Madras Gymkhana Club Employees’ Union-v. Management

Citation	AIR 1968 SUPREME COURT 554
Court	Supreme court of India
Decided on	3 October 1967
Petitioner	SECRETARY, MADRAS GYMKHANA CLUB EMPLOYEES’UNION
Respondent	MANAGEMENT OF THE GYMKHANA CLUB

Introduction 

The case “Secretary, Madras Gymkhana Club vs. Management of the Gymkhana Club” was decided by the Supreme Court of India on October 3, 1967. The main issue at hand was whether the Madras Gymkhana Club, a non-proprietary members’ club, could be classified as an ‘industry’ under the Industrial Disputes Act of 1947.

The club, organized on a large scale, provided various facilities including sports and recreational activities, as well as catering services for its members and guests. Despite having a significant number of employees—194, with a wage bill ranging from one lakh to two lakh rupees—the Industrial Tribunal had previously determined that the club did not meet the criteria for an ‘industry’. The employees claimed a bonus for the year 1962, which was rejected by the Tribunal based on the assertion that the nature of the club did not align with that of an industry.

The appeal brought before the Supreme Court challenged this decision, arguing that the club should indeed be recognized as an industry, thereby entitling employees to the claimed bonus. The Court scrutinized various definitions and interpretations related to the term ‘industry,’ reflecting on whether the activities of the club resembled those typically associated with trade or business.

Ultimately, the case delved into important legal definitions and concepts, seeking to clarify the boundaries of what constitutes an industry within the framework of labor relations and the application of the Industrial Disputes Act, 1947.

Facts of the case 

The key facts of the case “Secretary, Madras Gymkhana Club vs. Management of the Gymkhana Club” are as follows:

1. Nature of the Club: The Madras Gymkhana Club is identified as a non-proprietary members’ club. It is organized on a large scale and offers various activities and facilities, including sports, games, recreation, and catering for both members and guests.

2. Membership and Fees: As of December 31, 1962, the club had about 1,200 members, with 800 of them being active. Members paid various fees, ranging from an entrance fee of Rs. 300 and a monthly subscription of Rs. 20 for resident members, to lower fees for temporary and garrison members.

3. Employee Details: The club employed a total of 194 individuals including officers, clerks, and service staff like stewards and butlers. The total wage bill for employees ranged between one lakh and two lakh rupees.

4. Claim for Bonus: Employees of the club requested a bonus for the year 1962. This claim was denied by the Industrial Tribunal on the grounds that the club did not qualify as an ‘industry’ under the Industrial Disputes Act, 1947.

5. Tribunal’s Decision: After examining the operational structure and activities of the club, the Industrial Tribunal ruled that the club lacked the characteristics of an industry, thereby rejecting the employees’ claim for a bonus.

6. Appeal to Supreme Court: The Madras Gymkhana Club Employees Union appealed to the Supreme Court, contesting the Tribunal’s decision and arguing that the club should be classified as an industry, which would entitle the employees to the bonus.

7. Legal Framework: The case involved critical examination of the definitions of ’employer’, ‘workman’, and ‘industry’ under the Industrial Disputes Act, which was essential in determining the outcome of the appeal.

Arguments by the parties 

In the case “Secretary, Madras Gymkhana Club vs. Management of the Gymkhana Club,” both parties presented distinct arguments regarding whether the Madras Gymkhana Club should be classified as an ‘industry’ under the Industrial Disputes Act.

Arguments by the Appellant (Madras Gymkhana Club Employees Union):

The appellant’s primary argument was that the club operates with a significant scale of activities that reflect those of an industry, including organized sports facilities, catering services, and events that cater to both members and guests. They contended that the essential services provided by the club, along with its structured employee roster and substantial wage bill, aligned with the characteristics of an industry. The union argued that even without the intention of profit-making, the activities of the club fulfilled the criteria set forth in the definition of ‘industry,’ thereby entitling the employees to benefits such as bonuses under the Industrial Disputes Act.

Arguments by the Respondent (Management of the Gymkhana Club):

Conversely, the respondent asserted that the Madras Gymkhana Club is fundamentally a members’ self-serving institution that exists solely for the benefit of its members. They argued that the club does not engage in business or trade, as it is not operated for profit, nor does it function as a commercial enterprise. The club’s activities, they argued, are meant to cater primarily to its members and not as a way of conducting industry-like operations. The management emphasized that the definition of ‘industry’ includes aspects of profit-oriented trade, which the club does not possess. Thus, the Tribunal’s original ruling that the club did not constitute an industry was justifiable and should be upheld.

These opposing arguments framed the core of the legal dispute, leading the Supreme Court to examine the definitions and implications surrounding the classification of the club within the legal context of labor relations.

Judgment of the case 

In the case “Secretary, Madras Gymkhana Club vs. Management of the Gymkhana Club,” the Supreme Court delivered the judgment on October 3, 1967. The key points of the judgment are as follows:

1. Myth of Industry Definition: The Court analyzed the definition of ‘industry’ as per the Industrial Disputes Act, 1947, emphasizing that it refers to any business, trade, or undertaking that carries out activities for profit or in a manner akin to commercial enterprises.

2. Nature of the Madras Gymkhana Club: It was held that the Madras Gymkhana Club is a non-proprietary members’ club that primarily serves its members, existing as a self-serving institution rather than as a business. The Court identified that even though the club engaged in organized activities and employed a significant number of staff, these factors alone did not suffice to classify it as an industry.

3. Classification as a Non-Industry: The Supreme Court upheld the decision of the Industrial Tribunal, which had previously ruled that the club did not qualify as an industry because it lacked the elements associated with profit-making and commercial trading. The Court maintained that the club’s primary purpose is to provide services to its members, which does not align with the concept of an industrial enterprise.

4. Appeal Dismissed: Ultimately, the Supreme Court dismissed the appeal brought forth by the Madras Gymkhana Club Employees Union, affirming the Tribunal’s conclusion. It ruled that the employees were not entitled to a bonus under the provisions of the Industrial Disputes Act since the club did not qualify as an industry.

5. No Order on Costs: The Court decided that no order regarding costs would be made, which is typical in cases involving interpretations of legal definitions that do not favor one party over the other.

This judgment clarified the legal status of members’ clubs in relation to labor laws, distinguishing them from profit-oriented enterprises and influencing how similar cases would be viewed in the future.