Management Of Pratap Press, New Delhi vs Secretary, Delhi Press Workers' Union

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 23 February, 1960

Coram: P.B. Gajendragadkar, K. Subba Rao, K.C. Das Gupta

In the matter titled Management of Pratap Press, New Delhi versus Secretary, Delhi Press Workers’ Union, the Supreme Court of India delivered its judgment on 23 February 1960. The opinion was authored by Justice K.C. Das Gupta and was pronounced by a bench comprising Justices P.B. Gajendragadkar, K. Subba Rao and K.C. Das Gupta.

Justice K.C. Das Gupta began by observing that when an entrepreneur—whether an individual proprietor, a partnership firm, or an incorporated company—carries on several activities that each fall within the definition of “industry” under the Industrial Disputes Act, a common question is whether those activities together constitute a single industrial unit or whether they represent distinct, separate industrial units. He noted that it is rare for multiple ventures to achieve equally successful results in every year, and consequently, when a dispute arises between the owner and workmen of one of the ventures concerning the payment of bonus, the amount of bonus that may be reasonably payable, or even the existence of any liability, may hinge on whether the overall results of all ventures are considered or only the results of the specific venture in which the disputing workmen are employed. Accordingly, a proper resolution of such a dispute first requires a determination of whether the various ventures in which the employer is engaged form a single industrial unit with the particular venture where the workmen are employed. Justice Das Gupta explained that this precise issue formed the basis of the two appeals brought by the management of Pratap Press against its workmen. He recounted that the Press had been established by its proprietor, Shri Narendra, in 1951, and that Shri Narendra had commenced publication of the newspaper Vir Arjun in April 1954. In addition, Shri Narendra was a partner in the firm that owned another newspaper, the Daily Pratap. When a claim for bonus by the workmen of the Press was referred to the Industrial Tribunal, the workmen asserted that the three activities—the Press, Vir Arjun and the Daily Pratap—were essentially the industrial undertakings of a single family consisting of Shri Narendra and his sons, and therefore the profits or losses of all three concerns should be pooled for the purpose of determining any bonus liability. Alternatively, the workmen suggested that only the results of the Press should be taken into account. The employer, by contrast, argued that the workmen’s contention that all three concerns should be treated as one could not be accepted because the Daily Pratap was owned by a partnership of which Shri Narendra was merely one partner, whereas the Press and Vir Arjun were wholly owned by him. He maintained that the Press and Vir Arjun formed a single industry, and that the total results of those two ventures alone should be considered in deciding whether any bonus was payable.

In this case the Industrial Tribunal accepted the employer’s argument that the financial results of the Daily Pratap newspaper could not be considered when determining bonus entitlement. The Tribunal reasoned that the Daily Pratap was owned under a different legal arrangement than the Pratap Press and the Vir Arjun newspaper, and therefore it could not be grouped with them for the purpose of calculating surplus profits. The Tribunal then examined the separate question of whether the Pratap Press and the Vir Arjun constituted a single industrial unit or two distinct units. Contrary to the employer’s position, the Tribunal concluded, after reviewing the evidence presented, that the Vir Arjun was a distinct and separate industrial entity from the Pratap Press. Consequently, the profits or losses of the Vir Arjun could not be taken into account in the bonus calculation for the workers of the Pratap Press. The Tribunal highlighted that this distinction was highly significant for the appeals before it. It observed that if the losses of the Vir Arjun were included, the cumulative effect would be that the losses incurred by the Vir Arjun in each relevant year would offset the profits generated by the Pratap Press in those same years, leaving no surplus available for distribution as a bonus.

