REPORTABLE

2024 INSC 446 IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.6511 OF 2024

(Arising out of SLP(C)No.30005 of 2019)

TAMIL NADU MEDICAL SERVICES

CORPORATION LIMITED … APPELLANT(S)
Versus

TAMIL NADU MEDICAL SERVICES

CORPORATION EMPLOYEES WELFARE
UNION & ANR. …RESPONDENT(S)

WITH
CIVIL APPEAL NO.6512 OF 2024
(Arising out of SLP(C)No.2649 of 2020)

G. SUMATHI & ORS. … APPELLANT(S)

Versus
TAMIL NADU MEDICAL SERVICES
CORPORATION LTD. & ANR. …RESPONDENT(S)

J U D G M E N T

Signature Not Verified

Digitally signed by
Nidhi Ahuja
Date: 2024.05.17
18:32:02 IST
Reason:
SANJAY KAROL, J.

1. Leave to appeal by special leave granted.

1|SLP(C)30005/2019
THE APPEALS

2. The cross appeals, one by the Tamil Nadu Medical

Services Corporation Limited1 and the other by the

Tamil Nadu Medical Services Corporation Employees

Welfare Union2, question the judgment and order dated

9th August, 2019, passed by the High Court of

Judicature at Madras in W.P.Nos.17133 of 2001 and

15241 of 2009 respectively. The position of the

parties is in accordance with SLP(C)No.30005 of 2019.

3. The impugned judgment came to be passed in Writ

Petition No.17133/2001 which was directed against

order dated 31st March, 2001 of the Inspector of

Labour, Circle-III, Chennai3, by which the claim of

53 workmen to be conferred permanent status in the

Corporation was accepted, while the claim of 42 others

was rejected.

4. W.P. No.15241 of 2009 was filed by 22 out of the

said 53 workmen seeking a writ of mandamus to be

granted employment in the Corporation as per the order

of the Inspector of Labour.

1 Hereinafter ‘the Corporation’.

2 Hereinafter ‘the Union’.
3 Hereinafter ‘Inspector of Labour’.
2|SLP(C)30005/2019
QUESTIONS BEFORE THIS COURT

5. The questions that this Court is to consider

are –

(i) Whether the Tamil Nadu Industrial

Establishments (Conferment of Permanent
Status to Workmen) Act, 1981 would apply
to the parties?

(ii) Whether by way of the impugned

judgment, the suggestion to institute an
‘Industrial Disputes Claim’ questioning
non-employment was sustainable, given that
the Inspector of Labour had already passed
orders in that regard?

FACTS IN BRIEF

6. The Corporation was incorporated under the Indian

Companies Act, 1956 on 1st July, 1994. Its management

is under the State of Tamil Nadu. It has employed

various workmen in different capacities, including

the appellants in the appeal arising out of

SLP(C)No.2649 of 2020. Such employees had sought

regularization under the provisions of Tamil Nadu

Industrial Establishments (Conferment of Permanent

3|SLP(C)30005/2019
Status to Workmen) Act, 19814. Such representations

being unsuccessful, two Writ Petitions bearing

Nos.17263 and 17147 of 1998 were preferred before the

learned Single Judge of the High Court.

7. The learned Single Judge5, vide judgment and order

dated 21st July, 2000 passed the following directions:

“19….
1. The Tamil Nadu Industrial Establishments
(Conferment of Permanent Status to Workmen)
Act, 1981 (Tamil Nadu Act 46 of 1981) is
applicable to the second respondent
corporation.

2. The ‘Inspector’ having jurisdiction over the

second respondent is directed to inspect and
verify the records of the second respondent
corporation and pass appropriated orders under
Sec.3 of the said Act with regard to the claim
made by the members of the petitioner Union;

3. The ‘Inspector’ is also directed to consider

the claim made by the petitioner Union
regarding employment on Saturdays to the
members of the petitioner Union;

4. The ‘Inspector’ is further directed to

determine the above referred questions within
three months from the date of a copy of this
order after affording an opportunity of being
heard to both parties; and

5. Till an order is passed by the ‘Inspector’ as

stated above, status quo as on date shall be
maintained by both parties. Writ petitions
are allowed to the extent mentioned above. No
costs. All the miscellaneous petitions are
closed.”

4 Hereinafter ‘the Act’.

5 Annexure P1, pg 61.
4|SLP(C)30005/2019
 8. Pursuant to the above order, the Inspector of

Labour passed order dated 31st March, 20016, wherein

the following issues were framed :

“ISSUES
(a) Whether the act pertaining to conferment of
permanent status of Workmen could be made
applicable to the respondent Establishment

(b) Whether the authorized office under the

aforesaid act being Labour Inspector has got the
authority to try this case?

