Landmark judgment exempts housing societies from Industrial and Gratuity Act obligations.
In a significant ruling, the Bombay High Court has determined that a cooperative housing society does not qualify as an 'industry' under the Industrial Disputes Act, 1947, nor as an 'establishment' under the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017. The judgment, delivered by Justice Sandeep V. Marne, addresses Writ Petition Nos. 3908 and 4146 of 2025, filed by the Apsara Co-operative Housing Society Ltd.
The case originated when Vijay Shankar Singh, a former building manager of the society, filed applications seeking gratuity and additional dues under the Payment of Gratuity Act, 1971, and the Industrial Disputes Act, 1947. The society challenged these claims, arguing that as a cooperative housing society, it does not engage in trade or systematic commercial activities that would categorize it as an 'industry' or an 'establishment.'
Justice Marne, referencing multiple precedents, including the Supreme Court's ruling in "Mgt. Of Som Vihar Apartment Owners Housing Maintenance Society Limited v. Workmen," reiterated that cooperative housing societies primarily manage residential buildings for their members and do not partake in business or trade activities. Thus, they cannot be classified as industries or establishments under the respective laws.
The court emphasized that even though some societies might generate income through ancillary activities like renting space for telecommunication antennas, these do not constitute systematic commercial activities. The judgment further clarifies that the primary function of such societies is maintenance and management for personal use by members, which does not equate to industrial or commercial activity.
As a result, the court overturned previous orders from the Labour Court and the Controlling Authority under the PG Act that had allowed Singh's applications to proceed. The judgment effectively exempts similar cooperative housing societies from obligations under the Industrial Disputes Act and the Payment of Gratuity Act, provided they do not engage in business or trade activities.
This ruling is expected to have widespread implications for cooperative housing societies across Maharashtra, ensuring that they are not burdened with industrial obligations unless they engage in commercial activities.
Bottom Line:
Cooperative Housing Society is neither an 'industry' under the Industrial Disputes Act, 1947 nor an 'establishment' under the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017.
Statutory provision(s): Industrial Disputes Act, 1947 Section 2(j), Payment of Gratuity Act, 1971 Section 1(3), Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 Section 2(4).
