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Section 2(j) of the Industrial Disputes Act, 1947 defines industry as “any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft or industrial occupation or avocation of workmen.”[1]
The conflict with respect to the definition of the term ‘industry’ has been of its application and determine as to what all enterprises, activities and establishments qualify as industries within its meaning and purpose. It was in the case of Bangalore Water Supply[2] that the Supreme Court determined the dimensions and the limitations of the concept of ‘industry’ owing to the diverse opinions and the confusions. Justice Krishna Iyer formulated the triple test in the Bangalore Water case and it states where:
(a) There is a systematic activity,
(b) Organized by co-operation between employers and employees,
(c) For the production/distribution of goods and services for satisfying the demands of humans, there will be a prima facie case of an ‘industry’.
The ultimate conclusion of this test was if any:
- Club
- Profession
- Co-operatives
- Educational institutions[3]
- Charitable Institutions
- Research Institutions[4] or any other venture
satisfies the triple test then it will be held as an industry for the purpose of the Industrial Disputes Act, 1947.
Applying this test came the following decisions:
In the case of Management of FICCI v Workmen[5] the SC held that FICCI was an industry as it satisfied the triple test. Similarly in the case of Workmen, Indian Standards Institution Case [6] ISI was considered to be an industry as it also satisfied the triple test. Further a society formed for the protection of cows, which indulged in the task of milk selling was also considered to be an industry due to the triple test.[7] Surprisingly a mandir i.e. a place of worshipping was also held to be an industry.[8] However in the case of Manager, Shri Panchsara Jain Derasar v Mahamandkha Gajikha Baloch it was laid down that a temple, which is a spiritual institution cannot be construed as an industry. [9]
In another series of cases came the following decisions:
A Legal Aid Board was held to be an industry in the case of Mahesh Bhargav v State of MP[10] whereas in the case of Hussen Mithu v Bombay I&S Labor Board Bombay Steel and Iron Labor Board was considered to not be an industry.[11]Further in the case of Gopal Pranjape v Rashtriya Mill Majdoor Sangh a trade union was considered to be an industry.[12]
Reading the above cases one can easily gauge the confusion and the diversion in opinions of the courts across the country. It was at this juncture that there was a need to reconsider the test laid down in the Bangalore Water case owing to the diverse opinions and further globalization and expansion of the Indian society. The definition was given a liberal interpretation in that case so as to meet the goals of industrial harmony and peace. However it was not successful. Hence arose a need to reconsider it.
This need for re-consideration was first deliberated upon in the case of Coir Board Ernakulam, Cochin v Indira Devai [13]. In this case the question to determine before the Court was whether a Coir board can be considered an industry or not as per the ID Act, 1947. The Supreme Court observed, “there is a lot of uncertainty prevailing with respect to this aspect and owing to the experience of the courts in the last two decades there is a sincere need to re-consider the test laid down in the case of Bangalore Water Supply.”[14] The Court further added that the aim was to achieve industrial peace and harmony. However this definition might have done more harm than good to the industrial establishments by including within its ambit the establishments which were never intended to be a part of the Act.
While concluding the Supreme Court said, the Industrial Disputes Act never contemplated such a test and that there is no such need to label every organization, which engages in useful service as an industry. However Bangalore Water supply was a 7-judge bench decision and since the Coir board case a 2-judge bench therefore it could not over rule the Bangalore Water case and was bound by it.[15]
Similarly in the case of Physical Research Laboratory v K G Sharma[16] the Supreme Court said that the test laid down by the case of Bangalore Water Supply was not exhaustive and needed re-consideration. Ultimately it was the case of State of UP v Jai Bir Singh[17], which observed that the definition laid down by the judges in the BW case, was broad and was extremely favorable for the employees. There was a sincere need to refer this case to a larger bench to put an end to all the confusion and consider its dimensions and limitations again.
The Supreme Court highlighted various reasons, which compel the matter to be referred to a larger bench of the Supreme Court so as to re-consider its interpretation of the term ‘industry’.[18]
- The decision of the Apex Court was not a unanimous one.
- Five Judges formed the majority opinion.3 had a common opinion whereas the other 2 had different and separate opinions.
- The majority opinion observed that their interpretation of the term was temporary. It was only operational till the time legislature intervened and formulated a new definition or amended the existing one. This creates a doubt over the authoritative value of the precedent.
- The interpretation given was biased and worker oriented. However the aim was to harmonize relations between the employers and the employees.
- A broad interpretation of the term acts a deterrent to private sector industries in India.
- The current interpretation covered within its ambit such streams and professions which were never intended to be covered and hence they had to face the rigors of the ID Act.
- Thought the Act underwent an amendment in 1982 still uncertainty and confusion prevailed. It was a result of the judicial interpretations given to the term that inhibited the operation of the amended definition.
The definition of the term ‘industry’ got amended in 1982 but this definition has not yet been enforced. This will invalidate the decisions and interpretations given by the Supreme Court in various cases. This definition includes the observations of the Bangalore Water Case. It includes the triple test from the Bangalore Water Case and excludes from its ambit establishments like educational institutions, hospitals etc.
[1] Section 2(j) Industrial Disputes Act, 1947
[2] Supply, B. W. (1978). Sewerage Board v. A. Rajappa, 2.
[3] AIR 1963 SC 1873
[4] Ahmedabad Textiles Industry’s Research Association v State of Bombay, AIR 1961 SC 484
[5] AIR 1972 SC 763
[6] AIR 1976 SC 145
[7] The Bombay Panjrapole v the Workmen AIR 1971 SC 2422
[8] Workmen of M/s Baikunthnath Debasthan Trust v State of W.B [(1991) 1 Lab LJ 145 (Cal)]
[9] 1993 1 LLJ 523
[10] 1994 1 LLJ 1113 MP
[11] 1991 LIC 1385(BOM)
[12] 1995 2 Lab LJ 913 (BOM)
[13] AIR 1998 SC 2801
[14] Supra Note 18
[15] Supra Note 18
[16] AIR 1997 SC 1855
[17] (2005) 5 SCC 1
[18] Jai Bir Singh, Para 6
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