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Supreme Court of India
The State Of Madhya Pradesh vs Somdutt Sharma on 29 September, 2021Author: Ajay Rastogi

Bench: Ajay Rastogi, Abhay S. Oka

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NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6093 OF 2021
(Arising out of SLP (Civil) No. 4637 of 2021)

THE STATE OF MADHYA PRADESH & ORS. ..… APPELLANTS

v.

SOMDUTT SHARMA ….. RESPONDENT

J U D G M E N T

ABHAY S. OKA, J.

1. Leave granted.

2. The first appellant – State of Madhya Pradesh and three others

have taken an exception to the Judgment and Order dated 11 th

December 2019 passed by a Division Bench of High Court of Madhya

Pradesh in a writ appeal preferred by the present appellants. The writ

appeal was directed against the Judgment and Order dated 25 th June

2018 passed by the learned Single Judge on a Writ Petition filed by the

present appellants. In the Writ Petition, the challenge was to the award

made by the Labour Court at Gwalior by which appellants were directed

to reinstate the respondent in Rajghat Canal Project of the Irrigation
Signature Not Verified

Digitally signed by
NEETU KHAJURIA
Date: 2021.09.29
18:11:48 IST

Department of the first appellant. However, the Labour Court declined
Reason:
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to grant back wages. The said Order has been confirmed in the Writ

Petition filed by the present appellants and by the impugned Judgment

and Order dated 11th December 2019, the Division Bench confirmed

the decision of the learned Single Judge in the Writ Petition.

FACTUAL CONTROVERSY

3. The respondent was initially appointed as a daily wage employee

on the post of Helper in the Irrigation Department of the first appellant.

His employment was terminated on 1st December 1995. On the

directions of the Hon’ble the Chief Minister, the respondent was taken

back in service on 11th August 2004. But his employment was again

terminated by an Order dated 2 nd July 2005. A dispute was raised by

the respondent which was referred by the appropriate Government to

the decision of the Labour Court. The Labour Court held that Chapter

VB of the Industrial Disputes Act, 1947 (for short “ID Act”) was

applicable. It was held that as compliance with section 25N of the ID

Act was not made by the appellants, the respondent entitled to

reinstatement.

SUBMISSIONS OF THE LEARNED COUNSEL

4. Mr. Mukul Singh, the learned Deputy Advocate General of the

State of Madhya Pradesh has taken us through the impugned
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Judgments and Orders. He submitted that Irrigation Department of the

first appellant is not an Industrial Establishment within the meaning of

Section 25L of the ID Act. He submitted that as the Irrigation

Department of the first appellant is not an Industrial Establishment,

Chapter VB will have no application. He urged that though the Irrigation

Department may be having more than hundred workers, it is not a

factory within the meaning of clause (m) of section 2 of the Factories

Act, 1948 (for short the “Factories Act”) as it is not carrying on

manufacturing process. He, therefore, submitted that as section 25N of

the ID Act is a part of Chapter VB, it will not be applicable at all. He

submitted that compliance with section 25F of the ID Act was made by

the appellants as can be seen from Annexure P-1.

5. Mr. Prashant Shukla, the learned counsel appearing for the

respondent firstly submitted that compliance with Section 25F of the ID

Act had not been made. He submitted that the Irrigation Department of

the first appellant is also involved in the activity of pumping of water

and sewage. Hence, it is carrying on manufacturing process as defined

under clause (k) of section 2 of the ID Act. He submitted that the

Irrigation Department of the first appellant being an Industrial

Establishment was under an obligation to comply with section 25N of

the ID Act of obtaining permission from the appropriate Government.
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He submitted that three Courts have concurrently held that there is a

failure to comply with Section 25 N on the part of the appellants. He

relied upon a decision of this Court in the case of State of

Maharashtra and Anr. v. Sarva Shramik Sangh, Sangli and Ors. 1

He would submit that no interference is called for.

CONSIDERATION OF SUBMISSIONS AND CONCLUSIONS

6. We have given careful consideration to the submissions. The first

question to be decided is whether provisions of Chapter VB will apply to

the facts of the case. Chapter VB incorporates special provisions

relating to lay off, retrenchment and closure in certain establishment.

Section 25K lays down that the provisions of Chapter VB shall apply to

industrial establishments in which not less than hundred workmen were

employed on an average per working day for the preceding twelve

months. In the present case, there is no dispute that the Irrigation

Department satisfied the test of having not less than hundred workmen

employed on an average. However, the question is whether the

Irrigation Department is an Industrial Establishment as defined in

Section 25L which reads thus: –

“25L. Definitions.- For the purposes of this Chapter,-
(a) “industrial establishment” means—

1 (2013)16 SCC 16
5

(i) a factory as defined in clause (m) of
section 2 of the Factories Act, 1948 (63 of
1948);
(ii) a mine as defined in clause (i) of sub-
section (1) of section 2 of the Mines Act,
1952 (35 of 1952); or
(iii) a plantation as defined in clause (f) of
section 2 of the Plantations Labour Act, 1951
(69 of 1951).”
(emphasis added)
7. It is the case of the respondent that the Irrigation Department of

the first appellant is an Industrial Establishment as it is a Factory as

defined in clause (m) of section 2 of the Factories Act.

