1979 PLP 278 (PLC)

"(3) It shall not apply to any person employed in the Police or any of the Defence Services of Pakistan and any services or installations connected with or incidental to the Armed Forces of Pakistan including an Ordnance factory maintained by the Federal Government or to any person employed in the administration of the State other than those employed as workmen by the Railways, Posts, Telephone Depart ments or to any persons employed as a member for the security‑staff of the Pakistan International Airlines Corporation.

10. The above provision gives us a negative test. It says that it shall not apply to‑ (1) Police Force, (2) Defence Services of Pakistan, (3) Persons employed in the administration of the State. (4) Security Staff of P. I. A.

11. The above provision does not say that it shall not apply to Govern ment servants or civil servants. The only bar given in the provision is, it shall not apply to persons employed in the administration of the State. Who are such persons, has been defined in some reported cases. It has been laid down in these authorities that "administration of State" means the regal functions of a constitutional Government. It is stated that they are primary and unalienable functions and they relate to executive, judicial and legislative functions alone. All other functions which have been adopted by a Government on the strength of legislation, are riot the regal functions and they do not form the subject of administration of State. For instance, Railways, Post Offices, Agriculture, Health, Education, Public Works Depart ment, etc. are not the regal functions of the State, and so they do not fall within the ambit of administration of the State. The crux of the matter is that by enacting subsection (3) of section 1 of Industrial Relations Ordinance the intention of the legislator was that the Ordinance will not be applicable to Police Force, Defence Services and the persons employed in the executive, judicial and legislative Department of the Government. However, it will be applicable to all government servants, whether they fall within the definition of civil servants or not. My view is that all the civil servants except those mentioned above, can form a Trade Union provided of course their Department comes within the definition of industry. Accordingly, the present Union cannot be cancelled on the ground that the employees of Services Hospital are civil servants.

12. The real question, which has been argued at length, in this case is, whether the Services Hospital is an industry or not.

13. Since time immemorial, the law relating to the rights of workmen has remained under a continuous process of changing. These changes have not been brought by the legislators or the judges. These institutions have been vainly trying to abridge their way. I have no intention to criticise the role of any of these institutions, but what I see in the case of the employees of Hospitals is that they are restrained to form a Trade Union on the ground that a Hospital is not an industry. The first case brought to my notice is the State of Bombay and others v. Hospital Mazdoor Sabha (A I R 1060 S C 610). In this case, the employees of group of Hospital had formed a Trade Union and the question arose as to whether a Hospital falls within the definition of industry. It was held in this case that a Hospital is an industry. Various reasons were given for coming to this conclusion. The line of reasoning adopted in this case may be briefly stated here.

14. The definition of industry as given in the Industrial Disputes Act, 1947 and the Industrial Relations Ordinance, 1969, is almost the same. According to section 2(xiv), industry means any business, trade, manufacture, calling, service, employment or occupation. The first question argued in the case of Hospital Mazdoor Sabha was whether the rule of construction noscuntur a sociis applies to the definition of industry. This rule means that when two or more words which are susceptible of analogous meaning are coupled together they are under stood to be used in their cognate sense. They take as it were their colour from each other, that is, the more general is restricted to a sense analogous to a less general. It was held that this rule is not applicable. The observation of their Lordships was:‑

"Noscuatur a sociis is merely a rule of construction and it cannot prevail in cases where it is clear that the wider words have been deliberately used in order to make the scope of the defined word correspondingly wider. It is only where the intention of the Legislature in associating wider words with words of narrower significance is doubtful, or otherwise not clear that the present rule of construction can be usefully applied. It can also be applied where the meaning of the words of wider import is doubtful; but, where the object of the Legislature in using wider words is clear and free of ambiguity, the rule of construction in question cannot be pressed into service."

