'

-

,>

207

.UANGALORE WATER-SUPPLY & SEWERAGE BOARD, ETC. A

v.

R. RAJAPPA & OTHERS

February 21, 1978

&

April 7, 1978 *

,fM. H. BEG, C.J., Y. V. CHANDRACHUD, P. N. BHAGWATI, V. R.

KRISHNA IYER, JASWANT SINGH, v. D. TULZAPURKAR AND

D. A. DESAI, JJ .]

"INDUSTRY" Industry in Section 2(j) of the Industrial Disputes Act,

1941-Triple test to be applied and the doniinant nature test-Whether the

statutory Body performing what is in essence regal functions by providing the

basic amenties

'to the citizens is outside the scope of the

definition~

'fhe Tespondent employees were fined by the Appellant Board for miscon­

duct and various sums were recovered from them. Therefore, they

filed a Claims

Application No. 5 /72 under Section

33C (2) of tho Industrial Disputes Act,

. alleging that the said punishment was imposed in violation of the principles of

natural justice. The appellant Board raised a preliminary objection before the

Labour Court that the Board, a statutory body performing \vhat is in esseilce

a regal function by providing the basic amenities to the citizens, is not an

industry within the meaning of the expression under section 2(j) of the

Industrial Disputes Act and consequently the employees were not workmen

and the Labour Court had no jurisdiction

to decide the claim, of the work­

men. This cbjection being over-ruled, the appellant

Board filed two Writ

Petitions viz. Nos. 868 and 2439 of 1973 before the •Kamataka High Court at

Bangalore. The Division Bench of that High Court dismissed the petitions

and held that the appellant Board

is

"industry" within the meaning of the

expression under section

2(j) of the Industrial Disputes Act, 1947. The

appeals

by

Special Leave, considering "the chances of confusion from the crop

of cases in an area where the common man has to understand and apply the

law and the desirability that there should be

1

t}: comprehensive, clear and conclu­

~ive declaration as to what is an industry under the Industrial Disputes Act

as it stands'' ~·-ere placed for consideration by a larger Bench.

HELD : Per M. H. Beg, C.J. (concurring with Bhag,vati, Krishna Iyer and

Desai, JJ.)

1. The term

"analogous to the trade or business" could not cut down the

·~cope of the term "industry". The said words can reasonably mean only acti­

vity which results in goods made and manufactured or service rendered which

-are capable of being converted into saleable ones. They must be capable of

entering the \vorld of "res comniercium", although they may be kept out of the

market for some reason. It is not the motive of an activity in making goods

or running a service but the possibility of making them marketable if one

who makes goods or renders service so desires, that should determine ·whether

the activity lies within the domain or circle of industry. But eveii thls may

not

be always a satisfactory test. By this test the type

o[ services which ·are

rendered purely for the satisfaction of spiritual or psychological urges of per­

sons rendering those services would be excluded. Wilenever an industrial

dispute \vould arise between either employers and their wo1kmen or between

w·orkmen and \Vorkmen, it should be considered an area whhin the sphere of

~'industry" but not otherwise. In other words, the nature of the nctivity \Vlll

(•be dctermin~d by the conditions W'hich give rise to the likelihood of the occur­

. rence of such disputes and their actual occurrence

in the sphere. [220D, G, 221A-B]

*Judgn1ents published in the order and date as delivered.

B

c

D

E

F

G

H

A

B

c

D

208 SUPREME COURT REPORTS [1978] 3 S.C.R·

"D. N. Banerje'.s case [1953] SCR 302; -Corporation vf City of Nagpur v.

Its Employees [1960] 2 SCR 942; State of Bombay and Otherr v. The Hospital

Mazdoor Sabha and Others [1960] 2 SCR 866 referred to and followed.

3. The term "sovereign should be reserved technically and more correctly

for the sphere

of ultimate decisions. Sovereignty operates on

ai sovereign pfane

of its own. Only those services which are governed by separate rules _ and

constitutional provisions such

as Articles

310 and 311 should, strictly speaking

be excluded

fron1 the sphere of industry by a necessary in1plication.

[221E, GI

H. If.

Kcsva!landa Bharati Sripathagalavaru v. State of Kera/a [1973] Supple· -,;

mental S.C.R. Pa.ge-1 referred to.

4. The special excludes the applicability of the general. Certain public

utility services which

are carried out by governmental agencies or Corporations

are treated by the Act itself as within the sphere of industry. If express

rules

under other enactments govern the relationship between the State as an emplo­

yer and its servants as employees, it may be contended on the strength of such;

provisions that a particular set of employees are outside the scope of the

Industrial Disputes Act. [221G-H, 222A]

5. The

State today increasingly undertakes commercial functions and econo­

mic activities and services as part of its duties in a welfare state. Hence to

artificially exclude state-run industry from the sphere of the Act, unless the

statutory provisions expressly

or by necessary implication have

th<it effect,.

would not be correct. [222F-223A]

Rajasthan State Electricity Board v. Mohan/al [1967] 3 SCR 377;

Rajas­

than v. Mst. Vidyawanti & Anr. [1962] Supplemental 2 SCR 989 at 1002:

referred to.

Per Cha11drachud J.

E I. Section 2(j) of the Industrial Disputes Act (1947) which defines-

F

G

H

"industry" contains words of wide import, as wide as the Legislature could have

possibly 1nade them. The problem of what limitations could and should be

reasona.b1y read in interpreting the wide words used ln 3ection 2(j) is far too

poliQiY oriented to be satisfactorily settled by judicial decisions. The Parliament

must step in and legislate in ·a manner which will leave no doubt as to its

intention. That alone can afford a satisfactory solution to the question which.

has agitated and perplexed the judiciary

at all levels. [284H,

286A-B]

2. flospital Mazdoor Sabha was correctly decided in so far as it held that

the JJ Group of hospitals W<IB an industry but the same cannot be said in regard

to the view of the Court that certain· activities ought to be tr-2n.ted as falling out­

side the definition clause.

[287C-D1

3.

There is no justification for excepting the categories of public utility

activities underaken by the Government in the exercise of its inalieitable furic­

tions

under the constitution, call it regal or sovereign or by any other ni.me,

from the definition of "industry"~ It it be true that one must have regard to

the nature of the activity and not to who engages in it

1 it is beside the poiilt to·

enq

1uire whether

the activity is undertaken by the State, and further, if su,

wb1:ther it is undertaken in fulfilment of the State's constitutional obligatiorus

or in discharge of its constitutional functions. In fact, ,to concede the benefit

of an exception to the. State's activities which are in the nature of sovereign

functioils is really to have regard not so much to the nature of the activity as

to the consideration who engages in that activity; for, sovereign functions can

only be disch3.rged by the State and not by a private person. If the State's.

ina:lienable functions are excepted from. the sweep of the definition contained

in section

2(j), one shall have unwittingly rejected the fundamental test that

it

is the nature of the activity which ought to determine whether the activity

is an industry. Indeed, in this respect, it should make no difference whether,

-

I

)

~-'(

BANGALORE SEWERAGE BOARD V. RAJAPPA 209

on the one hand, an activity is undertaken by a corporate body in the dis­

charge of its statutory functions or, on the other, by the State itself in the

exercise of

its inalienable functions. If the water supply and sewerage

schemes or fire fighting establishments run by a Municipality can be

indus­

tries, so ought to be the manufacture of coins and currency, arms and ammu­

nition and the winning of oil and uranium. The fact that these latter kinds ot

activities are, or can only be, undertaken by the· State does not furnish any

answer to the question whether these activities are industries. When under­

takt!n by a private individual they are industries, therefore, when under­

taken by the State, they are industries. The nature of the activity is the deter·

mining factor and that does not change according to who undertakes it. Items

8, 11, 12,

17 and 18 of the First Schedule read with section 2(n)(vi) of the

lndustrial Disputes Act render support to this view. These provisions which

were described in

Hospital Mazdoor

Sabha as 'very significant' at least show

that, conceivably, a Defence Establishment,

a Mint or a Security

Press can be

an industry even though these activities are, ought to be and can only be under­

taken by the State in the discharge of its constitutional obligations or func­

tions. The State does not trade when it prints a currency note or strikes o:t

coin. And yet, considering the nature of the activity, it is engaged in an

industry when it does so. [287E-H, 288A-B]

4. A systematic activity which is organised or arranged in a manner 1n

which the trade or business is generally organised or arranged would be an

ind\il.StTY despite the fact that it proceeds from charitable motives. It is in the

nature of the activity that one has to consider and it is upon the application of

that test that the State's inalienable functions fall within the definition

of

industry. The very same principles must yield the result that just as the

con­

sideration as to who conducts the activity, is irrelevant for determining whether

the activity

is an industry so is the fact that the activity is charitable in nature

or is

unc,lertaken with a charitable motive. The status or capacity corporate

or constitutional, of the employer would have, if

at all, closer nexus, than his motive on the question whether the r.-ctivity is an industry. The motive which

propels the activity

is yet another step removed and ex

liypothesi can have

no relevance on the question

as to what is the nature of the activity. It is

never true to say that the nature of the activities is charitable. The subjective

n1otive force of an activity can be charity but for the purpose of deciding

\vhether an activity

is an industry one has to look at the process involved in

the activity, objectively. The jural foundation of any attempt to except

charitable enterprises from the scope of the definition can only be that such

enterprises are

not undertaken for profit. But then, that clearly, is to introduce

the

profit concept by a, side wind, a concept which has b~en rejected consistently

over the years. If any principle can be said

to be settled law in this vexed

field it

is this : the twin consideration of profit n1otive and capital

investm~nt JS

irrelevant for determining whether an activity is an industry. Therefore, acti­

vities which are don1inated by charitable motives either in the sense that they

fnvolve the rendering of free

or

near free services or in the sense that the pro­

fits which they yield are diverted to charitable purposes, are not beyond the

pale of the definition of section 2(j). It is as much beside the point to inquir"

who is the ernployer as it is to inquire, \1.'hy is the activity undertaken a-nd

\'hat the ernployer does with the profits, if any. [288C-H, 289A]

5. By this test a Solicitor's establishment \1.'ould be an industry. A Solicitor

undoubtedly does not carry on a trade or business when he acts for his client

or advises hi111 or plends for him. if and when pleading is permissible to him.

He pursues a profession which is variously and justifia·bly described as learried,

liberal or noble. But it is difficult to infer from the language of the definition

in section 2(j) that the Legislature could not have intended to bring in a

liberal profession like that of an Attornev within the ambit of the definition

of 'industry". [289A-B] -

National Union of Cornn1ercial Etnployees & Another v. M. R. Meher.

Industrial Tribunal Bornbav & Ors. [1962] Supplemental 3 SCR 157 dissented

fron1. ·

A.

c

E

F

G

H;

A

B

c

D

E

F

210 SUPREME COURT REPORTS [1978] 3 s.c.R.

6. In Hospital Mazdoor Sabha the Court while evolving a working principle

stated that an industrial activity generally involves,

inter alia, the cooperation

of the employer and the employees. That the production of goods or the

rendering

of material services to the community must be the direct and proxi­

mate result of such cooperation is a further extension of that principle and it

is broadly by the application thereof that a Solicitor's establishment is held

not to attract the definition clause. These refinements are, with respect not

warranted by the words of the definition, apart from the consideration that

in

practice they make the application of the definition to concrele cases depen­

dent upon a factual assessment so highly subjective

as to Jead to confusion

:ihQ

uncerta-inty in the understanding of the true legal position. Granting that the

language

of

the definition is so \Vide that some limitation ought to be read

into

it, one niust stop at a point beyond

v,:hich the Jefinition will skid into

a domain too rarefied to be realistic. Whether the cooperation between the

employer and the employee

is the proximate cause of the

ultimate product and

bears direct nexus with it is a test which is a-lmost impossible of application

with any degree of assurance or certitude. It will be as 1nuch true to say that

the Solicitor's Assistant, Managing Clerk, Librarian and the Typist do not

directly contribute

to the intellectual end product which is a

crea~ion of his personal

professional skill, as that, without their active assistance and cooperation

it

will be impossible for him to function effectively. The unhappy state

of

affairs in which the law is marooned will continue to baffie the skilled profes­

sional and his employees alike as also the Judge who has to perform the unen­

viable task

of sitting in judgment over the directness of the cooperation between

the employer and the

employee, until such time as the Jegislature decides to

manifest its intention by the use of clear and indubious language. Beside the

fact that this Court has so held 'in l\'ational Union of Comn1ercial. Employes

the legislature will find a plausible case for exempting the ]earned and liberal

professions of Lawyers, Solicitors, Doctors, Engineers, Chartered Accountants

and the like from the operation

of industrial laws. But until that happens.

in the present state

of the law it

ill difficult by judicial interpretation to

create exemptions in favour of any particular class. [289C-H]

7. The case of the c1ubs, on the present definition is weaker still. The de­

finition squarely covers them and there

is no justification for amending the law

so as to exclude them from the operation of the industrial laws. The fact

that the running of clubs

is not a calling of the club or its managing committee,

that the club has

no existence apart from its members that it exists for its

members though occasionally strangers take the benefit of its services and that

even after the admission

of guests, the club remains

a members' self-serving

institution does not touch the cor:e of the problem. f290:\-BJ

Per lyer ]. (on behalf of Bhagwati, }. J. Desai ]. and hi111self.)

(1) 'Indu~try as defined in Sec. 2(j) and explained in Banerji's case has a

wide import. [282A] ·

I. (a) \Vhere (i) systematic activity, (ii) organized by cooperation oetwecn

employer and en1ployee (the direct and substantial elern(:nt is chimerical); (iii)

for the production and/or distribution of goods and services calculated to

satisfy human wants and wishes (not sprituql or religious, but iri.clusive of

material things or services geared to celestial bliss e.g. making, on a larg~

-G scale prasad or food), prima facie there is an 'industry' in that enterprise.

(b) Absence· of profit motive or gainful objective is irrelevant, be the

venture in the public, joint, private

or other sector.

(c) The true focus

is functional and the decisive test is the nature of the

activity with special emphasis on the employer·employee relations.

(d) If the organisation is a trade or business it does not cease to be one

because

of philanthropy animating the undertaking.

[282.A.·C]

II. Although section 2(j) uses words of the widest amplitude i~ its two

Jimbs, their meaning cannot be magnified to overeach itself. [28201

,,

I

)

r

l

)

BANGALORE SEWERAGE BOARD V. RA.JAPPA 211

(a) 'Undertaking' must suffer a contextual and associational shrinkage as

explained in Banerji and in this judgment; so also, service, calling and the

like. This yields the inference that all organized activity possessing the triple

.elements in I (supra), although not trade or business, may still be 'industry'

provided the nature of the actirity, viz. the employer-employee basis~

bears resemblance to what we find in trade or business. This takes into the

fold of 'industry' undertakings, callings and services, adventures' analogous to

the carrying on of trade or business'. All features, other than the methodology

-of carrying on the activity viz. in organizing the cooperation between employer

and employee, may be dissimilar.

It does not, matter, if on the employment

terms there

is analogy. [282D-E]

A

B

ill. Application of these guidelines should not stop short of their logical

reach by invocation of creeds, cults or inner sense of incongn1ity

or outer ·sense of n1otivation for or resultant of the economic operations. The ideology

·of the Act being industrial peace, regulation and resolution of industrial

disputes bctv;·een en1ployer and \VOrkmen, the range of this statutory ideolo-

-gy must inform the reach of the statutory definition. Nothing less, nothing C

more.

(a) The consequences are (i) professions, (ii) clubs (iii) educational

:institutions (iv) cooperatives, (v) research institutes (vi) charitable projects

and (vii) other kindred adventures, if they fulfil the triple tests listed in 1

{supra), cannot be exempted from the scope of section

2(j).

(b) A restricted category of professions, clubs, cooperatives and even gurukular and little research labs, may qualify for exemption if, in simple

ventures, substantially and going

by the dominant nature criterion, substanti­

vely

no

:mployees are entertained but in minimal matters, marginal employees

.are hired without destroying the non-employee character of the unit.

(

c) lf, in a pious or altruistic mission, many employ themselves, free or

for

sm~1ll hono1aria or like return, n1ainly drawn by ~ha.ring 1n the purpose or

,cause, such as lawyers volunteering to run a free legal services clinic or doctors

serving in 'their spare hours in a free nledical centre

on asramites working at

the bidding of the holiness, divinity or like central personality, and the ser-

vices are supplied free or at

nominal cost and those who serve &re not engaged

for remuneration or on the basis of master and servant relationship, then the

institution

is not an industry even if stray servants, manual or technical, are

hired.

Such eleemosynary or like undertakings alone are exempt-not other

generosity, compassion, deveolpmental passion or project. [282F-H, 283A-C]

IV. The don1inant nature test :

D

E -

F

(a) Whe~e a complex of activities, some of which qualify for exemption,

others not, 1n\•olves employees on the total undertaking some of whom are

not 'workmen' as in the University of Delhi case or som~ departments are not

productive of goods and services if isolated, even then, the predominant nature

of the servic.es and the integ_rated nature of the departments as explained in

the Corporation of Nagpur, will be tbe true test. The vrhole undertaking will be

'industry' although those who are not 'workmen' by definition may riot benefit

by the status. G

(b) Notwithstanding the previous clauses, sovereign functions, strictly under­

stood, (alone), qualify for exemption, not the welfare activities of economic

adventures undertaken by Government or statutory bodies .

. (c) Ev~n in ~epartments discharging soYereign functions if there are units

which are industnes and they are substantially severable then they can

be con-

sidered to come witbin sec.

2(j). '

(d) Constitutionally and competently enacted legislative provisions may

well remove from .the scope of the Act categories which otherwise may

be

covered thereby. [28JC-F]

H

A

B

c

D

212 SUPREME COURT REPORTS [1978] 3 s.c.R-

Ma11age111ent of Safdarjung Hospila[, New Delhi v. Kuldip Singh Sethi

[1971] 1 SCR 177=AIR (1970) S.C. 1407 Dhanrajgiri Hospital v. Workmen

AIR 1975 S.C. 2032, National Union of Commercial E1nployees & Anr. v.

M. R. Meller, Industrial Tribunal, Bombay AIR, [1962] S.C. 1080. I?abindranath

Sen & Ors. v. First Industrial Tribunal, West Bengal AIR -[1963}: Cal. 310;

University of Delhi & Anr. v. Ramnath & Ors. AIR [1963] S.C. 1873; Madras

Gymkhana Club v. Employees' Union v. Management AIR 1968] S.C. 554.

Cricket Club of India v. Bombay Labour Union & Anr. [1969] I SCR 600=

AIR [1969] SC 276 over-ruled;

Hospital Mazdoor's case AIR 1960 S.C. 610 approved.

Per Jaswant Singh J. (on behalf of Tulzapurkar J and himself).

l. Despite the width of the definition it could not be the intentien of the

legislature that categories 2 and 3 of the charities alluded to in the 1ead1ng

judgipent. hospitals run on charitable basis or as a pa.rt of the functions.

Of 'the Government or local bodies like Municipalities and educational and

research institutions whether run

by private entities or by Government and

liberal and learned professions

Jike that of doctors, lawyers and

teachers, the

pµrsvit of ·which is dependant up0n an individual's own education, intellectual

atta•inmcnts and special expertise should fall within the pale of the definition.

[290G·H, 291A}

2. The definiton in

s. 2(j) of the Act is limited to those activities

systemati~

cally or habitually undertaken on commercial lines by private entrepreneurs

with the cooperation of employees for the production or distribution

of goods

or for the rendering of material services to the community at large or a

part

of such community. In the case of liberal professions, the contribution of

the usual type

of employees employed by the professionals to the value of

the

end product (viz. advice and services rendered to the client) is so marginal

that the end product cannot be regarded as the fruit of the cooperation bet­

ween the professional and his employees. [291A-C]

E 3. The need for excluding some callings, services and undertakings from

F

G

the purview of the aforesaid definition has been felt and recognised by this

Court from time to time while explaining the scope of the definition of "industry". [29 IC-DJ

OBSERV AT/ON :

4. It is high time that the Legislature steps in with a comprehensive bill

to clean

up the fog and remove the doubts and set at rest once for all the

controversy

v1hlch crops up from time to tin1e in relation to the meaning of

the aforesaid term rendering it necessary for larger Benches of this Court to be

constituted v.,hich are driven to the necessity of evolving a working formula

to cover particular cases. [292 A-B)]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 753-754 of

1975

(Appeals by Special, Leave from the Judgment and Order dated

5-7-1974 of the Karnataka High Court

in Writ Petition Nos. 868 and

2439 of 1973)

CIVIL APPEAL Nos : 1544-1545 OF 1975

H (Appeals by Special Leave from the Judgments and Order dated"

15-4-75 and 11-6-1975 of the Andhra Pradesh High in Writ Appeals

Nos. 205 and 231 of 1975)

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I

..

BANGALORE SEWERAGE BOARD V. RAJ APPA 213

SPECIAL LEAVE PETITION (CIVIL) No. 3359 OF 1977

(From the Award dated 9-3-1977 of the Industrial Tribunal Gujarat

in Ref. I.T. No. 183 of 1973 published in the Gujarat Govt. Gazette

dated 14-4-1977)

CIVIL

APPEAL N 0. 1171 OF 1972

• J (Appeal by Special Leave from the Judgment and Order dated

18-8-

71 of the Madhya

Pradesh High Court Gwalior Bench in Misc.

Petition No. 45 of 1970)

t

CIVIL APPEAL No. 1555 OF 1970

(Appeal by Special Leave from the Award dated 6-12-1969 of the

4th Industrial Tribunal West Bengal in Case No. 428 of 1966 publish­

ed in the Calcutta Gazette dated 15-1-1970)

CIVIL

APPEAL No. 2151 OF 1970

A

B

c

(Appeal by Special Leave from the Order dated 28-2-1970 'of the

Additional Industrial Tribunal, Delhi in I.D. No. 23 of 1969) D

>

CIVIL APPEAL No. 898 OF 1976

(Appeal by Special Leave from the Order dated 23-1-1976 of the

Labour Court Delhi in L.C.I.D. No. 14/72)

CIVIL APPEAL Nos. 1132-1135 OF 1977

(Appeal by Special Leave from the Order dated 25-11-1976 of the

Industrial Tribunal

(II)

U.P. at Lucknow in Adj. Case Nos. 3-6/76)

CIVIL APPEAL No. 2119 OF 1970

(Appeal by Special Leave from the Award dated 16-4-1970 of the

Industrial Tribunal

(I)

U.P. Allahabad in Reference No. 15 of 1968

published

in the

Uttar Pradesh Gazette dated the 18th July, 1970)

S. V. Gupte, Att. Genl., S. V. Subrahmanyam, M. Veerappa, and

K. N. Bhat for the appellants in C.A. No. 753-754

E

F

M. K. Ramamurthi (in CA753), M. C. Narasimhan (in CA

754), N. Nettar and J. Ramamurthi for the respondents G

R. K. Garg, S. C. Agarwal, V. J. Francis and A. Gupta for the

Intervener , "''!ill

G. B. Pai, 0. C. Mathur, D. N. Misra, Shri Narain and K. J. John

for the Interveners (T. B. Hospital)

.._ '!' Naunil Lal & Miss Lalita Kohli for the appellant in C.A Nos H

1544-45 . . .

P. P. Rao and G. N. Rao for R. 1 in CA 1545

A

B

214 SUPREME COURT REPORTS [1978] 3 S.C.R,

P. P. Rao & T. V. S. N. Chari and Ashwani Kumar for R. 3 in CA

1545

I. N. Shroff and H.

S. Parihar for the Appellant in CA No. 1171/

72

S. K. Gambhir, Mohan !ha & B. Ra. Rakhiani for the respon­

dent

in CA No. 1171/72

K. Rajendra Chowdhari & E.

C. Agarwala for the appellant in

CA 1555/1970

L. M. Singhvi, H. K. Puri, Miss Aslwka Jain, M. L. Dingra, Vivek

Seth & H. L. Kumar for the appellant in CA No. 2151

A. K. Gupta & Aruneshwar Gupta for the respondent in CA

C No. 2151

D

E

F

G

H

V. M. Tarkunde, 0. C. Mathur, Shri Narain, K. J. John for the

appellant

in CA 898

Madan Mohan for the respondent in CA 898

In person : For the Applicant/Intervener

·in CA 898

A. K. Sen & E. C. Agarwala for the appellant in CA 1132-35

Urmila Kapoor, Sobha Dikshit & Kamlesh Bansal for the appel­

lant in CA Nos. 1132-1135

A. K. Ganguli & D.

P. Mukherjee for the appellant in CA 2119/

70

R. K. Garg, S. C. Agarwa/a, V. J. Francis & A. Gupta for the

respondent in 2119 /70

D. V. Patel, M. V. Goswami & Ambrish Kumar for the peti­

tioner

in SLP No. 3359/77

P. G. GO'khale, P. H. Parekh, Manju Sharma, Kai/ash Vasdev &

C. B. Singh for the respondent in SLP No. 3359.

The following Judgments

were delivered

BEG, C.J. I am in general agreement with the line of thinking

adopted and the conclusions reached by

my learned brother Krishna

Iyer. I would, however, like

to add my reasons for this agreement

and to indicate

my approach to a problem where relevant legislation

leaves so mnch for determination by the Court

as to enable ns to

perform a function very akin to legislation.

My learned brother has relied on what was considered in England

a somewhat unorthodox method of construction in

Seaford Court

Estates Ltd.

v.

Asher(!), where Lord Denning, L.J., said :

"When a defect appears a judge cannot simply fold his

hands and blame the draftsman. He must set to work on

the constructive task of finding the intention of Parliament­

and then he must supplement the written words so as to give

'force and life' to the intention of legislatnre. A judge

should ask himself the question

how, if !he makers of the

(!) [1949] 2 All. E. R. 155 at 164.

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BANGALORE SEWERAGE BOARD v. RAJAPPA (Beg, C.J.) 215 215

Act had themselves come across this ruck· in the texture of

it, they would have straightened it out ? He must then do

as they would have done. A judge must not alter the material

of which the Act

is woven, but he can and should iron

out the

creases".

When this case went up to the House of Lords it appears that the

Law Lords disapproved of the bold effort of Lord Denning

to make

ambiguous legislation more comprehensible. Lord Simonds found

it to

be "'a naked usurpation of the legislative function under the

thin disguise of interpretation". Lord Morton (with whom Lord

. Goddard entirely agreed) observed : "These heroics are out of place"

and Lord Tucker, said "Your Lordships would be acting in a legislative

rather than a judicial capacity

if the view put forward by Deuning,

L.J., were to

prevail".

Perhaps, with the passage of time, what may be described as the

extension

of a method resembling the

"arm chair rule" in the cons­

truction of wills, judges can more frankly step into the shoes of the

legislature where an enactment leaves its own intentions in much

too

nebulous or uncertain a state. In M. Pentiah v. Verramallappa(

1

),

Sarkar, J. approved of the reasoning, set out above, adopted by Lord

Denning. And, I must say that,

in a case where the definition of

"industry" is left in the state in which we find it, the situation perhaps

calls for

some judicial heroics to cope with the difficulties raised.

In

his heroic efforts, my learned brother Krishna Iyer, if I may

say

so with great respect, has not discarded the tests of industry for­

mulated in the past. Indeed, he has actually restored the tests laid

down by this Court

in D. N. Banerji"s case(2), and, after that, in the

Corporation of the City of Nagpur v. Its Employees('), and State of

Bombay &

Ors. v. The Hospital Mazdoor Sabha & (Ors.) (

4

), to their

prestine glory. My learned brother has, however, rejected what may

appear, to

use the word employed recently by an American Jurist,

"excrescences" of subjective notions of judges which may have blurred

those tests. The temptation

is great, in such cases, for us to give

expression of what may be purely subjective personal predilections.

It has, however, to be resisted if law is to possess a direction in

conformity with Constitutional objectives and criteria which must

impart that reasonable state of predictability and certainty to inter­

pretations of the Constitution

as well as to the laws made under it

which citizens should expect. We have,

so, to speak, to chart what

may appear to

be a

Sea in which the ship of law like Noah's ark may

have to be navigated. Indeed, Lord Sankey on one occasion, said

that law itself

is like the ark to which people look for some certainty

and security amidst the shifting sands of political

life and vicissitudes

of times. The Constitution

and the directive principles of State policy,

read

with the basic fundamental rights, provide us with a compass.

