whether two units form part of the same establishment. Unity of
ownership, unity of management and control, unity of finance and unity of labour,
unity of employment and unity of functional “integrality” were the tests which the
Court applied in that case. It is obvious there is an essential difference between the
question whether the two units form part of one establishment for the purposes of
Section 25-E(iii) and the question whether they form part of one single industry for
the purposes of calculation of the surplus profits for distribution of bonus to workmen
in one of the units. Some assistance can still nevertheless be obtained from the
enumeration of the tests in that case. Of all these tests the most important appears to
us to be that of functional “integrality” and the question of unity of finance and
employment and of labour. Unity of ownership exists ex hypothesie. Where two units
belong to a proprietor there is almost always likelihood also of unity of management.
In all such cases therefore the Court has to consider with care how far there is
“functional integrality” meaning thereby such functional interdependence that one unit
cannot exist conveniently and reasonably without the other and on the further
question whether in matters of finance and employment the employer has actually
kept the two units distinct or integrated.
6. Coming now to the facts of the present appeals we find that the functions of the
Press and the Vir Arjun paper cannot be considered to be so interdependent that one
cannot exist without the other. That many presses exist without any paper being
published by the same owner is common knowledge and is not seriously disputed. Nor
is it disputed that an industry of publishing a paper may well exist without the same
owner running a press for the printing of the paper. The very fact that Daily Pratap
owned by a partnership firm, was being printed at the Pratap Press belonging to Shri
Narendra itself shows this very clearly. It cannot therefore be said that there is such
functional interdependence between the press unit and the paper unit that the two
should reasonably be considered as forming one industrial unit.
7. Along with this it is necessary to consider the conduct of the businessman
himself. Has he mixed up the capital of the two, the profits of the two and the labour
force of the two units? These are matters on which the employer is the best person to
give evidence from the records of his concerns. No evidence has however been
produced to show that at any time before the dispute was raised he treated the capital
employed in the two units as coming from one single capital fund, nor anything to
show that he pooled the profits or that the workmen were treated as belonging to one
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establishment. It is interesting to note that there is no record showing whether for his
own purposes he treated the assets of the two units as forming one composite whole
or the assets of two distinct units has been produced. The profit and loss accounts
which we find on the record appear to have been prepared sometime in 26-12-1951,
— apparently after the reference had been made and the dispute whether these units
were one or two, had arisen. No weight can therefore be attached to the fact that in
this profit and loss account — both the receipts from the press and the receipts from
the Vir Arjun were shown as the income.
8. Some account-books appear to have been produced in Court but it is nobody's
case that these throw any light on the question whether the capital fund or the labour
force for the two units were treated as one and the same. It is reasonable to think that
the account-books were produced only to show the actual working results of the Vir
Arjun. It has to be noticed that the Tribunal thought that the accounts had not been
kept in a satisfactory manner and there was room for suspicion about the correctness
of the same.
9. The position therefore is that the activities of the press unit are independent of
the activities of the paper unit and there is no record from which it can be ascertained
how the employer himself treated these two units. When in this position of things we
find the employer himself making a statement that “there are two institutions, the Vir
Arjun and the press, the account books are kept separately” and that “there are two
cashiers”, the conclusion reached by the Tribunal that the Press and the Vir Arjun
paper are distinct and separate industrial units appears to be reasonable and cannot
be successfully challenged.
10. Once this conclusion is reached the question of what bonus is payable depends
on a proper calculation of the available surplus of the Pratap Press itself without taking
into consideration the loss incurred by the Vir Arjun. No objection has been taken
before us to the calculation made by the Tribunal on that basis. As the only point
raised in this appeal, viz., that the Vir Arjun and the Pratap Press form one industrial
unit fails the appeal is dismissed with costs.
11. The position is the same in the other appeal i.e. Appeal No. 189 of 1959. There
also the only question raised is that the Pratap Press and the Vir Arjun are two parts of
one industrial unit. For the reasons already mentioned in the first appeal we must hold
that these must be held to be distinct industrial units and that the workmen of the
Press are entitled to such bonus as the working results of the Pratap Press justify. This
appeal is also therefore dismissed with costs.
———
* Appeals by Special Leave from the Awards dated 4th January, 1958 15th September, 1958, of the Industrial
Tribunal, Delhi, in ID Nos. 152 of 1957 and 79 of 1958 respectively.
1 1958 LLJ 358
2 1952 (I) LLJ 507
3 1951 LLJ 379
4 AIR 1960 (SC) 56
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