Office of Controller General of Patents, Designs and Trade Marks Is An Industry U/S 2(j) of Industrial Disputes Act: Delhi HC [Read Judgment]

The Delhi High Court on Monday held that the office of a Controller General of Patents, Designs and Trade Marks is an industry under Section 2(j) of the Industrial Disputes Act and it directed reinstatement of workers illegally retrenched from their services. It also held that the Supreme Court's verdict in Umadevi v. State of Karnataka, (2006) 4 SCC 1, does not impact the powers of a labour court or power of judicial review of the high court under Article 227 of the Constitution, to order reinstatement of victims of unfair labour practices. Not Performing a Sovereign Function The court resisted the argument that the office of office Controller General was performing a "sovereign function" and that it did not qualify the dominant nature test, stipulated by the seven-judge Constitution Bench of the Supreme Court in Bangalore Water Supply & Sewerage Board v. A. Rajappa, (1978) 2 SCC 213. Justice C Hari Shankar made it made clear that, every function, rendered by the Government, is not sovereign, all sovereign functions are not insulated from Section 2 (j) of the ID Act, and sovereign functions, which are core, inalienable and, thus, "strictly" sovereign, alone, escape the clutches of Section 2(j). Reliance was placed on Chief Conservator of Forests v. Jagannath Maruti Kondhare, (1996) 2 SCC 293, whereby it was held that "strict" sovereign functions, alone, are excepted from the ambit of Section 2 (j) of the ID Act. Justice Hari Shankar observed that Sovereign functions become inalienably sovereign only when it is impossible to delegate them to any other authority. However, in the present case, grant of patents was not a function that could not be delegated or entrusted to any private entity. "only such functions may be regarded as "inalienably sovereign", as could not, constitutionally and at any point of time, ever be delegated to a private authority, as they are incapable of being discharged by private persons. The fact that, in view of the statutory dispensation, existing at a particular point of time, the function is required to be discharged by the Government, or by a governmental authority, would not, ipso facto, be sufficient to characterise the function as "sovereign"," he observed. Reliance was placed on State of Bombay v. Hospital Mazdoor Sabha, (1960) 2 SCR 866, whereby the Supreme Court had held that "if a business or activity could not be carried on by a private individual or group of individuals, it could not be an industry; while if it could be, it might fall within the scope of 'industry'". Nature of Sovereign Function Exempted From ID Act The court then held that functions such as collection of tax, maintenance of public law and order, legislation, external relations, and eminent domain, which have, at all times, to be performed by the Government, and by the Government alone, would qualify as "strictly" or "inalienably" sovereign functions, and establishments performing such functions cannot be regarded as 'industry'. Reliance was placed on Agricultural Produce Market Committee v. Ashok Harikuni, (2000) 8 SCC 61. Making an account of core functions performed by the office of the Controller General, the court said, "…these functions, though multifarious, cannot be treated as inalienably sovereign, or akin to the functions of taxation, eminent domain, legislative functions, administration and maintenance of law and order, internal and external security and police pardon. Nor, in the opinion of this Court, can they be regarded as core sovereign functions which, are constitutionally incapable of delegation." Analogy with Trade or Business The court held that "analogy" with trade or business is an essential sine qua non for an establishment to be an 'industry' within the meaning of Section 2(j) of the ID Act; and this analogy could be inferred in the running of the establishment, not in the manner in which its proceeds are used. Reference was also made to the "triple-test", postulated in the Bangalore Water Supply case. it prescribed that to be an industry, an establishment must be engaged in systematic activity, providing services which are of inestimable worth, to the patent-seeking public, and should function in a manner analogous to trade and business. Finding the triple-test to be satisfied, the court held, "The office of the Controller General, ex facie, satisfies the triple test. It is run analogously to trade or business, in that it involves a mammoth establishment, employing several employees, who work for wages, and is also commercial in the manner in which it deals with those who approach it, in that a person, who seeks grant of a patent or design, or registration of a trade mark, cannot expect to get it free; he has to apply for it, and, apart from fulfilling other requisite formalities, pay the prescribed fee. Analogy to trade or business is, therefore, in my...

Office of Controller General of Patents, Designs and Trade Marks Is An Industry U/S 2(j) of Industrial Disputes Act: Delhi HC [Read Judgment]

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