This Court has tried to indicate in recent cases that the meaning of

(I) A.LR. 1961

S.C. 1107 @ 1115.

(2) [1953] S.C.R. 302.

(3) [1960] 2 S.C.R. 942.

(4) [1960] 2 S.C.R. 866.

A

B

c

D

E

F

G

H

A

B

D

E

F

G

H

216 SUPREME COURT REPORTS [1978] 3 S.C·R,

what could be described as a basic "structure" of the Constitution

must necessarily be found in express provisions of the construction

and not merely in subjective notions about meanings of words. Similar

must be the reasoning we must employ in extracting the core of

meaning hidden between the interstices of statutory provisious.

Each of us

is likely to have a subjective notion about

"industry".

For objectivity, we have tQ look first to the words used in the statutory

provision defining industry in an attempt to

find the meaning. If that

meaning

is clear, we need proceed no further. But, the trouble here

is that the words found there do not yield a meaning so readily. They

refer to what employers

or workers may do as parts of their ordinary

avocation or business in life. When

we turn to the meaning given

of the term

"worker" in Sec. 2(s) of the Act, we are once more

driven back to

find it in the bosom of

"industry", for the term

"worker" is defined as one :

"employed in any industry to do any skilled or unskill­

ed manual, supervisory, technical or clerical work for hire

or reward, whether the terms of employment be express or

implied, and for the purposes of any proceeding under this

Act in relation to an industrial dispute, includes any such

person who has been dismissed, discharged or retrenched

in

connection with, or as a consequence of that dispute, or

whose dismissal, discharge or retrenchment has led to that

dispute".

The definition, however, excludes specifically those who are subject

to the Army Act 1950 or the Air Force Act 1950, or the Navy Disci­

pline Act 1934,

as well as those who are employed in the Police

Service or Officers and other employees of a Prison, or employed in

mainly managerial or administrative capacities or who, being

employed

in supervisory capacity, draw wages exceeding Rs. 500/-per men­

sem.

Thus, in order to draw the "circle of industry", to use the expres­

sion of my learned brother Iyer, we do not find even the term "work­

man" illuminating. The definition only enables us to see that certain

classes of persons employed in the service of the State are excluded

from the purview of industrial dispute which the Act seeks to provide

for in the interests of industrial peace and harmony between the

employers and employees so that the welfare of the nation is secured.

The result

is that we have then to turn to the preamble to find the

object of the Act itself,

to the legislative history of the Act, and to

the socio-economic ethos and aspirations and needs of the times

in

which the Act was passed.

The method which has been followed, whether it be called inter­

pretation

or construction of a part of an organic whole in which the

statute, its objectives, its past and its direction for the future, its

constitutional setting are all parts of this whole with their correlated

functions. Perhaps it

is impossible, in adopting such a

method of

interpretation, which some may still consider unorthodox, a certain

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BANGALORE SEWERAGE BOARD V. RAJAPPA (Beg, C.J.) 217

degree of subjectivity. But, our attempt should be not to break with

the

well established principles of

interpretation in doing so. Progres­

sive rational and

beneficial modes

Of interJ)retation import and fit into

the body of the old what may

be new.

It is a process of adaptation

for giving new vitality in keeping with the progress of thought in

our times. All this, however, is not really novel, although we may

try to say it in a new

way.

)

If one keeps in mind what was laid down in Heydon's

case (supra)

referred to by my learned brother Iyer, the

well known principle that

a statute must be

interpreted as a whole, in the context of all the

provisions of the statute, its objects, the

preamble, and the functions

of various provisions, the true meaning may emerge.

It may not be

strictly a dictionary meaning in snch cases. Indeed, even in a modern

statute the meaning of a term snch as "Industry" may change with a

rapidly changed social and economic structure. For this proposition

I can

do no better than to quote Subba Rao J. speaking for this Court

in

The Senior Electric Inspector v. Laxmi Narayan Chopra(') :

"The legal position may be summarized thus : Tlie

maxim contemporanea expositio as laid down by Coke was

applied to construing ancient statutes but not to interpreting

Acts

which are comparatively modern. There is a good

reason for this change

in the mode of interpretation. The

fundamental rule of construction

is the same whether the

Court is asked to construe a provision of an ancient statute

or that of a modern one, namely, what is the expressed inten­

tion of the Legislature. It

is perhaps difficult to attribute

to a legislative body functioning in a static society that

its

intention was couched in terms of considerable breadth so as

to take within its sweep the future developments comprehend­

ed by the phraseology used. It is more reasonable to con­

fine its intention only to the circumstances obtaining at the

time the law

was made. But in a modern progressive society

it would be unreasonable to confine the intention of a

Legislature to the meaning attributable to the

word used

at

the time the law was made, for a modern Legislature

making laws to govern a society which

is fast moving must

be presumed

to be aware of an enlarged meaning the same

concept might attract with the march of time and with the

revolutionary changes brought abont in social, economic,

political and scientific and other

fields of human activity.

Indeed, unless a contrary intention appears, an interpreta­

tion should

be given to the words used to take in new facts

and situations, if the words are capable of comprehending

them."

Jn the Workmen of Dimakuchi Tea Estate v. The Management of

Dimakuchi Tea Estate(')

it was observed :

(I) [1962! 3

S.C,R. 146.

(2) [1958] S.0.R. 1156 at 1163.

15-21 ISCJ/7~

A

c

D

E

F

H

A

B

c

D

E

F

G

H

218 SUPREME COURT REPORTS [1978] 3 s.c.11..

"A little careful consideration will show, however, that

the expression "any person" occurring ill the third part of

the definition clause cannot mean anybody and everybody

in this wide world. First of all the subject matter oi dis­

pute must relate to (i) employment or non-employment or

(ii) terms of employment or conditions of Jabour of any

person; these necessarily import a limitation

in the sense that

a person

in respect of whom the employer-employee rela­

tion never existed or can never possibly exist cannot be the

subject matter of a dispute between employers and workmen.

Secondly, the definition clause must

be read in the context

of the subject matter and scheme of the Act, and consistent-.

ly with the objects and other provisions of the Act. It is ,

well settled that

"the words of a statute, when there is a

doubt about their meaning are to be understood

in the sense

in which they best harmonise with the subject of the enact­

ment and the object which the Legislature has

in view.

Their meaning is found not so much in strictly grammatical

or etymological propriety of language, nor even

in its popular

use, as in the subject or in the occasion on which they

are used, and the object to be

attained." (Maxwell, Inter­

pretation of Statutes, 9th Edition, p. 55),

It was also said there :

"It is necessary, therefore, to take the Act as a whole

and examine

its salient provisions. The long title shows

that

the object of the Act is

"to make provision for the in­

vestigation and settlement of industrial disputes, and for

certain other purposes." The preamble states the same

object and

s. 2 of the Act which contains definitions states

that unless there

is anything repugnant in the subject or

context, certain expressions will have certain

meanings."

Thus, it is in the context of the purpose of the Act that the meaning

of the term 'industry'

was sought.

Again dealing

with the objects of the Act before us in Budge Budge

Municipality

case(') this Court said :

"When our Act came to be passed, labour disputes had

already assumed big proportions and there were clashes bet­

ween workmen and employers in several instances. We can

assume that

it was to meet such a situation that the Act was

enacted, and it is consequently necessary to give the terms

employed in the Act referring to such disputes

as wide an

import

as reasonably possible."

In that very case this Court also said (at p.

308) :

"There is nothing, however, to prevent a statute from

giving the word "industry" and the,wor~s "indus!rial dispute"

a wider and more comprehensive import m order to

(1) [1953] S.C.R. 302 at 310.

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·BANGALORE SEWERAGE BOARD v. RAJAPPA (Beg, C.J.) 219

meet the requirements of rapid jndustrial progress and to

bring about in the interests

of industrial peace and economy,

a fair

ang satisfactory adjustment of relations between

employers and workmen

in a variety of fields of activity. It

is obvious that the limited concept of what an industry meant

in early times must

now yield place to an enormously wider

concept so as to take in various and varied forms of industry,

so that disputes arising in connection with them might be

settled quickly without much dislocation and

disorganisa­

tiou of the needs of the society and in a manner more adapt­

ed to conciliation and settlement than a determination of the

respective rights and liabilities according to strict legal pro­

cedure and principles."

Again, in Hospital Mazdoor Sabha case(') this Court said:

"JI the .object and scope of the statute are considered

there would

be no difficulty in holding that the relevant

words of wide import have

been deliberately used by the

Legislature

in defining

"industry" in Sec. 2(j). The object

of the Act

was to make provision for the investigation and

settlement of industrial disputes, and the extent and scope

of the provisions would be realised if

we bear in mind the

definition of

"industrial disputes" given by Section 2(k),

of "wages" by Section 2(rr), "workmen" by Section 2(s),

and of "employer" by Section 2(g) ."

lt added:

B

c

D

"It is obvious that the words used in an inclusive defini- E

lion denote extension and cannot be treated

as restricted in

any sense."

I may here set out the definition given by the Act of the term •industry' in section 2, sub. s. (j) :

"(j) "Industry" means any business, trade, undertaking,

manufacture or calling of employers and includes any calling,

service, employment, handicraft, or industrial occupation or

avocation of

workmen;"

F

It seems to me that the definition was not meant to provide more

"than a guide. It raises doubts as to what could be meant by the

"calling of employers" even if business, trade, undertaking or manu· G

'facture could be found capable of being more clearly delineated. It

is clear that there is no mention here of any profit motive. Obviously,

the word "manufacture" of employers could not be interpreted liter­

ally. It merely means a process of manufacture in which the employ·

ers may be engaged. It is, however, evident that the term 'employer'

necessarily postulates employees without whom there can

be no

employers. But, the second part

of the definition makes the concept H

more nebulous as it, obviously, extends the definition to

"any calling,

~I) [1960] 2 S.C.R. ~66 at 875.

A

B

c

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220 SUPREME COURT REPORTS [ 1978] 3 s.c.R.

service, employment, handicraft or industrial occupation or avocation

of workmen". I have already examined the meaning of the term

"workman" which refers us back to what is an "industry". It seems

to me that the second part, relating to workmen, must necessarily

indicate something which may exclude employers and include an

"industry" consisting of individual handicraftsmen or workmen only.

At any rate, the meaning of industrial disputes includes disputes bet­

ween workmen and workmen also. Therefore, I cannot see how we

can cut down the wide ambit of last part of the definition by search­

ing for the pre-dominant meaning in the first part unless

we were

determined, at the outset, to curtail the scope of the second part some­

how. Jf we do that, we will be deliberately cutting down the real

sweep of the last part. Neither

"Noscitur a sociis" rule nor the

"ejusdem generis" rule are adequate for such a case.

There

is wisdom in the suggestion that in view of these difficulties

in finding the meaning

of the term 'industry', as defined in the Act, it

is best to say that an industry cannot strictly be defined but can only

be described. But, laying

down such a rule may again leave too

wide a door open for speculation and subjective notions

as to what

is describable

as an industry. It is, perhaps, better to look for a

rough rule

of guidance in such a case by considering what the con­

cept of 'industry' must exclude.

I think the phrase 'analogous

to industry', which has been used

in the

Safdarjung Hospital case (supra) could not really cut down

E the scope of

"industry". The result, however, of that decision has

been that the scope has been cut

down. I, therefore, completely agree

with

my learned brother that the decisions of this Court in Safdarjung

Hmpital case and other cases mentioned by my learned brother must

be held

to be overruled. It seems to me that the term 'analogous

to trade or business, could reasonably mean only activity

which results

in goods made or manufactured or services rendered which are capa-

F ble

of being converted into saleable ones. They must be capable

of entering the world

of

"res commercium" although they may be

kept out of the market for some reason. It is not the motive of an

activity

in making goods or rendering a service, but the possibillty of

making them marketable

if one who makes goods or renders services.

so desires, tbat should determine whether the activity lies within the

domain or circle of industry. But, even this

may not be

always a

G satisfactory test.

H

The test indicated above would necessarily exclude the type of

services which are rendered purely for the satisfaction of spiritual or

psychological urges of persons rendering those services. These can­

not be bought or sold. For persons rendering

such services there

may be no 'industry', but, for persons who want to benefit from the

services rendered, it could become an

"industry". When services

are rendered by groups of ·charitable individuals to the111:selves or

others out of missionary zeal and purely charitable mol!ves, there

would hardly be any need to invoke the provisions of the Industrial

'

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BANGALORE SEWERAGE BOARD V. RAJAPPA (Beg, C.J.) 221

Disputes Act to protect them. Such is not the type of persons who A

will raise such a dispute

as workmen or employees whatever

they may

be doing.

This leads one on to consider another kind of test.

It is that,

wherever an industrial dispute could arise between either employers

and their workmen or between workmen and workmen, it should be

considered an area within the sphere of 'industry' but not

otherwise. B

In other words, the nature of the activity will be determined by the

conditions which

give rise to the likelihood of occurrence of such

dis­

putes and their actual occurrence in the sphere. This may be a

pragmatic test. For example, a lawyer or a solicitor could not raise

a dispute with his litigants in general on the footing that they were

his employers. Nor could doctors raise disputes with their patients

on such a footing. Again, the personal character of the relationship

c

between a doctor and his assistant and a lawyer and his clerk may

be

of such a kind that it requires complete confidence and harmony

in the productive activity in which they may be cooperating so

that,

unless the operations of the solicitor or the lawyer or the doctor

take an organised and systematised form of a business or trade,

employing a number of persons, in which disputes could arise bet­

ween employers and their employees, they would not enter the field D

of industry. The same type of activity may have both industrial and

non-industrial aspects or sectors.

I would also like to make a

few observations about the so called

"sovereign" functions which have been placed outside the field of

industry. I

do not feel happy about the use of the term

"sovereign"

here. I think that the term 'sovereign' should be reserved, technically E

and more correctly, for the sphere of ultimate decisions. Sovereignty

operates on a sovereign plane of its

own as I suggested in

Keshva­

nanda Bharati's case(') supported by a quotation from Ernest Barker's

"Social and Political Theory". Again, the term "Regal", from which

the term "sovereign" functions appears to be derived, seems to be

a

misfit in a Republic where the citizen shares the political sovereignty

in which he has even a legal share, however small,

in as much as he

exercises the right to vote. What is meant by the use of the term F

"sovereign", in relation to the activities of the State, is more accurately

brought out by usinl! the term "1wvernmental" functions although

there are difficulties here also in

as much as the Government has

entered largely now

fields of industry. Therefore, only

those services

which are governed by separate rules and constitutional provisions, such

as Article

310 and 311 should, strictly speaking, be excluded from

the sphere of industry by necessary implication. G

I am impressed by the argument that certain public utility services

which are carried out by govermnental agencies

or

corporations are

treated by the Act itself as within the sphere of industry. If express

ruies under other enactments govern the relationship between the

State as an employer and its servants as employees it may be' contend·

ed, on the strength of such provisions, that a particular set of employe-H

es are outside the scope of the Industrial Disputes Act for that reason.

The special excludes the applicability of the general. We cannot

(I) 1973 Sup.S. C. R. P l

222 SUPREME COURT REPORTS [1978] 3 s.c.Jt~

A ~orget that we have to detetmine the meaning of the term 'industry!

m the context of and for the purposes of matters provided for in the'·

Industrial Disputes Act only.

I have contented myself with a very brief and hurried outline of

my line of thillking: partly because I am in agreement with the conclu­

sions of my Ieii.rned brother Iyer and I also endorse his reasoning·

B allilost wholly, but even more because the opinion I have dictated just

now must be given today if I have to deliver it at all. From tomor­

row I cease to have any authority

as a Judge to deliver it. There­

fore, I have really

no time to discuss the large number of cases cited

before us, including

those on what are known as "sovereign" func­

tions.

c

D

I will, however, quote a passage from State of Rajasthan v.

Msh

Vidyawati & Anr.(1) where this Court said:

"In this connection it has to be remembered that under

the Constitution

we have established a welfare state, whose

functions arc not confined only to maintaining

Jaw and order

but extend to engaging

in all activities including industry,

public transport, state trading, to name only a

few of them.

In so far as the

State activities have such wide ramifications

involving not only the

use of sovereign powers but also its

powers

as employers in so many public sectors, it is too much

to claim that the

State should be immune from the conse­

quences of tortious acts of its employees committed in the

course of their employment

as

such."

,

E I may also quote another passage from Rajasthan State E/ecrricity

Board v. Mohan Lal(') to show that the State today increasingly-/'

undertakes commercial functions and economic activities and services.

F

G

H

as part of its duties in a welfare state. The Court said there :

"Under the Constitution, the State is itself envisaged as

having the rigbt to carry on trade or business as mentioned

in Art. 19(l)(g). In Part IV, the State has been given

the same meaning

as in Art. 12 and one of the Directive

Principles laid

down in Art. 46 is that the

State shall pro­

mote with special care the educational and economic inter­

ests of the weaker sections of the people. The State, as

defined in Art. 12, is thus comprehended to include bodies

created for the purpose of promoting the educational and

economic interests of the people. The State, as constituted

by our Constitution,

is further specifically empowered. under

Art. 298 to carry on any trade or business. The circum­stances tllat the Board under the Electricity Supply Act is

required to carry on some activities of the nature of trade

or commerce does not, therefore,

give any indication that

the Board must be excluded from the scope of the word "State" as used in Art. 12."

(I) [1962] Supp, 2 S.C.R. 989 at 1002.

(2)

[1967] (3)

SCR 377 at 385.

..

BANGALORE SEWEAAGE BOARD v. RAJAPPA (Krishna Iyer,].) 223

-, ~ Hence, to artificially exclude State run industries from the sphere A

of the Act, unless statutory provisions, expressly or by a necessary

implication

have that effect, would not be correct. The question

is

•

•

one which can only be soJved by more satisfactory legislation on it.

Otherwise, Judges could only speculate and formulate tests of

"industry" which cannot satisfy all. Perhaps to seek to sati5fy all is

to cry for the moon.

For the reasons given above, I endorse the opinion and the con-

B

~ clnsi&ns of my learned brother Krishna Iyer .

)

KRISHNA IYER, J.-The rather zigzag course of the landmark

cases and

the tangled web of judicial thought have perplexed one

branch of Industrial

Law, resulting from obfuscation of the basic

concept

of 'industry' under the Indnstrial Disputes Act, 1947 (for c

short, the Act). This bizarre situation, 30 years after the Act was

passed and industrialization bad advanced on a national scale, could

not be

allowed to continue longer.

So, the urgent need for an autho­

ritative resolution of this confused position which has survived­

indeed, has been accentuated by-the judgment of this six-member

bench in Safdar Jung('), if we may say so with deep respect, bas led

to a reference to a larger bench of this diehard dispute as to what an D

'industry' under Section 2(j) means.

Legalese and logomachy have the

genius to inject mystique into

common

words, alienating the laity in effect from the rule of law.

What is the common worker or ordinary employer to do if he is bewil­

dered

by a definitional dilemma, and is unsure whether his enterprise­

say, a hospital, university, a library, a service club, a local body, E

a research institute, a pinjarapole, a chamber

of commerce, a

Gandhi

Ashram-is an industry at all? Natural meaning is nervous of

acceptance in court where the meaning of meanings is lost in un­

certain erudition and

cases have even cancelled each other out while

reading meaning_

"I do not think," said Diplock L.J., that anywhere,

except

in a court of law, it would be argued with gravity F

that a Dutch barn or grain and fodder stores or any ordi-

nary

farm buildings are properly described as repositories.

A Gloucestershire farmers would

say they were farm build-

ings and would laugh at their being called 'repositories'."

in the same spirit,

Stamp J. rejected the argument that the

carrying on

of the business of a crematorium involved the "subjection of goods or materials to any process" within G

section

27l(l)(c) of the Income Tax Act 1952 as a

distortion

of the English language ....

_ . I protest against

subjecting the English language. and more particularly

simple English phrase, to

this kind of process of philology

and

semasio!ogy." (')

(!) Management of Safdar Jung Hospital, New Delhi, v. Ku/dip Singh Sethi [l 97 l] H

I S.C.R. 177.

{2) ·Maxwell on 'The Interpretation of Statutes' 12th Edn. by P. St. J_ Langan

pp. 81-82.

224 SUPREME COURT REPORTS [1978] 3 s.c.Jl. ·

A

Esoterica is anathema for law affecting the common man in the

commerce of life, and so the st,arting point for our discussion is the

determination to go by the plain, not the possible, sense of tlie

words used in the definition, informed by the context and purpose

of the statute, illumined by its scheme and setting and conceptuiilly

coloured by what is an industry at die current developmental stage

B in our country.

In our system of precedents our endeavour

musr

be, as urged by counsel, to reconcile prior pronouncements, if possi­

ble, and to reconsider the question altogether, if necessary. There

are no absolutes in law since life, which it serves,

is relative.

What

is an industry in America or the Soviet Union may not be one in

India and even in our Country what

was not an industry decades ago

may

well be one now.

Our judgment here has so pontifical flavour

c but seeks to serve the future hour till changes in the law or industrial

culture occur.

Law, especially industrial law, which regulates the rights and

remedies of the working class, unfamiliar with the sophistications of

definitions and shower of decisions, unable to secure expert legal

opinion, what with poverty pricing them out of the justice market

D and denying them the staying power to withstand the multi decked

Iitigative process,

de facto denies social justice if legal drafting is

vagarious, definitions indefinite and court rulings contradictory. Is

it possible, that the legislative chambers are too preoccupied with

other pressing business to listen to court signals calling for clarifica­

tion of ambiguous clauses ? A

car~ful, prompt amendment of

Sec. 2(j) would have pre-empted this docket explosion before tribu-

E nals and courts. This Court, perhaps more than the legislative and

Executive branches,

is deeply concerned with law's delays and to

devise a prompt delivery system of social justice.

Though the tailoring of a definition

is the sole forensic job in

this

batch of appeals, dependent on which, perhaps, a few thousand

other cases await decision, the cycloramic semantics of the simple

F word 'industry' and the judicial

gloss on it in a catena of cases,

have led to an avoidable glut of Jabour litigation where speedy finality

and working criteria are most desirable. And this delay

in

disposal

of thousands of disputes and consequent partial paralysis in the

industrial

life is partly blamable on the absence of a mechanism of

communication between the court and the law-making chambers.

G The great American judge, Justice Cardozo, while he

was Chief

Justice of New York Supreme Court,. made this point:

H

"The Courts are not helped as they could and ought

to

be in the adaptation of Jaw to justice. The reason

they

are not helped is because there is no one whose business

it

is to give warning that help is needed. . .....

We must

have a courier who

will carry the tidings of distress ...... .

Today courts and legislative work in separation and aloof-

ness. The penalty

is paid both in the wasted effort of pro­

duction and

in the lowered quality

o~ the product. On the

one side, the judges, left to

fight against anachronism and

..

BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 225

injustice by the methods of judge-made law, arc distracted

by the conflicting promptings of jnstice and logic, of consis­

tency and mercy, and the output of their labors bears the

tokens

of the strain.

On the other side, the legislature, in­

formed only casually and intermittently of the needs and

problems of the courts, without expert or responsible or

disinterested or systematic advice

as to the workings of one

rule or another, patches the fabric here and there, and mars

often when it

would mend. Legislature and courfs move

on in proud and silent isolation. Some agency must be

found to mediate between

them."

The grave disquiet about arrears in courts must be accompanied

A

B

by deeper insights into newer methodology than collection of, statistics

and minor reforms. Appreciating the urgency of quick justice a C

<:omponent of social justice, as a priority item on the agenda of

Law Reforms and suspecting public unawareness of some. essential

aspects

of the problem, we make these painful observations.

This obiter exercise is in discharge of the court's obligation to

inform

the community in our developing country where to look

for

the faults in the legal order and how to take meaningful corrective D

measures. The courts too have a constituency -the nation-and a

manifesto-the Constitution. That is the validation of this

divagation.

Back

to the single problem of thorny simplicity : what is an

~ndustry' ? Historically speaking, this Indian statute has its begin­

nings in Australia, even as the bulk of our corpus juris, with a E

colonial flavour, is a carbon copy of English law. Therefore, in

interpretation,

we may seek light Australasially, and so it is that

the precedents of this court have drawn on Australian cases as on

English dictionaries. But India

is India and its individuality. in

law and scciety, is atte.sted by its National Charter, so that statutory

construction must

be home-spun even if hospitable to alien thinking.

The reference to

us runs thus :

"One should have thought that an activist Parliament by

taking qnick policy decisions and by resorting

to amenda­

tory processes would have simplified, clarified and

de-limited

the definition of

"industry'', and, if we may add "workman".

Had this been done with aware and alert speed by the

legislature, litigation which is the besetting sin of industrial

life could well have been avoided to a co'nsiderable degree.

That consummation may perhaps happen on a distant

day,

but this Court has to decide from day to day disputes involv­

ing

thi~ branch of industrial law and give guidance by declar­

ing w!1at is an industry, tlirough the process of interpretation

and re-interpretation, with a murky accumulation of case

Jaw.

Counsel on both sides have chosen to rely on Safdar lung

each emphasising one part or other cif the decision as

F

G

H

A

B

c

D

226 SUPREME COURT REPORTS (1978] 3 s.c.Jt.

supporting his argument. Ruliugs of this Court before and

after have revealed no unanimity nor struck any unison and

so,

"'.e confess to our ii:tability to .d_iscern any golden thread

runrung through the strmg

of

decisions bearing on the issue

at hand."

". . . . the chance of coufusion from the crop of cases in an

area where the common man has

to understand and apply

the

~aw makes it desirable. that there _should be a compre­

hensive, clear and conclusive declaration as to what is an

industry under the Industrial Disputes Act

as it now

stapds.

Therefore, we think it necessary to place this case before the

learned Chief Justice for consideration by a larger Bench.

If in the meantime the Parliament does not act, this Court

may have to illumine the twilight area of law and help the

industrial community carry

on smoothly."

So, the long and short of it is, what is an industry ? Section 2 (j}

defines it :

"

'industry' means any business, trade, undertaking, manu­

facture or calling of employers and includes any calling,

service, employment, handicraft, or industrial occupation or

avocation

of worTmen :

"

Let us put it plain ! The canons of construction are trite that we

must read the statute as a whole to get a hang of it and a holistic

perspective

of it. We must have regard to the historical background,

E objects and reasons, international thoughtways, popular understanding,

--

contextual connotation and suggestive subject-matter. Equally im- /~

portant, dictionaries, while not albsolutely binding, are aids to ascer-

tain meaning. Nor are we writing on a tabula rosa. Since

Banerjee,(') decided a silver jubilee span of years ago, we have a

heavy harvest '{lf rulings on what is an 'industry' and we have to be

F guided by the variorum of criteria stated therein, as far as possible, ,

and not spring a creative surprise on the industrial community by a

stroke of freak originality.

Another sobering sign. In a world of relativity where law and'

life interface, a search for absolutes is a self-condemned exercise.

Legal concepts, ergo, are relativist, and If} miss this rule of change and

G developmental stage

is to interpret

oneself into error.

Yet a third signpost. The functional

focus of this industrial

legis­

lation and the social perspective of Part IV of the Paramount Law

drive us tp hold that the dual goals of the Act are contentment of

workers and peace in the industry and judicial interpretation should

be geared to their fulfilment, not their frustration. A worker-oriented

statute must receive a construction

where conceptna11y. the keynote

H thought must be the worker and the community, as the Constitution

has shown concern for them,

inter-alia, in Articles

38, 39 and 43.

(I) [1953) S.C.R. 302.

'-

)

;

BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 227

A look at the definition, dictionary in hand, decisions in head and A

Constitution at heart, leads to

some sure characteristics of an 'industry', narrowing down the twilit zone of turbid controversy. An industry is a

continuity,

is an

"rganized activity, is a purposeful pursuit-not any

isolated adventure, desultory excursion or casual, fleeting engagement

motivelessly undertaken.