(c) If, the respondent’s Management is covered by

the Jurisdiction of the aforesaid Act what is the
nature of relief that could be awarded to the
petitioners?”

9. The Inspector of Labour concluded that G. Sumathi

and 52 other workmen were in the service of the

Corporation continuously for 480 days over a period

of 24 months and accordingly they could be granted

permanent status.

10. It is against this order that the judgment and

order impugned before us, eventually came to be

passed. An appeal assailing the order dated 21st July,

2000 and, an independent writ petition was filed

against the order dated 31st March, 2001 of the

Inspector of Labour, and Division Bench vide order

6 Annexure P3, pg.98.

5|SLP(C)30005/2019
dated 10th December 20097 in such proceedings,

confirmed both these orders and the Corporation was

directed to provide employment to the Respondents,

such as those who were before the Court as petitioners

(original writ petitioners) in those proceedings.

Against such confirmation of the order of the

Inspector of Labour, Civil Appeal Nos. 6567 and 6568

of 2012 were preferred.

11. Hence, this Court on 29th March 2010 while issuing

notice, stayed the operation of the impugned judgment.

Subsequently, on 10th March, 2016, while allowing the

appeal, this Court remanded the matter to the High

Court, thus-

“3. It has been submitted that while deciding

the writ petitions and the connected matters,
the High Court did not consider the fact
whether the aforesaid Act is applicable to the
members of the respondent-Union and the said
submission appears to be correct.
4. In the afore-stated circumstances, the
impugned judgment is set aside and the matters
are remanded to the High Court for considering
the same afresh in accordance with law. We are
sure that the High Court will hear the matters
afresh and decide the same in accordance with
law.
5. Interim order dated 29th March, 2010
granted by this Court shall continue till the
High Court modifies the same after hearing the
concerned parties…”

7 page 205 of paper book

6|SLP(C)30005/2019
THE IMPUGNED JUDGMENT

At this juncture, it is worth clarifying that the

dismissal of the Writ Appeal Nos.1430 & 1431 of 2000

was not challenged before this Court and what was

challenged was the dismissal of W.P.No.17133/2001 and

the directions in W.P.No.15241/2009, which took on

Civil Appeal Nos.6567 and 6568 of 2012, wherein the

Court remanded the matter.

12. Pursuant to the above order of remand, The High

Court in its judgment, recorded its agreement with the

judgment of the learned Single Judge, reproduced

supra. It was observed that the learned Single Judge

had extensively examined the constitution of the

management of the Corporation, the nature of

activities conducted by it, et cetera and then

concluded that the Act would apply on the ground that

it was an industrial establishment under Section

2(3)(e) of the Act, and that they (the learned

Division Bench) concur with the same.

13. It was further observed that since no appeal stood

preferred after the writ appeals against the order of

7|SLP(C)30005/2019
the learned Single Judge, were dismissed, the order

of the Inspector of Labour had become final. On

independent analysis with respect to the application

of the act on the Corporation, it was observed as

under:

“50. However on independent analysis of the

facts, we categorically hold that the
provisions of Tamil Nadu Act, 46 of 1981 are
applicable to TNMSC Management, in view of the
fact that, TNMSC Management is an industrial
establishment as defined under section 2(3)(e)
of the Act and that it is an establishment as
defined under section 2 (6) of Tamil Nadu Act,
36 of 1947. By the above reasoning be
conclusively hold that TNMSC Management is an
industrial establishment and is covered under
the provisions of Tamil Nadu Act, 46 of 1981.”

SUBMISSIONS OF THE PARTIES

14. We have heard the learned counsel for the parties

and perused the written submission. On behalf of the

appellant, it has been submitted :-

a) That the order dated 10th March, 2016 of this

Court was not complied with. The specific plea of

the appellant that the Act as also the Tamil Nadu

Shops and Establishments Act, 19478 would not be

applicable to the appellant. However, the same was

not considered by the High Court. The only manner in

8 Hereinafter 1947 Act

8|SLP(C)30005/2019
which the said Act could be applicable was that the

Corporation would fall under the definition of

‘commercial establishment’ under Section 2(3) of the

1947 Act.

b) That the impugned judgment did not analyze

whether any of the activities of the Corporation fell

under Section 2(3) of the 1947 Act. Section 7 of the

Act exempts such of those industrial establishments,

that are engaged in construction activities and since

some of the activities of the Corporation, include

construction, the Corporation would be exempt.

c) That most of the 53 employees who are

appellants in Appeal arising out of SLP(C)No.2649 of

2020, who were directed to be given permanent status

by the Inspector of Labour, have obtained other

profitable employment and the Corporation cannot be

forced to grant permanent status.

