Article (March-2019)


Housing societies & Labour laws

H.L. Kumar

Designation : -   Advocate, Supreme Court

Organization : -  New Delhi


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Living in housing societies has become the preferred choice of the city dwellers because of numerous advantages, which are available to them at minimum cost. In a gated security set-up, one usually finds systems like the CCTV Surveillance, Intercom facility and boom barriers etc. The provision of manual security by guards enhances the protection from thieves and unwanted visitors. Most of the contemporary housing projects allow quick access to world-class facilities at a fraction of cost. A gated community usually contains amenities of the plumbers, electricians, sweepers, gardeners and lift operators etc. at a very low cost.  The facilities like swimming pool and gymnasium are also made available in certain high-end societies, which increases the health consciousness among the residents. Provision for providing a place for worship is also found in many housing apartments. The emphasis for maintaining cleanliness and keeping them eco-friendly is the order of the day. Some items of basic needs like milk delivery, groceries and vegetables are made available to inmates at an affordable cost.
For providing the facilities to the residents, the need for employing different types of employees is always there. Advocates and HR Executives are, however, often asked about the applicability of various labour laws in the housing societies. This article has assiduously culled through many judgments of the Supreme Court and High Courts about the applicability of certain labour laws upon the cooperative housing/apartment societies, which are being given here for the benefit of the HR Executives and other mainly for those who are entrusted with responsibilities of managing the societies.  It must be stated here that although housing is not like the business establishments, therefore labour laws cannot be applied on them with as much rigour as on other establishments.
Industrial Disputes Act, 1947
The object of the Industrial Disputes Act is essentially for providing job security to the workmen against illegal and/or unjustified terminations by their employers.  The mechanism of the Act is geared to conferment of regulated benefits to workmen and resolution, according to a sympathetic rule of law, of the conflicts, actual or potential, between managements and workmen.  Its goal is amelioration of the conditions of workers, tempered by a practical sense of peaceful co-existence, to the benefit of both the workmen and the employer.  Although the Constitution Bench of the Supreme Court in Bangalore Water Supply & Sewage Board vs. A. Rajappa, 1978 AIR SC 548 has held that there is hardly any establishment which will be excluded by the definition of industry i.e. coverage under the Act.  However, in State of UP vs. Jaibir Singh, 2005(5) SCC 1 the Constitution Bench of the Supreme Court observed that the Act cannot be looked at only as a worker oriented statute and that the main aim of the statute, as is evident from its preamble and various provisions contained therein, is to regulate and harmonize relationships between employers and employees for maintaining industrial peace and social harmony.
In Management of Som Vihar Apartment Owners Housing Maintenance Society Ltd. vs. Workmen C/o Indian Engineering and General Mazdoor, 2001 LLR 599 (SC) wherein the Industrial Tribunal has held that the residential housing society is an industry and the employees are ‘workman’ under section 2(s) of the Industrial Disputes Act and as such the employees will be entitled to uniforms.  However, the Supreme Court set aside the award in holding that when personal services are rendered to the members of a society and that society is constituted only for the purpose of those members to engage the service of such employees, its activity should not be treated as an ‘industry’ nor such employees are to be treated as ‘workmen’.
In M/s. Arihant Siddhi Co.Op. Hg. Soc. Ltd. vs. Pushpa Vishnu More & Ors., 2018 LLR 869 the Bombay High Court has held that a co-operative housing society will not be an ‘industry’.  It was further observed that merely because of charging some extra charges from a few members, the society cannot be treated as an ‘industry’ carrying on business of hiring out of neon signs or allowing display of advertisements.  Also when there are multiple activities carried on by an establishment, what is to be considered, is the dominant function on the basis of which it is to be decided as to whether the establishment is covered under the term ‘industry’ or not as per section 2(j) of the Industrial Disputes Act, 1947.
Contract Labour (R&A) Act, 1970
The object of the above Act is two pronged. First, to regulate the employment of contract labour in certain establishments and second was to prohibit such employment in certain circumstances.
In Smt. Rachana Gopinath & Another vs. The State of Karnataka, 2016 LLR 864 the Karnataka High Court has held that Contract Labour (Regulation and Abolition) Act, 1970 is applicable to only that establishment, which is engaging 20 or more employees.  As such Apartment Owners’ Association or Society is not an establishment under section 2(e) of the Contract Labour (Regulation and Abolition) Act, 1970 if it is neither an office or department of the Government or a local authority nor any activity of an industry, trade, business, manufacture or occupation is carried on in any place of the Association, to attract applicability of the Act.  When the Apartment Owners’ Association or Society is neither an establishment nor an ‘industry’ under the Industrial Disputes Act, persons employed by it cannot be characterized as workmen under the Act.  Hence, non-registration and non-maintenance of records under section 7, Rule 17(1) read with section 29 of Contract Labour (Regulation and Abolition) Act, 1970, is not its violation since Association is not an establishment to be covered under the Act.