Such is the common feature of a trade,

business, calling, manufacture-mechanical or

handicraft-based­

service, employment, industrial occupation or avocation. For those B

who know English and are not

given to the luxury of splitting semantic

hairs, this conclusion argues itself. The expression 'undertaking' can

not be torn off the

wotlls whose company it k;eeps. If birds of a

feather

flock together

!Jnd noscitur a sociis is a commonsense guide

to construction, 'undertaking' must

be read down to conform to the

restrictive characteristic shared

by the society of words before and

after. Nobody

will torture 'undertaking in

Section 2(j) to mean C

meditation or

musheira which are spiritual and aesthetic undertakings.

Wide meanings must fall in

line and

discprdance must be excluded

from a sound system. From

Banerjee to Safdar Jung and beyond,

this limited criterion

has passed muster and we see no reason, after all

the marathon

of argument, to shift from this position.

Likewise, an 'industry' cannot exist without co-operative endea-D

vour between employer and employee. No employer,

no industry;

no employee, no

industry-not as a dogmatic proposition in

econo­

mics but as an articulate major premise of the definition and the

schema of

the Act, and as a necessary postulate of industrial disputes

and statutory resolution thereof.

An industry

is not a futility but geared to utilities in which the E

community

has concern. And in this mundane world where law lives

now) economic utilities-material goods and services, not transcenden-

tal flights nor intangible achievements-are the functional focus of

industry. Therefore,

no temporal utilities,

no statutory industry, is axio­

matic. If society, in its advance, experiences subtler realities and

assigns values

to them, jurisprudence may reach out to such collective

good. Today, not tomorrow,

is the first charge of pragmatic law of F

western heritage.

So we are confined to material, not ethereal end

prodncts.

This much

flows from a plain reading of the purpose and

provi­

sion of the legislation and its western origin and the ratio of all the

rulings.

We bold these triple ingredients to be unexceptionable.

The relevant constitutional entry speaks of industrial and labour G

disputes (Entry 22 List I

Sch. VII). The Preamble to the Act refers

to 'the investigation and settlement of industrial disputes'. The defi­

nition of industry has to be decoded in this background and our hold-

ing

is reinforced by the fact that industrial peace, collective bargaining,

strikes and lock-outs, industrial adjudications, works committees of

employers and employees and

the like connote organised, systematic

II

operations and collectivity of workmen co-operating with their emplo-

yer in producing goods and services for the community. The better­

ment of the workmen's lot, the avoidance of out-breaks blocking pro-

228

SUPREME COURT REPORTS (1978] 3 s.c.R.

A duction and just and speedy settlement of disputes concern the commu­

nity.

In trade and business, goods and services are for the commu­

nity not for self-consumption.

The penumbra! area arrives as we move on lo the other essentials

B

n.eeded to

mah an organized, systematic activity, oriented pn produc­

tive collabora!Ion between employer and employee, an industry as

defined in Section

2(j). Here we have to be cautious not to fall into the

trap of definitional expansionism bordering on reducio ad absurdum

nor to truncate the obvious amplitude of the provision to

fit it into

our mental mould of beliefs and prejudices

p'r social philosophy condi­

tioned by class interests. Subjective wish shall not be father to the

c forensic thought, if credibility with a pluralist community is a value

to be cherished. "Courts do not substitute their social and economic

beliefs for the judgment

of legislative bO\lies''. [See (Constitution of

the

United States of America) Corwin p. xxxi]. Even so, this legisla­

tion has something to do with social justice between the 'haves' and

the 'have-nots, and naive, fugitive and illogical cut-backs on the import

of 'industry' may do injustice to the benignant enactment. Avoiding

D Scylla and Charybdis

we proceed to decipher the fuller import of the

definition.

To sum up, the personality of the whole statute, be it

remembered, has a welfare basis,

it being

a beneficial legislation whicb

protects Labour, promotes their contentment and regulates situations

of crisis and tension where production may be impe.ril!ed by untenable

strikes and blackmail lock-outs. The mechanism of the Act is gear­

ed to conferment of regulated benefits to workmen and resolution,

E according to a sympathetic rule of law, of the conflicts, actual or

potential, between managements and workmen. Its goal is ameliora­

tion of the conditions of workers, tempered by a practical sense of

peaceful co-existence, to the benefit of

both-not a neutral position

but restraints on laissez

faire and concern for the welfare of the

weaker lot. Empathy with the statute

is necessary to understand

not merely its spirit, but also its sense.

One of the vital concepts dn

F which the whole statute is built, is 'industry' and when we appro!!Ch

the definition in Section 2 (j), we must be informed by these values.

This certainly does not mean that we should strain the language of

the definition to import into it what we regard as desirable in

an

industrial legislation, for we are not legislating de nova but construing -,

an existing Act. Crusading for a new type of legislation with dynamic

ideas or humanist justice and industrial harmony cannot be nnder the 1.

'G nmbrellal of interpreting an old, imperfect enactment. Nevcrtheles;;,

statutory diction speaks for today and tomorrow; words are semantic

seeds to serve the futnre hour. Moreover, as earlier highlighted, it

is legitimate to project the value-set of the Constitution, especially

Part IV, in reading the meaning of even a pre-Constitution ~at'!te.

The paramount law is paramount and Part IV sets out Directtve

Principles of State Policy which mnst guide the judiciary, like other

l:I instrumentalities, in interpreting all legislation. Statutory construction

is not a petrified process and the old bottle may, to the extent language

and realism permit be filled with new wine. Of course, the bottle

should not break or lose shape.

•

-

)

BANGALORE SEWERAGE BOARD v. RAJAPPA, (Krishna Iyer, J.) 229

Lord Denning has stated the judge's task in r.eading the meaning A

of enactments :

"Tl1e English language is not an instrument of mathematical

precision. Our literature would be much poorer if it were

. . . . . . . . He must set

to work in the constructive task of

finding the intention

m Parliament, and he must do this not

only from the language of the statute, but also from a consi­

dera1

i0n of the social conditions which gaw rise to it and

of the mischief which it was passed to remedy, and then he

must supplement the written word so

as to give 'force and

life'

tci' the intention of the legislature ................. .

A judge should ask himself the question, how, if the makers

of the Act had themselves come across this ruck in the

texture of it, they would have straightened it out

? He must

then do as they would have done. A Judge must not alter

the material of which the Act is woven, but he can and

should iron out the

creases."

* • • • •

The duty of the court is to interpret the words that the legis­

lature has used; those words may be ambiguous, but. eve!lj if

they are, the power and duty of the court to travel outside

them on a voyage

of discovery are strictly

limited."

The Industrial Disputes-Malhotra, Vol. I pp. 44 & 45)

We may start the discussion with the leading case. on the point,

which perhaps may be treated as the mariner's compass tor judicial

navigation B.

N. Banerji v. R. P. Mukherjee &

Others. (1954) S.C.R.

302)· But before setting sail, let us map out briefly the range of

dfspufe around the definition. Lord Denning in Automobile Proprie-

tary Ltd. observed :-

"It is true that 'the industry' is defined; but a definition is

not to

be read in isolation. It must be read in the context Of the phrase which it defines, realising that the function of

a definition

is to give precision and certainty to a word or

phrase which would otherwise be vague and uncertain-but

not to contradict it or supplant it

altogether."

c

D

E

F

Hotel and Catering Industry Training Board v. Automobile G

Proprietary Ltd. (1968) 1 W.L.R. 1526 at 1530.

A definiti.o'n is ordinarily the crystallisation of a legal concept promot­

ing precision and rounding

off blurred edges but, alas, the definition

in

S. 2(j), viewed in retrospect, has achieved the opposite. Even so,

we must try to clarify. Sometimes active interrogatories tell better

than bland affirmatives and so marginal omissions notwithstanding,

we will string the points together in a few questions oh which we have

been addressed.

H

A

·C

D

230 SUPREME COURT REPORTS (1978] 3 s.c.R.

A cynical jurist surveying the forensic scene may make unhappy

comments. Counsel for the respondent Unions sounded that note.

A pluralist society with a capitalist backbone, notwithstanding the

innocuous adjective 'socialist' added to the Republic

by the Constitu­

tion (

42nd Amendment Act, 1976) regards profit-making as a sacros­

anct value. Elitist professionalism and industrialism

is sensitive to the

'worker' menace and inclines

to exclude such sound and fury as 'labour

unrest' from

its sanctified precincts by judicially de-industrblising the

activities of professional men and interest groups to the extent feasible.

Governments in a mixed economy, share some of the habits of

thought of the dominant class

an.d doctrines like sovereign

Tuncti6ns,

which pull out economic enterprises run by them, come in bandy.

The latent love for club life and charitable devices and escapist insti­

tutions bred by clever capitalism and hierarchical social structure,

shows up

as inhibitions transmuted as

dclctrines, interpretatively

carving out immunities from the 'industrial' demands of labour

by

labelling many enterprises 'non-industries'.

Universities, clubs, insti­

tutes, manufactories and establishments managed by eleemosynary

or

holy entities, are instances. To objectify doctrinally subjective

cons­

ternation is casuistry.

A counter-critic, on the other hand, may acidly ciontend that if

judicial interpretation, uninformed by life's realities, were to

go

wild,

every home will be, not a qµiet castle but tumultuous industry, every

research unit

will grind to a halt, every god will face new demands,

every service club

will be the venue of rumble and every charity

choked

off by brewing unrest and the salt of the earth as well as the

Jowliest and the lost

will suffer. Counsel

fo'r the appellants struck

E this pessimistic note. Is it not obvious from these rival thoughtways

that law

is value-loaded, that social philosophy is an inarticulate inter­

pretative tool ? This

is inescapable in any school of jurisprudence.

F

·G

1H

Now.Jet us itemise, illustratively, the po'sers springing from the

competimi submissions, so that the contentions may be concretised.

1. {a) Are establishments, run without profit motive. indus­

tries?

(b) Are Cha.ritable institutions industries ?

(c) Do undertakings governed by a no-profit-no-loss rule.

statutorily or otherwise fastened, fall within the

defi­

nition in Sec. 2(j) ?

( d) Do clubs or other organisations (like the Y.M.C.A.)

whose general emphasis is not on profit-making but

fellowship and self-service, flt into the definitional

circle?

(e)

2. (a)

To go to the c,o're of the matter, is it an inalienable in­

gredient of 'industry' that it should be plied with a

commercial object ?

Should co-operation between employer and employee

be

direct in

so far as it relates to the basic service

y

-----

•

.--L-i.-

)

BANGALORE SEWERAGE BOARD v. RA.TAPPA, (Krishna Tyer, !.) 231

or essential manufacture which is the output of the A

undertaking? ·

(b) Could a lawyer's chambers or chartered accountant's

.office,. a doctor's clinic or other liberal profession's

occupation or calling

be designated an industry ?

(c) Would a University or college or school or research

institute

be called an industry ?

3.

(a) Is the inclusive part of the definition in

Sec. 2(j)

relevant to the determination or an industry? If so,

what impact

dp'es it make on the categories ?

(b)

Do domestic service drudges who slave without res­

pite-become 'industries' by this extended sense ?

4. Are governmental functions, stricto sensu, industrial and

if not, what is the extent of the immunity of instrumentali-

ties of government ?

5. What rational criterion exists for a cut-back on the

dynamic

po'tential and semantic sweep of the definition,

implicit in the industrial law of a progressive society

geared to greater industrialisation and consequent concern

for regulating relations and investigating disputes between

employers and employees as industrial processes and rela-

tions become more complex and sophisticated and

workmen become more right-conscious?

B

c

D

6. As the provision now stands, is it scientific to define E

'industry' based on the nature-the dominant nature of the

activity,

i.e. on the terms of the work, remuneration and

conditions of service which bond

the· two wings together

intp an employer-employee complex ?

Back to Banerji, to begin at the very beginning. Technically, this

Bench that hears the appeals

now is not bound by any of the earlier F

decisions. But

we cannot agree with Justice Roberts of the

U. S.

Supreme Court that 'adjudications of the court were rapidly gravitat-

ing into the same class as a restricted railroad ticket, good for this

day and train only' (See Corwin XVII). The present-even the

revolutionary

present-does not break wholly with the past but breaks

bread with it, without being swallowed by it

O:nd may eventually

swallow it. While

it is true, academically speaking, that the court G

should be ultimately right rather than consistently wrong, the social inter£st in the certainty of the law is a valne which urges continuity

where possible, clarification where sufficient and correction where

derailment, misdirection or fundamental

flaw defeats the statute or

creates considerable industrial confusion.

Shri M. K. Ramamurthy,

encored by Shri R. K. Garg, argued emphatically that after Safdar­

ju~g. the law is in trauma and so a fresh look at the problem is ripe. H

The learned Attorney General and Shri Tarkunde, who argued at

effective, illuminating length, as well as Dr. Singhvi and Shri A. K.

Sen who briefly and tellingly supplemented, did not hide the fact

A

B

c

232 SUPREME COURT REPORTS [1978] 3 s.c.a.

that the Jaw. is _in Que~r Street but s~ught tel discern a golden thread

of sound pnnc1ple which could explain the core of the rulings which

peripherally had contradictory thinking.

In this situation, it is not

wise, in our view, to reject everything ruled till date and fabricate

new tests, armed with lexical wisdom or reinforced by vintage judicial

thought from

Australill. Banerji we take as good, and, anchored

on its authority,

we will examine later decisions

tc;> stabilize the law

on the firm principles gatherable therefrom, rejecting erratic excur·

sions. To sip every flower and change every hour is J¥)t realism but

romance which must not enchant the court. Indeed, Sri Justice

Chandrasekhara Iyer, speaking for a unanimous Bench, has sketched

the guidelines perceptively, if

we may say so respectfully. Later cases

have only added their glosses, not overruled it and the fertile source

of

conflict has been the bashyams rather than the basic decision.

Therefore, our task

is not to supplant the ratio of Banerji but to

straighten and strengthen it in its application, away

from different

deviations and aberrations.

Banerji. The Budge Budge Municipality dismissed two employees

whose

dispute wa& sponsored by the Union. The award o[ the Industrial

Tribunal directed re-instatement but the Municipality challenged the

D award before the High Court and this Court on the fundamental

ground that a municipality in discharging its normal duties connected

with local self-government

is not engaged in any industry as defined

in the Act.

E

F

G

H

A paaoramic view of the statute and its jurisprudential bearings

has been projected there and the essentials

of. an industry decocted.

The definitions of employer

[Sec. Z(g)], industry [Sec. 2(j)], indus­

trial dispute [Sec. 2(k)] workman [Sec. 2(a) ], are a statutory dic-

tionary, not popular parlance.

It is plain that merely because the

employer

is a government department or a local body (and, a

fortiori,

a statutory board, society or like entity) the enterprise does not cease

to

be an 'industry'. Likewise, what the common man does not

consider

as 'industry' .need not necessarily stand excluded from the

statutory concept. (And

vice versa.) The

Jattef is deliberately

drawn wider, and in some respects narrower, as Chandrasekhara

Aiyer,)., has emphatically expressed :

"In the ordinary or non-technical sense, according to what

is understood by the man in the street, industry or business

means

as undertaking where capital and labour co-operate

with each other for the purpose of producing wealth

in the shape of goods, machines, tools etc., and for

making profits. The concept of industry in this ordinary

sense applied even to agriculture, horticulture, pisciculture

and so

pn and so forth. It is also clear that every aspect

of activity in which the relationship of employer and em·

ployee exists or arises does not thereby become an industry

as common! y understood. W c hardly think in terms of an

industry, when we have regard, for instance, to the rights

and duties of

master

and servant, or of a Government and

its secretariat,

or the members of the medical profession

------

'

~

•

-'

' l

BANGALORE SEWERAGE BOARD v. RAJ APP A (Krishna Tyer, J.) 2 3 3

workil.lg in. a hospital. It would be regarded as absurd to

think ro; at any rate the layman unacquainted with advanc-

ing legal concepts of what is meant by industry would

rule out such a connotation

as impossible. There is noth-

ing however to prevent

a statute from

giving the word

"industry" and the words "industrial dispute" a wider and

more comprehensive import in order to meet the require­

ments of rapid industrial progress and to bring about in the

interests. qj industrial peace and economy, a fair and sati3-

factory adjustment of relations between employers and work-

men in a variety of fields of activity. It is obvious that the

limited concept of what

an industry meant

·in early time~

must now yield place to an enormously wider concept so a'

to take iu various and varied forms of industry, so that

dispute arising in connection with them might be settled

quickly without much dislocation and disorganisation of the

needs of society and in a manner more adapted to concilia-

tion and settlement than a determination of the respective

rights and liabilities according to strict legal procedure and

principles. The conflicts between capital and labour have

now to be determined more from the standpoint of status

than of contract, Withont such an approach, the numerous

problems that now arise for solution in the shape of indus-

trial disputes

cannpt be tackled satisfactorily, and this 1~

why every civilised government has thought of the machinery

of conciliation officers, Boards and Tribunals for the effec-

tive settlement of disputes." (emphasis added)

The dynamics of industrial. law, even if incongruous with popular

understanding,

is this first proposition we derive from Banerji : "Legislation had to keep pace with the march of times

and to provide for

new situations.

Social evolution is a pro­

cess of constant growth, and the State cannot afford to

standstilltwithout taking adequate measure by means of legis­

lation to sdlve large and momentous problems that arise in

the industrial field from day to day almost."

The second, though trite, guidance that we get is that we should

not be beguiled

by similar words in dissimilar statutes, contexts,

subject-matters or socio-economic situations. The same words may

mean one thing in one context and another in a different context.

This

is the reason why decisions on the meaning of particular words

or collection of words found in other statutes are scarcely

of much

value when we have to deal with a specific statute of our own; they

may persuade, but cannot pressure.

We would )nly add that a developing country is anxious to

preserve the smooth flow of goods and services, and interdict undue

exploitation and, towards those ends labour legisiation

is enacted

and must receive liberal construction to

fulfil its role.

Let

us get down to the actual amplitude and circumscription of the

statutory concept of 'industry'. Not a narrow but an enlarged accept­

ation

is intended; This is supported by several considerations.

Chandrasekhara Aiyar,

J. observes :

16-.Zl lSCI/78

A

c

D

E

F

G

H

A

c

'.

D

F

·.(;

H

•

234 SUPREME COURT REPORTS [1978) 3 S.C·R.

"Do the definitions of 'industry', 'industrial dispute' and

'workman' taken in the extended significance,

or exclude it

1

Though the word 'undertaking' in the · definition of 'indus­

try'

is wedged in between business and trade

on-the one

hand and manufacture

on the other, and though therefore it

might mean only a business or trade undertaking, still it

must

be remembered that if that were so, there was no need

·· to-use the word separately from business or trade. The

wider import. is attracted even more clearly when we loo'k:

at the latter part of the definition which refers io "calling,

service, employment, or industrial occupation of avocation

of workmen". "Undertaking" in the first .part of the defi­

nition. and 'industrial occupation

or avocation in the second

part obviously mean much more than what is ordinanly . understood by trade or business. The definition was

apparently int;:nded to include within its scope what might

not strictly

be called a trade or business

venture."

So 'industry' overflows trade and · business.~_ Capital, ordinarily

assumed to

be a component of 'industry', is an .expendable item so

far as statutory 'industry' is concerned.

To reach

this conclusion,

the Court referred

to 'public utility service' [Sec. 2(n)l and argued:

"A public utility service such as railways, telephones and·

the supply of power, light or water to the public may be

carried on by private· companies or business corporations.

Even conservancy

or sanitation may be so carried on, though

after the introduction of local

self-gdvernment this work

has in almost every country been assigned as a duty to local

bodies like

our Municipalities or District Boards or

Local

Boards. A dispute in these services between employers llnd

workmen is an industrial dispute, and the provisd to section

10 lays down that where such a dispute arises ·and a notice

under section

22 has been given, the appropriate Govern­

ment shall make a reference under the sub-section.

If the

public utility service

is carried on by a corporation like

a

Municipality which is the creature of a statute, and which

functions under the limitations imposed by the statute. does

it cease to be an industry filr this reason ? The only ground

on which one could say that what would amount to the

· · carrying on of an industry if it is done by a private person

ceases

to be so if the

same· work is carried on by a local body

like a Municipality

is that in the letter there is nothing

like the investment

of any capital or the existence of

a

profit earning motive as there generally is in a business.

But neither the one nor the other seems a sine qua non or

necessary element in the modern conception of indusry ?

(emphasis added)

Ab•ence of capital does not negative 'industry'. Nay, eveR ·chari­

table services do not necessarily cease to be 'industries' deflniti,on!illy

although populady charity is not industry. Interestingly, the Learned

Judge dealt with the point. After enumerating typical municipo] llcti­

:viti~s he concluded :

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BA~GALORE SEWERAGE BOARD v. RAJAPPA. (Krishna Iyer, J.) 235

"Some of these functions may appertain to and partake of A

the natu.re of an industry, while others may not.

For

instance, there is a necessary element of distinction between

the supply

of power and light to the inhabitants of a Muni-

cipality and the running

of

chgritable hospitals and dis­

penJaries for the aid of the poor. In ordinary parlance,

the former might be regarded

as an industry but not the

latter. The very idea underlying the entrustment of such B

duties or functions to local bodies

is not to take them out

of the sphere of industry but to secure the substitution of

public authorities

in

the place of private employers and to

eliminate the motive of profit-making

as far as possible. The

levy of taxes for

the maintenance pf the services of

sanitation and the conservancy pr the supply of light and

water is a method adopted and d~vised to make up for the C

a.l;>sence of capital. The undertaking or the service will

still remain within the al!,lbit of what we understand by an

industry though it is cauied on with !he aid of taxation,

and no immediate material

gain by way

<Xf profii is envisag-

ed." (emphasis added) '

The contention that charitable undertakings are not industries

is, D

by this token, untenable.

Another argument pertinent to our discussion

is the sweep of

tlte

expr~sion 'trade'. The Court refers, with approval, to Lord Wright

in Bolton Corporation (143 A.C. 166) where the Law Lord had

()f}served :

"Indeed 'trade' is not only in the etymological or dic­

tionary sense,

but. in the legal usage,

u term of the widest

scope.

It is connected originally with the word 'tread' and

indicates a way of life

or an occupation. In ordinary usage

it may mean the occupation of a small shopkeeper equally

with that of a commercial magnate.

It may also mean a

·skilled craft. It is true that it is often used in contrast with a

profession. A professional worker would not ordinarily

be

called a tradesman, but the word 'trade' is used in the widest

application to the appellation 'trade unions'. Professions have their trade unions. It is also used in the Trade Boards

Act to include industrial undertakings. I see no reason to

·exclude from the operation of the Industrial Courts Act the

activities of local authorities, even without taking into account

the fact that these authorities now carry on in most cases im­

portant industrial undertakings. The order expressly states in

its definition section that 'trade' or 'industry' includes the

performance of its functions by a 'public local authority'.

It is true that these words are used in

Part III, which deals

with 'recognized terms and conditions of employment', and

in Part IV, which deals with 'departures from trade prac­

tices' in 'any industry or undertaking' and not in Part I .

which deals with 'national arbitration' and is the part material

in this case, bnt I take them as illustrating what modern

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SUPREME COURT REPORTS [1978] 3 S.CR.

conditions involve-the idea that the functions of local autho­

rities· may come under the expression 'tra~e or industry'. I

think the ·same may be said of the Industnal Courts Act and

of

Reg. 58-AA, in both of which the word 'trade' is used in

the

very wide connotation which it bears in the modern legis­

lation dealing with conditions of employment, particularly

in relation to matters of collective bargaining and the like".

(emphasis added)

In short, 'trade' embraces functions of local authorities, even pro­

fessions, thus departing from popular notions. Another facet of !he

controversy is next touched upon-i.e. profit-making motive is not a

sine quo non of 'industry', functionally or definitionally. For this,

Powers

J, in Federated Municipal and

Shire Employees' Union of

Australia v. Melbourne Corporation(') was quoted with . emphatic

approval where the Australian High Court considered an industrial

legislation :

"So far as the question in this case is concerned, as the

argument proceeded the ground mostly relied upon (after

the Councils were held not to be exempt

as

State instru­

mentalities) was that the work was not carried on by the

municipal corporations for profit

in the ordinary serise of

the term, although it would generally speaking be carried

on

by the Councils themselves to save contractors' profits.

If that argument were sufficient, then a philanthropist who

acquired a clothing factory and employed the same

em­

ployees as the previous owner had employed would not be

engaged in an occupation about which an industrial dispute

could arise, if he distributed

the clothes made to the poor

free of charge or even if he distributed them to the poor at

the

bare cost of production. If the contention of the

res­

pondent is correct, a private cp'nlpany carrying on a ferry

would be

engaged in an industrial occupation. If a

muni­

cipal corporation carried it on, it would not be industrial.

The

same argument would apply to baths, bridge-building,

quarries, sanitary contracts, gas-making for lighting streets

and public halls, municipal building of

houses or halls, and

many other similar industrial undertakings. Even

coal­

mining for use on municipal railways or tramways would

not be industrial work if the contention of the respondents is

correct. If the works in question are carried out by con­

tractors or by private individuals it is said to be industrial,

but not industrial within the meaning of the Arbitration

Act or Constitution

if carried out by municipal corporations.

I cannot accept that

view". (emphasis added)

The negation of profit motive, as a telling test against 'industry',

is clear from this quote.

(!) 26 C.L.R. 508.

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llANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 237

All the indicia of 'industry' are packed into the judgment which A

condenses

the conclusion tersely to hold that 'industries' will cover

'branches of

WIYl'k that can be said to be analogous to the carrying

out of

a

trade or business'. The case, read as a whole, contributes to

industrial jurisprudence, with special reference to the Act, a

few

positive facets and knocks down a few negative fixations. Govern­

ments and municipal and statutory bodies

may run enterprises which

do not

for that reason cease to be industries. Charitable activities

may also be industries. Undertakings, sans profit motive, may well

be

indn.;tries. Professions and not ipso facto out of the pale of in­

dustries. Any operation carried on; in a manner analogous to

trade or business

may legitimately be statutory 'industry'.

The

popular limitations -0n the concept of industry do not amputate the

ambit

of legislative generosity in

Sec.2 (j). Industrial peace and the

smooth supply to the

community are

among the aims and objects the

Legislature had

in view, as also the nature, variety range and areas

of disputes between employers and employees. These factors

must

inform the construction of the provision .

The limiting role

of Banerji must also be noticed so that a total

view is gained. For instance, 'analogous to trade or business' cuts

down 'undertaking', a word of fantastic sweep. Spiritual under­

takings,

casual undertakings, domestic undertakings, war waging,

policing, justicing, legislating, tax collecting and the like are, prima

fade, pushed out. Wars are not merchantable, nor justice saleable,

nor

divine grace marketable. So, the problem shifts to

what fs

'analogous to trade or business'. As we proceed to the next set of

cases, we come upon the annotation of other expressions like 'calling'

and

get to grips with the specific organisations which call for

ide)itifi­

-cation in the several appeals before us.

At thi6 stage, a close-up of the content and contours of the contro­

versial words 'analogous etc.', which have consumed considerable time

of counsel, may be taken. To be fair to Banerji. With the path­

finding decision which conditioned and canalised and fertilised 5uf5se­

quent juristic-humanistic ideation, we must show fidelity to the termi­

nological exactitude of the seminal expression used and search care­

fully for its import. The prescient words are : branches of work lhat

can be said to be analogous to the carrying out of a 'trade or liusi­

ness'. The same judgment has negatived the necessity for profit­

motive and included charity impliedly, has virtually equated private

sector and public sector operations and

has even perilously hinted at

'professions' being 'trade'.

In this perspective, the comprehensive

reach

of 'analogous' activities must be measured. The

similarity

stressed relates to 'branches of work'; and more; the analogy with

trade or business is in the 'carrying out' of the economic adventure.

So, the parity is in the modus operandi, in the working-not in the.

purpose of the project nor in the disposal of the proceeds but in tile

organisation of the venture, including the relations between the two

1imbs viz. labour and management. If the mutual relations, the

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238 SUPREME COURT REPORTS [1978] j SC·R ..

method of employment and the process of co-operation in the carrying:

out of th~ work b~ar ci.ose resemblance to the organization, method,

remu~1e~at~on, relat1onsh1p of employer and employee and the like,.

then it 1s mdustry, otherwise not. This is the kernel of the decision.

