M.N. Chandurkar, J.
1. Both these petitions raise a common question as to whether the Octroi Department of Municipal Council is an "industry" as defined in section 2 (j) of the Industrial Disputes Act 1947, (hereinafter referred to as "the Act").
2. In the first petition i. e. Special Civil Application No. 1028/74, the dispute with regard to the demand for reinstatement of the petitioner was referred to the Industrial Tribunal, Bombay, by the Government of Maharashtra under section 10 (1) (d) of the Act for adjudication. Apart from the petitioner, the dispute relates to the reinstatement of 7 other workmen with whom we are not concerned. With regard to the petitioner who was working in the Octroi Department the Industrial Tribunal has held in paragraph 8 of the order that in view of the decision of this Court in Abdul Sabir Khan & others v. Municipal Council, Bhandara 1969 Mh. L. J. page 532, wherein Octroi Department has been held not to be an "industry", the reference would not be tenable. This position is challenged by the petitioner in this petition (Spl. C. A. No. 1028 of 1974).
3. The second petition (Spl. C. A. 1095/74) is filed on behalf of the Municipal Council, Pandharpur, challenging the order made by the Labour Court, Sholapur, in a proceeding under section 33C (2) of the Act, in which 52 employees of the Municipal Council had claimed certain monies which according to them were payable under an award. One of the defences put forth by the petitioner was that the respondents-employees were employed in the Octroi Department and the Octroi Department not being an "industry" the applications under section 33 C (2) of the Act were not maintainable. The Labour Court found that the respondents-applicants, though were employed in the Octroi Department, they were later on transferred to another Department in the Municipal Council and their applications could therefore be entertained. The Labour Court held that the respondents-applicants were entitled to the amount claimed by them. This order of the Labour Court is challenged in this petition (Spl. C. A. 1095/74) by the Pandharpur Municipal Council.
4. Since a common question as to whether the Octroi Department of a Municipality is an "industry" was involved in both these cases, both these petitions have been heard together. Common arguments were advanced both on behalf of the employees and on behalf of the Municipal Council. Mr. Sankaranarayanan, the learned counsel appearing on behalf of the workman in Special Civil Application No. 1028 of 1974, has contended that in view of the recent decision of the Supreme Court in Bangalore Water Supply v. A. Rajappa : A I R 1978 SC 548, [LQ/SC/1978/73] wherein the entire case law has been now reviewed afresh with regard to the definition of "industry", the Industrial Tribunal was not justified in holding that the Octroi Department is not an "industry". It was contended that an infirmity was created in the order of the Industrial Tribunal and according to the learned counsel the Supreme Court in Bangalore Water Supplys case having expressly approved the tests laid down by the Supreme Court in the Corporation of the City of Nagpur v. Its employees : A I R 1960 S C 675, even Octroi Department of Municipal Council or Corporation would be covered by the definition of "industry" in the. Act. We have heard the counsel appearing in these petitions and we must mention the fact that the counsels on behalf of the Municipal Councils in both the petitions have substantially relied on the earlier decision of this Court in Mehkar Municipal Council, Mehkar v. Municipal Octroi Employees Union 1975 Mh. L. J. 313. To that decision one of us (Chandurkar, J.) was a party. It was held in that decision that having regard to the latest decisions of the Supreme Court in Madras Gymkhana Clubs case and the Safdar Jung Hospitals case, the tests which were originally laid down by the Supreme Court in the Nagpur Corporations case could not be applied for deciding whether the Octroi Department of Municipality falls within the definition of "industry" or not. It is also held in the Mehkar Municipal Councils case that the power to tax is essentially a legislative power and taxation is a legislative function and was therefore a regal function. 5, The learned counsel appearing on behalf of the employees in these two petitions before us have now contended, and in our view with justification, that the decision in the Mehkar Municipal Councils case could not be said to be good law in view of the decision of the Supreme Court in Bangalore Water Supplys case which has approved the earlier view expressed in the decision of the Supreme Court in Nagpur Corporations case. It is not necessary to refer in detail to the several points discussed in the Supreme Court decision in Bangalore Water Supplys case. It is sufficient for us to point out that the Nagpur Corporations case has been discussed in detail by the Supreme Court in Bangalore Water Supplys case and the tests which were laid down in Nagpur Corporation case and which were originally formulated in the decision in the Federated State School Teachers Association of Australia v. State of Victoria 41 C L R 569 (Aust.), have been expressly approved in paragraph 76 of the Judgment in Bangalore Water Supply case. What is further important for our present purpose is that the Supreme Court in the Bangalore Water Supplys case has expressly approved the statement of law made in the decision of the Supreme Court in the Nagpur Corporations case in which it has been held that the employees in the Tax Department of the Municipal Corporation were also entitled to the benefits under the Act. The relevant observations of the Supreme Court in Bangalore Water Supplys case are in paragraphs 87 and 88, which are as follows :
Two seminal guidelines of great moment flow from this decision: 1, the primary and predominant activity test; and 2, the integrated activity test The concrete application of these two-fold tests is illustrated in the very case. We may set out in the concise words of Subba Rao J., the sum-up (at p. 684 of A I R):
The result of the discussion may be summarized thus:(1) The definition of "industry" in the Act is very comprehensive. It is in two parts: one part defines it from the standpoint of the employer and the other from the standpoint of the employee. If an activity falls under either part of the definition, it will be an industry within the meaning of the Act, (2) The history of industrial disputes and the legislation recognizes the basic concept that the activity shall be an organized one and not that which pertains to private or personal employment, (3) The regal functions described as primary and inalienable functions of State though statutorily delegated to a corporation are necessarily excluded from the purview of the definition. Such regal functions shall be confined to legislative power, administration of law judicial power. (4) If a service rendered by an individual or private person would be an industry, it would equally be an industry in the hands of a Corporation. (5) if a service rendered by a corporation is an industry, the employees in the departments connected with that service, whether financial, administrative or executive, would be entitled to the benefits of the Act. (6) If a department of a municipality discharged many functions, some pertaining to industry as defined in the Act and other non-industrial activities, the predominant functions of the department shall be the criterion for the purpose of the Act.
