SUPREME COURT RULES TEMPLE TRUST DOES NOT QUALIFY AS AN ‘INDUSTRY’ UNDER INDUSTRIAL DISPUTES ACT:

The Supreme Court recently upheld the termination of an accountant employed by a temple trust, holding that a temple trust does not qualify as an “industry” within the meaning of the Industrial Disputes Act, 1947. While declining to interfere with concurrent findings of the labour court and the Gujarat High Court, the Court nevertheless granted monetary compensation to the employee, taking into account his long and uninterrupted service and the absence of a formal disciplinary inquiry prior to his termination.

The judgment was delivered by a Bench comprising Justices Aravind Kumar and Prasanna B. Varale. The Court agreed with the conclusion that the respondent trust, being a temple and charitable institution, could not be brought within the statutory definition of “industry” under Section 2(j) of the Act. It noted that the trust did not engage in manufacturing activity, commercial operations, or profit-oriented functions, and therefore fell outside the regulatory framework of industrial law.

The appellant had been appointed as an accountant in the Laxminarayan Dev Trust in 1977 and had served continuously for over twelve years. On November 1, 1999, his services were allegedly terminated orally, without the initiation of any domestic inquiry or disciplinary proceedings. Following the termination, the appellant made repeated representations seeking reinstatement, but received no response from the trust.

Left with no alternative, the appellant approached the Labour Conciliation Officer. During the conciliation process, the trust issued a communication directing him to report for duty at a transferred posting in Vadtal, a distant location. The communication indicated that failure to comply would result in termination proceedings. The dispute eventually culminated in a formal labour reference.

By an award dated December 3, 2009, the Labour Court rejected the reference, holding that the respondent trust was a temple and charitable institution and therefore did not constitute an “industry” under the Industrial Disputes Act. The Labour Court found that the trust’s activities were religious in nature and not aimed at generating profit, thereby excluding it from the Act’s ambit.

This decision was subsequently affirmed by a Single Judge of the Gujarat High Court. An intra-court appeal filed thereafter was dismissed by a Division Bench, leading the appellant to approach the Supreme Court.

The Supreme Court declined to interfere with the concurrent findings of the courts below, reiterating that the respondent trust was essentially a temple trust and could not be covered under the statutory definition of industry. However, the Court took note of the appellant’s uninterrupted and blemish-free service spanning twelve years, as well as the fact that his services had been terminated without conducting any inquiry and followed by a transfer to a far-off location.

In view of these circumstances, the Court held that the ends of justice would be met by awarding lump-sum monetary compensation rather than ordering reinstatement. Accordingly, the respondent trust was directed to pay a sum of ₹12,00,000 to the appellant as full and final settlement of all claims arising out of the dispute. The Court specified that the amount was to be paid within four weeks, failing which it would carry interest at the rate of 9% per annum. It was also clarified that in the event of non-payment, the appellant would be entitled to recover the amount by initiating appropriate execution proceedings or by filing an application under Section 33(C)(2) of the Industrial Disputes Act before the Labour Court. With these directions, the Supreme Court disposed of the appeal.