An activity oriented, not motive based, analysis.

The landmark Australian case in 26 C.I.R. 508 (Melbourne Cor­

poration).' which 'Yas h.eavily re lie? on in Banerji may engage us.

That rulmg contams dicta, early m the century, which make Indian

forensic fabianism, sixty years after in the 'socialist' Republic, blush.

That apart, the discussion in the leading judgments dealing with

'industry' from a constitutional angle but relying on statute similar to

ours.

is instructive For instance, consider the promptings

,of profit

as a condition of 'industry'. Higgins

J. crushes that credo thus : "The purpose of profit-making can hardly be the criterion. If it

were, the labourers who excavated the underground passage for the·

Duke of Portland's whim, or the labourers who build (for pay) a

tower of Babel

or a Pyramid, could not be parties to an 'industrial dis­

pute'. The worker-oriented perspective

is underscored by Isaacs and

Rich JJ. It

is at the same time, as is perceived, contended on the

oart of labour, that matters even indirectly prejudicially affecting the

~orkers are within the sphere of dispute. For instance, at P. 70 (par.

175 (

4) (a) one of the competing contentions is thus stated :

"Long

hours proceed from the competition of employer with employer in·

the same trade. Employers ought to be prevented from competing

in this way at the expense of their workmen." (emphasis added) As

a fact, in a later year, Lord James of Hareford, in an award', held that

one employer in a certain trade must conform to the practice of

others. What must be borne steadily in mind, as evidenced by the

nature of the claims made,

is that the object of obtaining a large share

of the product of the industry and of exercising a voice

as to the general

conditions under which

it shall be carried on (par. l

00) covers all

means direct and incidental without which the main object cannot

be fully or effectively attained. Some of these

will be

particularizecr

but in the meantime it should be said that they will show in them­

selves, and from the character of the disputants this will be confirmed

that

so long as

t.he operations am of capital and labour in co-operation

for the satisfaction of material human needs, the objects and demand~

of labour are the same whether the result of the operations be money·

or n1011ey's-worth. The inevitable conclusion,. as it seems to us, from

this is that in 1894 it was well understood that "trade disputes". which

at one time had a limited scope of action, without altering their in­

herent and essential nature, so developed as to be recognised bette1

under the name of "industrial disputes' 'or "labour disputes," and to

be more and more founded on the practical view that human labour

was not a mere asset of capital but

was a co-operating agency of

equal

dignity-a working partner-and entitled to

qonsideration as.

such".

The same two judges choose to impart a wide construction to the:

word 'industry', for they ask : 'How can we, conformably to recog-

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MN-0ALORE SEWERAGE BOARD v. RA.TAPPA (Krishna Iyer, !.) 239

nizeu rules of legal construction, attempt to limit,· in an instrument

of self-government for this Continent, the simple and comprebensi'.'.'e

words "industrial disputes" by any apprehension of what we mignt

imagine would be the eJl'ect of a full literal construction, or by con­

jecturing what

was in the minds of the framers of the Constitution,

or by the forms

industrial disputes have more recently assumed~

"Industria! warfare" is no mere figure of speech. It is not the mere

phrase of theorists.

It is recognized by the law as the correct des­

cription of internal conflicts in industrial matlers.

It was adopted by

Lord Loreburn L.C. in Conway v. Wade (A)

(1909) A.C., at p.

511. Strikes and lock-outs are, by him, correctly described as

"weapons".' These arguments hold good for the Indian industrial

statute, and

so,

Sec. 2(j) must receive comprehensive literal force,

limited only

by some cardinal criteria.

One such criterion, in the

monarchical vocabulary of English Jurisprudence,

is Crown exemp­

tion, re-incarnating

in a Republic as inalienable functions of consti­

tutional government. No government,

no order; no order, no

law

no rule of law, no industrial relations. So, core functions of the State

are paramount and paramonntcy is paramountcy. But this doctrinal

exempli6n is not expansionist bnt strictly narrowed to necessltm\s

functio'Gs. Isaacs and Rich JJ., dwell on this topic and, after quot­

ing Lord Watson's test of inalienable functions of a ConstitL1tional

government, state : "Here we have the discrimen of Crown exemp­

tion. If a municipality either [(1897) 1 Q.B., at pp. 70-71] ii legally

empo'wered to perform and does perform any function whatever for

the Crown, or

[(1897) 1 Q.B., at p.

'71] is lawfully empowered to

perfoi;tn and does perform any function which constitntionally is in­

alienably a Crown function-as, for instance, the adminiStration of

justic<>--'-tlle municipality is in law presumed to represent the Crown,

and the exemption applies. Otherwise, it is outside that exemption,

and,

if impliedly exempted at all, some other principle must be re­

sorted to. The making and maintenance of streets in the munici­

polity

is not within either proposition". (Italics supplied).

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supported by Lord Mayor of the City of Melbourne.

A chronological survey of post-Banerji decisions

1

o~ this Court,

with 'accent on the juristic contribution registered by them,

may be

meth9dical. Thereafter, cases in alien jurisdictions and derivation of

guidelines may be atten1pted. Even here,

we may warn ourselves that

the literal latitude of the words in the definition cannot

be allowed

grotesqnely inflationary play but

musf"be read down to accord with the

broad industrial sense of the nation's economic community of which

Labour is an integral part. To bend beyond credible limits is to break

with facts, unless language leaves no optio!i. Forensic inflation of

the sense of words shall not lead to an adaptational break-down out­

raging the good sense of even radical realists. After all, tlie Act bas

been drawn on an industrial canvas to solve the problems of industry,

not of chemistry. A functional focus and social control desideratum

mnst be in the mind's

eye of the judge.

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240 SUPREME COURT REPORTS [1978] 3 S.CR.

The two landmark cases, The Corporation of the City 'of Nag­

pur

v. Its

Employees(') and State of Bombay and Others v. The

Hospital Mazdoor Sabha & Ors.(') may now be analysed in the light

of what we have just said. Filling the gaps in the Banerji decision and

the authoritative connotation of the

fluid phrase 'analogous to trade

and business' were attempted in this twin decisions. To be

analO··

gous is to resemble in functions relevant to the subject, as between

like features

of two apparently different things. So, some kinship

through resemblance to trade or business,

is the key to the problem,

if Banerji is the guide star.

Partial similarity postulates selectivity of

characteristics for comparability. Wherein

lies the analogy to trade

or business,

is then the query.

Sri Justice Subba Rao, with uninhibited logic, chases this thought

and reaches certain tests in

Nagpur Municipality,

speaking for a un­

animous Bench.

We respectfully agree with much of his reasoning

and proceed to deal with the decision.

If the ruling were

right, as

we think it is, the riddle of 'industry' is resolved in some measure.

Although foreign decisions, words and phrases, lexical plenty and

·definitions

from other legislations, were read before us to

stress the

D necessity of direct co-operation between employer and employees in

·the essential product of the undertaking, of the need for . the com­

mercial motive, of service to the community etc.,

as implied inarti­

culately

in the concept of 'industry', we bypass them as but

margi­

nally persuasive. The rulings of this Court, the language and scheme

of the Act and the well-known canons of construction exert real pres-

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sure on our judgment. And, in this latter process, next to Bmierji

comes Corporation of Nagpur which spreads the canvas wide anCI

illumines the expression 'analogous to trade or business', although it

comes a few days after Hospital Mazdoor Sabha decided by the same

Bench.

To

be sure of our approach on a wider basis let us cast a

glance

at internationally recognised concepts vis-a-vis iudustry. The Inter­

national Labour Organisation has had occasion

to consider freedom

of association for labour

as a primary right and collective bargaining

followed by strikes, if necessary, as a derivative right. The question

has arisen as to whether public servants employed in the. crucial

func­

tions of the government fall outside the orbit of industrial conflict.

Convention No. 98 concerning the Application of the Principles of

the Right to Organise and to Bargain Collectively, in . Article 6

states :

"This Convention does not deal with the position of

Public servants engaged in the aaministration of the State,

nor shall it be construed

as prejudicing their rights or

status in any

way."

' (1"I [1960] 2 S.C.R. 942.

(21 [1960] 2 S.C.R. 866.

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BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 24!

Thus, it is well-recognised that public servants in the key sectors of

Administration stand out

of the industrial sector. The Committee

of Experts

of the

ILO had something to say about the carving out of

the public servants from the general category.

A

Incidentally, it may be useful to note certain clear statements

made

by

ILO on the concept of industry, workmen and industrial dis-B

pute, not with clear-cut legal precision but with sufficient particu­

larity for general purposes althougb looked at from

a different angle.

We quote from 'Freedom of Association',

Second edition, 1976, which

is a digest of decisions of the Freedom of Association Committee of

the Governing Body

of the

!LO :

"2. Civil servants and other workers in the employ of

the State.

250. Convention No. 98, and in particular Article 4

thereof concerning the encouragement and promotion of

collective bargaining, applies both to the private sector and

to nationalised undertakings and public bodies, it being

possible to exclude from such application public servants

engaged

in the administration of the

State.

141st Report, Case No. 729, para. 15.

251. Convention

No. 98, which mainly concerns . col­

lective bargaining, permits (Article

6) the exclusion of

"public servants engaged in the administration of the Stale".

In this connection, the Committee of Experts on the Appli­

cation

of Conventions and Recommendations has pointed

out that,

while the concept of public servant may vary to

some degree under the various national legal systems,

the ·

exclusion from the scope of the Convention of persons

employed by the State or in the public sector, who do not

act as agents of the public authority (even though they may

be granted a status identical with that of public

officials

engaged in the administration of the

State) is contrary to

the meaning

of the Convention. The distinction to be

drawn, accordingly to the Committee, would appear to be

basically between civil

servants employed in various capa­

cities in governmen1 ministries or comparable bodies on the

one hand and other persons employed by the government,

by public undertakings or by independent

public corpora­

tions.

116th Report, Case

No. 598, para. 377;

!21st Report, Case

No. 635, para. 81;

143rd Report, Case

No. 764, para. 87.

254. With regard to a complaint concerning the right of

teachers

to engage in collective bargaining, the Committees,

in the light

of the principles contained in Convention No.

98

drew attention to the desirability of promoting voluntary

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242 SUPREME COURT REPORTS (19781 3 s.c.R.

col!ective bargaining, according to national conditions, with

a view to the regulation of terms and conditions of employ­

ment.

118th Report, Case No. 573, para. 194.

255. The Committee has pointed out that

Convention

No.

98, dealing with the promotion of collective bargaining,

covers all public servants who do not act as agents of the

public authority,

and consequently, among these, empioyers

of the postal and telecommunicntions services.

139th Report, Case No. 725, para. 278.

256.

Civil aviation technicians working under the juris­

diction of the armed forces cannot be considered, in view

of the nature of their activities, as belonging to the «rmed

forces and as such liable to be excluded from the guarantees

laid down in Convention No. 98;

the rule contained in

Article

4 of the convention concerning collective bargainings should

be applied to them.

116th Report, Case No. 598, paras. 375-378.

This divagation was calculated only to emphasise certain funda­

mentals in international industrial thinking which accord with a wider

conceptual acceptation for 'industry'. The

wings of the word

'industry' have been spread wide in section

2(j) and this has been

brought out iu the decision in

Corporation of Nagpur (supra). That

case was concerned with a dispute between a municipal body

a1.1d its

employees. The major issue considered there

was the meaning of

the much disputed expression 'analogous to the carrying on of a

trade

or business''. Municipal undertakings are ordinarily industries as

Baroda Borough Municipality(!) held. Even so the scope of 'indus­

try' was

inv~stigatcd by the Bench in the City of Nagpur which affirm­

ed

Banerji and Baroda. The Court took the view that the words used

in the definition

were prima facie of the widest import and declined to

curtail the width of meaning by invocation of

noscitur a sociis.

Even so, the Court was disinclined to spread the

n~'t too wide by

expanding the elastic expressions calling, service, employment and

handicraft. To be over-inclusive may

be impractical and so while

accepting the enlargement of meaning by the device of inclusive defi­

nition the Court cautioned :

"But such a wide meaning appears to over-reach the

objects for which the Act

was passed. It is, therefore, neces­

sary to limit its scope on permissible grounds, having regard

to the aim, scope and the object of the whole

Act."

After referring to the rule in Heydon's case, Subba Rao, J. pro­

ceeded to outline the ambit of industry thus :

"The word 'employers' iu cl. (c) and the wo~d

'employees' in cl. (b) indicate that the fundamental basIS

for the application of the definition is the existence of that

(I) [1957] S.C.R. 33.

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BANGALORE SEWERAGE BOARD v. RA.JAPPA. (Krishna Iyer,!.) 243

relationship. The cognate definitions of 'industrial dispute',

'employ'er', 'employee', also support. The Jong title of the

Act

as well as its preamble show that the Act was passed to

rnake provision for the promotion of industries and peace­

ful and amicable settlement of disputes between employers

and employees in an organised activity by conciliation and

arbitration

and for certain other purposes. If the preamble

is read with the historical background for the passing of the

Act, it is manifest that the Act was introduced as an impor­

tant step

in achieving social justice. The Act seeks

to

ameliorate the service conditions of the workers, to provide

a machinery for resolving their conflicts and

to encourage

co-operative effort

in the service of the community. The

history

of labour legislation both in England and India also

shc,ws that it was aimed more to ameliorate the conditions

of service of the labour in organised activities than

to any­

thing

else. The act was not intended to

reach the personal

service which

do not depend upon the employment of

a

. labour force."

Whether the exclusion of personal services is warranted may be

examined a little later. I>

The Court proceeded to carve out the negative factors which, not­

withstanding the literal width of the language of the definition, must,

for other compelling reasons,

be kept out of the scope of industry.

For instance, sovereign functions

of the State cannot be included

altboutJi what such functions are has been aptly termed 'the primary

and inalienable functions of a constitutional government'. Even here

we may point out the inaptitude of relying on the doctrine of regal

powers. That has reference,

in this context, to the Crown's liability

in tort and has nothing to do with Industrial Law. In any case, it

h

open to Parliament to make law which governs the State's relations

with its employees. Articles 309 to 311 of the Constitution of India,

the enactments dealing

with the Defence Forces and other legislation

dealing

with employment under statutory bodies may, expressly or

by

necessary implication, exclude the operation of the Industrial Disputes

Act, 1947. That

is a question of interpretation and statutory exclu­

sion; but,

in the absence of such provision of law, it may indubitably

be assumed that the key aspects of public administration like public

justice stand out of the circle of industry. Even here,

as has been

brought

put frotn the Cxccrpts of ILO documents) it is not every

employee who is excluded but only certain categories primarily

engaged and supportively employed in the discharge of the essential

functions of constitutional government. In a limited

way, this head

of exclusion has been recognised throughout.

Although

we are not concerned in this case with those categories

of employees who particularly come under departments charged

with

the responsibility for essential constittrtionat functions of government,

it

is appropriate to state that if there are industrial units severable

from

the essential functions and possess an entity of their own it may

be plausihle to hold that the employees

of tlrose units are

workmen

E

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244 SUPREME COURT REPORTS (1978] 3 s.c.R.

and those undertakings are industries. A blanket exclusion of every

one. of the host of employees e~gag~ J;>Y govermnent in departments

falling under general rubncs like, JUStlce, defence, taxation legisla­

ture, may not necessarily

be thrown out of the umbrella of

tbe Act.

We say no mow except to observe that closer exploration, not sum·

mary rejection, is necessary.

The Court proceeded, in the Corporation

of Nagpur case, to pose

for itself the import of the words 'analogous to the carrying out of a

trade

or business' and took the view that the emphasis was more on

'the nature of the organised activity implicit in trade or business than

to equate the other activities with trade or business'.

Obviously,

non-trade operations were in many cases 'industry'. Relying on the

Fabricated Engine Drivers(') Subba Rao, J., observed :

"It is manifest from this decision that even activities of

a municipality which cannot

be described as trading activi­

ties can be the subject-matter

of an industrial

disputes."

The true test, according to the Learned Judge, was concisely

expressed by Isaacs J., iu his dissenting judgment in the Federated

D State School Teachers' Association of Australia v. State of Victoria.(')

"The material question is : What is the nature of the

actual function assumed-is it a service that the State could

have left to private enterprise, and, if so fulfilled, could such

a dispute

be 'industrial'

?".

Thus the nature of actual function and of the pattern of ' organised

E activity

is decisive. We will revert to this aspect a little later.

/,,..

F

G

It is useful to remember that the Court rejected the test attempted

by counsel in the case :

"It is said that unless there is a quid pro quo for the·

service it cannot be an industry. This is the same argument,

namely, that the service must be in the nature of trade ,in a

different garb."

We agree with this observation and with the further observation that

there

is no merit in the plea that unless the public who are benefited

by the services pay in cash, the services so rendered cannot be indus­

try. Indeed, the signal service rendered by the Corporation

of Nagpur

is to dispel the idea of profit-making. Relying on Australian cases

which held that profit-making may be important from the income tax

point of

view but irrelevant from an industrial dispute point of view,

the Court approved of a critical passage in the dissenting judgment of

Isaacs

J., in the

School Teachers' Association case (supra) :'

"The contention sounds like an echo from the dark ages

of industry and political economy. . . . . . . . . . Such disputes

H are not simply a claim to share the material wealth. ,, ' : .. "

(1) (1913) 16 C.L.R. 245.

(2) (1929) 41 C.L.R. 569.

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llANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 245

· 'Monetary considerations for service is, therefore, not

an essential characteristic of industry in a modern State."

Even according to the traditional concepts of English Law, profit

has

to be .disregarded when ascertaining whether an enterprise is a

business :

'

"3. Disregard of Profit. Profit or the intention to make

profit' is not an essential part of the legal definition of a

trade or business; and payment

or profit does not constitute

a trade or business that which would not otherwise be

such".

(Halsbury's Laws of England, Third Edition, Vol. 38, p. 11).

Does

the badge of industrialism, broadly understood, banish, from

its fold, education

? This question needs fuller consideration, as it has

been raised in

this batch of appeals and has been answered

i"n favour

of employers by this Court in the Delhi University case.(') But since

Subba Rao, J., has supportively cited Isaacs J. in School .Techers'

Association

(supra), which relates to the same problem, we may, even

here, prepare the ground

by dilating on the subject with special refe­

rence to the

Austrnlia:n case. That learned Judge expressed surprise

at

the very question :

"The basic question raised by this case, strange as it may

seem, is whether the occupation of employees engaged in edu­

cation, itself universally recognized

as the key

industry to all

skil:ed ·occupations, is 'industrial' within the meaning of the

Constitution". ·

The employers argued that it was fallacious to spin out 'industry'

from 'education' and the logic was a specious economic doctrine.

Issacs J.,

with unsparing sting and in fighting mood, stated and re­

futed

the plea :

"The theory was that society is industrially organised for

the production and distribution of wealth in the sense of tan­

gible, ponderabJ.;, corpuscular wealth, and therefore an

"industrial dispute" cannot possibly occur except where there

is furnished to the public-the consumens-by the combined

efforts of employers and employed, wealth

of that

"nature.

Consequently, say the employers, "education" not being

"wealth" in that sense, there never can be an "industrial dis~

pute" b<~tween employers and employed engaged in the avoca­

tion of education, regardless of the wealth derived by the

employers from the joint co-operation.

The contention sounds like an echo from the dark ages

of industry and political economy. It not merely ignores the

constant currents of life around us, which is the real danger

in deciding questions

of this nature, but it also forgets the

memorable industrial organization of the nations, not for the

production or distribution of material wealth, but

for ser-

(1) [1964] 2

S.C.R. 703.

A

B

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246 SUPREME COURT REPORTS [1978] 3 s.c.1.

vices, national service as the service of organized industry

must always be. Examina\ion of this contention will not onlf

completely dissipate it, but will also serve to throw material

light on the question in hand generally. Th0 contention

is radically unsound for two great reasons. It erroneonsly

conceives the object of national industrial organization and

thereby unduly limits the meaning of the terms "production"

and. "wealth" when used in that connection. But it further

neglects the fundamental character of "industrial disputes"

as a distinct and i'nsistent phenomenon of modern society.

Such disputes arc not simply a claim to share the material

wealth jointly produced and capable of nogistration in statis­

tics. At heart they are a struggle, constantly becoming more

intense on the part of the employed group engaged

in

co­

operation with tho employing group in renderi'ng services to

the community essential for a higher general humanwelfarc,

to share in that welfare

in a greater degree. . . . . . . . . . . .. .

That contention, if

acced·~d to, would be revolutionary ... .

. . . . . . . . . . . . . . . . . . . . . . How could it reasonably be saiol

that a comic song or a jazz performance, or the representa­

tion of comedy, or a ride in tramcar or motor-bus, pilot­

ing a ship, lighting a lamp or showing a moving picture

is more

"materiar' as wealth than instruction, either cultural or v,oca­

tional ? Indeed, to take one instance, a workman who travels

in a tramcar a mile from

his home to his factory is not

more efficient for

his daily

task than if he walked ten yards,

whereas his technical training has a direct effect in increasing

output.

If music or acting or personal transportation is ad­

mitted to be

"industrial" because each is productive of wealth

to the employer as his businer;s undertaking, then an educa­

tional establishment stands on the same footing. But if edu­

cation

is excluded for the reason advanced, how are

V<'e to

admit barbers, hair-dressers, taxi-car drivers, furniture re­

movers, and other occupations that readily suggest them­

selves ? And yet the doctrine would admit manufactures

of intoxicants and producers of degrading literature and pic­

tures, because these are considered

to be

"wealth" ·J The

doctrine would concede, for instance, that establishments for

the training of performing

dogs, or of monkeys simulating

human behaviour, would be "industrial," because one would

have increased ma~erial wealth, that is, a more valuable dog

or monkey, in the sense that one could exchange it for more

money.

If parrots are taught to say

"Pretty Polly" and to

dance on their perch, that

is, by concession, industrial,

be­

cause it is the production of wealth. But if Anstrialian

youths are trained to read and write their language correctly

and in other necessary elements of culture and vocation

making them more efficient citizens, fitting them with more

or less directness to take their place in the general industrial

ranks of the nation and to render the services required by the

commnnity, that training

is said not to be wealth and the work

done by teachers employed

is said not to be

industrial."

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BANGALORE SEWERAGE B.OARD v. RAJAPPA (Krishna Iyer,!.) 247

So long as services are part of the wealth of a nation-and it is

A

obscurantist to object to it-educational services arc wealth, are 'indust-

rial'. We agree with Isaacs J.

More closely analysed, W\l may ask ourselves, as Isaacs J. did, whe­

ther, if private scholastic establishments carried on teaching on the

same Jines as the State schools, giving elementary education free, and

charging fees for the higher subjects, providing the same curriculum

and so on, by means of employed teachers, would such dispute

as we

B

have

here be an industrial dispute ? ................ "I have already

indicated

my

view", says Isaacs J. "that education so provided consti­

tutes in itself an independent industrial operation as a service rendered

to the community. Charles Dic!Nhs evidcnt:y thought so when ninety

y~ars ago Squeers called his school "the shop" anJ prided himself on

Nickleby's being "cheap" at £ 5 a year and commensurat~ living condi­

tions. The world has not turned back since then.

In 1926 the

Committee on Industry and

Trad"'-in their report to the British Prime

Minister, ~ncluded among "Trade Unions" those called "teaching." It

the.re appoars that in 18.97 there were six unions with a total member­

~hip of 45,319 and in 1924 thep, were seventeen unions with a mem­

bership of 1,94,946. The true position of education in relation to the

actively oporative trades is not really doubtful. Education, cultural

::ind vocational, is now and is daily becoming as much the artisan's

capital and tool, and to a great extent his safeguard against unemploy­

ment,

as the employers'

banking credit and insurance policy are part

of his meaoo to carry on the business. There is at least as much rea­

son for includi'ng the educational establishments in the constitutio.nal

power as "labour" services, as there is to include insurance companies

as "capital" servio.;:s."

We have extensively excerpted from the vigorous dissent because

the same position holds good for India which is emerging from feudal

illiteracy to industrial education.

Jn Gandhi's India basic education

and handicraft merge and

in the latter half of our century higher edu­

cation involves

field studies, factory training, house surgeoncy and clini­

cal education, and,

sans such technological training and education in

humanities, industrial progress

is self-condemned. If education and

· training are integral to industrial and agricultural activities, such services

are part of industry even

if highbrowism may be unhappy to acknow­

ledge it.

It is a class-conscious, inegalitaria'n outlook with an elitist

aloofness which makes some people shrink from

we accepting educa­

tional institutions, vocational or other

as industries. The definition is

wide, embraces training for industry which, in truth, ensconces all pro­

cesses

of producing goods and services by employer-employee co­

operation. Education

is the nidus of industrialization and itself is

industry.

We may consider certain aspects of this issue while dealing with

later cases

of our Court.

Suffice. it to say, the unmincing argument of

Isaacs J. has been specifically approved in Corporation of Nagpur

and Hospital Mazdoor Sabha (supra) in a different aspect.

Now we revert to the more crucial part of

Corporation of Nagpur.

It is meaningful to notice that in that case, the Court, in its incisive

c

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F

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248 SUPREME COURT REPORTS [1978] 3 s.c.R.

A analysis, department by department of variform municipal services,

specifically observed :

"Education Department : This department looks after the

primary education, i.e., compulsory primary education within

the limits of the Corporatio'n. (See the evidence

of Witness

No,

1). This service can equally be done. by private persons.

B This department satisfies the other tests. The employees of

this department coming under the definition of

"employees"

under the Act would o~rtainly be entitled to the benefits of the

Act."

c

D

E

F

G

H

The substantial break-through achieved by this decffiion in laying

bare the fundamentals of 'industry' in its wider sense deserves mention.

The ruling tests are clear. 1. The 'analogous' species of

quasi­

trade quailly for becoming 'industry' if the najure of the organized

activity implicit in a trade or business

is shared by them.

(See p. 960.

the entire organisational activity). It is not necessary to 'equate the

other activities with trade

or business'. The pith and substance of the

matter is ' that the structural, organisational, engineering aspect, the

cr.ucial industrial relations like wages, leave and other service

condi­

tions as well as characteristic business methods (not motives) in run­

ning the enterprise, govern the conclusion. Presence pf profit motive

is expressly negated as a criterion. Even the

quid pro quo theory­

which is the same monetary object in a milder version-has been

dismis­

sed. The· subtle distinction, drawn in lovely lines and pressed with

emphatiC effect by Sri Tarkunde, between gain a"nd profit, lxotween no­

profit no-loss basis having different results in the private and public

sectors, is fascinating but, in the rough and tumble, and sound and fnry

of industrial life, snch nnances break down and nice refinements defeat.

For the same reason, we are disinclined to chase the differential ambits

of the first and the second parts of Sec. 2(j). Both read tog,ther and

each viewed from the angle of employer or employee and applied in its

sphere, as the barned Attorney General pointed out, will make sense.

If the nature of the activity is para-trade or quasi-business, it is of no

moment that it

is undertaken in the private sector, joint sector, public <ector, philanthropic sector or labour sector 'it is industry'. It is the

human sector, the way the employer-employee a relations are set

up

and processed that gives rise to claims, demands, tensions,

adjudica­

tions, settlements trnce and peace in industry. That is the raison

d' etre pf industrial law itself.

Two seminal guidelines of great moment

flow from this decision

1. the primary and

predpminant activity test; and 2, the integrated

activity test. The concrete application of the~, two-fold tests is illus­

trated in the very case. We may set out in the concise·words of Subba

Rao J., the sum-up :

"The result of the discnssion may be summarised thus :

(1) The definition of "?ndustry" in the Act is very compre­

hensive. It is in two parts : one part defines it from the stand­

point of the employer and the other from the standpoint of

the employee. If an activity falls under either part of the

,,_.