8. It is, therefore, necessary to consider the definition of Factory

under clause (m) of section 2 of the Factories Act, which reads thus:-

“(m) “factory” means any premises including the
precincts thereof –
(i) whereon ten or more workers are working,
or were working on any day of the preceding
twelve months, and in any part of which a
manufacturing process is being carried on
with the aid of power, or is ordinarily so
carried on, or
(ii) whereon twenty or more workers are
working, or were working on any day of
the preceding twelve months, and in any
part of which a manufacturing process is
being carried on without the aid of power,
or is ordinarily so carried on,-
(emphasis added)
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An establishment cannot be termed as a factory unless it is carrying on

manufacturing process. The manufacturing process is defined under

clause (k) of section 2 of the Factories Act, which reads thus:-

“(k) “manufacturing process” means any process for—
(i) making, altering, repairing, ornamenting,
finishing, packing, oiling, washing, cleaning,
breaking up, demolishing, or otherwise treating
or adapting any article or substance with a view
to its use, sale, transport, delivery or disposal;
or
(ii) pumping oil, water, sewage or any other
substance; or
(iii) generating, transforming or transmitting power;
or
(iv) composing types for printing, printing by letter
press, lithography, photogravure or other
similar process or book binding;
(v) constructing, reconstructing, repairing, refitting,
finishing or breaking up ships or vessels;
(vi) preserving or storing any article in cold
storage.”
(emphasis added)

9. We have carefully perused the findings recorded by the Labour

Court as well as the High Court. In paragraph 9 of the Judgment, the

Labour Court held that as hundreds of employees are posted in

Irrigation Department, provisions of Chapter VB will apply. However, the

crucial question whether the Irrigation Department of the first appellant

is a factory within the meaning of clause (k) of section 2 of the

Factories Act, is not considered at all. Even the learned Single Judge
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of the High Court has not adverted to this aspect. The Division Bench

in paragraph 8 of its judgment observed that Irrigation Department is

responsible for creation and maintenance of irrigation potential through

construction of Water Resources Department. It is also mentioned that

it also looks after the calamity management work. It is stated that as the

Irrigation Department is pumping water and sewage, it will be governed

by sub-clause (ii) of clause (k) of section 2 of the Factories Act.

10. The respondent has only relied upon sub-clause (ii) of clause (k)

of section 2. The Irrigation Department, as noted in paragraph 8 of the

impugned judgment and order, looks after creation and maintenance of

irrigation potential through construction of water resources projects.

The Irrigation Department also deals with disaster management,

calamity management, maintenance of flood control works, reservoir

operations etc. None of these functions will attract the definition of

Industrial Establishment. Even assuming that some of the employees

may be doing the work of pumping of water, that is not sufficient to hold

that Irrigation Department of the first appellant is carrying on

manufacturing process. Overall activities and functions of the Irrigation

Department will have to be considered while deciding the question

whether it is carrying on manufacturing activities. Few employees of

the Irrigation Department out of several may be incidentally operating
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pumps. But the test is what are the predominant functions and

activities of the said Department. Even if the activity of operation of

pumps is carried on by few employees, the Irrigation department does

not carry on manufacturing process. As it is not carrying on

manufacturing process, it is not a factory within the meaning of clause

(m) of section 2 of the Factories Act. Therefore, the Irrigation

Department of the first appellant will not be an Industrial Establishment

within the meaning of Section 25L. Accordingly, Chapter VB will have

no application in the present case.

11. The learned counsel relied upon a decision of the Apex Court in

the case of Sarva Shramik Sangh, Sangli (supra). In the facts of the

said case, the employees were involved in activity of pumping of water

and therefore, the said decision is of no help to the respondent. As

regards compliance with clause (F) of section 25 of the ID Act,

Annexure P-1 is a copy of the notice dated 28 th January 2012 issued by

the Executive Engineer of Sindh Project Pucca Dam Division. It is a

notice under section 25F of the ID Act addressed to the respondent. It

is stated therein that in compliance with section 25F, a sum of Rs.

36,361/- was being transferred to his bank account mentioned in the

notice. This fact is specifically pleaded in ground 5F of this petition.
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There is no counter filed by the respondent denying the fact of payment

of compensation in accordance with Section 25F.

12. The Labour Court as well the learned Single Judge and the

learned Division Bench of the High Court have not adverted to the

question whether the Irrigation Department of the first appellant is an

Industrial Establishment within the meaning of Section 25L. There is no

finding recorded that the Irrigation Department of the first appellant is

doing manufacturing activity as provided in sub-clause (k) of Section 2

of the Factories Act.

13. Accordingly, this appeal must succeed. We, accordingly, set aside

the impugned judgments and orders and hold that the termination of

the employment of the respondent was legal and valid.

14. The appeal is accordingly allowed in the above terms. There will

be no order as to costs.

…………..…………………J
(AJAY RASTOGI)

…………..…………………J
(ABHAY S. OKA)
New Delhi;
September 29, 2021.

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