PGDM-HRM 2022-24

MDI Gurgaon

(Term-2)

PROJECT REPORT

On

Employment Law - 1

7th November 2022

Case Analysis

Case 6.2: CMTI v Assistant labour Commissioner

Presented by:

Group - 3

AARUSHI SHARMA- 22PGHR001

KOMAL MARWAH - 22PGHR014
RUGVED APARAJIT - 22PGHR026
SUCHI GOENKA - 22PGHR037
LAKSHYA SEHGAL - 22PGHR056
SIDDHARTH SETH - 22PGHR059
AYUSH MISHRA - 22PGHR062

Under the guidance of:

Prof. Parul Gupta
FACTS OF THE CASE:

● The case discusses a society situated in Bangalore called the management of

CMTI, registered under the Karnataka Societies Registration Act, 1960
● The society, under the objectives set out by the memorandum of association,
was a research-based organization for development of machine tools, training of
personnel in design, etc.
● The Govt. of India granted an exemption to the society from paying customs duty
and application fees for import licenses
● The society also received grants from Govt. of India from the funds under the
Dept. of Heavy Industry
● The society consisted of 400 personnel, including supervisory staff
● The employees of the society formed the CMTI Employees association, under
provisions of the Trade Union Act, of 1926
● The General Secretary of the association sent a communication to the
management on 10th May 1977 and another communication was received from
Association to the petitioner society on 26th May 1977, regarding the association
being registered under Trade Unions Act, 1926
● On grounds that the society was not an industry and the employees were not
workmen, the society requested Asst.Labour Commissioner for cancellation of
registration certificate granted to the association under Trade Unions act
● The Asst.Labour Commissioner denied cancellation on grounds that the society
engaged in systematic manufacturing activities and also was involved in the sale
of prototypes and tools built in workshops. This led to the start of the dispute
● The decision of the Assistant Labour Commission was challenged by the CMTI
Employees Association and it was alleged that he had failed to take into account
the research-based activities undertaken by the society, for the greater good of
the public, and so the society didn’t qualify as an industry, as per association.

LEGAL INTERPRETATIONS OF THE PROBLEM:

Central Machine Tool Institute (CMTI) questioned the legality of the registration of their
employee’s association as a trade union under the provisions of the Indian Trade Unions
Act, 1926, because the institute is purely a research and development organization
without any profit motive. Consequently, the registration of the association of the
employees of the institute under the Trade Unions Act is without the authority of law.
Central Machine Tool Institute (CMTI) Presented the following facts to support its claim:
1. It is a society registered under the Karnataka Societies Registration Act, 1960 for
developing machine tools, training personnel in design, inspection, testing, and
 production engineering methods, and doing research in the field of machine tool
technology and other activities of similar nature
2. For income tax purposes, the CMTI's revenue receipts are not considered
3. The Government of India has granted an exemption to the CMTI from payment of
customs duty and paying applications fees for import licensees
4. CMTI receives grants from the Government of India from the Consolidated Funds
of India allotted to the Ministry of Industry (Department of Heavy Industry) under
whom it is functioning

The Assistant Labor commissioner refused to cancel the registration and presented the
following facts to establish that CMTI can be considered an ‘Industry’:
1. It can be disputed that the Central Machine Tool Institute was purely a research
and development organization. Society has engaged itself in systematic
manufacturing activities having workshops and departments wherein articles are
produced, adopted, and manufactured for use and sale
2. The society has a printed catalog giving particulars of its various products
3. Through its computer center, CMTI provides data processing services to other
organizations and industries for a fee.

APPLICABLE PROVISIONS:

The Trade Unions Act, 1926

Brief History-
● Trade Union movement began in India after the end of the First World War
● Trade unionism in India – 1890 with the formation of the Bombay Mill Hand’s
Association
● The All-India Trade Union Congress was formed in 1920 on a National Basis, the
Central Labour Board, Bombay, and the Bengal Trades Union Federation was
formed in 1922
● In March 1921, Shri N. M. Joshi, then General Secretary of the All-India Trade
Union Congress, successfully moved a resolution in the Central Legislative
Assembly
● Legislature came into force on 1st June 1927 as the Indian Trade Unions Act, of
1926
● By section 3 of the Indian Trade Unions (Amendment) Act, 1964, the word "Indian"
has been omitted, and now it is known as THE TRADE UNIONS ACT, 1926

Objectives-

● This act deals with all modalities pertaining to the registration of trade unions to
decision of trade-related disputes
 ● sets guidelines for both the workers and the industrialists
● provides for the registration of trade unions, their rights, their liabilities and
responsibilities as well as ensures that their funds are utilized properly
● It gives legal and corporate status to the registered trade unions
● It also seeks to protect them from civil or criminal prosecution

Trade Dispute (Section 2(g))

● Covers any dispute, between employer and workmen, between workmen and
workmen, between employer and employer.
● Any such dispute must be connected with the employment or nonemployment or
the terms of employment or the conditions of labor of any person. and
● "workmen" means all persons employed in the trade or industry whether or not in
the employment of the employer with whom the trade dispute arises; and

Trade Unions (Section 2(h))

● Any combination, whether temporary or permanent, formed primarily for the
purpose of regulating the relations between workmen and employers or between
workmen and workmen or between employers and employers, or for imposing
restrictive conditions on the conduct of any trade or business, and includes any
federation of two or more trade unions

Industry (Section 2(j)) – IDA, 1947

● Under the Act, Industry means any business, trade, undertaking, manufacture or
calling of employers and includes any calling, service, employment, handicraft or
industrial occupation or avocation of workmen.
‘Industry’ has been explained by the competent court as “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 part of a such community with the help of
employees. Industrial activity involves the cooperation of the employers and the
employees and its object is the satisfaction of human wants.”
CONCLUSION

Yes, society falls under the category of “industry” because of three reasons:

1. Regularly and habitually: It can be disputed that the Central Machine Tool Institute
was purely a research and development organization. Society has engaged itself in
systematic manufacturing activities having workshops and departments wherein articles
are produced, adopted, and manufactured for use and sale.

2. Purpose was sale: The society had workshops, computer labs, and other
departments wherein articles were produced, adopted, and manufactured with a view to
their use and sale.

3. Employee-Employer Relationship: Employees were being paid a salary that was

funded by the ministry. Through its computer center, CMTI provided data processing
services to other organizations and industries for a fee.

If an establishment or activity falls within the meaning of the word "industry" as defined
in Industrial Disputes Act, the workmen thereof are also workmen employed in a trade
or industry as specified in the definition of the words "trade dispute" consequently they
are entitled to form a trade union.

The registration of the Central Machine Tool Institute Employees' Association under the
provisions of the Trade Unions Act was held to be legal and valid.