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BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, 1.) 249

definition, it will be an industry within the meaning of the

Act. (2) The history

of industrial disputes and the

legislation

recognizes the basic concept that the activity shall be an or-

ganised

one and not that which pertains to private or

personal

employment. (3) The regal functions described as primary

and inalienable functions

of

State though statutorily delegated

to a corporation are necessarily excluded from the purview

of the defiinition. Such regal functions shall be confined to

legislative power, administration of law and judicial power.

(

4) If a service rendered by an individual or private person

would

be an industry, it would equally be an industry iu the

hands of a Corporation. ( 5) If a service rendered by a cor-

poration

is an industry, the employees in the departments

connected with that service, whether

financial, administrative

or eirecutive, would be entitled to the benefits of the Act ( 6)

If a department of a municipality discharged many functions,

some pertaining to industry as defined in the Act and other

non-industrial activities,

the predominant

functions of the de-

partment shall be the criterion for the purpose

of the

Act."

By these tokens, which find assent from us, the tax department of

A

B

c

the local body is 'industry'. The reason is this. D

"The scheme of the Corporation Act is that taxes and tees

are collected in order to enable the municipality to discharge

its statutory functions.

If the functions so discharged are

wholly or predominantly covered by definition of

"indus­

try", it would be illogical to exclude the tax department from

the definition. While in the case of private individuals or

firms services are paid in cash or otherwise, in the case of

public institutions, as the services are rendered to the public,

the taxes collected from them constitute a fund for perform­

ing those services.

As most of the services rendered by the

municipality come under the definition

of

"industry", we

should hold that the employees of the tax department are

· also entitled to the benefits under the Act.

The health department

of the municipality too is held in that case

to be

'industry'-a fact which is pertinent when we deal later with

hospitals, dispensaries and health centres.

"This. department looks after scavenging, sanitation, con­

trol

of epidemics, control of food adnlteration and running of

public dispensaries. Private institutions can also render these

services.

It is said the

contml of food adulteration and the

control of epidemics cannot ·be done by private individuals

and institutions. We do not see why. There can be pri­

vate medical units to help in the control of epidemies for

remuneration. Individuals may get the food articles pur­

chased by them examined by the medical unit aud take neces­

sary action against guilty merchants. So too, they can take

advantage of such a unit to prevent epidemics by having

17--21lSCI/78

E

F

G

H

A

B

c

250 SUPREME COURT REPORTS [1978] 3 S.C·R.

necessary inoculations and advice. This department also

satisfies the other tests laid down by us, and is an industry

within the meaning

of the definition of

'industry" in the Act."

Even the General Administration Department is 'indus­

try'. Why?

"Every big company with different sections will have a

general administration department.

If the various depart­

ments collated with the department are industries,

thii>

department would also be a part of the industry. Indeed

the efficient rendering of all the services would depend

upon the proper working

of this department, for,

pther­

wise there would be confusion and chaos. The state

Industrial Court in

this case has held that all except five

of the departments of the Corporation come under the defi­

nition of

"industry" and if so, it fp'llows that this depart­

ment, dealing predominantly with industrial departments,

is also an industry. Hence the employees of this depart­

ment are also entitled

to the benefits of this

Act."

D Running right through are three tests : (a) the paramount and

E

F

G

H

predominant duty criterion (p. 971); (b) the specific service being

an integral, non-severable part of the same activity (P. 960) and

(c) the irrelevance of the statutory duty aspect.

"It is said that the functions p'f this department are

statutory and no private individual can discharge those

statutory functions. The question

is not whether the dis­

charge

of certain functions by the Corporation have

statutory hacking, but whether

those functions can equally

be performed by private individuals. The provisions of

the Corporation Act and the bye-Jaws prescribe certain

specifications for submission

of plans and for the

sanction

of the authorities concerned before the building is put up.

The same thing can be done by a co-operative society or ·

a private individual. Co-operative societies and private

individuals can allot lands for building houses in accord­

ance with the conditions prescribed by law in this regard.

The services of. this department are therefore analogous to

those of a private individual with the difference that o'nc

has the statutory sanction behind it and the other is gov­

erned by terms of contracts."

He it noted that even co-operatives are covered by the learned Judge

although

we may deal with that matter a little later.

The same Bench decided both

Corporation of Nagpur and

Hospital

Mazdoor Sabha. This latter case may be briefly consider­

ed

now. It repels the profit motive and quid

pro, quo theory as

having any bearing on the question .. The wid~r imP?J! .of Sec. 2(_j)

is accepted but it expels essential 'sovereign act1v1t1es from its

scope.

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BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Tyer, J.) 251

It is necessary to note that the hospital concerned m that case

was run by ·Government for medical relief to the people. Nay more.

It had a substantial educational and training role.

"This group serves as a clinical training group tor students

of the Grant Medical College which is a Government

Medical College run and managed by the appellant for im­

parting medical sciences leading to the Degree of Bachelor

of Medicine and Bachelor of Surgery of the Bombay

University as well -as var\o'us Post-Graduate qualifications

of the said University and the College of Physicians and

Surgeons, Bombay; the group

is thus run and managed by

the appellant to provide medical relief and to promote the

health of the people of

Bombay."

And yet the holding was that it was an Industry. Medical educa­

tion, without mincing words,

is 'industry'. It has no vulgarising

import

at all since the term 'industry' as

a technical one for the

purpose of the Act, even as a master-piece of painting

is priceless

art but is 'goods' under the

Sales Tax Law, without any philistinic

import. Law abstracts certain attributes of persons .ar things and

assigns juridical values without any pejorative· connohtion about

other aspects. The Court admonishes that :

"'Industrial adjudication has necessarily to be aware

of the

current of socio-economic thought ground; it must recog­

nise that in the modern welfare

State healthy industrial

relations are a matter of paramount importance and ;ts

essential function is to assist the State by helping a solu­

tion of industrial disputes which constitute a distinct and

persis!ent phenomenon of modern industrialised States. In

attempting to solve industrial disputes industrial adjudica­

tion does not and should not adopt a doctrinaire approach.

It must evolve some working principles and should gene­

rally avoid formulating or adopting abstract generalisations.

Nevertheless it cannot harm back to

old age notions about

the relations between

-employer and employee or to the

doctrine of

laissez faire which then governed the regulation

of the said relations. That

is why, we think in construing

the wide words used in Section

2 (j) it

would be erroneous

to attach undue importance

to attributes associated with

business or trade in the popular mind in days gone

by."

(pp. 875-6)

Again, this note

is reported on a later page

:

"Isaacs J. has uttered a note of caution that in dealing

with industrial dispufes industrial adjudicators !'lust be con­

versant with the current knowledge on the subject and they

shi:luld not ignore the constant current~ of !ife ar.oun.d the':"

for otherwise it would introduce a senous rnfirm1ty m their

approach. Dealing with the general characteristics of

industrial enterprise the learned. Judge observed . that they

contribute more or less to the general welfare of the

com­munity." p. 883)

A

B

c

D

E

F

G

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A

B

c

D

E

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252 SUPREME COURT REPORTS [1978] 3 s.c.a.

A conspectus of the clauses has induced Gajendragaclkar J. to

take note

of the impact

,of provisions regarding public utility service

also:

"If the object and scope of the statute are considered

there

would be no

difficulty in holding that the relevant

words of wide import have been deliberately used by the

Legislature in

defining

"industry" in Sec. 2(j). The object of

the Act

was to make provision for the investigatidn and

settlement

of industrial disputes, and the extent and scope

of its provisions would be realised if we bear in mind the

definition of

"industrial dispute" given by Sec. 2(k), of

"wages" by Sec. 2(rr), "workman" by s. 2(s), and of

"employer" by s. 2(g). Besides, the definition of a public

utility service prescribed by

s. 2(m) is very significant. One has merely tj.l glance at the six categories of public

utility service mentioned

by s. 2(m) to realise that the rule

of construction on which the appellant relies is inapplicable

in interpreting the definition prescribed bys. 2(j)

." (p. 875)

The positive delineation

of 'indusry' is set in these terms : ". . . . . . as a working principle it may be stated that an

activity systematically or habitually undertaken for the pro­

duction or distribution of goods or for the rendering of

material service

to the community at large or a part of

such community

with the help of employees is an

under­

taking. Such an activity generally involves the coopera­

tion of the employer and the employees; and its Object is

the satisfaction of material human needs. It must be orga­

nised or arranged in a manner in which trade or business

is generally organised or arranged. It must not be casual

nor must it be for oneself nor for pleasure. Thus the

manner in

which the activity in question is

(ltganised or

arranged, the condition of the co-operation between em­

ployer and the employee necessary for its success and its

object

to render material service to the community can be

regarded

as some of the features which are distinctive of

acti­

vities to which s. 2(j) applies. Judged by this test there

would be no difficulty in holding that the State is carrying on

an undertaking when it runs the group of Hospitals in

question." (p. 879)

Again,

"It is the character of the activity which decides the ques­

tion as to whether the activity in question attracts the pro­

vision of Sec. 2(j); who conducts the activity and whether

it is conducted for profit or not do not make a material

difference." (p. 878)

By these tests even a free or charitable hospital is an industry. That

the court intended such a conclusion

is evident :

"If that be so, if a private citizen runs a hospital with­

out charging any fees from the patients treated in it, it would

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BANGALORE SEWERAGE BOARD v. RAJAPPA. (Krishna Iyer,/.) 253

nevertheless be an undertaking under s. 2 (j). Thus the

character of the activity involved in running a hospital brings

the institution

of the hospital within s.

2(j)"

The 'rub' with the ruling, if we may with great deference say so,

begins when the Court inhibits itself from effectuating the logical thrust

of its

own crucial ratio : " ........ though s. 2(j) uses words of very wide

del\otation, a line would have to be drawn in a fair and ;ust

manner,

so as to exclude some callings, services or undertak­

ings.

1f all the words used are given their widest meaning,

all services and all callings would come within the purview

of the definition; even service rendered by a servant purely

in a personal or domestic matter or even

in a casual way

would fall within the definition. It is not and cannot be

suggested that in its wide sweep the word

"service" is intend­

ed to include service howsoever rendered in whatsoever capa­

city and for whatsoever reason.

We must, therefore, consi­

der where the line should

be drawn and what limitations can

and should be reasonably implied in interpreting the wide

words used in

s. 2(j); and that no doubt is a somewhat diffi­

cult problem to

decide."(p.876)

A

B

c

D

What is a 'fair and just manner' ? It must be founded on grounds

justifiable by principle derived from the statute if it

is not to be

sublimation of subjective phobia, rationalization of interests or judici­

alisation of non-juristic negatives. And

this bunch, in our respectful

view, has been proved true not

by positive pronouncement in the case

but by

twq points suggested but left open. One relates to education E

and the other to professions.

We will deal with them in due course.

Liberal Professions

When the delimiting line is drawn to whittle down a wide defini­

tion, a principled working test, not a projected wishful thought, should

be sought. This

conflict surfaced in the Solicitor's case ( 1962 Supp .

(3) S.C.R. 157). Before us too, a focal point of contest was as to F

whether the liberal professions are,

ipso facto, excluded from 'industry'.

Two grounds were given by Gajendragadkar, J. for over-ruling

Sri

A. S. R. Chari's submissions. The doctrine of direct co-operation and

the features of liberal professions were given

as good reasons to barric~de professional enterprises from the militant clamour for more

by lay labour. The learned

judge expressed himself on the first

salvational plea : G

"When in the Hospital case this Court referred to the

organisation of the undertaking involving the co-operation of

capital and labour or the employer and

his employees, it

obviously meant

the co-operation essential and necessary for

the purpose of rendering material service or for the purpose

of production.

It would be realised that the concept of

industry postulates partnership between capital and labour

or between the employer and

his

employ~es. It ~s un~er

this partnership that the employer contnbutes his capital

H

A

B

c

D

E

F

254

SUPREME COURT REPORTS [1978] 3 s.c.a.

and the employees their labour and the joint contribution of

capital and labou~ leads directly to the production which the

mdustry ~as m view. In other words, the co-operation bet­

ween capital and labour or between the employer and his

employees wl;tich is treated as a working test in determining

~hether. an)'. activity amounts to an industry, is the co-opera­

t10n which 1s directly involved in the production of goods or

in the rendering of service. It cannot be suggested that

every form or aspect of human activity in which capital and

labour co-operate or employer and employees assist each

other

is an industry. The distinguishing feature of an indus­

try

is that for the production of goods or for the rendering of

service, co-operation between capital and labour or between

the employer and his employees must

be direct and must be

essential." pp. 163-164 Co-operation to which the test refers

must

be co-operation between the employer and his employees

which

is essential for carrying out the purpose of the enter­

prise and the service to be rendered by the enterprise should

be the direct outcome of the combined efforts of the employer

and the employees. ·

The second reason for exoneration is qualitative. 'Look­

ing at this question in a broad and general

way, it is not easy

to conceive that a liberal profession like that of an attorney

could have been intended by the Legislature to fall within

the definition of

"industry" under s. 2(j). The very con-

cept

of the liberal professions has its own special and dis­

tinctive features which do not readily permit the

inclusicm of

the liberal professions into the four corners of industrial law.

The essential basis of an industrial dispute

is that it is a

dispute arising between capital and labour

in enterprises

where capital and labour combine to produce commodities

or to render service. This essential basis would be absent

in the case of liberal professions.

A person following a

liberal profession does not carry on

Ws profession of his

employees and the principal,

if not the sole, capital which he

brings into his profession is his special or peculiar intellectual

and educational equipment. That

is why on broad and

general considerations which cannot be ignored, a liberal

profession like that of an attorney must,

we think, be deemed

to be outside the definition of

"industry" under section

2(j)". pp. 167-168

Let us examine these two tests.

In the sophisticated, subtle, com­

plex, assembly-line operations of modern enterprises, the test of 'direct'

and

'indirect', 'essential' and 'inessential', will snap easily. In an

American automobile manufactory, everything from shipping iron 'Ofe

into and shipping care out of the vast complex takes place with myriad

H major and minor jobs. A million administrative, marketing and adver­

tising tasks are done. Which, out of this maze of chores,

is direct? A

battle may

be lost if winter-wear were shoddy. Is the army tailor a

direct contributory ?

•

I • .;

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BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, !.) 255

An engineer may lose a competitive contract if his typist typed

wrongly or shabbily

or despatched late. He is a direct contributory

to the disaster. No lawyer or doctor can impress client or court

if his

public relations job

or

]¥nne work were poorly done, and that part

depends on smaller men, adjuncts. Can the great talents in administra­

tion, profession, science or art shine if a secretary fades or faults ? The

whole theory of direct co-operation

is an improvisation which, with

great respect, hardly impresses .

Indeed, Hidayatullah, C.J., in

Gymkhana Club Employee

Union(

1

)

scouted the argument about direct nexus, making specific reference to

the Solicitors' case :

'' ...... The service of a solicitor was regarded as indivi-

dual depending upon his personal qualifications and ability, to

which the employees did not contribute directly

or essentially.

Their contribution, it was held, had no direct

or essential nexus

with the advice or services.

In this way learned professions

were

excluded."

To nail this essential nexus theory, Hidayatullah, C.J., argued :

"What partnership can exist between the company and/or

Board of Directors on the one hand and the menial staff em-

ployed to sweep floors on the other'? What direct and essen-

tial nexus

is there between such employees and production ?

This proves

tfiat what must be established is the existence of

an industry viewed from the angle of what the employer is

A

B

c

D

doing and if the definition from the angle of the employer's E

occupation is satisfied, all who render service and fall within

the definition of workman come within the fold

of industry

irrespective of what they do. There is then

no need to

estab-

lish a partnership as such in the production of material goods

or material services. Each person doing his appainted task

in an organisation will be a part of industry whether he attends

to a loom or merely polishes door haudles. The fact of

em- F

ployment as envisaged in the second part is enough provided

there

is an industry and the employee is a workman. The

learned professions are not industry not because there is

ab-

sence of such partnership but because viewed from the angle

of the employer's occupation, they

do not satisfy the

test."

Although Gajendragadkar J. in Solicitor's case and Hidayatullah, G

J. in Gymkhana case agreed that the learned professions must be ex­

:c!uded, on the question of direct or effective contribution in partner­

lship, they flatly contradicted each other. The reasoning on this part of

the case which has been articulated in the Gymkhana Club Employees

Vnion (supra) appeals to us. There is no need for insistence upon the

~rinciple of partnership, the doctrine of direct pexns or the contribu­

tion

of

value.s by employees. Every employee in a professional office, H

ibe he a para-legal assistant or full-fledged professional employee or,

{l) [1968] i s.c.R. 742.

256 SUPREME COURT REPORTS [1978] 3 S.C.lt.

A down the ladder, a mere sweeper or janitor, every-one makes for the

success of the

office, even the mali who collects flowers and places a

beautiful bunch in a vase on the table spreading fragrance and plea­

santness around. The failure of anyone can mar even the success

of everyone else. Efficient collectivity

is the essence of

profess\onal

success. We reject the plea that a member of a learned or liberal

B

profession, for that sole reason, can self-exclude himself from opera­

tion of the Act.

c

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G

H

The professional immunity from Labour's demand for social justice

because learned professions have a halo also stands on sandy founda­

tion and, perhaps, validates

G. B.

Shaw's witticism that all professions

are conspiracies against the laity. After aU, let us be realistic and re­

cognise that

we live in an age of experts alias professionals, each

having his ethic, monopoly, prestige, power and profit. Proliferation of

professions

is a ubiquitous phenomenon and none but the tradition

bound

will agree that theirs is

nO'! a liberal profession. Lawyers have

their code. So too medicos swearing by Hippocrates, chartered

accountants and company secretaries and other autonomous

nidi of

know-how.

Sociological critics have tried to demythologize the

learned profes­

sions. Perhaps they have exaggerated. Still it is there. The politics

of skill, not service of the people,

is the current orientation, according

to a recent book on 'Professions

For the People':

"The English professions in the eighteenth century were

an acceptable successor to the feudal ideal of landed pro­

perty

as a means of earning a living. Like landed property,

a professional

"competence" conveniently "broke the direct

connection between work and income

....

" (Reader, 1966,

p. 3) for the gentryman. A professional career provided

effects, aristocratic, protective coloration, and at the

same

time enabled one to make a considerable sum of money with­

out sullying his hands with a

"job" or "trade". One could

carry

on commerce by sleigh of hand while donning the

vestments of professional altrnism.

To boot, one could

also work without appearing to derive income directly from

it.

As Reader explains :

"The whole subject of payment .... seems to have caused

professional men acute embarrassment, making them take re­

fuge in elaborate concealment, fiction, and artifice. The root

of the matter appears to lie

in the feeling that it was not fitting

for one gentleman to pay another for services rendered, parti­

cularly

if the money passed directly. Hence, the device of pay­

ing a barrister's fee to the attorney, not to the barrister

himself.

Hence,

a1so the convention that in many professional dealings

the matter of the fee was never openly talked about,

which

could be very convenient, since it precluded the client or

patient from arguing about whatever sum his advisor might

eventually indicate

as a fitting honorarium (1966, p. 37). The

•

•

. BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, 1.) 257

established professions-tlie law, medicine, and the clergy-held A

(or continued to hold) estate-like positions :

The three 'liberal professions'

of the eighteenth century

were the nucleus about which the professional class of the niue­

teenth century

was to form. We have seen that they were

united by the bond of

classical education; that their broad and

ill-defined functipns covered much that later would crystallise B

out into new, specialised, occupations; that each, ultimately,

derived much of its standing with the established order in the

State .... (1966, p. 23),"

In the United States, professional associations are gnilds in modern

dress.

"Modern professional associations are organizational

counterparts

of the

gnild.Ji. They are occupational self-interest

organisations.

In as much as the professions

still perform

custom work and exercise a monopoly of 1raining and skill,

the guild analogy

is plausible. However, aspects of economic

history lead to a different conclusion. There has been a shift

of emphasis on the part of professionals from control over the

quality of the product or service, to control of

price."

Indeed, in America, professionals advertise, hold a strict monopoly,

charge heavy

fees and wear humanitarianism as an altruist mask. In

England a

Royal Commission has been appointed to go into certain as­

pects of the working of the legal profession.

The observer, in a leading article 'WIGS ON THE GREEN" dated

15 February, 1976, wrote :

"In preparing for the challenge of a Royal Commission,

lawyers ought to realise how deep public disillusionment

goes, how the faults of the legal system are magnified by the

feeling that the legal profession

is the most

powerful pressure

group--some would

say a mutual protection society-in the

land, with its loyal adherents in

Westminster, Whitehall, and

on the bench, like a great freemasonry designed to protect

the

status quo.

*

• •

It robs the client of the benefits of free competition among

barristers for his custom.

It confirms his impression that Her

Majesty's courts, which he rightly regards

as part of the service

the

State offers to all its citizens, are a private benefit society

for lawyers.

*

• •

. \he fees that lawyers are paid, and the services that they

give m retu!n, must. al?o be studied. A recent_ survey sug­

gested that m one cnmmal court 79 per cent of barristers in

contested cases and 96 per cent in uncontested cases saw their

c

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258 SUPREME COURT REPORTS (1978] 3 S.C.ll.

clients only on the morning of the hearing. How much is that

worth?

• • •

. . . . . . . . For Britain at present bas a legal system which

often looks

as anachronistic as its wigs and gowns, a system in

which solicitors are plentiful in well-to-do areas, and inaccessi­

ble in less fashionable districts; in which

t!Je law appears suited

only to the property rights of the middle class, bnt oblivious

of the new problems of poorer and less well-educated peo­

ple,

who need help with their broken marriages or their land­

lord-and-tenant disputes.

Sooner rather than later, the legal

system must be made to appear less like a bastion of privilege,

more like a defender of

us

all."

* * *

The American Medical Association has come in for sharp social criti­

cism and litigative challenge. Which architect, engineer or auditor has

the art to make huts, landscape little villages or bother about small

units ? And which auditor and company secretary has not been pres­

sured to break with morals by big business ? Our listening posts are

raw life.

The Indian Bar and Medicine have a high social ethic upto now.

Even so, Dabolkar(l) cannot be ignored as freak or recondite. Doctors

have been criticised for unsocial conduct. The halo conjured up in the

Solicitor's case hardly serves to 'de-industrailise' the professions. After

all, it

is not infra dig for lawyers, doctors, engineers, architects, auditors,

company secretaries or other professionals to !egard themselves

as wor­

kers in their

own sphere or employers or suppliers of specialised service

to society. Even justicing

is service and,

·but for the exclusion from indus­

try on the score of sovereign functions, might qualify for being regarded

as 'industry'. The plea of 'profession' is irrelevant for the industrial law

except

as

expression of an anathema. No legal principle supports it.

Speaking generally, the editors of the book Professions for the

People earlier mentioned state :

"Jethro K. Lisberma·n (1970, p. 3) warns "Profes-

sionals are dividing the world into spheres of influence

and erecting large signs saying "experts at work here, do not

proceed further." He shows that via such mechanisms as

licensing, &elf-regulation, and political pressure the profes­

sions are augmenting the erosion of democracy. Profes­

sional turf is now ratified by the rule of law. If there is

'the case, it represents a significant development : the division

of labour in society

is again moving towards the legalisation

of social

status quo occupational

roks."

All this adds up ~'.} the decanonisation of the noble professions.

Assuming that a professional in our egalitarian ethos,

is like any other

man of common clay plying a trade or business,

we cannot assent

to the cult of the elite

in carving out islands of exception to 'industry'.

(I) A.T.R. 1976. S.C. 242

BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 259

The more serious argument of exclusion urg~d to keep the pro­

fessions out of the coils of industrial disputes and the employees'

demands backed

by agitations 'red in tooth and claw' is a sublimated

version of the same argument. Professional expertise and excellence,

with its occupational autonomy, ideology,

learning, bearing and

morality, holds aloft a standard of service which centres round the

individual doctor, lawyer, teacher or auditor. This reputation and

quality

of special service being

af the essence, the co-operation of the

workmen in this core activity

of professional offices is absent. The

clerks and stenos, the

bell-boys and doormen, the sweepers and

menials have

no art or part in the soul of

professional functions with

its higber code of ethic and Intellectual proficiency, their contribution

being peripheral and low-grade, with no relevance to the clients' wants

and requirements. This conventional model

is open to the

spciologi­

cal criticism that it is an ideological clock conjured up by highborns,

a posture of

noblesse oblige which is incongruous with raw life es­

pecially

i"n the democratic third world and post-industrial societies.

To hug the past

is to materialise the ghost. The paradigms of pro­

fessionalism are

gone. In the large

solicitors' firms, architects' offices,

medical polyclinics and surgeries, we find a humming industry, each

section doing

its work with its special tlavour and culture and code,

and making the end product worth

its price. In a regular factory you

have higbly skilled technicians whose talent

is of the essence,

managers whose

abiiity organizes and workmen whose co-ordin~ted

input is, from one angle, secondary, from another, significant. Let us

look at a surgery or walk into a realtor's tirm. What physician or

surgeon will not kill 1f a'n attendant errs or clerk enters wrong or dis­

penses deadly dose? One such disaster somewhere m the assembly­

line operations and the clientele

will be scared despite the doctor's

distalled

skill. The lawyer is no better and just cannot function

without the specialised supportive

tools of para-professionals like secre­

taries, librarians and law-knowing steno-typists or

even the messengers

and telephone girls. The mystique of professionalism easily melts

Ill

the hands of modern social scientists who have (as Watergate has

shown in America and has India had its counterpart?) debunked and

stripped the professional emperor naked. 'Altruism' has been expos­

ed, cash has overcome craft nexus and if professionalism is a mundane

ideology, then "profession" and "professional" are sociological contri­

butions to the pile. Anyway,

in the sophisticated organization of

expert services, all occupations have central skills, an occupational

code of ethics, a group culture, some occupational authority, and

some

permission to monopoly practice from the community. This incisive

approach makes it difficult to 'caste-ify' or

'cla'.ss-ify' the liberal pro­

fessions

as part and beyond the pale of 'industry' in our democracy.

We mean no disrespect to the members of the professions. Even the

judicial profession or administrative profession cannot escape the winds

of social change.

We may add that the modern world, particularly

the third world, can hope for a human tomorrow only through profes­

sions for the people, through expertise at the service of the millions.

Indian primitivism can

be banished only by pro bona publico profes­

sions

in the

fie!~ of law, medicine, education, engineering and what not.

But hat radicalism does not detract from the thesis that 'industry' does

A

B

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260 SUPREME COURT REPORTS (1978] 3 S.C·R.

A

not spare professionals. Even so, the widest import may still self-exclude

the little moffusil lawyer, the small rural medico or the country engi­

neer, even though a hired sweeper or factotum assistant may work with

him.

We see no rationale in the claim to carve out islets. Look.

A solicitor's firm or a lawyer's firm becomes successful not merely

by

the talent of a single lawyer but by the co-operative operations of

several specialists, juniors and seniors. Likewise the ancillary ser-

B vices of competent stenographers, para-legal supportive services are

equally important. The same test applies

to· other professions. The.

conclusion is inevitable that contribution to the success of the institu­

tion-every professional unit has an institutional good-will and reputa­

tion--<:omes not merely from the professional or specialist but from

all those whose excellence in their respective parts makes for the total

proficiency.

We have, therefore, no doubt that the claim for exclu-

C sion on the score of liberal professions

is unwarranted from a func­

tional or definitional angle. The flood-gates of exemption from the

obligations under the Act

will be opened if professions flow out of its

scope.

Many callings may clamour

to be regarded as liberal professions.

D

In an age when traditions have broken down and the old world pro­

fessions of liberal descent have begun to resort to commercial prac­

tic~s (even legally, as in America, or factually, as in some other coun­

tries) exclusion under this new label will be infliction of injury on the

statutory intent and effect.

E

F

The result of this discussion is that the solicitors' case is wrongly

decided and must, therefore,

be over-ruled. We must hasten, how­

ever,

to repeat that a small category, perhaps

large in numbers in the

muffasi!, may not squarely fall within the definition of industry. A

single lawyer, a rural medical practitioner or urban doctor

with a

little assistant

and/or menial servant may ply a profession but may

not

be said to run an industry. That is not because the employee does

not make a contribution nor because the profession

is too high

t9 be

classified

as a trade

OT industry with its commercial connotations but

because there

is nothing like organised labour in such employment.