The Tribunal further noted that determining whether two activities carried out by a single owner constitute one industrial unit or two separate units is a complex inquiry that does not lend itself to a rigid rule. Each situation must be examined on its own factual matrix. In some circumstances, the two activities may each satisfy the statutory definition of an industry, yet they may be so closely interlinked that a reasonable observer would not regard them as independent. In other instances, the mere existence of a connection between the activities may be insufficient to reach a conclusion, and the employer’s conduct—such as the manner in which capital, staff, and management are inter‑mixed or kept separate—often provides decisive guidance. To illustrate the first category, the Tribunal referred to the decision in Workers in Hindi Prachar Press v. Hindi Prachar Press, 1958‑2 Lab LJ 358, where a question arose as to whether press workers were entitled to a bonus. The Labour Court held that the press functioned merely as a department within the larger organization, Dakshina Bharat Hindi Prachar Sabha, whose primary objective was the promotion of Hindi in South India. The Sabha operated several inter‑dependent sections, including a library, publicity, book sales, and training centres that provided stipends and accommodation to teachers. The Court ruled that because these various activities were carried out through interconnected departments, the income and expenditure of the entire institution had to be considered in determining the surplus available for bonus payment.

In the case of G. G. Industries Mazdoor Union v. G. G. Tin Factory, Agra, 1952‑1 Lab LJ 507 (LATI‑All), the Tribunal dealt with a dispute that centred on the demand for a bonus by workmen employed in the G. G. Tin Factory. The employer was the sole proprietor not only of that tin factory but also of four other enterprises: the G. G. Chocolate Factory, the G. G. Toy Factory, the G. G. Fruit Factory and the Krishna Ice Factory. The workmen of the tin factory sought both a wage increment and a bonus for the year 1949. If the Tribunal had considered all five factories as forming a single industrial unit, the combined accounts would have shown an overall loss of approximately Rs. 1,25,000, a figure that would have negated any claim for a bonus. However, the Labour Appellate Tribunal examined the financial records and observed that separate books of account and distinct balance‑sheets were maintained for each factory. Moreover, the capital invested by the proprietor in each factory was kept apart from the others. On this basis, the Tribunal concluded that the G. G. Tin Factory must be treated as a separate and distinct industrial unit. The Tribunal quoted the proprietor’s own practice, stating that “the proprietor himself is treating each Factory as a distinct undertaking and the several factories as independent of each other.” In a similar vein, the case of Pipe Mill Mazdoor Union, Lucknow v. Indian Hume Pipe Co. Ltd., 1951‑1 Lab LJ 379 (LATI‑All) examined whether the Lucknow branch of the company constituted an independent entity from its other branches. The company, responding to a request from the regional conciliation board, supplied written information showing that the Lucknow branch kept its accounts separately and that the capital employed at the Lucknow factory was separately disclosed for the financial years 1947‑48 and 1948‑49. The Appellate Tribunal observed that this documentation demonstrated that the company maintained capital, profit and loss accounts for the Lucknow branch as if it were an independent unit, and therefore considered whether a bonus could be awarded to the workmen of that branch. Finally, in Associated Cement Co., Ltd. v. Their Workmen, the Court examined the employer’s defence against a lay‑off compensation claim by workers of Chaibasa Cement Works. The employer contended that the lay‑off resulted from a strike at another part of the establishment, namely the limestone quarry at Rajanka. The crucial question was whether the Rajanka quarry formed part of the Chaibasa Cement Works establishment within the meaning of Section 25E(iii) of the Industrial Disputes Act. The Court noted that no single test could be applied universally to decide such questions, warning against adopting a rigid, invariable standard.