Employees’ State Insurance Act, 1948
The Employees’ State Insurance Act, 1948 is the first of its kind in India for it introduces the compulsory insurance of a specified class of wage earners against certain inevitable risks and to uphold the human dignity of fellow feelings in contingencies, such as death, disease or physical disability that results in deprivation of basic needs like food, clothing and more particularly medical care.
In Regional Director, Employees’ State Insurance Corporation vs. Tulsiani Chambers Premises Co-operative Society, 2008 LLR 362 the Bombay High Court has held that the co-operative societies rendering services to the members are domestic in nature like operating lifts, water supply, electricity, cleaning, sweeping and security, as such, these services are essential for the very existence and security of its members and society building cannot be said to be economic activity hence to be covered under the ESI Act.  The co-operative societies cannot be treated as establishments even though twenty or more employees employed or were employed for wages on any day of the preceding twelve months, as contemplated under the ESI Act. Hence, unless extended and made applicable specifically by notification and/or by any other mode, the society and/or such companies cannot be treated as an establishment as defined under the ESI Act.
Employees’ Provident Funds & MP Act, 1952
The above Act came into existence in 1952 to ensure compulsory provident fund, family pension fund.  Scheme now Employees’ Pension Scheme, 1995 and deposit linked insurance in factories and other establishments for the benefit of employees.
Under section 16 of the Employees Provident Funds & MP Act, shall not be applicable to any establishment registered under Co-operative Societies Act, 1912, employing less than fifty persons and working without the aid of power: In this connection reference is made in the case of Backbay Premises Co-operative Society Ltd. vs. Union of India, 1997 (II) CLR 1075 the Bombay High Court has held that petitioner is a society consisting of various premises which are used for business purpose and the members are required to pay maintenance charges and after statutory charges under the provisions of Co-operative Societies Act and the bye-laws.  Government Notification No.728 dated November 20, 1963 published in the Gazette of India, part II Page 850 referred to against Item 16(2) of Appendix-I to the Scheme does not apply to housing societies and that as such petitioner is not covered by the Act even under section 1(3)(b) of the Act.
Minimum Wages Act, 1948
The object of above Act is to prevent exploitation of labour through the payment of unduly low wages.  The Act provides for fixing the minimum rates of wages for certain employments specified in the schedule.
In the case of Kiran Industrial Premises Co-op. Society Ltd. vs. Janata Kamgar Union and others, 2001 (1) LLJ 1499 (Bom. HC) it has been held that a cooperative society has employed four watchmen and two clerks.  Respondent No.1 is espousing their cause.  They filed complaints of unfair labour practices under Item 9 of Scheme IV of the Act alleging that they are paid wage less than prescribed under Minimum Wages Act.  Industrial Court allowed their claim and hence this petition.  It has also been held that society is neither an industry nor a commercial establishment to attract provisions of Minimum Wages Act.  It’s a simple activity confined to the maintenance of the premises and payment of different statutory dues.  There is not an iota of such activity to make it either an ‘industry’ or ‘commercial establishment’.
In Tantrik Shikshan Karamchari Sahakari Pat Sanstha Maryadit vs. Assistant Commissioner of Labour-cum-Authority under Minimum Wages Act, 1948, 2017 LLR (SN) 98 (Bom. HC) also it has been held that a cooperative society for rendering personal service to its members could not be treated to be a ‘commercial establishment’ or an industry and the employees as workmen, would not be entitled to attract Minimum Wages Act.
Shops & Establishment Act
The object of Shops & Establishment Act is to regulate hours of work, payment of wages, leave, holidays, term of service and other conditions of work of persons employed in shops, commercial establishments, establishments for public entertainment or amusement etc. etc.  Almost every State has its own Shops & Establishments Act or may be adopting the Act of some other State. Every Shops & Establishment Act defines ‘commercial establishment’ whereas its definition is by and large common under every Shops & Establishment Acts.  In Smt. Rachana Gopinath & Another vs. The State of Karnataka, 2016 LLR 864 the Karnataka High Court has held that when the Apartment Owners’ Association is out of the purview of term ‘commercial establishments’ under the Karnataka Shops and Commercial Establishments Act, 1961, non-renewal of registration obtained under wrong conception would not entitle the Labour Authority to harass the petitioners by filing criminal complaint on some flimsy grounds.
 However, there will be no escape from applicability of Child and Adolescent Labour (Prohibition and Regulation) Act, 1986, Employees’ Compensation Act, 1923, Maternity Benefit Act, 1961, Payment of Gratuity Act, 1972, Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 whereas the Payment of Bonus Act would not be applicable since a housing/apartment cooperative society cannot be termed as an ‘establishment’.