The image of industry or even quasi-industry

is one of a plurality of

workmen, not an isolated or single little assistant or attendant. The

latter category

is more or less like personal avocation for livelihood

taking some paid

or part-time from another. The whole purpose of

G the Industrial Disputes Act

is to focus on resolution of industrial dis­

putes and regulation of industrial relations and not to meddle with

. every little carpenter in a village or blacksmith in a town

who sits with

his son or assistant to work for the customers who trek m. The

ordinary spectacle of a cobbler and his assistant or a cycle repairer

with a helper, we come across

in the pavments of cities and towns,

H

repels the idea of industry and industrial dispute. For this reason,

which applies all along the line, to small professions, petty handicrafts­

men, domestic servants and the like, the solicitor or doctor or rural

engineer, even like the butcher, the baker and the candle-stick

maker,

with an assistant or without, does not fall within the definition

11

(

'j

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BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, !.) 261

of industry. In regular industries, of course, even a few employees A

are enough to bring them within sec.

2(s). Otherwise automated

industries

will slip through the net.

Education

We will now move on to a consideration of education as an indus­

try.

If the triple tests of

·systematic activity, co-operation between

employer and employee and production of goods and services were

alone to be applied, a University, a college, a research institute

or

teaching institution will be an industry. But in University of

Delhi(')

B

it was held that the Industrial Tribunal was wrong in regarding the

University

as an industry because it would be inappropriate to describe

education as an industrial activity. Gajendragadkar

J., agreed in his

judgment that the employer-employee test was satisfied and coopera­

tion between the two was also present.

Undoubtedly, education is a

sublime cultural service, technological training and personality­

builder. A man without education is a brute and no body can

quarrel with the proposition that educati,dn, in its spectrum, is signi­

ficant service to the community. We have already given extracts from

Australian Judge Issacs J.,

to substantiate the thesis that education is

not merely industry but the mother of industries. A philistinic, illi­

terate society

will be not merely uncivilised but incapable of indus­

trialisation. Nevertheless Gajendragadkar J., observed :

c

"It would, no doubt, sound somewhat strange that education should

be described as industry and the teachers as workmen within the

meaning

of the Act, but if the literal construction for which the

res­

pondents contend is accepted, that consequence must follow." Why

is it strange to regard education as an industry ? Its respectability?

Its lofty character

? Its professional stamp ? Its cloistered virtue

which cannot be spoiled by the commercial implications and the

raucous voices of workmen ? Two reasons are given to avoid the

conclusion that imparting education

is an industry. The first ground

relied on

by the Court is based upon the preliminary conclusion that

teachers are not 'workmen' by definition. Perhaps, they are not,

because teachers do not do manual work or technical work. We are

not too sure whether it

is proper to disregard, with contempt, manual

work and separate it from education, nor are

we too sure whether in

our technological universe, education has to be excluded. However,

that may be a battle to

be waged on a later occasion by litigation and

we do not propose to pronounce on it at present. The Court, in the

University of Delhi, proceeded on that assumption viz. that teachers

are not workmen, which

we will adopt to test the validity of the

argument. The reasoning of the Court

is best expressed in the words

of Gajendragadkar,

J. :

"It is common ground that teachers employed by edu­

cational institutions, whether the said institutions are impart­

ing primary, secondary, collegiate or postgraduate educa­

tion, are not workmen under

s. 2(s), and so, it follows that

the whole body

of employees with whose

co~operation the

I) [1961] 2 S.C.R. 703.

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262 SUPREME COURT REPORTS (1978] 3 S.C·R.

work of imparting education is carried on by educational

institutions do not fall within the purview of

s. 2(s) and any

disputes between them and

the institutions which employed

them are outside the scope of the Act.

-In other words if

imparting education is an industry under s. 2 (j), the bulk of

the employees being outside

the purview of the Act, the

only disputes

which can fall within the scope of the Act are

those which arise between such institutions and their sub­

ordinate staff, the members

of which may fall under s. 2(s).

In our opinion, having regard to the fact that the work of

education is primarily and exclusively carried on with the

assistance of the labour and co-operation

of teachers, the

omission of the whole class of teachers, from the definition

prescribed

by s. 2(s) has an important bearing and signi­

ficance in relation to the problem which we are considering.

It could not have been the policy of the Act that education

should be treated

as industry for the benefit of a very minor

and insignificant number

of persons who may be employed by

educational institutions to carry on the duties of the sub­

ordinate

staff. Reading

ss_ 2(g}, (j) and (s) together,

we are inclined to hold that the work of education carried

on by educational institutions like the University of Delhi is

not an industry within the meaning of the Act."

The second argument whicn appealed to the Court to reach its

conclusion

is that :

"the distinctive purpose and object of education

would make it very difficult

to assimilate it to the position of any

trade, business or calling or service within the meaning

of sec.

2(j)."

Why so? The answer is given by the learned judge himself :

"Education seeks to build up the personality of the pupil

by assisting

his physical, intellectual, moral and emotional

development. To speak

of this educational process in terms

of industry sounds so completely incongruous that one is not

surprised that the Act has deliberately

so defined workmen

under

s. 2(s) as to exclude teachers from its scope.

Under

the sense of values recognised both by the traditional and

conservative

as well as the modern and progressive social

outlook, teaching and teachers are,

no doubt, assigned a high

place ol: honour and it is obviously necessary and desirable

that teaching

and teachers should receive the respect that is

due to

them, A proper sense of values would naturally

hold teaching and teachers

in high esteem, though power or

wealth may not be associated

with them. It cannot be denied

that the concept

of social justice is wide enough to include

teaching and teachers, and

the requirement that teachers

should receive proper emoluments and other amenities

which is essentially based on social justice cannot be disput­

ed; but the effect of excluding teachers from s. 2(s) is only

this that

the remedy available for the betterment of their

financial prospects does not

fall under the Act. It is well

known that Education Departments of the

State Govern­

ments

as well as the

Union Government, and the University

(' -

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llANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 263

Grants Co=ission carefully consider this problem and

assist the teachers by reqmring the payment to them of

proper scales of pay and by insisting on the fixation

of other

reasonable terms and conditions of service in regard to teach­

ers engaged in primary and secondary education and colle­

giate education which fall under their respective jurisdic­

tions. The position nevertheless

is clear that any problems

connected with teachers and their salaries are outside the

purview of the Act, and since the teachers form the sole

class

of employees with whose co-operation education

-is

imparted by educational institutions, their exclusion from

the purview of the Act necessarily corroborates the conclu­

sion that education itself

is not without its

scope."

Another reason has also been adduced to reinforce this condu­

sion:

"'lt is well known that the University of Delhi and most

other educational institutions are not formed or conducted

for making profit;

no doubt, the absence of profit motive

would not take the work of any institution ontside s. 2 (j)

if the requirements of the said definition are otherwise

satisfied.

We have referred to the absence of profit motive

only

to emphasise the fact that the work undertaken by such

educational institutions

differs from the normal concept of

trade or business. Indeed, from a rational point of

view, it

would be regarded

as inappropriate to describe education

even

as a profession. Education in its true aspect is more a

mission and a vocation rather than a profession ·or trade or

business, however

wide may be the denotation of the two

latter words under the Act. That is why we think it would

be unreasonable to hold that educational institutions are

employers within the meaning of

s. 2(g), or that the work

of teaching carried on

by them is an industry under s. 2(j),

because essentially, the creation of a well-educated healthy -

young generation imbued with a rational progressive out­

look on life which

is the sole aim of education, cannot at all

be compared or assimilated with what may be described

as

an industrial

process."

The Court was confronted by the Corporation of Nagpur where

it had been expressly held that the education department of the Cor­

poration

was service rendered by the department and so the sub­

ordinate menial employees of the department eame under the definition

of employees and

would be entitled to the benefits of the Act. This

A

B

c

D

F

G

was explained away by the suggestion that "the question as to whether

educational work carried on by educational institutions like the Uni­

versity of Delhi which have been formed primarily and solely for the-. H

purpose of imparting education amounts to an industry within the

meaning of

s. 2 (j), was not argued before the Court and was not

really raised

in that

form."

A

B

c

D

E

F

G

264 SUPREME COURT REPORTS [1978) 3 $.C.R.

We dissent, with utmost deference, from these propositions and

are inclined to hold,

as the Corporation of Nagpur held, that educa­

tion is industry,

and as Isaacs J., held, in the Australian case (supra),

that education

is pre-eminently service.

The actual decision in

University of Delhi was supported by another

ground, namely, that the predominant activity

of the university was

teaching and since teachers did not come within the purview of the

Act, only the incidental activity of the subordinate

staff could fall within

its scope hut that could not alter the predominant character of the insti­

tution.

We may deal with these contentions in a brief way, since the subs­

tantial grounds on which we reject the reasoning have-already b~en

set out elaborately. The premises relied on is that the bulk of the

employees in the university

is the teaching community. Teachers are not

workmen and cannot raise disputes under the Act. The subordinate smff being only a minor category of insignificant numbers, the institu­

tion must be excluded, going by the predominant character test. It is

one thing to say that an institution is not an industry. It is altogether

11Dother thinking to say that a large number of its employees are not

'workmen' and cannot therefore avail of the benefits of the Act

so the institution ceases to be an industry. The test

is not the

predo­

minant number of employees entitled to enjoy the benefits of the Act.

The true test

is the predominant nature of the activity. In the case of

the university or an educational institution, the

nature of the activity

is,

ex hypothesi, education which is a service to the co=unity. Ergo,

the university is an industry. The

error has crept in, if we may so

say with great respect, in mixing up the numerical strength

of the

personnel with the nature of the activity.

·

Secondly there are a number of other activities of the University

Administration, demonstrably industrial which are severable although

ancillary to the main cultural enterprise. For instance, a university

may have a large printing press

as a

·separate but considerable establish­

ment. It may have a large fleet of transport buses with an army of

running staff.

It may have a tremendous administrative strength of

officers and clerical cadres.

It may have karamoharis of various hues.

As the

Corporation of Nagpur

ha·s effectively ruled, these operations,

viewed in severalty or collectively, may be treated as industry.

It

would be

strauge, indeed, if a university has 50 transport buses, hiring

drivers, conductors, cleaners and workshop technicians. How are

they to be denied the benefits of the Act, especially when their work

is separable from academic teachin,11;, merely because the buses are

owned by the same corporate personality

? We find, with all defence,

little force in this process of nullification of the industrial character of

the University's multi-form operations.

H The next argument which

hits appealed to the Court in that case

is that education develops the personality of the pnpil and this process

if described as industry, sounds grotesque. We are unable to apore2

ciate the force of this reasoning, if we may respectfully say so. It is

.,,..

,

....

• ..

---...--_1

·;

'

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i

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BANGALORE SEWERAGE BOARD v. RAJAPPA, (Krisluuz Iyer,],) 265

true that our social values assign a high place of honour to education,

out

how aoes

it 1011ow trom uus tnat eaucatton is not a service ·1 'lhe

sequitur 1s not easily dtscermble. lhc pejorative assumption seems

to oe that 'lllaumy is SO!Ilemmg vulgar, !Illenor, disparaging and

snou1d not be alloweu to sully t!1e sancuhed subject of education. Ill

our view, maustry is a nob1e term and embraces even the most sublime

acuvity. At any rate, in legal terminology located 1Il the statutory

dctimuon it is not money-maKmg, it is not lucre-loving, it is not com­

merciahsmg, it is not proht hunger. On the othc.r hand, a team

ot painters who proaucc works of art and sell them or

an orchestra

group which travels and pertorms and makes money

may be au

trnJustry 1f they employ suppo.rtive sta1f ot artistes or others. 1herc

is no uegradmg touch about 'industry', especially m the light ot

Mahatma Ganuhi's dictum that 'Work is Worship'. lndeed the

colonial system of education, which divorced book learning from

manual work anu practical training, has been responsible for the

calamities in that field. For that very reason, Gandhiji and Dr. Zak:ir

Hussain propagated basic education which used work as moaus

operandi for teaching. We have hardly any hesllal!on m regaromg

eoucation as an industry.

The

final ground accepted by the Court is that education is a mis­

sion and vocauon, rather than a profession or trade or business. The

most that one can

say is that this is an assertion

which does not prove

itself. Indeed, all hie is a mission and a man without a miss10n is

spiritually still-born. The high mission u( life is the ma11ifesta:1un of

tne divinity already in n1an~ To christen education as a ml.,sion,

A

B

c

D

even if true, is not to negate its being an industry. We have to JUok E

at educational activity from the angle of the Act, and so V1ewed the

ingredients of education are fulfilled. Education is, therefore,

an

industry and nothing can stand in the way of that conclusion.

It may well be said by realists in the cultural field that educational

managements depend

so much on governmental support and some of F

them charge such

high fees that schools have become trade and

managers merchants.

Whether this will apply to universities or lJIJ't,

schools and colleges have been accused, at least in the private sector,

of being tarnished with trade motives.

Let

us trade romantics for realities and see. With evening classes,

correspondence courses, admissions unlimited,

fees and government G

grants escalating, and certificates and degrees for prices, education­

Jegal, medical, technological, school level or collegiate-education-is

ri.sklcss trade for cultural 'entrepreneurs .and hapless posts of campus

(mdustnal) unrest. lmagmary

assumpt10ns are experiments with

untruth .

.

our conclusion is that the University

?f .Delhi case was wrongly H

decided and that education can be and is, m its mslltut10nal form an

industry. '

18-211SCI/78

A

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E

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266 SUPREME COURT REPORTS [1~78J 3 S.C·R.

Are Charitable Institutions Industries ?

Can charity be 'industry' ? This paradox can be unlocked only

by examining the nature of the activity of the charity,

for the.re are

charities and charities. The grammar of labour law in a pluralist

society tells

us that the worker is concerned with wages and conditions

of service, the employer with output and economies and the community

with peace, production and stream of supply. This complex of work,

wealth and happiness, firmly grasped,

·will dissolve the dilemma of

the law bearing on charitable enterprises. Charity

is free; industry is

business. Then how ? A lay look may scare; a legal look will see;

ii

social look will see through a hiatus inevitable in a sophisticated

society

with organizational diversity and motivational dexterity.

If we mull

ove.r the major decisions, we get a hang of the ba5ic

&trncture of 'industry' in its legal anatomy. Bedrocked on the ground­

norms,

we must analyse the elements of charitable economic euter­

prises, established and

mainWned for satisfying hmnan wants. Easily,

three brpad categories emerge more may exist. The charitable element

enlivens the operations at different levels in these patterns and the

legal consequences are di'ffereut, viewed from the angle of 'industry'. For

income-tax purposes, Trusts Act or company law or registration law

or penal code requirements the examination

will be different. We are

concerned

with a benignant disposition towards workmen and

a tricho­

tomy of charitable enterprises run for producing

and/or supplying

goods and

service•, organised systematically and employing workmen,

is scientific.

The first

is one where the enterprise, like any other, yields profits

but they are siphoned

off for altruistic objects. The second is one

where the

instit!Jtion makes no profit but hires the services of employees

as in other like businesses but the goods and services, which are the

output, are made available, at

low or no cost, to the indigent needy who

are priced out of the market. The

third is where the establishment

is oriented on a humane mission fulfilled by man who work, not be­

cause they are paid

wages, b\lt because they share the passion for the

cause and derive job satisfaction from their contribution. The first

two are industries, the third not. What

is the test of identity whereby

these institutions with eleemosynary inspiration fall or

do not fall under

the definition of industry

?

All industries are organised, systematic activity. Charitable ad­

ventures which

do not possess this feature, of course, are not industries.

Sporadic or fugitive strokes

of charity do not become industries. All

three philanthropic entities,

we have itemised, fall for consideration

only if they involve co-operation between employers and employees to

prodnce

and/or supply goods and/or services. We assume, all three

do. The crucial difference

is over the presence of charity in the quasi­

business nature

of the activity. Shri Tarkunde, based on Safdarjung,

submits that, ex hypothesi, charity frustrates commerciality and thereby

deprives it of the character

of industry.

BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 267

It is common ground that the first category of charities is dii-

A

qualified for exemption. If a business is run for production and or

supply of goods and services with an eye on profit, it

is plainly an

industry. The fact that the whole or substantial part of the profits

so earned

is

diverted for purely charitable purposes does not affect

the nature of the economic activity which involves the co-operation

of employer and employee and results in the production of gqo'ds and

B

services. The workers are not concerned about the destination of the ..

profits. They work and receive wages. They are treated like any ~

other workman in any like industry. All the features of an industry,

as spelt out from the definition by the decisions of this Court, are fully

present in those charitable businesses.

In short, they

are industries.

The application of the income for philanthropic purposes, instead of

filling private coffers, makes no difference either to the employees or

c

to the character of the activities. Good Samaritans can be clever

industrialists.

1 The second species of charity is really an allotropic modification

of the

first. If a kind-hearted businessman or high-minded industrialist

or service-minded operator hires employees like

his non-philanthropic D

counter-parts and, in co-operation with them, produces and supplies

goods or services to the lowly and the Jost, the needy and the ailing

without charging them any price or receiving a negligible

return, people

regard

him as of charitable disposition and his enterprise as a charity.

But then, so far

as the workmen are concerned, it boots little

whether

he makes a'vailable the products free to the poor. They

c.o·ntribute labour in return for wages and conditions of ·service. E ....

For them the charitable employer is exactly like a commercial-minded

employer. Both exact hard work, both pay similar wages, both treat

them as human machine

cogs and nothing more. The material

diffe-

rence between the commercial and the compassionate employers is not

~

with reference to the workmen but with reference to the recipients or

goods and services. Charity operates not vis-a-vis the workmen in

which case they

will be paying a liberal wage and generous extras with F

no prospect of strike. The beneficiaries of the employer's charity

are

the indigent consumers. Industrial law doe5 not take note of such

J---.,-extraneous factors but regulates industrial relations between employers

and employers, employers and workmen and workmen and workmen.

,.

From the point of view of the workmen there is no charity. For him

charity must begin at home. From these strands of thought flows the

G

conclusion that the 'second group may legitimately and legally be des-

cribed as industry. The fallacy in the contrary contention lies in shift-

ing the

focus from the worker and the industrial activity to the disposal

of the end product. This law

has nothing to do with that. The

income-

tax may have, social opinion may have.

Iii

H

Some of the appellants may fall under the second category jusl

described. While we are not investigating into the merits of those

appeals, we may as well indicate, in a general way, that the Gandhi

A

B

c

E

F

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. 268.

SUPREME COURT REPORTS [1978] 3 s.c.R.

Ashram, which employs workers like spinners and weavers and sup­

plies cloth or other handicraft at concessional rates to needy rural

consumt;rs, may not qualify for exemption. Even ·so, particular inci­

dents may have

to he closely probed

before pronouncing with precision

upon the nature of the activity. Jf cotton or yarn is given free to

workers, if charkhas are made available free for families, if fair price

fa paid for the net product and substantial charity thus benefits the

similar undertakings and commercial adventures do. To qualify for

closely into the character

of the enterprise. If employees are hired and

their services are

J"ewarded by wages-whether on cottage industry

or factory basis-the enterprises become industries. even if some kind

of concession

is shown and even if the motive and project mav be to

encourage and help poor families and find them employment. A com­

passionate industrialist

is nevertheless an industrialist. However, if

iaw material is made available free and the finished product is fullv

paid for-rather exceptional to imagine-the conclusion may be

hesite.nt but for the fact that the integrated administrative, purchase,

mark«~!ng. advertising and other functions are like in trade and busi­

ness. This makes them industries. Noble obiectives. oiou·s purposes,

shidtu::i1 fo11nclations and develoomental r,roieots are no reason not to

imnlic~te these institutions as industries.

We now move on to economic activitie" and occupation's of an

altruistic character fallinrr under the third category.

The heart of trade or business

or analogous activity is organisa­

tion with an

eye on competitive efficiency, by hinng employees,

systematising processes, producing goods and services needed by the

community and obtaining money's worth of work from employees.

ff such be the nature of operations and employer-employee relations

which make an enterprise an industry, the motivation of the emp­

loyer in the final disposal of products

or profits is immaterial. Indeed

the activity

is patterned on a commercial basis, judged by

what other

similar undertakings and commercial adventures do. To qualify for

exemptio!) from the definition of 'industry' in a case where there are

e'mploycrs and employees and systematic activities

a1id production of

)',Oods and services, we need a totally different orientation, crganisa­

tion and m.ethod which will stamp on the enterprise the imprint of

cbinmerciality. Special emphasis, in such cases, must be placed

on

the central fact of employer-employee relations. If a philanthropic

devotion is the basis for the charitable foundation or establishment,

the institution

is headed by one who whole-heartedly dedicates him­

self for the

mission and pursues it with passion, attracts 0thers into

the institution, not for wages but for sharing in the cause and its

fulfilment, then the undertaking is not 'industrial'. Not that the

orc>cncc of charitable impulse extricates the institution from the

definition in

Sec. 2 (j) but that there is no

eminomic relationship such

as is found in trade or business between the head who employs and

the other.s who emotively flock to render service. In one sense,

there are no employers and emplovees but crusaders all. In another

sense, there

is

no wag~ basis for the employment but voluntary par-

--

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BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 269

ticipation in the production, inspired by lofty ideals and unmindful

of remuneration, service conditions and the like. Supposing there

is an Ashram or Order with a guru or other head. Let us further

assume that there

is a band of disciples, devotees or priestly sub­

ordinates in the

Order, gathered together for prayers, ascetic prac­

tices, bhajans, meditation and worship. Supposing, further, that

outsiders are also invited daily or occasionally,

to

sl;are in the

spiritual proceedings. And, let

us assume that all the

mmetes of the

Ashram and members of the Order, invitees, guests and other out­

side participant3 arc fed, accommodated and looked after by the

institution.

In such a case, as often happens, the cooking and the

cleaning, the bed-making and service, may often be done,

at least

substantially by the Ashramites themselves. They may chant in

spiritual ecstasy even as material goods and services ar<: made and

served. They may affectionately look after the guests, and, all this

they may do, not for wages but for the chance to propitiate the

Master, work selflessly and acquire spiritual grace. It may well be

that they may have surrendered their lucrative employment to come

into the holy institution.

It may also be that they

take some small

pocket money from the donations or takings

of the institution. Nay

more, there may be a

few scavengers and servants, a oart-time

auqi­

tor or accoun1ant employed on wages. If the substantial number of

participants in making available goods and services, if t1e substan­

tive nature

cf the work, as distinguished from trivial

iten:», is render­

ed by voluntary wagcless sishyas. it

is impossible to designate the

institution

~s an industry, notwithstanding a marginal fev/ \Vho arc

employed on a regular basis for hire. The reason is that in tl1c

crucial, substantial and substantive aspects of institut10nol life the

nature of the relations between the oarticipants is non-iridustrial.

Perhars, when Mahatma Gandhi lived in Sabarmati, Aurobindo had

his hallowed silence in Pondicherry, the inmates belonged to this

chastened brand. Even now,

in many foundations, centres, monas­

taries, holy orders and Ashrams in the East and in the

West. spiritual

fascination pulls men and women into the precincts and they work

tirelessly for the Maharishi or Yooi or Swamiji and arc not wage­

earners in any sense of the term. Such people are not workmen and

such institutions are not industries despite some menh• ls and some

professionals in a vast complex being hired. We muse look at the

prndominant character of the institution and the natu··e oi the re­

lations resulting in the production of goods and sen·ices. Stray

wage-earning employees do not shape the soul of an ir·stitution into

a!l industry.

It now remains to make a brief survey of the precrdems on the

point. One case which is germane to the issue is Bo,nbay Pinjra­

pole(I). A Bench of this Court considered the earlier case-law. in­

cluding the decisions of the High Courts bearing on hurrane activities

for the benefit of sick animals. Let there be no doubt that kindness

to our dumb brethren, especially invalids. sorings from the highest

motives of fellow feeling. In the land of the Buddha and Gandhi

no enc dare argue to the contrary. So let there be no mistaking

(I) [19721 l S.C.R. 202

B

c

D

E

F

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A

B

c

D

E

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270 SUPREME COURT REPORTS [ 197 8) 3 s.c.!l.

our compassionate attitude to suffering creatures. It is laudable and

instituticns dedicated to amelioration of conditious of animals deserve

eucouragement from the State and affluent philanthropists. But these

considerations have no bearing on the crucial factors which invoke

the application of the definition in the Act

as already set out elabor­

ately by us.

"The manner in which the activity in question is orga­

nised

or

mranged, the condition of the cooperation between the emp­

loyer and the employee necessary for its success and its object to

render 1naterial service to the community" is a pivotal factor in the

activity-oriented test of an 'industry'. The compassionate motive and

the charitable inspiration are noble but extraneous. Indeed, medi­

cal relief for human beings made available free by regular hospitals,

run

by

government or philanthropists, employing doctors ~nd snp­

portive staff and business-like terms, may not qualify for exemption

from industry. Service to animals cannot be on a hi~her footin.g

than serYice to humans. Nor is it possible to contend that love of

animals

is

religioos or spiritual any more than love of human-beings

is. A pinjrapole is no church, mosque or temple. Therefore, with­

out going into the dairying aspects, income and expenditure and other

features of Bombay Pinjrapole, one may hold that the institution is

an industry. After all, the emplovees are en~aged on ordinary eco­

nomic terms and with conditions of service as fn other business insti­

tutions and the activities nlso have organisational comparability to

other profit-making dairies or Pinjrapoles. What

is different is the charit.ible obiect. What is. common is the nature of the employer­

employces relations. The conclusion, notwithstanding the humani­

tarian overtones.

is that such organisations are also industries.

Of

course. in Bombay Pinjrapole the same oonclusion was reached but

on different and, to some extent faultv reasonin)?. For, the assump­

tion iq the judgment of Mitter J., is that if the income were mostly

from donations and the treatment of animals were free, perhaps such

charity, be it a hospital for humans or animals, may not be

an

industry. We

agree with the holding, not because Pinirapoles have

commercial motives but because, despite comnassionate objectives,

thev share business-like orientation and operation.

In this view,

section 2(j) applies.

We may proceed to consider the applicabilitv of Sec. 2-(j) to insti­

tutiom, wl1ose obiectives and activities cover the research field in a

significant way. This has been the bone of contention in a few

cases in the past and in one of the aooeais argued at considerable

length and with considerable force bv Shri Tarkunde who has presen­

ted a panoramic view of the entire subject in his detailed submiss:o~s.

An earlier decision of this Court. The A hmedabad Textile Industries

Research Association(')case has taken the view that even research

institutes are roped in by the definition bnt later judicial thinking at

the High Court and Sunreme Court levels has leaned more in favonr

of exemotion where profit-motive has been absent. The Kurji Holy

Family Hospital(

2

)

was held not to be an industry because it was a

(I) [1961) 2 S.C.R. 480.

(2) [19711 I S.C'.R. 177.

f

BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 271

non-profit-making body and its work was in the nature of training, A

research aud treatmem. Likewise m 1Jhanra1gir1i liospztal v. WorK­

men('), a bench ot this Court held that the charitable trust which

ran a hospital and served research purposes and training

ol nurses

was not an industry.

'fhe High Courts of Madras and Keraia have

also heid that research

mst1tmes such as the Pasteur Institute, the C.S.I.R. and the Central l'lantauon Crops Research Institute are not

indus',ries. The basic decis10ri which has gone against the Ahmeda- B

bud Te;i.llle case is the Safdarjung case. We may brietly examine the

rival view-points, although in substance

we have already

stated the

correct principle. The view that commends itself to ns is plainly in

reversal of the ratio

of Safdarjung which has been wrongly decided,

if we may say so with great respect.

Research C

Does research involve

colla1¥Jration between employer and

cn;ployee ? It does. The employer is the institution, the employees are

the scientists, para-scientists and other personnel.

ls scientific resea1ch

service

'I Unooubtedly it is. lts d1sooveries arc valuable contribu­

tions

to the wealth ot the nation.