In every case the Court observed that the purpose of the various tests was to discover the actual relationship that existed between the different parts, branches or units of an enterprise. The Court therefore set out a series of factors that could assist in deciding whether two units should be treated as belonging to the same establishment. The factors mentioned were unity of ownership, unity of management and control, unity of finance, unity of labour, unity of employment and the presence of functional “integrality”. In applying these factors the Court pointed out that there was a clear distinction between the question of whether two units formed a single establishment for the purposes of Section 25E(iii) of the Industrial Disputes Act and the separate question of whether they constituted a single industry for the purpose of computing surplus profits for the distribution of bonuses to work‑men in one of the units. Although the enumeration of the tests could still be of assistance, the Court emphasized that the most significant factor was functional “integrality” together with the questions of unity of finance and unity of employment and labour. Unity of ownership, the Court noted, existed by hypothesis; whenever two units were owned by the same proprietor there was a strong likelihood of also having unity of management. Consequently, the Court held that it was necessary to examine carefully the extent of functional integrality – meaning that the two units were so functionally interdependent that one could not exist conveniently or reasonably without the other – and also to consider whether, in financial and employment matters, the employer had kept the units separate or had combined them.

Turning to the facts of the present appeals, the Court found that the activities of the Press and the Vir Arjun newspaper could not be said to be so interdependent that one could not exist without the other. It was well‑known and undisputed that many printing presses operated without publishing any newspaper of the same owner, and likewise that a newspaper publishing business could exist without the owner also running a printing press. The fact that the Daily Pratap, owned by a partnership firm, was printed at the Pratap Press owned by Shri Narendra clearly illustrated this separation. Accordingly, the Court concluded that there was no functional interdependence between the press unit and the newspaper unit that would justify treating them as a single industrial unit. The Court also examined the conduct of the businessman to see whether he had merged the capital, profits or labour forces of the two units. Such information could only be supplied by the employer from his own records. However, no evidence was presented showing that, prior to the dispute, the employer had treated the capital of the two units as a single fund, nor any evidence indicating that the profits or the labour force had been pooled. Consequently, the Court could not infer that the two units had been operated as one combined enterprise.

The Court observed that there was no evidence that the employer had combined the profits of the two establishments or that the workers were treated as belonging to a single establishment. It noted that the record did not contain any document showing whether, for his own purposes, the employer regarded the assets of the press and the newspaper as a single composite whole or as the assets of two distinct units. The profit‑and‑loss accounts that appeared on the record were prepared on 26 December 1951, apparently after the dispute concerning whether the two units were one or two had already been raised. Consequently, the Court held that no significance could be attached to the fact that these accounts listed both the receipts from the press and the receipts from the Vir Arjun newspaper as part of the income. Some account‑books had been produced before the Tribunal, but the Court found that they did not shed any light on the question of whether the capital fund or the labour force of the two units had been treated as one and the same. It was reasonable to conclude that those account‑books were produced merely to demonstrate the actual working results of the Vir Arjun. The Tribunal, however, had expressed the view that the accounts had not been kept in a satisfactory manner and that there was room for suspicion about their correctness. On this basis, the Court stated that the activities of the press unit were independent of the activities of the newspaper unit and that there was no record from which it could be ascertained how the employer himself had treated the two units. When, in this situation, the employer declared that “there are two institutions, the Vir Arjun and the press, the account books are kept separately” and that “there are two cashiers,” the Court found the Tribunal’s conclusion—that the press and the Vir Arjun newspaper were distinct and separate industrial units—to be reasonable and not open to successful challenge.

Having accepted that conclusion, the Court held that the question of the bonus payable to the workmen of the press depended on a proper calculation of the surplus generated by the Pratap Press alone, without taking into account the loss incurred by the Vir Arjun newspaper. No objection was raised before the Court to the calculation made by the Tribunal on that basis. The only ground advanced in the appeal was the contention that the Vir Arjun and the Pratap Press formed a single industrial unit; that contention failed, and consequently the appeal was dismissed with costs. The Court noted that the same position applied to the other appeal, namely Appeal No. 189 of 1959. In that appeal as well, the sole issue raised was that the Pratap Press and the Vir Arjun were parts of one industrial unit. For the reasons already explained in the first appeal, the Court held that the two must be regarded as distinct industrial units and that the workmen of the press were entitled to the bonus justified by the working results of the Pratap Press. Accordingly, that appeal was also dismissed with costs.