6. By these tokens, which find assent from us, the tax department of (he local body is "industry". The reason is this (at pp. 685, 686 of AIR):
The scheme of the Corporation Act is that taxes and fees are collected in order to enable the municipality to discharge its statutory functions. If the functions so discharged are wholly or predominantly covered by the definition of "industry", it would be illogical to exclude the tax department from the definition. While in the case of private individuals or firms services are paid in cash or otherwise, in the case of public institutions, as the services are rendered to the public, the taxes collected from them constitute a fund for performing those services. As most of the services rendered by the municipality come under the definition of "industry", we should hold that the employees of the tax department are also entitled to the benefits under the Act.
7. These observations leave no room for any argument that the Octroi Department of a Corporation cannot be called an "industry" for the purpose of the Act. There can hardly be any dispute that octroi is a tax which is levied by the Corporation in the exercise of its taxing power. Since Octroi is a tax, the decision of the Supreme Court in the Nagpur Corporations case as indicated in the passage extracted above, will also govern the activity of the department of the Municipal Council which deals with levy and recovery of the Octroi tax. In Nagpur Corporations case, the Supreme Court has held that the employees of the tax department are entitled to the benefits of the provisions of the Act for the reasons that the tax collected from the public constituted a fund for performing the services and for discharging its statutory functions, and if the functions so discharged are wholly or predominantly covered by the definition of the "industry", it would be illogical to exclude the tax department from the definition of "industry". Funds raised by the Corporation or a Municipality by way of octroi duty also go into the common fund of the Municipal Corporation or Municipality as the case may be.
8. Mr. S. M. Mhamane, the learned counsel appearing on behalf of Pandharpur Municipal Council, has contended that the Supreme Court has expressly observed in paragraph 74, in the Bangalore Water Supply case that "a blanket exclusion of every one of the host of employees engaged by government in departments falling under general rubrics like, justice, defence, taxation, legislature, may not necessarily be thrown out of the umbrella of the Act," and therefore, according to the learned counsel, the Supreme Court has itself given an indication that the activity of taxation cannot be included within the definition of "industry". It is further contended that taxation itself is a regal function and if it constitutes an essentially governmental function that activity cannot be included in the definition of "industry". The observations made in paragraph 74 of the judgment will have to be harmoniously read with the observations which we have extracted earlier. The effect of the observations relied upon by Mr. Mhamane is not that the Supreme Court has taken the view that the activity of taxation should be excluded. On the other hand it appears that what the Supreme Court wanted to point out by these observations was that the activity of taxation need not necessarily be excluded from the definition of "industry". In any case having regard to the fact that the Supreme Court has now expressly approved its earlier decision in Nagpur Corporations case, us do not think that it is now open to debate as to whether an Octroi Department of a Municipality of Municipal Corporation falls in the definition of "industry" or not.
9. The decision in the Mehkar Municipal Councils case was rendered on the footing that while laying down the test for determining whether an activity is an "industry" Supreme Court had in its later decision departed from the earlier view in the Nagpur Corporation case and Hospital Mazdoor Sabha case. Since the law originally declared by these two decisions has not been declared to be the correct law, the very basis of the decision of this Court in the Mehkar Municipal Council case does not now exist. The counsel for the Municipal Councils cannot therefore now rely on the decision in Mehkar Municipal Councils case. Consequently the Special Civil Application No. 1028/74, will have to be allowed and the decision of the Industrial Tribunal holding that it has no jurisdiction to entertain the dispute in respect of the demand of reinstatement of the petitioner is quashed.
10. At this stage, it is necessary for us to point out that it was the contention of Mr. Shastri, appearing on behalf of the Municipal Council, Nandurbar, that the petitioner had earlier filed a petition under articles 226 and 227 of the Constitution of India, challenging the decision of the Municipal Council terminating his employment and that petition was dismissed in limine. Therefore, according to the learned counsel for the Municipal Council, Nandurbar, the petitioner is not entitled to re-agitate the question about the legality of the action of termination of his employment by the Municipal Council. Now the scope of the petition before us is extremely limited. We are not called upon in this petition to decide whether the petitioner is entitled to re agitate the legality of the order of his termination. The petition does not seek an order of reinstatement. Since we are remanding the matter back to the Labour Court, it will be open to the Municipal Council to raise such contentions as are legally open to it on the basis of the fact of the earlier rejection of the petition filed by the petitioner.
11. In the view which we have taken Special Civil Application No. 1095/74 is liable to be dismissed though we may note that it was the contention of Mr. Abhyankar appearing on behalf of the employees that the decision of the Labour Court has based its decision on the fact that though the respondents were originally appointed in the Octroi Department, their services were transferred to other departments and they could not, therefore, be considered to be the employees of the Octroi Department. It is not necessary for us to go into that question as the only question raised before us related to whether the Octroi Department was an "industry" or not. Special Civil Application No. 1095/74, is thus rejected. However, there is no order as to costs of this petition.