Such discoveries may be sold for

a heavy price in the industrial or other markets. Technology has to

be paid for and technological inventions and innovations may be

patented and sold. In our scientific and technological age nothing

nas more cash value, as intangible goods and mvaluable services,

than discoveries. For instance, the discoveries of Thomas Alva

Edison made him fabulously rich. It has been said that his brain

had the lughest cash value m history tor he maae the world vibrate

w1t11 tile mrraculous discovery ot recorded. sound. Unlike most m­

ventors, he did not have

lo

wait to get his reward in heaven; he

recceived it munificently on this gratmed and gratclul cartn, tnanks

to conversion ot his inventions lllto money a ptcuty. Kesearcn bene-

fits industry. Even thougll a research rnstitutc may be a separate

entity-disconnected from tne many industries whicll wnued tne insti ·

tute itself, 1t can be regarded as an orgamsation, propelled by

systematic activity, moaelled on co-operat10n between employer unu

employee and calculated to throw up discoveries and inventiOl)S and

usetul solutions which benefit indivioual industries and the nation in

terms of goods and services and wealth.

It follows that research

institutes, albeit run without profit·motive, are industries.

True Shri Tarkunde

is right if Safdarjung is rightly decided. The

concluding portions of that decision proceed on the

~doting that re­

search and training have an exclusionary

effect. That reasoning, as

we have already expounded, hardly has our approval.

Clubs : Are clubs industries ? The wide words used in Sec. 2 (f)

if applied without rational limitations, may cover every bilateral

activity even spiritual, religious, domestic, conjugal, pleasurable or

political. But functional circumscriptions spring from the subjcct­

ip.atter aud other cognate considerations already set out early in this

judgment. Industrial law, any

Jaw, may insanely run amok if limitless

(1) A.i.R.

i97S S.0. 2232.

D

E

F

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A

B

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272

SUPREME COURT'REPORTS [1978) 3 s.c.R.

lexical liberali;y. were to intlatc expressions into bursting point or

prohterate odu Jud•cial arrows which at random sent, hits, many an

trrelevant mark the leg1slat1ve archer never meant. To read down

words to y1elu rele ;&nt sense is a pragmatic art if care is taken to

. - . . '

eschew sub3ect1ve i;roiecl!ons masked as judicial processes. The true

test

as we

ap;irche,1d from the ccononuc history and functional

phtlosophy

or the Act

is based on the pathology ot industrial friction

~nd explosio'1 impedrng community production and consumption and

tmpenllmg po ,cc and wcllarc. This social pathology arises from the

exploilat1vc p<,tenttal latent Ill organized employer-emp\oyee relations.

So, where th0 dichotomy of employer and workmen in the process of

matenal prod·1ct•on is present, the service of economic fnction and

need for conft,ct resolut10n show up. The Act is meant to obviate

such confr.oncLtion and 'industry' cannot functionally and defunctional­

ly exceed this object. The question is whether in a club situation-or

of a co-oper;itivc or even a monastery situation, for that matter--a

dispute potential .of the nature suggested exists. If it does, it · is

an Jndustry, smce the basic elements are satisfied. If productive co­

operation be;ween employer and employee is necessary, contlict

between them is on the cards, be it a social club, mutual benefit

society, pinjarapole, public service or professional ol!ice. Tested on this

touchstone,

nost clubs will fail to qualify for exemption. For clubs­

gentlemen's

dub;, proprietary clubs, service clµbs, investment clubs,

sports clubs, art clubs, military clubs or other brands of recreational

associations--when x-rayed from the industrial angle, project a picture

on the

screeH

tyi;ical of employers hiring employees for wages for ren­

dering services and/or supplying goods on a systematic basis at specill­

ed honrs. There

is a co-operation, the club management providing the

capital, the

rc1w material, the appliances and auxilliaries and the cooks,

waiters, bell boys, p:ckers, bar maids or other servants making

available enj"yable cats, pleasures and other permissible services for

price paid

by way of subscriptions or bills charged. The club life, the

warm

comp<-ny, the enrichment of the spirits and freshening of the

mind are theie. But these blessings do not contradict the co-existence

of an 'industry' in the technical sense. Even tea-tasters, hired for

high

wages, or commercial art troupes or games teams remunerated

fantastically, enjoy company, taste, travel and games; but, elementally,

they are workmen with employers above and together constitute not

merely entertainment groups but industries under the Act. The protean

hues of human orgamzation project delightfully different designs

de­

pending upon the legal prism and the filtering process used. No one

can deny the cultural value of club life; neither can anyone blink at

the legal result

pf the organization.

'

The only ground to ~xtricatc clubs from the coils of industrial

law (except specific statutory provision)

is absence of employer­

employec co-operatio.n on the familiar luring-firing pattern.

Before·

we explain tlis possible excmpllon and it applies Ip :i1~11y clubs at

the poorer levels

of society we must meet another subm1ss1on made by

counsel.

Clubs are exclusive; they cater to needs and pleasures of

members, not of the community

as

~uch and this fatter feature salvages

them from the clutches of industnal regulation. We do not agree.

•

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BANGALORE SEWERAGE BOARD v. RAJ APP A (Krishna lyer, I.) 2 7 3

Clubs are iopen to the public for membership subject to their own

bye-laws and rules. But any member of the community complying

with those conditions and waiting for his turn has reasonable chance

.of membership. Even the world's summit club-the

United Nations has

cosmic membership subject to vetoes, qualifications, voting and what

not. What

we mean is that a club is not a limited partnership but form­

ed from the community.

M,oreover, even the most exclusive clubs of

imperial vintage and class snobbery admit members' guests who are

not specific souls but come from the undefused community or part of

a community. Clubs, speaking generally are social institutions enli­

vening community life and are the fresh breath of relaxation in a

faded society. They serve a sectipn and answer the doubtful test of

servin,g the community. They are industry.

We have adverted to a possible category of clubs and associa­

ticns which may swim out of the industrial pool-we mean self­

serving clubs, societies or groups or associations. Less fashionable

but more numerous in a poor, populous, culturally hungry country

with democratic urges and youthful vigour is this species. Lest there

should be a rush by the clubs

we have considered and dismissed

A

B

c

to get into this proletarian brood if we may so

describe them to identify, D

not at all to be

pejorative,-we must elucidate.

It is a common phenomenon in parts of our country that

workers, harijans, student youth at the lower rung of the socio-eco­

nomic ladder, weaker sections like women and low-income groups qucnoh their cultural thirst by forming gregarious organisations main­

ly for recreation. A

few

books and magazines, a manuscript house

magazine contributed by and circulated among members, a football

or volley ball game in the evenings-not golf, billiards or other expen­

sive games-a music or drama group, an annual day, a competition

and pretty little prizes and family get together and even organising occasional meetings inviting V.I.Ps.-these tiny yet luscent . cultural

balls dot our proletarian cheerlessness. And these hopeful organisms,

if fostered, give a mass spread for our national awakening for those

for whom

no developmental bells yet toll.

Even these people's organs cannot be non-industries unless one

. strict condition

i~ fulfilled. They should be-and usually are-self­

serving. They are poor men's clubs without the wherewithal of a

Gyamkhana or C.C.l. which reacted this court for adjudication.

Indeed, they rarely reach a court being easily priced out of our ex­

l)ensive judicial market. These self-service clubs do not have hired

\Jn""""Jees to cook or serve, to pick or chase balls, to tie up nets or

arrange the "ards table, the billiards table, the bar and the oath or

do those elabc.rate business management chores of the well-run city

or conntry clubs.

The members come and arrange things

f•'r them­

selves. The secrebry, an elected member, keeps the key. Those in­

terested in particul>.r pursuits organise those terms themselves. Even

the small accounts: "r clerical items are maintained by one member

or other.

On

special wenings all contribute efforts to make a good

19-211 SCI/78

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A

B

c

D

E

F

G

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•

show, excursion, ioY picnic or anniversary celebratiOn. The dynamic

aspect is self-service. In such an institution, a part-time sweeper or

scavenger or multi-purpose attendant ma;· sometimes exit He may

be ao employee. This marginal element does· not transform a little

association into an industry. We have projected an imprecise profile

aud there may. be minor variations. The central thrust of' our pro­

position is that if a club or other like collectivity has a basic and

dominant self-service mechanism, a modicum

of employees

at the

periphery

will not metamorphose it into a conventional

club· whose

verve.and virtue

are.taken care of by paid staff, and

the members'

. role is to enjoy. The small man's Nehru Club (Gandhi Granthasala,

·Anna Manram, Netaji Youth Centre, Brother Music Club, Muslim

Spcrts Club and like organs often named after natural or provincial'

heroes and manned by members themselves as contrasted with the ·

upper bracket's Gyamkhana Club, Cosmopolitan Club, Cricket Club

of India, National Sports Club of India whose badge is pleasure paid

for

and provided through skilled or semi-skilled catering staff. We do

not deal with hundred per cent social service clubs which meet once

.

in a way, hire a whole evening in some hotel, have no regular staff

and devote their energies and resources also to social service projects.

TI1ere are many brands and we need not deal with every one. Only

if they answer the test laid down affirmatively they qualify.

Tte leading cases on the point are Gyamkhana and C.C.l. We

mu't deal with them before we_ conclude on this topic.

The Madras Gymkhana Club, a blue-blooded, members' club

has the socialite cream of the city on its rolls. It offers choice faci­

lities for golf, tenni~ and billiards, arranges dances, dinners aml

refreshments; entertainS and ·accommodates guests and conducts

tournaments for members and· non-members. These are all activities

rictJy charged with pleasurable. service. For fulfilment of these object>

the club employs officers, caterers, and others on reasonable salaries.

Does this club become

an industry ? The label matters little; tl1e sub­stanc~ is the thing. A night club for priced 'nocturnal sex is a lasci­

vious 'industry'.

But a literary club, meeting weekly to read or

discuss poetry, hiring a venue and running solely by

the self-help of the

participants, is not. Hidayatullah C.J ., in Gymkhana ruled that

the club was not

an 'industry'. Reason? 'An industry

is thus said

to involve cooperation between employer and employees for the .object

of satisfying material human needs

but not for oneself nor for plea­

sure

nor necessarily for profit.' "It is not of any consequence that there is no profit

motive because that is considered immaterial.

It is also · true that the affairs of the club are organised in the way ·

business is orgainsed, and that there is production of materi­

al and other services and in a limited way production of

material goods mainly in the catering department But these

circumstances are not truly representative in the case of

the club because the services are to the members them-

. selves for · their own pleasure and amusement and · the

-,

BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 2 7 5

material goods are for their consumption. In other words,

the club exists for its members. No doubt occasionally

strhngers also benefit from its services, but they can

only do

so on invitation of members. No one outside the

list

of members has the advantage of these services

as

of right. Nor can these privileges be bought. In fact

they are available only to members or through members.

If today the club were to stop entry of outsiders, no

essential change in its character viS:-a-vis the members

would take place.

In other words, the circumstances that

guests are admitted is irrelevant to dete1mine

if the club

is an industry. Even with the admission of guests being

open the club remains the same, that

is to. say, a mem­

ber's self-serving institution. No doubt the material needs

or wants of a section of the community

is catered for but

that

is not enough. This must be done

m: part of trade or

business or as undertaking analogous to trade or busi­

ness. This element

is completely missing in a members' club".

Why is the club not an industry'! It involves c:ooperati011 of employer

and employees, organised like in a trade and calculated to supply plea­

surable utilities to members and others. The learned Judge agrees that

'the material needs or wants of a section of the community

is catered

for but that is not enough. This must be done as part of trade or

business or as an undertaking analogous

to trade or

business. This

element

is completely missing in a members' club.

'This element' ? What element makes it analogous

to trade ?

Profit motive? No, says the learned judge. Because it is a self serving

institution? Yes? Not at all. For, if .it is self-service then why the

expensive establishment and staff

wih high salary bills ? It is plain as

day-light that the club members do nothing to produce the goods or

services. They are rendered by employees who work for wages. The

members merely enjoy club life, the geniality of company and

ex­

hilarating camaraderie, to the accompaniment of dinners. dance,

games and thrills. The 'reason' one may discover

is that it is

a mem­

bers' club

in the sense that 'the club belongs to members for the time

being on its list

o! members and that is what matters. Those mem­

bers can deal with the club as they like. Therefore, the club

is . identified with its members at a given point of time. Thus it can­

not be said that the club has an existence apart from the members'.

We are intrigued by this reason. The ingredients nec~ssary for an

industry are present here and yet it is declared a non-mdustry be­

cause the club belongs to members only. A company belongs to the

shareholders only; a co-operative belongs to the share mei;nbers only;

a firm of experts belongs to the partn~rs only. And yet, if. they em­

ploy workmen with whose co-op~rat10n goods and serv1c~s are

made available to a section of the community and the operatic;ms. are

ornanised in the manner typical of business method and "!rgan.1sat10n,

the conclusion is irresistible that an 'industry' emerges. L1kew1se, the

A

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276

SUPREME COURT REPORTS (1978] 3 S.C.R.

members of a club may own the institution and become the em­

ployers for th~t reason. It is transcendental logic to jettison the in­

fercnoo of an 'industry' frC?m such a factual situation on the ingenious

plea that a club 'belongs

to members for the time being and that is

what matters'. We are inclined to think that that just does

ndt matter.

TI1e Gymkhana case, we respectfully hold, is wrongly decided.

The

Cricket

Club of India(') stands in a worse position. It is a

huge undertaking with activities wide-ranging, with big budgets,

army of staJI and profit-making adventures. Indeed, the members'

share

in the gains of these advantures by getting money's worth by

cheaper accommodation, free or

low priced tickets for entertain­

ment and concessional refreshments; and yet Bhargava J, speaking

for the Court held this mammoth industry a non-Industry. Why?

Is

che promotion of sports and games by itself a legal reason for ex­

cluding the organisation from the category of industries if all the

necessary ingredients are present ? Is the fact that the residential

facility

is

exclusive for members an exemptive factor ? Do not the

members share

in the profits through the invisible process of lower

charges ?

When all these services are rendered by hired employees,

how can the nature of the activity be described as self-service, with­

out taking

liberty with reality? A number of utilities which have

money's

worth, are derived by the members. An indefinite section

of the community entering

as the guests of the members also share

in these

services. The testimony of the activities can leave none in

doubt that this colossal 'clnb' is a vibrant collective undertaking

which offers goods and services to a section of the community for

payment and there

is co-operation between employer and employees

in this project. The plea of non-industry is un-presentable and ex­

clusion is possible only by straining law to snapping point to

salva&e

a certain class of socialite establishments. Presbyter is only priest writ

large. Club is industry manu brevi.

Co-operatives.

Co-operative societies ordinarily cannot, we feel, fall outside

Sec. 2 (j) ·

After all, the society, a legal person, is ~e. employer. The members

and/ or others are employees and the act1V1ty partakes of the nature

of trade. Merely because Co-operative enterprises

deserve

State en­

couragement the defination cannot be distorted. Even if the society

is worked by the members only, the entity (save where they are f~w

and self-serving) is an industry because the member-workers are paid

wages and there can be disputes about rates and different scales of

wages among the categories i.e. workers and workers or between

workers and employer. These societies-<:_re~it societies, marketing

co-operatives, producers' or consumers'

soc1e!Jes or apex

soc1et1es­

are industries.

Do credit unions, organised

on a

copperative basis, scale the defi?i­

tional walls of industry ? They do. The judgment of the Austral~an

High Court in The Queen v. Marshall Ex Parle Federated Clerks Union

(l) [1969] l S.C.R. 600.

I

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BANGALORE.SEWERAGE BOARD v .. RAJAPPA (Krishna Iyer,!.) 277

of Australia(') helps reach this conclusion. There a credit union

which

was a co-operative association which pooled

the savings of small

people and made loans to its members at low interest was considered

fr~m ~e point of view of industry. Admittedly, th~y were credit

umons mcorporated

as co-operative societies and the thinking of Mason

J., was that such institutions

were industrial in character. The indus-

trial mechanism of society according to Starke

J, inc;uded

"all those

bodies. 'of men associated, in various degrees of ·competition

a'nd co­

operation, to win their living by providing the community

with some

service

w~ich it requires' ". Mason J., went a step further to hold

that even 1f such credit unions were an adjunct of industry, they could

be regarded as industry.

It is enough, therefore, if the activities carried on by credit unions

A

can accurately be described

as incidental to industry or to the organized C

production, transportation or distribution of commodities or other forms

of material wealth. To our minds the evidence admits of no doubt

that the activities of credit unions are incidental in this sense.

~ This was sufficient, in his view, to conclude that credit unions

•

constituted au industry under an Act which has resemblance to our

own. In our vi1~w, therefore, societies are industries. D'

The Safdarjung Hospital Case.

A sharp bend in the courne of the Law came when Safdarjung was

decided. The present reference has come from that land mark case,

and, necessarily, it claims our close attention. Even so, no lengthy

discussion

is called for, because the connotation of 'industry' has

al­

ready bee'n given by us at sufficient length to demarcate out deviation

from the decision in

Safdarjung.

Hidayatullah C. J., considered the facts of

the appeals clubbed

toge/her there and held that all the three institutions in the bunch of

appeals were not industries. Abbreviated reasons were

given for the

holding in regard

to each institution, which we may extract for precise

understanding :

"It is obvious that Safdarjung Hospital is not embarked

on an economic activity which can be said to be analogous

to trade or business. There is no evidence that it is more

than a place where persons can

get treated. This is a part

of the functions of Government

a'nd the Hospital is run as a

Department of Government.

It cannot, therefore,

hoe said

!o

be an industry.

The Tuberculosis Hospital

is not an independent insti­

tution.

It is a part of the Tuberculosis Association of India.

The hospital

is wholly charitable and is a research institute.

The dominant purpose of the Hospital

is research and train­

ing, but as reseiirch and training cannot be given without

beds in a hospital, the

Jaospital is run. Treatinent is thus a

part of research and training.

In these circumstances the

Tuberculosis Hospital

cannot be described as industry.

(I) [1975] 132 O.L.R. 595.

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278 SUPREME COURT REPORTS [1978] 3 S.C·R.

The objects of the Kurji Holy Family Hospital are

entirely charitable.

It carries on work of training research

and treatment. Its income

is mostly from donations and

distribution of surplus

as profit is prohibited. It is, there­

fore, clear that it

is not an industry

as laid down i'n the

Act." ·

Even a cursory glance makes it plain that the learned Judge took

the view that a place of treatment of patients, run

as a department of

government, was not an industry because it was a part of the functions

of the

government. We cannot possibly agree that running a hospital,

which

is a welfare activity and not a sovereign function, cannot be an

industry. Likewise, dealing with the Tuberculoois Hospital case, the

learned Judge held that the hospital

was wholly charitable and also

was a research institute. Primarily, it was an institution for research

and training. Therefore, the Court concluded, the institution conld

not be described

as industry. Non sequitur. Hospital facility, re­

search products and training services are surely services and hence

indnstry.

It is difficult to agree that a hospital is not an industry. In

the third case the same factors plus the prohibition of profit are relied

on

by the Court.

. We find it difficult to hold that absence of profit,

or functions o!f tra:iriing and research, take the institution out of the

scope of industry.

Although the facts of the three appeals considered in

Safdarjung

related only to hospitals with research and training component, the

bench went extensively into a survey of the earlier precedents and

crystallisation of criteria for designating industries. After stating that

trade and business have a wide connotation, Hidayatullah, C. J., took

the

view that

professions must be excluded from the ambit of industry;

"A profession ordinarily is an occupation requiring intellectual skill,

often coupled with manual skill. Thus a teacher uses purely intellec­

tual skill, while a paint.er ~ both. In any event, they are not

engaged in

an

occupation in which employers and employees co­

operate in the production or sale of commodities or arrangement for

their production or sale or distribution and their services cannot be

described as material service".

We are unable to agree with this rationale. It is difficult to under­

stand why a school or a painting institute or a studio which uses the

services of employees and renders the service to the community cannot

be regarded as an

industr;. What is more baffling is the subsequent

strillg of reasons presented by the learned Judge :

"What is meant by 'material services' needs some expla­

nation too. Material services are not services which depend

wholly or largely upon the contribution of professional know­

ledge, skill or dexterity for the production of a result. Such

services being given individually and by individuals are ser­

vices no doubt but not material services. Even an establish­

ment where many such operate cannot be said to convert

their professional services into material services. Material .

services involve an activity carried on through co-operation ·

,

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.BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 279

between employers and employees to provide the community

with the use of something such as electric power, water,

transportation, mail delivery, telephones

and the like. In

providing

these services there may be employmen~ of trained

men and even professional

men, but the emphasis is not on

what

these men do but upon the productivity of a service

·organised as an industry and commercially valuable. Thus

the servioes of professional men involving benefit to indivi­

duals according to their

needs, such as doctors, teachers, lawyers, solicitors etc. are easily distinguishable from an acti­

vity such as transport service. The latter is of a commercial

character in which something

is brought into existence quite apljl't from the benefit to particular individuals. It is the

production of

this something which is described as the pro­

duction of material

services."

With the greatest respect to the learned Chief Justice, the argu­

ments strung together in

this paragraph are too numerous and subtle

for

us to imbibe. It is transcendental to define

material services as

·excluding prefessional senices. We have explained this position

at some length elsewhere in this judgment and do not feel the need to

repeat. Nor are

we convinced that Gymkhana and Cricket

Club of

India are correctly decided. The learned Judge placed accent on the

non-profit making members club

as being outside the pale of trade or

industry.

We demur to this proposition.

Another

intriguing reasoning in the judgment is that the Court has

stated "it is not necessary that there must be a profit motive but the

enterprises must be analogous to trade or business in a commercial

sense''. However, somewhat con~rary to this reasoning we find, in the

<:oncluding part of the judgment, emphasis on the non-profit making

aspect of the institutions. Equally puzzling is the reference to "com­

mercial sense" what precisely does this expression mean ? It is

interesting to note that the word "commercial" has more than one

semantic shade. If it mea'ns profit-making, the reasoning is self­

contradictory.

If it merely means a commercial pattern of organisa­tion, of hiring and firing employees, of indicating the nature of

employer-employee -relation as in trade or commercial house, then

the activity-oriented approach

is

the correct one. On that footing, the

conclusions reached

in that case do not follow. As a matter of fact,

Hidayatullah, C.J., had

in Gymkhana turned down the test of com-

merciality :

"Trade is only one aspect of industrial activity ......... .

...... This requires co-operation in some form between employers

and workmen and the result

is directly the product of this association

but

not necessarily

·commercial". Indeed, while dealing with the

reasoning in

Hospital Mazdoor Sabha he

observes : "If a hospital,

nursing home or a dispensary is run as a business, in a commercial way,

there may be found elements of an industry there". This facet

suggests either profit motive,

which

has been expressly negatived in

the very

case, or commercial-type of activity, regardless of profit,

which

affirms the test which we have accepted, namely, that there

must be employer-employee relations more or.

less on the

pattern . of

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280 SUPREME COURT REPORTS [1978] 3 S.C.lt.

trade or business. All that we can say is that there are different

strands of reasoning in the judgment which are somewhat difficult to

reconcile. Of course, when the learned judge states that the use of

the first schedule to the Act depends on the conditioh precedent of

the existence of an industry,

we agree. But, that by itself

doe.§ not

mean that a hospital cannot be regarded

as an industry, profit -or no

profit, research or no research.

We have

adduced enough reasons in

the various portions of this judgment to regard hospitals, research

institutions and training centres

as valuable material services to the

community, qualifying for coming within

sec. 2(j). We must plainly

state that vis-a-vis hospitals,

Safdarjung was wrong and Hosp;tal Maz­

door

Sabha was right.

Because

of the problems of reconciliation of apperently contra­

dictory stands

of reasoning in Safdarjung we find subsequent cases

of

this Court striking different notes. In fact, one of us (Bhagwati J.}

in Indian Standards Institution (') referred, even at the opening, to

!h(l baffling, perplexing question which judicial ventures had not solved.

We fully endorse the observations of the Court in l.S.I. :

"So infinitely varied a'nd many-sided is human activity

and with

the incredible growth and progress in all branches

of

knowledge and

ewr widening areas of experience at all

levels, it is becoming so diversified and expanding in so

many directions hitherto u'nthought of, that

no rigid and

doctrinaire approach can be adopted

in considering this

question.

Such an approach would fail to measure up to the

needs of the growing welfare state which is constantly

engaged in undertaking

new and varied activities as part of

its social welfare policy. The concept of industry, which is

intended to be a convenient and' effective tool in the hands of

industrial adjudication for bringing about industrial

peace

and harmony, would lose its capacity for adjustment and

change.

It would be petrified and robbed of its dynamic

content. The Court should, therefore,

so far as possible

avoid formulating or adopting generalisations and hesitate

to cast the concept of industry in a narrow rigid mould

which would not pennit of expansion as and when

n~essity

arises. O'nly some working principles may be evolved which

would furnish guidance in determining what are the attri­

butes

or characteristics which would ordinarily indicate that

an undertaking

is analogous to trade or business". Our endeavour in this decision is to provide such working princi­

ples. This Court, within a

few years of the enactment of the salutary

statute, explained the benign

sweep of 'industry' in Banerji which

serv~d

as beacon in later years-Ahmedabad Textile Research acted on it,

HospUal Mazdoor Sabha and Nagpur Corporation marched in its shoon.

The law shed steady light on industrial inter-relations and the country's

trjbunals and courts settled down to

evolve a progressive -lab.our

juris~

prudence, burying the bad memories-of laissez faire and bitter struggles

(I) [19761 2 S.O.R. 138.

:SANGALORE SEWERAGE BOARD v. RAJ APP A (Krishna Iyer, !.) 2 81

in this field and nourishing new sprouts of legality fertilised by the

seminal ratio in Banerji( Indeed, every great judgment is not merely

an adjudication of an existing Us but an appeal addressed by the pre­

sent to the emerging futuPo. And here the future responded, harmoni­

sing with the humanscape hopefully projected by Part

IV of the Consti­

tution. But the drama of a nation's life, especially when

·it confronts

die-hard forces, develops situations of imbroglio and tendencies to

back-track. And Law quibbles where Life wobbles. Judges only

read

signs and translate symbols in the national sky. So ensued an

era of islands of exception dredged up by judicial process. Great

clubs were privileged out, liberal professions

swam to safety, educa­

tional institutions, vast and

small, were helped out, divers charities,

disinclined to

be charitable to their own weaker workmen, made pious

pleas and philanthropic appeals to be extricated.

A procession of deci­

sions--Sol1citors' case, University of Delhi, Gymkhana Club, Cricket

Club of India (supra) Chartered Accountants(') climaxed by Safdar­

jung,

carved out sanctuaries.

The six-member bench-the largest

which sat on this court conceptually to reconstruct 'industry', affirmed

and reversed, held profit motive irrelevant but upheld charitable service

as exemptive, and in its lights and shadows, jndicial thinking became

ambivalent and industrial jurisprudence landed itself in a legal quag­

mire. Pinjrapoles sought salvation and succeeded in principle

(Bombay Panjrapole), Chambers of Commerce fought and failed,

hospitals battled to victory

(Dhanrajgirji Hospital),

standilras institute

made a vain bid to extricate (LS.I. Case), research institbtes, at the

High Court level,

waged and won non-industry status in Madras and

Kerala. The murky legal

sky

paral)'8ed tribunals and conrts and

administration and then came, in consequence, this reference to a larger

bench of

seven judges.

Banerji, amplified by

CorporaJion of Nagpur, in effect met with its

waterloo

in Safdarjung. But in this latter case two voices could be

heard and subsequent rulings zigzaged and conflicted precisely because

of this

built~in ambivalance. It behoves us, therefore, hopefully to

abolish blurred edges, illumine penumbra! areas and over-rule what

we

regard as wrong. Hesitancy, half-tones and hunting with the hounds

and running with the hare can claim heavy penalty in

the shape of

industrial

confusio·n, adjudicatory quandary and administrative per­

plexity at a

time when the nation is striving to promote employment

through diverse

strategi~s which need for their smooth fulfilment, less

stress and distress, more mutual understanding and trust based on a

dynamic rule of law which speaks clearly,

firmly and humanely. If

the salt of Jaw lose its savour of progressive certainty wherewith

s~all

it ~ salted? So we proceed to formulate the principles, deducible

from our discussion, which are decisive, positively and negatively, of

the identity of 'industry' under the Act.