15. The respondent-Union has submitted –

(a) That the Corporation is attempting to

distinguish the status of the respondents by applying

9|SLP(C)30005/2019
the ratio of State of Karnataka v. Uma Devi9 after

having exploited them for years together as temporary

employees. Reliance has been placed on Maharashtra

State Road Transport Corporation v. Casteribe Rajya

Parivahan Karmachari Sanghathana10 and particularly,

paragraphs 32 to 36 thereof.

(b) Relying on U.P. Power Corporation Limited &

Anr. v. Bijli Mazdoor Sangh & Ors.11, it is submitted

that the industrial adjudicator, although can vary

terms of employment, but cannot do anything violative

of Article 14 and if the case at hand is covered by

the concept of regularization, the same Rule applies.

(c) Relying on ONGC Limited v. Petroleum Coal

Labour Union & Ors.12 and Ajay Pal Singh v. Haryana

Warehousing Corporation13, it is urged that the powers

of Industrial and Labour Courts were not in

consideration in Uma Devi (supra).

(d) A tabular chart has been provided in respect

of the 12 appellants in the Appeal arising out of

SLP(C)No.2649 of 2020 and it is submitted that since

9
(2006) 4 SCC 1
10 (2009) 8 SCC 556
11 (2007) 5 SCC 755
12 (2015) 6 SCC 494
13 (2015) 6 SCC 321
10|SLP(C)30005/2019
the Inspector of Labour vide its order has declared

the eligibility of the said workmen for grant of

permanent status, there falls no requirement to raise

an industrial dispute questioning the non-employment.

Such of those respondents who have reached the age of

superannuation would be entitled to compensation in

lieu of regularization as recognized in Ranbir Singh

v. S.K. Roy, Chairman, Life Insurance Corporation of

India & Anr.14.

ANALYSIS AND CONSIDERATION

16. The relevant provisions for the adjudication of

the present dispute are reproduced below for ease of

reference :-

2. Definitions. - In this Act, unless the context

otherwise requires,-
x x x x x

(3) "industrial establishment" means-

(a) …….; or
(b) …….; or
(c) ……..; or
(d) ……..; or
(e) an establishment as defined in clause
(6) of section of the Tamil Nadu Shops and
Establishments Act, 1947 (Tamil Nadu Act
XXXVI of 1947); or
(f) ………; or
(g) any other establishment which the
Government may, by notification, declare

14 2022 SCC OnLine SC 521

11|SLP(C)30005/2019
 to be an industrial establishment for the
purpose of this Act.
(4) "workman', means any person employed in any
industrial establishment to do any skilled or
unskilled, manual supervisory, technical or
clerical work for hire or reward, whether the
terms of employment be express or implied [and
includes a badli workman, but does not include
any such person,-
(a) who is employed in the police service or
as an officer or, other employee of a
prison; or
(b) who is employed mainly in a managerial
or administrative capacity; or
(c) who, being employed in a supervisory
capacity, [draws wages exceeding three
thousand and five hundred rupees per
mensem] or exercises either by the nature
of the duties attached to the office or by
reason of the powers vested in him,
functions mainly of a managerial nature.
X x x x
3. Conferment of permanent status to workmen. -
(1) Notwithstanding anything contained in any
law for the time being in force every workman
who is in continuous service for a period of
four hundred and eighty days in a period of
twenty-four calendar months in an industrial
establishment shall be made permanent.
(2) A workman shall be said to be in
continuous service for a period if he is,
for that period, in uninterrupted service,
including service which may be interrupted
on account of sickness or authorised leave
or an accident or a strike, which is not
illegal, or a lock-out [xxx], or a
cessation of work which is not due to any
fault on the part of the workman.

[Explanation [I]. - [For the purposes of

computing the continuous service referred to
in sub-sections (1) and (2), a workman shall
be deemed to be in continuous service during
the days on which] -
(i) he has been laid-off under an agreement
or as permitted by standing orders made
under the Industrial Employment
(Standing Orders) Act, 1946 (Central Act
XX of 1946) or under any other law

12|SLP(C)30005/2019
 applicable to the industrial
establishment;
(ii) he has been on leave with full wages,
earned in the course of this employment;
and
(iv) in the case of a female, she has been
on maternity leave; so however, that the
total period of such maternity leave does
not exceed twelve weeks.
[Explanation II. - For the purpose of
this section, Law' includes any award,
agreement, settlement, instrument or
contract of service whether made before
or after the commencement of this Act.]”
(Emphasis supplied)

17. The core issue here is the application of the Act

to the Corporation qua the employees and their Union.

