Housing society not an industry even if it earns profit: HC

A housing society is not an industry, the Bombay high court has ruled. Justice Suresh Gupte, in a significant order, quashed a labour court's order asking a housing society in Mumbai to reinstate a watchman whose services were terminated. The labour court had held that since the society earned a profit from the additional income that it earned from its members for displaying neon signs, it was an industry. The society said that the services provided by a watchman were personal in nature.

"Merely because the society levied some extra charges from a few of its members for display of neon signs, the society cannot be treated as an industry carrying on the business of hiring out of neon signs or allowing display of advertisements," said Justice Gupte. "The labour court appears to have been swayed by the fact that a few members of the society were carrying on businesses such as a coaching classe and a dispensary and the society was charging advertisement charges for the neon signs put up by the members. The labour court was of the view that since the society was earning income, it could not be termed as a mere housing society," said the judge. The court said that when there are multiiple activities carried out by an establishment, then what is to be considered is its dominant function.

Arihant Siddhi housing society in Borivli had terminated the services of its watctman when he turned 60 in 2000. The society claimed that it was a mutual agreement and he was paid ex gratia and other benefits, but the watchman disputed this. He challenged his termination and claimed that he was a permanent employee of the society and could not have been fired. He sought reinstatement and retrenchment compensation.

The labour court referred to the profits made by the society and held that it was an industry, bringing it under the purview of the Industrial Disputes Act. The court ordered the watchman's reinstatement as well as directed the society to pay back wages. The society contended that the services rendered by the watchman were personal in nature and he was not a workman as per the labour laws.