The Bombay High Court ruled that a cooperative housing society cannot be treated as an “industry” or an “establishment” under labour and employment laws merely because it hosts telecommunication infrastructure and employs staff to manage society affairs. The judgment was delivered in a petition filed by a housing society against a Labour Court order which had directed payment of gratuity and dues to a former manager who worked for the society’s upkeep. The manager had contended that the society’s activities, particularly renting out space for telecommunication towers and offering club facilities, amounted to trade or commercial activity, thereby making the society an “industry” or “establishment” within the meaning of the Industrial Disputes Act and the Maharashtra Shops and Establishments Act, and entitling him to statutory benefits on termination of his services.
In setting aside the Labour Court’s order, the High Court observed that the mere installation of telecommunication antennas on the terrace and the generation of income from such installation does not transform a cooperative housing society into an “industry”. The Court explained that the primary objective of a housing society is collective ownership and management of land and building for the benefit of its members, and not to conduct trade or business systematically. While acknowledging that modern housing complexes require professional management due to their size and complexity, the Bench noted that activities such as maintenance, cleanliness, garbage collection, lift operations, parking management, and other services are provided solely for the personal use of members and do not constitute commercial operations.
The Court elaborated that although a few buildings may earn ancillary income through exploitation of commercial opportunities, such as leasing space for hoardings or telecommunication towers, such activities do not acquire the character of systematic trading or commercial business undertaken as an industry. The Bench stressed that generating some income to reduce members’ contributions does not equate to running a deliberate business enterprise. It further clarified that if a society were engaged in clearly defined commercial ventures, such as operating a store, restaurant, or banquet hall for outsiders, and employees were appointed exclusively for those commercial operations, then that part of the activity might come within the definition of “industry”. However, the Court held that merely employing personnel to look after services provided to members cannot convert the society’s activities into an industry under Section 2(j) of the Industrial Disputes Act.
Regarding the applicability of the Payment of Gratuity Act, the High Court reasoned that since the society was not an industry or establishment under relevant statutes, employees such as the upkeep staff or manager could not claim gratuity or other statutory benefits under that act. The Bench noted that when a residential flat is not considered an “establishment” within the statutory framework, a collective body formed by residents to manage the building does not become an establishment by virtue of employing workers for maintenance. It held that the provisions of the Payment of Gratuity Act do not apply to cooperative housing societies that do not qualify as industries or establishments, and this principle extended to the Maharashtra Shops and Establishments Act as well.
In reaching its decision, the Court emphasized the distinction between activities carried out for members’ benefit and systematic commercial activity. It clarified that housing societies typically depend on members’ contributions and do not engage in trade or business of a commercial nature. While the presence of infrastructure such as telecom antennas may generate some income, such incidental earnings do not alter the fundamental nature of the society’s operations. This distinction was central to the High Court’s conclusion that the society’s personnel are not entitled to statutory dues and gratuity under labour and employment laws applicable to industries and establishments.
Accordingly, the High Court allowed the housing society’s petition, quashed the Labour Court order, and held that the society’s activities do not qualify it as an industry or establishment for the purpose of claiming benefits under labour statutes including gratuity. This judgment clarifies that ancillary income‑generating activities within a housing society do not, by themselves, trigger application of labour law protections that are otherwise confined to industries and formal commercial establishments.
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