15. Regarding the essential attributes or features of trade or business as conventionally understood, their observation was:‑ "The conventional meaning attributed to the words "trade and business" has lost some of its validity for the purpose of industrial adjudication. Industrial adjudication has necessarily to be aware of the current of socio‑economic thought around; it must recognise that in the modern welfare State healthy industrial relations are a matter of paramount importance and its essential function is to assist the State by helping a solution of industrial disputes which constitute a distinct and persistent phenomenon of modern industrialised States. In attempting to solve industrial disputes, industrial adjudication does not and should not adopt a doctrinaire approach. It must evolve some working principles and should generally avoid formulating or adopting abstract generalisations. Nevertheless it cannot harp back to old‑age notions about the relations between employer and employee or to the doctrine of laissez faire which then governed the regulation of the said relations. That is why, we think, in constructing the wide words used in section. 2(j) it would be erroneous to attach undue importance to attributes associated with business or trade in the popular mind in days gone by."

16. It may be noted that a contrary opinion was expressed by Mr. Justice Shafi‑ur‑Rehman of Lahore High Court in the case of K. G. Old v. Presiding officer Punjab Labour Court (P L D 1976 Lah. 1097). This opinion was that the use of the expressions business, Trade etc. in the definition of industry is not in its ordinary dictionary meaning, but in its popular conventional meaning. I will come to this authority in the later part.

17. What are attributed and features of trade and business. On this question, I would reproduce the words of their Lordships of Indian Supreme Court from three paras taken out of the Hospital Mazdoor Sabha case:‑‑ (1) Negatively stated the activities of the Government which can be properly described as regal or sovereign activities are outside the scope of section 2 (i). These are functions which a constitutional Government can and must undertake for governance and which no private citizen can undertake." (2) Activities undertaken by the Government in the interests of socio -economic progress of the country as beneficial measures should be exempted from the operation of the Act which in substance is a very important beneficial measure itself." (3) It is difficult to state these possible attributes definitely or exhaustive ly; as working principle it may be stated that an activity systematically or habitually undertaken for the production or distribution of goods or for the rendering of material services to the community at large or a part of such community with the help of employees is an under taking. Such an activity generally involves the co‑operation of the employer and the employees; and its object is the satisfaction of material human needs. It must be organised or arranged in a manner in which trade or business is generally organised or arranged. It must not be casual nor it must be for oneself nor for pleasure. Thus the manner in which the activity in question is organised or arranged, the condition of the co‑operation between employer and the employee necessary for its success and its object to render material service to the community can be regarded as some of the features which are distinctive of activities to which section 2(j) applies."

18. Regarding the profit motive, it was held that it was not necessary. On these basis, a Hospital was held to be an industry.

19. The above view prevailed in the Indian Courts for more than ten years. Then, came the judgment in the case of, The Management, Safdar Jang Hospital v. Kuldip Singh Sethi ((1970)2 L L J 266). The previous view was overruled and it was held that a Hospital is not an industry. The reasoning in the case of Safdar Jang Hospital is briefly stated here:

"If a hospital is run as a business in a commercial way there may be found elements of an industry. In Hospital Mazdoor Sabha case the hospital run by the Government was held to be an industry as the view taken was that the second part of the definition of the term 'industry' contained an extension of the first part by including other items of industry. But the first and second parts of the definition must be read together and not in isolation as if they were different industries but only aspects of the occupation of employers and emplo yees in an industry. There are two counter parts in one industry. The Hospital Mazdoor Sabha case (1960) 1 L L J 251 proceeded on the wrong assumption that an industry need not be an economic acti vity since capital and profit motive were considered unessential. An economic activity can exist without the presence of both. Instead of applying the normal test, new test evolved was `can such activity be carried on by private individuals or group of individuals'. Holding that such a hospital could be run as business proposition and for profit, it was held in (1960) 1 L L J 251 that the hospital run by the Government without profit must bear the same character. The test stated supra is intended to distinguish the administrative functions of Government and local authorities and their functions analogous to business but could not be used in this context. When it was emphasised in that case, i. e. (1960) 1 L L J 251 that the activity must be analgous to business and trade and that it must be productive of goods or their distribution or producing material services to the community at large or a part of it, there was no room for other proposition that privately run hospitals may in certain circumstances be regarded as industries. The Australian case which is relied upon (Federal Municipal and Shire Council Employees of Australia v. Malbourne Corporation (26 C L R 508) only observes that in those activities in which Government takes to industrial ventures, the notion of profit making and the absence of capital in the true sense of the word are irrelevant. It further shows that industrial disputes occur in operations in which employers and employees associate to provide what people want and desire where there is production of material goods or material services. Therefore the view taken in Hospital Mazdoor Sabha's case is an extreme one which cannot be justified."