In order to examine the same, what is to be considered

is as to whether the Corporation can be termed as an

industrial establishment as per the provisions

reproduced supra and whether the members of the Union

would qualify as workmen and therefore would be

eligible for permanent status under Section 3 of the

Act.

18. The High Court considered this question in line

with Section 2(3)(e), as above, i.e., the definition

of ‘establishment’ provided under section 2(6) of the

1947 Act. It reads thus –

“2. Definitions- In this Act, unless there is

anything repugnant in the subject or context-

13|SLP(C)30005/2019
 x x x x

(6) ‘establishment’ means a shop. commercial

establishment, restaurant, eating-house,
residential hotel, theatre or any place of
public amusement or entertainment and includes
such establishment as the 1 [State] Government
may by notification declare to be an
establishment for the purposes of this Act;”

19. For an establishment to be covered under the

definition thereof under the 1947 Act, unless it is

one of those specifically mentioned, it must satisfy

being a commercial establishment which is defined

under Section 2(3) which is as under -

“(3) ‘commercial establishment´ means an

establishment which is not a shop but which
carries on the business of advertising,
commission, forwarding or commercial agency, or
which is a clerical department of a factory or
industrial undertaking or which is an insurance
company, joint stock company, bank, broker’s
office or exchange and includes such other
establishments as the State Government may by
notification declare to be a commercial
establishment for the purposes of this Act.”

20. The affidavit dated 16th September, 2009 filed by

the Corporation before the High Court records that

the actual turnover for the year 2007-2008 is Rs.27.5

crores, vis-à-vis, the value of drugs distributed

being at Rs.186.60 crores. The order of the Inspector

of Labour records as under -

14|SLP(C)30005/2019
 “Further the respondent advanced the
arguments that the Tamil Nadu Medical Services
Corporation is not functioning with any profit
motive, that quality argues are being obtained
from quality manufacturing and supplied the
same to the consumers without obtaining any
service charges and therefore, the respondent’s
establishment is not attending to any
commercial duty and while perusing all the
aforesaid factors and also the audited balance
sheets of the respondents filed on behalf of
the petitioner i.e. for the years 1994-95, 1995-
96 and 1996-97 it is seen that for the year
1994-95 the profit to the tune of Rs.6.96 lakhs
and for 1995-96 Rs.8.44 lakhs and for 1996-97
Rs.1.84 lakhs had been obtained. Therefore it
is clearly seen that the respondent’s
establishment has no profit intention as
mentioned by the respondent is not at all true.”

21. For any establishment to be commercial, it has to

be established that the activities undertaken by it

are for making some monetary gain. Commercial in the

most rudimentary sense means buying or selling of

goods in exchange of money. As the above reproduced,

uncontroverted paragraph (also recorded by the High

Court) establishes, the commercial element was not

absent.

22. Further, it was submitted that the activities

conducted by the Corporation did not fall under those

mentioned under Section 2(3) of the 1947 Act. This

submission too, is difficult to accept. The

construction work, which the Corporation, by its own

15|SLP(C)30005/2019
admission, carries out, is also for non-governmental

bodies such as firms, companies, and individuals. It

would be apposite to refer to the observations of the

High Court in this regard, in particular, paragraphs

37 and 38 of the impugned decision, which, for ease

of reference are reproduced below :

“37. TNMSC Management is a company registered

under the Indian Companies Act, 1956 which iv
wholly owned by the Government of Tamil Nadu.
The objects of the company as seen from the
memorandvm of articles of association are as
follows :
“(1) To buy or otherwise acquire all
kinds and varieties of generic and patent
medicines, drugs, mixtures, formulations,
tablets, pills, powders, pharmaceutical and
wadical products, needles, syringes,
injectables, vaccinesr sera, immunogens,
phylacogens, chemicals and surgical
dressings, kits and instruments and to sell
or supply to various hospitals and other
health centres.
(ii) To purchase, distribute,
assemble, install, maintain or otherwise
deal in all types of capitai quipments and
instruments required in hospitals.
(iii)To undertake designing and
construction of Hospitals and or other
buildings for Government, or for any other
person including local authorities,
corporations, societies, trusts, companies,
firms and individuals.
(iv)To establish modern varehouses and
Engineering workshops to manufacture,
assemble, repair or otherwise maintain
various medical equipments, surgical
instruments, diagnostic equipments, fire-
fighting equipments, furniture and –
fittings including, hospital furniture and
also to undertake civil and other general
maintenance of hospitals.