We speak, not exhaustively,

but to the extent covered by

th~ debate at the bar and, to that extent,

authoritatively, until over-ruled

by a larger bench or superseded by the

legislative branch:

(!) [1963! I L.L.J.

567 ~Cukutta).

A

B

c

D

E

F

G

H

A

B

282 SUPREME COURT REPORTS [1978) 3 S.C.IL

I. 'Industry', as defined in Sec. 2U) and explained in Banerji, has a

wide import.

(a) Where (i) systematic activity,

(ii) organized by co-operation

between employer and employee, (the direct and substantial

element

is chimerical) (iii) for the production and/or distribution of goods

and services calculated to satisfy human wants and wishes (not spiri­

tual or religious but inclusive of material things or

services geared to

celestial bliss e.g. making, on a large scale, prasad or food), prima

facie, there

is an 'industry' in that enterprise.

(b) Absence of profit motive or gainful objective

is irrelevant, be

the venture in the public, joint private or other sector.

C (c) The .true focus is functional a'nd the decisive test is the nature

of the activity with special emphasis on the employer-employee

rela­

tions.

D

E

F

G

(d) If the organisation is a trade or busine5s it does not cease to

be one because of philanthropy animating the undertaking.

II. Although sec. 2

(j) uses words of the widest amplitude in its

two limbs, their meaning cannot

be magnified to overreach itself.

(a) 'Undertaking' must suffer a contextual and associational

shrinkage

as explained in Banerji and in this jndgment, so

also, service,

calling and the like. This yields the inferehce that all organizr.xl acti­

vity possessing the triple elements in I (supra), although not trade

or business, may still be 'industry' (provided the nature of the activity,

viz. the employer-employee basis, bears resemblance to what we find

in trade or business. This takes into the fold of 'industry' under­

takings, callings and services adventure 'analogous to the carrying on

of trade or business'. All features, other than the methodology of

carrying on the activity

viz. in organizing the co-operation

between

employer and employee may be dissimilar. It does not matter, if on

the employment terms there is analogy.

III. Application of these guidelines should not slot> short of their

logical reach by invocation of creeds, cults or inner sense of incongruity

or other sense of motivation for or resultant of the economic operations.

The ideology of the Act being industrial peace, regulation and resolu­

tion of industrial disputes between employer and workmen, the range

of this statutory ideology must inform the reach of the statutory defini­

tion. Nothing Jess, nothing more.

(a) The consequences

are (i) professions, (ii) Clubs (iii)

educa­

tional institutions (iiia) co-operatives, (iv) research institutes (v)

charitable projects and (vi) other kindred adventures,

if they fulfil the

triple tests listed in

I (supra), cannot be exempted from the scope

of

H sec. 2(j).

(b) A restricted category of professions, clubs, co-operatives and

even

Gurukulas and little research labs, may qualify for exemption if

I• •

I

.,

,

BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna J'yer, !.) 2 8 3

in simple ventures substantially and going by the dominant nature cri-A

terion substantatively,

in single simple ventures, no employees are

entertained but in minimal matters, margi'nal employees are hired with-

out destroying the non-employee character of the unit.

( c)

If in a pious or altruistic mission many employ them­

selves, free or for small honoraria, or likely return mainly

by sharing

in the

purpose or cause, such as lawyers volunteering to rw1 a free legal

services clinic or doctors serving in their spare hours in a free medical

centre or

ashramites working

at the bidding of the holiness, divinity

or like central personality and the rervices are supplied free or at nomi-

nal cost and those

who serve are not engaged for remuneration or on

the basis of master and servant, relatio'nship, then, the institution

is not

an industry even if stray servants, manual or technical, are hired. Such

eleemosynary or like undertakings alone are

exempt-not other gene­

rosity, compassion, developmental passion or project.

IV The dominant nature test :

(a) Where a complex of activities, some of which qualify for

exemption, others not, involves employees on the total undertaking,

some of whom are not 'workmen' as in the

University of Delhi Case or

some departments are not prodnctive of goods and se1"1ices if isolated,

even then, the predominant

'.nature of the services and the integrated

nature of the departments

as

explained in the Corporation of Nagpur,

will be true test. The whole undertaking will be 'industry' although

those who are not 'workmen'

by definition may not benefit by the

status.

(b)

Notwithstandi!_lg the previous clauses, sovereign functions,

strictly understood, alone qualify for exemption, not the welfare acti-

vities or economic adventures undertaken

by government or statutory

bodies.

( c) Even

in departments discharging

soV'~reign functions, if there

ar·~ units which are industries and they are substantially severable,

then they can

be considered to come within sec. 2(j).

(d) Constitutional and competently enacted legislative provisions

may well remove from the scope of the Act categories which otherwise

may be covered thereby.

We over-rule Safdarjung, Solicitors' case, Gymkhana, Delhi

Uni-

B

c

D

E

F

versity, Dhanrajgirji Hospital and other rulings whose ratio runs cow1-G

ter to the pri'nciples enunciated above, and

Hospital Mazdoor Sabha is

hereby rehabilitated.

We conclude with diffidence because Parliament which has the

commitment

to the political nation to legislate promptly in vital areas

like industry and trade and articulate the welfare expectations in the

'conscience' portion of the constitution, has hardly intervened to re­

structure the rather clumsy, vapourous and tall-and-dwarf definition

or

tidy. up

the scheme although Judicial thesis and anti--thesis, disclosed

in the two decades long decisions, should have produced· a legislative

H

A

B

c

D

E

F

284 SUPREME COURT REPORTS [1978) 3 &C.R.

synthesis becoming of a welfare State and Socialistic Society, in a

world settmg where I.L.O. norms are adva'ncing and India needs up­

dating.

We feel confident, in another sense, since counsel stated at

the bar that a bill on the subject

is in the offing.

The rule of Jaw,

we are sure, will run with the rule of Life-Indian Life-at the thres­

hold

of the decade of new development in which Labour

a"nd Manage­

ment, guided by

the State, will constructively partner the better

pro­

duction and fair diffusion of national wealth. We have stated that,

save the Bangalore Water Supply. and Sewerage Board· appeal, we are

not disposing of the others on the merits.

We dismiss that appeal with costs and direct that all the others be posted before a smaller

bench for disposal on the merits in accordance with the principles of

Law herein laid down.

ORDER

We are in respectful agreement with the view expressed by Krishna

Iyer, J. in his critical judgment that the Bangalore Water Supply and

Sewerage Board appeal should

be dismissed. We will give our reasons

later indicating

the area of concurrence and divergence, if any,

on the

various points in controversy

on which our learned Brother has

dwelt.

CHANDRACHUD, C. J.-By a short order dated February 21, 1978,

which I pronounced on behalf of myself and my learned Brethre'n

Jaswant Singh and Tulzapurkar, I had expressed our agreement with

the

view taken by Brother Krishna Iyer on behalf of himself and three

other learned Brethren that the Bangalore Water Supply

& Sewerage

Board's appeal be dismissed. I had stated that the area of concurrence

or divergence with

the rest of the judgment will, if necessary, be

indi­

cated later.

I have

now the added advantage of knowing the divergent view

expressed by Jaswant

Singh and Tulzapurkar, JJ. on certain aspects

of the matter. Almost every possible nuance of

the question as to

what

is comprehended within "Industry" and what ought to be exclu­

ded from the

sweep of that expression has received co'nsideration in the two judgments. Having given a further thought to the frustrating

question

as to what falls within and without the statutory concept of 'industry' I am unable to accept, respectfully, the basis on which

Jaswant Singh and Tulzapurkar, JJ. have expressed their dissent.

G Section 2(j)

of the Industrial Disputes Act, 1947, defines 'i'ndustry'

to

mean-

"any business, trade, undertaking, manufacture or calling

of employen and includes any calling, service, employment,

handicraft, or industrial occupation or avocation of work­

me'n".

H These are words of wide import, as wide as the legislature could have

possibly made them. The first question which h~s engaged the atte~­

tion of every court which is called upon to consider whether a partt-

T

'

.BANGALORE SEWERAGE .BOARD v. RAJAPPA (Chandraclwd, C.J.) 285

cular activity is 'industry' is whether, the definition shou'.d be permitted

to have its full sway embracing within its wide sweep every activity

which squarely falls within its Mms or whether, some limitation ought

not be read into the definition

so as to restrict

its scope as reasonably

as one may, without doing violence to the supposed intention of the

legislature.

An attractive argument based on a well-known principle

of statutory interpretation is often advanced in support of the latter

view. That principle is known as 'noscitur a sociis' by which is

moont that associated words take' their meaning from one another.

That

is to say, when two or more words which are susceptible of

.analogous meaning are coup:ed

toge_ther, they take their colour from

each other so that the width of the more general words may square

with that of words of lesser

gen·~rality. An argument based on this

principle was rejected by Gajendragadkar, J., while speaking on behalf

of the Court, in

State of Bombay & Others v. The Hospital Mazdoor

Sabha & Others('). A group of five hospitals called the J. J. Hospital,

Bombay, which

is run a'nd managed by the

State Government in order

to provide medical relief and to promote the health of the people

was

beld in that case to be an industry.

A

B

c

The Court expressed its opinion in a characteristically clear tone D

by saying that if the object and s.cope of the Industrial Disputes Act are

·considered, there would be no difficulty in holding that the relevant

words

of wide import have been

delirerately used by the legislature

in defining 'industry' in section 2

(j) of the Act. The object of the

Act, the Court said, was to

make. provision for the investigation and

·settlement of indsutrial disputes, and the extent and scope of itJs pro­

visions would be realised if one were

to bear in mind the definition of E

'industrial dispute' given

bys. 2(k), of 'wages' bys. 2(rr), 'workman'

bys. 2(s), a'nd of 'employer' bys. 2(g). The Court also thought that

in deciding whether the

State was running an industry, the definition

of 'public utility service' prescribed by section

2(n)

was very signifi­

·cant and one had merely to glance at the six categories of public utility

services mentioned therein to f'ealise that i'n running the hospitals the

State was running an industry. "It is the character of the activity F

·which . decides the question as to whether the activity in question

attracts the provision of section 2

(j) ; who

conductG the activity", said

the Court. "and whether it is conducted for profit or not do not make

a material difference".

But having thus expressed its opinion in a language which left no

doubt as to its meaning, the Court went on to observe that though G

section 2

(j) used words of a very wide denotation,

"It is clear" that

a line would have to be drawn in a fair and just manner so as to

exclude some· callings, services or undertakings from the scope of the

definition. This was considered 'necessary because i'f all the words

~used in the definition were given their widest meaning, all services and

all callings would come within the purview of the definition including

services rendered by a person

in a purely perso'nal or domestic capacity H

or in a casual manner. The Court theu undertook for examination

(1)

[1960] 2 S.C.R. 866.

A

B

c

D

E

F

G

286 SUPREME COURT REPORTS [1978] 3 S.C.R.

what it euphemistically called "a somewhat difficult" problem to decide

and it proceeded to draw a line in order to ascertain what limitations

could and should be reasonably imp:iect in interpreting the wide words

used in section

2(j). I consider, with great respect, that the problem

is far too policy-oriented to be satisfactorily settled by judicial deci­

sions. The Parliament must step in and legislate in a manner which

will leave no doubt as to its intention. That alo'ne can afford a satis­

factory solution to the question which has agitated and perplexed the

judiciary at all levels.

In the Hospital Mazdoor Sabha (supra) the Court rejected, on

concession,

two possible limitation on the meaning of 'industry' as

defined in section 2(j) of the Act : firstly, that

no activity can be an

industr.):'. unless accompanied by a profit motive and secondly, that

!nvestrnent of capital is indispensible for treating an activity as an

mdustry. The Court

also rejected, on examination, the limitation that

a

quid pro quo for services rendered is necessary for bringing an acti­

vity within the

terms of section 2(j). If the absence of profit motive

was immaterial, the activity, according to the Court, could not be

excluded from section 2(j) merely because the person responsible for

the conduct of the activity accep~ed no return and was actuated by

philanthropic or charitab:e motives. The Court ultimately drew a line

at the point where

the regal or sovereign activity of the Government is

undertaken and held that such activities of the Government as have

been pithily described by Lord Watson as

"the primary and inalien­

able

functio'ns of a constitutional

Government", could be stated· nega-

tively as falling outside the scope of section 2(j). The judgment

concludes with the summing-up that,

as a working principle, an activity

systematically or habitually undertaken

for the production or

dil'Stri-

bution of goods or for the rendering of material services to the com­

munity at large or a part

of such community with the help of employees

is an undertaking within the meaning of section 2 (j); that such an

activity generally involves the co-operation

of the employer and the

employees; that the activity must not be casual nor

must it be for

oneself nor for pleasure, but it must be organised or arranged in a

manner in which trade

or business is generally organised; and

thus~ the

manner in which an activity

is organised or arranged and the form and

the effectiveness

of the

cooperation between the employer and employee

for producing a desired result and for rendering of material services t,o

the community become distinctive of activities falling within the terms

of section 2 (j). Seeds of many a later judgment were sown by these

limitations which were carved out by the Court in order to reduce the

width of a definition

which was earlier described as having been deli-

berately couched by the legislature

in words of the widest amplitude.

These exceptions which the Court engrafted upon the definition of

'industry' in

section 2(j) in order to give to the definition the merit

of reasonableness, became in course of time

as many categories of

H activities exempted from

the operation of the definition clause. To

an .extent, it

seems to me clear that though the decision

in Hospital

Mazdoor Sabha

(supra) that a Government run hospital was an indus­

try proceeded upon

the rejection of the test of 'noscitur a sociis', it is

r

'

I

•

,

'

y

BANGALORE SEWERAGE BOARD v. RAJAPPA (Chandrac/1ud, C.J.) 287

this very principle which constitutes the rationale of the exceptions

carved out

by the Court. It was said that the principle of

'noscitur

a sociis'" is applicable in cases of doubt and since the language of the

definition admitted

of no doubt, the principle had no application. But

if the language was clear, the definition had to be given the meaning

which the words convey and there can be no scope for seeking excep­

tions. The contradiction. with great respect,

is that the Court rejected

the test of 'association of words' while deciding whether the Govern­

ment-run hospital

is an industry but accepted that very test while indi­

cating which categories

of activities would fall outside the definition.

The question then

is : If there is no doubt either as to the meaning

of the words used by the legislature in

scctio'n 2 (j) or on the question

that these are words of amplitude, what justification can one seek for

diluting the concept of industry as envisaged by the legislature ?

On a _careful consideration of the question I am of the opinion

that Hospital Mazdoor Sabha was correctly decided in w far as it held

that the J. J. groujl o'. hospitals was an industry but, respectfully, the

same. cannot

be

said m regard to the view of the Court that certain

activities ought

to be treated as

fa:Jing outside the definition clause.

. Oi;e of the exceptions carved out by the Court is in favour of

achv1t1es undertaken by the Government in the exercis" of its inalien­

able functions under the Constitution, call it regal, sovereign

or by any othe~ nam_e. I ~e.e. no justification fo'. ·~xccptiug these categories of

jlUbhc ul!hty act1V1t1es from the defiml!on of 'industry'. If it be true

tnat one must have regard

to the nature of the activity and not to

who engages in it, it seems to

m, beside the point to enquire whether

the activity

is undertaken by the

State, aind further, if so, whether

it

is undertaken in fulfilment of the State's constitutional obligations or

in discharge of its constitutional functions. In fact, to

conced.~ the

benefit of an exception

to the State's activities which are in the nature

of sovereign functions is really to have regard not

so much to the

nature of the activity as to the consideration who engag1~s in that acti­

vity; for, sovereign functions can only

be discharged by the

State an.cl not

by a private person. If the State's inalienable functions are excepted

from the sweep of the definition conta~ned in section 2. (jJ, one shall

liave unwittingly rejected the fundamental test that

it is the nature of the

activity which ought to determine whether the activity is an industry.

Indeed, in this

P'spect, it should make no difference whether, on the

one hand, an activity is undertaken by a corporate body in the dis­

charge of its statutory functions or, on the other, by the State itself

in the exercise of its inalienable functions.

If

the water supply and

sewerage schemes or

fire fighting establishments run by a Municipality

can be industries,

so ought to be the manufacture of

coins and currency,

arms and ammunition and the winning of oil and uranium.

The fact

that these latter kinds of activities are,

or can only be, undertaken by

A

B

c

D

E

F

G

the State does not furnish a'ny answer to the question whether these

activities are industries. When undertaken by a private individual they H

are industries. Therefore, when undertaken by the State, they are

industries. The nature of the activity is the determining factor and

that does not change according to who undertakes it. Items 8, 11,

A

B

c

D

E

F

G

H

288 SUPREME COURT REPORTS [1978) 3 S.C.R.

12, 17 and 18 _of the First Schedule read with section 2(n)(vi) of

the_ Industm Disputes Act render support to this view. These pro­

v1s1ons w~1ch were described in Hospiwl Mazdoor Sabha as 'very

s1gmficant at least show that, conceivably a Defence Establishment,

a. Mint or a Security Press can be an indu~try even though these acti­

v1t1es are, ought to be and can only be undertaken by the State in the

discharge of its constitutional obligations

or functions. The

State

does not trade when it prints a currency 11ote or strikes a coin. And

yet, considering the nature of the activity, It is engaged in au industry

when it does so.

That leads to the consideration whether charitable enterprises can

at

all be industries. Viewing the problem from the angle from which

one must, according to

me, view the State's inalienable functions, it

seems to

me to follow logically that

a systematic activity which is

organised or aq!lnged in a manner in which trade or business. is

generally organised or arranged would be an industry despite the fact

that it proceeds from charitable motives.

It is the nature of the acti­

vity that one has to consider and it

is upon the application of that

test that the State's inalienable functions fall within the definition

of 'in­

dustry'. The very same principle must yield the result that just

as

the consideration as to who conducts an activity is irrelevant for

determining whether the activity is an industry, so is the fact that the

activity

is charitable in

ffature or is undertaken with a charitable motive.

The status or capacity, corporate

or constitutional, of the employer

would have,

if at all, closer nexus, than his motive, with the

quest10n

whether the activity is an industry. And yet that circumstance, accord­

ing to me, cannot affect the decision

of the question. The motive

which propels an activity

is yet

.another step removed and, ex hypo­

thesi,

·can have no relevance on the question as to what is the nature

of the activity. It

is never true to say that the nature of an activity

is charitable. The subjective motive force of an activity can be

charity but for the purpose

of deciding whether an activity is an in­

dustry, one has to look at the process involved in the activity, ob­

jectively. The argument that he

who does charity is not doing trade

or business

misses the point because the true test is whether the acti­

vity, considered objectively,

is organised or arranged in a manner in

which trade or business is normally organised or arranged. If so, the

activity would be an industry

no matter whether the employer 1s

actuated by charitable motives in undertaking it. The jural founda­

tion of any attempt to except charitable enterprises from the scope of

the definition can only be that

such enterprises are not undertaken

for profit. But then that, clearly,

is to introduce the profit-concept

by a side wind, a concept which, I suppose,

has been rejected consis­

tently over the years.

If any principle can be said to be settled law

in this vexed

field it is this : the twin consideration of profit motive

and capital investment

is irrelevant for determining whether an

acti­

vity is an industry. Therefore, activities which are dominated by

charitable motives, either

in the sense that they involve the rendering

of

free or near-free services or in the sense that the profits which they

vield are diverted to

charitable purposes, are not beyond t11e pale of

the definition

in section 2(j). It is as much beside the point to in-

. I

•

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BANGALORE SEWERAGE BOARD v. RAJAPPA (Chandrachud, C.JJ 289

quire who is the employer as it is to inquire why is the activity under-A_

taken and what the employer does with his profits, if any.

Judged

by these tests, I find myself unable to accept the

broad

formulation that a Solicitor's establishment cannot be an industry. A

Solicitor, undoubtedly,

does not carry on trade or business when he

acts for his client or advises him or pleads for him, if and when

pleading is permissible to him. He pursues a profession which is B.

variously and justifiably described as learned, liberal or noble. But,

with great respect, I

find it difficult to infer from the language of the

definition in section

2(j), as was done by this Court in The National

Union of Commercial Employees and Another v. M. R. Meher, In­

dustrial Tribunal, Bombay and Others, (1) that the legislature could

not have intended

to bring a liberal profession like that of an attorney

within

the ambit of the definition of industry. In Hospital Mazdoor

C'

Sabha (supra) the Court while evolving a working principle stated

that an industrial activity generally involves,

inter alia, the coopera-

tion of

the employer and the e1nployee. That the production of goods

or the rendering

of material services to the community must be the

direct and proximate result of such cooperation is a further extension

of that principle and it is broadly by the application thereof that a

Solicitor's establishment

is held not to attract the definition clause.

D·

These refinements are, with respect, not warranted by the words of

the definition, apart from the consideration that in practice they make

the application

of the definition to concrete cases dependant upo11 a

factual assessment

so highJy subjective as to lead to confusion and

uncertainty

in the understanding of the true legal position. Granting

that the language of

the definition is so wide that some limitation

ought to

be read into it, one must stop at a point beyond which the

E:

definition will skid into a domain too rarefied to be realistic. Whether

the cooperation between the employer and the employee

is the proxi-

mate cause

of the ultimate product and bears direct nexus with it

is '

a test which is almost impossible of application with any degree of

assurance or certitude. It will be as much true to say that the Soli­

citor's Assistant, Managing Clerk, Librarian and the Typist do not

directly contribute to the intellectual end product which is a creation F

of his personal professional skill as that, without their active assis­

tance and cooperation

it will

bl' impossible for him to function effecti-

vely. The unhapply state of affairs in which the law is marooned

will continue to baffle the skilled professional and his employees alike

as also the Judge who has to perform the unenviable task of sitting

in judgment over the directness of the cooperation between the em­

ployer and the employee, until such time as the. legislature decides to G:

manifest its intention by the use of clear and indubious language.

·Beside the fact that this Court has so held in National Union of Com­

·mercial Employees, (supra) the legislature will find a plausible case

for e~empting the learned and liberal professions of Lawyers, Solici-

tors, Doctors, Engineers, Chartered Accountants and the like from

the operation

of industrial

lawll. · But until that happens, I consider

that

in the present state of the law it is difficult by judicial interpreta- H:

tion

·to create exemptions in favour of any particular 'class.

(1) [1962] Supp, 3 s.C.R. 157.

A

!B

D

290 SUPREME COURT REPORTS [1978] 3 S.C.R.

The case of the clubs, on the present definition is weaker still·

and not only ~o .1 consider !ha~ the definition squa;ely covers them'.

.except to the limited extent mdicatcd by Brother Krishna Iyer in his

Judgment,

but I see no justification for amending the law so as to

exclude them from the operation

of the industrial laws. The fact

that

t~e running of clubs is not a ca~ling of the club or its managing

co~1ttee_, that the club has no eXIstence apart from its members,

that

1t exists for its members though occasionally strangers also take

the benefit of its services and that even with the admission of guests ~e club remains a members' self-se~ving institution, seems to me,

with respect, not to touch the core ¢ the problem. And the argu­

ment that the activity of the clubs cannot be described as trade

or

business or

manufactUJ:e overlooks, with respect, that the true test can

only be whether the activity

is organised or arranged in a manner in

which a trade

or business is normally organised or arranged. I have

already said enough on that question.

On the remaining aspects of the case I have nothing useful to add

to the penetrating analysis of the problem made by Brother Krishna

Iyer in his judgment.

JAsWANT SINGH, J. It may be. recalled that in the order dated

February 21, 1978 pronounced by

oui: learned brother,

Chandracbpd,

J. (as he then was) on behalf of himself, brother Tulzapurkar and

myself, expressing our respectful agreement with the view expressed

by our learned brother Krishna Iyer that the Bangalore Water' Supply

& Sewerage Board appeal be dismissed, it was stated that we would

indicate the area of concurrence and divergence,

if any, later on.

Accordingly, we proceed to do that

now.

The definition of the term

"industry" as contained in Section 2 (j)

of the Industrial Disputes Act which is in two parts being vague and

too wide as pointed out by Beg, C.J. and Krishna Iyer, J., we have

struggled to find out its true scope and ambit in the light of plethora

of decisions of this Court which have been laying down fresh tests from

F time to time making our task an uphill one. However, bearing in

mind the collocation of the terms in which the definition

is couched

and applying the doctrine of

noscitur a sociis (which, as pointed out

by this Court in

State of Bombay &

Ors. v. The Hospital Mazdoor

Sabha & Ors.(') means that, when two or more words which are sus­

cephole of analogous meaning are coupled together they are under­

stood

to be used in their cognate sense. They take as it were their ·G colour from each other, that is, the more general is restricted to a sense

analogous

to a less general. Expressed differently, it means that the

meaning of a doubtful word may be ascertained by reference

to the

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meaning of words associated with it, we are of the view that despite

the width of the definition it could not be the intention of the Legis­

lature that categories 2 and 3 of the charities alluded

to by our lerurn~d brother Krishna Iyer in his judgment, hospital run on charit-

:H able basis or as a part of the functions of the Government or local

bodies like muniCipalities 11nd educational and research institutions

(ll [1960) 2 S.0.R. 866.

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BANGALORE SEWERAGE BOARD v. RAJAPPA (laswant Singh, !.) 2 91

whether run by private entities or by Government and liberal and

learned professions like that of doctors, lawyers and teachers, the

pursuit of which

is dependent upon an individual's own education,

int"1lectual attainments and special expertise E.hould fall within the

pale of the definition.

We are inclined to think that the definition

is limited to

th.ose activities systematically or habitually undertaken

on commercial lines by private entrepreneurs with the cooperation of

employees for the production or distribution of goods, or for the render­

ing of material services to the community at large or a part of such

community. It

is needless to emphasise that in the case of liberal

professions, the contribution of the usual type of employees employed

by the

professionals to the value of the end product (viz. advice and

services rendered to the client)

is so marginal that the end product

cannot be regarded as the fruit of the cooperation between the

pro­

fessional and his employees.

It may be pertinent to mention in this connection that the need

for excluding some callings, services and undertakings from the pur­

view of the aforesaid definition has been felt and recognised by this

Court from time to time while explaining the scope of the definition

of "industry". This is evident from the observations made by this

Court

in State of Bombay &

Ors. v. The Hospital Mazdoor Sabha &

Ors. (supra), Secretary, Madras Gymkhana Club Employees Uinon v.

Management of the Gymkhana Club(

1

) and Management of Safdar­

jung Hospital, New Delhi

v. Ku/dip Singh Sethi('). Speaking for the

Bench in State

of Bombay &

Ors. v. The Hospital Mazdoor Sabha &

Ors. (supra), Gajendragadkar, J. (as he then was) observed in this

connection thus :

"It is clear, however, that though s. 2(j) uses words

of very wide denotation, a

line would have to be drawn in

a

fair and just manner so as to exclude some callings, ser­

vices or undertakings.

If all the words used are given their

widest meaning, all services and all callings would come

within the purview of the definition; even service rendered

by a servant purely

in a personal or domestic matter or

even in a casual way would

fall within the definition. It is

not and cannot be suggested that in its wide

sweep the word

"service" is intended to include service however rendered

in whatsoever capacity and for whatsoever reason. We

must, therefore, consider where the line should be drawn

and what limitations can and should be reasonably implied

in interpreting the wide words used in

s. 2(j); and that no

doubt

is a somewhat difficult problem to

dedde."

(1)1 [1968] I S.C.R. 742.

(2) [1971[ 1 S.C.R. 177.

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292

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SUPREME ~URT REPORTS

[I 978] 3 s.c.R.

In view of the difficulty experienced by all of us in defining the

true denotation of the term "industry" and divergence of opinion in

regard thereto-as has been the case with this bench also--we think,

it·

is high time that the Legislature steps in with a comprehensive bill

to clear np the fog and remove the doubts and set at rest once for

all the controversy which crops up from time to time in relation to

the meaning of the aforesaid term rendering it necessary for larger

B

benches of this Court to be constituted which are driven to the neces­

sity of evolving a working formula to cover particular cases.

SJ~ .. Appeal dismi$sed.

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211 SCI/78-2500--GIPF.

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