20. Our Courts have not given a very serious consideration to the question of Hospital. In one case, it was held by the National Industrial Relations Commission, Islamabad that Services Hospital is not an industry. In another case, the Punjab Labour Appellate Tribunal, Lahore held that the United Christian Hospital is not an industry. Both the cases have not been reported. In Marie Adelaide Leprosy Centre Employees' Union v. Registrar of Trade Unions, Sind (1977 P L C 13), it was held by Agha Ali Hyder, J, of the Sind High Court that a Hospital is an industry. In this case, the real question was whether the Registrar can cancel a Union without filing a complaint in the Labour Court. On this point, it was held that the Registrar was not so competent. On the question whether a Hospital is an industry or not, reliance was placed on the case of Hospital Mazdoor Subha that profit motive was unnecessary and so a Hospital, which is of a charitable nature, falls with the definition of industry. The observation of his Lordabip was:‑

"It is true that the activities of the respondent Hospital are of a charitable nature. But the scheme of the Ordinance also is of 'beneficial nature to ameliorate the conditions of the workmen in general. Wherever the Government wants to provide protection and cover, it has done expressly, as in the case of any person, employed in the Police, or in Defence of Services of Pakistan etc."

21. The matter was not viewed in the case of Marie Adelaide Leprosy Hospital from every angle. Specially the attributes and features of business or trade were totally ignored. The real bard work on the question of definition of industry was put by our eminent Judge, Mr. Justice Sharif‑ul-Rehman in K. G. Old v. Presiding Officer, Punjab Labour Court (PL D 1976 Lah. 1097). It was a case of Educational Institution and the matter was viewed from every angle. Both the cases of Hospital Mazdoor Sabha and Safdar Jang Hospital were dismissed and the conclusion arrived at was as under:‑

"The upshot of the entire discussion is that the use of the expressions, "Business, Trade, Manufacture, Calling, Service, Employment or Occupation" the definition of Industrial Relations Ordinance, is not in its ordinary dictionary meaning but in its popular and conventional meaning. 1n the context of industrial and labour laws, these expressions apply to any enterprise which is organised and is systema tic depending substantially, if not entirely, on the co‑operation between labour and capital, and having as its object production, distribution and consumption of wealth, or the production or provision of material services. The enterprise as a whole has to be looked at to find out its ralson d'etre, and any party of it which is incidental, ancillary or an adjunct cannot determine the character of the whole."

22. The scope of the definition of industry has been restricted to a great extent. In the case of a Hospital, the organisation does not substantially depend on the co‑operation between labour and capital. Such an organisa tion has to employee medical experts, who are not concerned with the production, distribution and consumption of wealth or the production and availabi lity of material service. There is no doubt that profit motive and the capital are not the essential features of an industry, but there must be the object of production or provision of material service. Material service in an activity it is to provide the community with the source of some thing, organised as an industry and commercially valuable. This ingredient is lacking in the case of Hospital.

23. The interpretation of the word 'industry' as given in the case of K. G. Old and Safdar Jang Hospital, bars the employees of Hospital to form a Union, because such an organisation is not an industry. Following the view expressed in these cases, I hold that Services Hospital, Lahore, is not an industry.

24. The result is that the petition is accepted and the Registrar is directed to cancel the Union. Petition allowed.