16|SLP(C)30005/2019
 (v)To establish research and
development centres and institutes for
medical and para-medical personnel for
imparting training in various Techno-
Managerial fields.”
(Emphasis supplied)
38. It is also seen that TNMSC Management has
warehouses in channel and in all. The District
Headquarters. These warehouses are used for
storing of medicines and drugs. It has been
specifically held as a fact by the Inspector of
Labour in the order dated 31.03.2001, that TNMSC
Management had earned profit of Rs.6.95 lakhs
in the year 1994-95, Rs.8.44 lakhs in the year
1995-96 mnd As.1.84 lakhs in the year 1996-97.
Consequently, any contention raised that it is
run on a “no profit basis” has to rejected.”

23. It was argued that the Corporation’s activities

included construction and therefore it would be exempt

from the application of the Act. Section 7 reads

thus-

“7. Act not to apply to workmen employed

in certain industrial establishment. –
Nothing contained in this Act shall apply
to workmen employed in an industrial
establishment engaged in the
construction of buildings, bridges,
roads, canals, dams or other construction
work whether structural, mechanical or
electrical.”

The language of the provision is clear. It implies

that this act shall not apply to those workmen who

are engaged in the construction of buildings and the

like or other construction work be it structural,

mechanical, or electrical. Therefore, those

17|SLP(C)30005/2019
establishments and their workmen shall be exempt, who

are engaged exclusively, in the work of construction.

The objectives of the Corporation, which have been

reproduced15 in the affidavit of the Union before the

High Court, state:-

“
x x
x
iii) To undertake the designing and
construction of hospitals and other buildings
for the Government, or any other person
including local authorities, corporations,
societies, trusts, companies firms and
individuals.
…”

24. This, however, in our view would not allow the

Corporation to wash its hands off the responsibilities

or obligations under the Act, since the construction

to be undertaken by the Corporation, is only one of

the many activities to be undertaken by it. To take

all the workers out of the purview of the Act,

especially, when the said workers, like the members

of the respondent union, were not the ones undertaking

construction is unwarranted.

15 Page 137 of the paperbook in SLP (c) 2649 of 2020

18|SLP(C)30005/2019
25. It was further argued that many of the persons

directed to be granted permanent employment by the

order of the Inspector of Labour have found profitable

employment elsewhere, and as such the SLP on their

behalf should be dismissed. We cannot accept this

submission. Simply because some of the persons

involved in the employment dispute have allegedly

found other employment, that does not justify a

dismissal of others’ claims. Per the written

submissions of the appellants in the appeal arising

out of SLP(C)No.2649 of 2020, twelve appellants have

approached this court. And therefore, it must be seen

to its logical conclusion.

26. It was argued before the Courts below that the

respondents had not continued in service after a

certain point in time, however, the said argument was

not accepted and we find no reason to take a different

view on fact which since the year 1997 remains proven

and recognized by the Courts.

27. As such, both requirements, of the establishment

being covered under the definition of industrial

establishment as provided and that of the employee

19|SLP(C)30005/2019
having uninterruptedly continued in service for 480

days or more for 24 months, having been met we have

no hesitation in holding that the Act would apply to

the parties to the present dispute.

28. The next question to be considered is whether the

High Court on remand, could have ignored the order of

the Inspector of Labour and suggested that the

employees raise an industrial dispute questioning

their non-employment. The reason for remand, as is

seen from the judgment dated 10th March, 2016, was

that the High Court had not considered that the Act

would be applicable to the parties, which were the

very same as the parties before us. In other words,

the scope of remand was limited. The order of the

Inspector of Labour was passed under the Act. Since

the High Court concluded that the Act would apply,

there was no reason for it to disturb the finding of

the Inspector of Labour and, therefore, it ought to

have simply ordered that the order of Inspector of

Labour which concluded that the members of the

respondent-Union be given permanent employment, be

complied with. When an issue stands already decided

20|SLP(C)30005/2019
and such decision does not suffer from any vice of

authority or jurisdiction then, putting those who

enjoy an order in their favour through the wringer

once more of having to re-establish their claim, this

time before the authority under the Industrial

Disputes Act, 1947, would be unjustified.

29. The appeal filed by the Corporation (Appeal

arising out of SLP(C)No.30005 of 2019) is, in terms

of the above, dismissed and the appeal filed by the

respondent-Union through its President, G. Sumathi

(Appeal arising out of SLP(C)No.2649 of 2020) is

accordingly allowed with all consequences in favour

of the respondent-employees, under the law, to follow.

Pending application(s), if any, shall stand

disposed of.

……………………………………J.
(SANJAY KAROL)

………………………………………………………………………J.
(PRASANNA BHALACHANDRA VARALE)
May 17, 2024;
New Delhi.

21|SLP(C)30005/2019