Bangalore Water-Supply & Sewerage Board, Vs. R. Rajappa & Ors [1978] INSC 44 (21 February 1978)
BEG, M. HAMEEDULLAH (CJ) BEG, M. HAMEEDULLAH (CJ) CHANDRACHUD, Y.V.
BHAGWATI, P.N.
KRISHNAIYER, V.R.
SINGH, JASWANT TULZAPURKAR, V.D.
DESAI, D.A.
CITATION: 1978 AIR 548 1978 SCR (3) 207 1978 SCC (2) 213
CITATOR INFO:
R 1979 SC 170 (22) R 1979 SC 582 (6) D 1979 SC1132 (2,6) APL 1979 SC1210 (1) E 1980 SC 856 (3) R 1980 SC2181 (28,54) D 1984 SC1700 (13) D 1985 SC 76 (5) D 1985 SC1016 (12) RF 1988 SC1060 (12) R 1988 SC1182 (13) RF 1988 SC1700 (6) RF 1990 SC2047 (7,9) F 1991 SC 101 (30) D 1991 SC 915 (6,7)
ACT:
"INDUSTRY" Industry in Section 2(j) of the Industrial Disputes Act, 1947-Triple test to be applied and the dominant 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.
HEADNOTE:
The respondent employees were fined by the Appellant Board for misconduct,duct and various sums were recovered from them. Therefore, they filed a Claims Application No. 5/72 under Section 33C (2) of the Industrial Disputes Art.
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 what is in essence 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 workmen. This objection being over-ruled, the appellant Board filed two Writ 'Petitions viz. Nos. 868 and 2439 of 1973 before the Karnataka 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(i) 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, ? comprehensive, clear and conclusive declaration as to what is an industry under the Industrial Disputes Act as it stands" were placed for consideration by a larger Bench.
HELD Per M. H. Beg, C.J. (concurring with Bhagwati, Krishna Iyer and Desai, JJ.
1. The term "analogous to the trade or business" could not cut down the scope of the term "industry". The said words can reasonably mean only activity 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 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 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 even this may not be always a satisfactory test. By this test the type of services which are rendered purely for the satisfaction of spiritual or psychological urges of persons rendering those services would be excluded. Whenever an industrial dispute would 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. In other words, the nature of the activity will be determined by the conditions which give rise to the likelihood of the occur- rence of such disputes and their actual occurrence in the sphere.
[220D, G, 22 1 A-B] *Judgments published in the order and date as delivered.
208 "D. N. Banerje's case [1953] SCR 302; Corporation of City of Nagpur v. Its Employees [1960] 2 SCR 942; State of Bombay and Others 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 a sovereign plane, 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 from the sphere of industry by a necessary implication.
[221E, G] H. H. Kesvananda Bharati Sripathagalavaru v. State of Kerala [1973] Supplemental S-C-R, Page-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 employer 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 economic activities and services as part of its duties in a welfare state. Hence to artificially exclude state-ran industry from the sphere of the Act, unless the statutory provisions expressly or by necessary implication have that effect, would not be correct. [222F- 223A] Rajasthan State Electricity Board v. Mohanlal [1967] 3 SCR 377; Rajasthan v. Mst. Vidyawanti & Anr. [1962] Supplemental 2 SCR 989 at 1002 referred to.
Per Chandrachud J.
1. Section 2(j) of the Industrial Disputes Act (1947) which defines, "industry" contains words of wide import, as wide as the Legislature could have possibly made them. The problem of what limitations could and should be reasonably read in interpreting the wide words used in section 2(j) is far too. policy 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. Hospital Mazdoor Sabha was correctly decided in so far as it held that the JJ Group of hospitals was an industry but the same cannot be said in regard to the view of the Court that certain activities ought to be treated as falling outside the definition clause. [287C-D]
3. There is no justification for excepting the categories of public utility activities undertaken by the Government in the exercise of its inalienable function,., under the constitution, call it regal or sovereign or by any other name, from the definition of "industry". If it be true that one must have regard to the nature of the activity and not to who engages in it, it is beside the point to enquire whether the activity is undertaken by the State, and 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 concede 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 engages in that activity; for, sovereign functions can only be discharged by the State and not by a private person. If the State's inalienable functions are excepted from the sweep of the definition contained in section 2(j), one shall have it is the nature of the activity is an industry. Indeed, in this respect, it should make no difference whether 209 on the one hand, an activity is undertaken by a corporate body in the discharge 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 sought 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 the State does not furnish any answer to the question whether these activities are industries. When undertaken by a private individual they are industries, therefore, when under- taken 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, 12, 17 and18 of the First Schedule read with section 2 (n) (vi) of the Industrial 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 undertaken by the State in the discharge of its constitutional obligations or functions. The State does not trade when it prints a currency note or strikes a coin. And yet, considering the nature of the activity, it is engaged inan industry when it does so. [287E-H, 288A-B]
4. A systematic activity which is organised or arranged in a mannerin which the trade or business is generally organised or arranged would be an industry despite the fact that it proceeds from charitable motives. It is inthe 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 consideration 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 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 on the question whether the activity is an industry. The motive which propels the activity is yet another step removed and ex hypothesis 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 motive force of an activity can be charity but for the purpose of deciding whether 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 been 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 motive and capital investment is irrelevant for determining whether an activity 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 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 inquire who the employer is as it is to inquire, why the activity is undertaken and what the employer does with the profits, if any. [288C-H, 289A] 5. By this test a Solicitor's establishment would be an industry. A Solicitor undoubtedly does not carry on a 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 variously and justifiably described as learned, 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 Attorney within the ambit of the definition of 'industry'. [289A-B] National Union of Commercial Employees & Another v. M. R.
Meher. Industrial Tribunal Bombay & Ors. [1962] Supplemental 3 SCR 157 dissented from.
210 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 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. 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 dependent upon a factual assessment so highly 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 definition 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 almost impossible of application with any degree of assurance or certitude. It will be as much 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 creation 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 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 employer and the employee, until such time as the legislature decides to manifest its intention by the use of clear and indubious language. Beside the fact that this Court has so held 'in National Union of Commercial Employees the legislature will find a plausible case for exempting the learned 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 is difficult by judicial interpretation to create exemptions in favour of any particular class.
[289C-H] 7.The case of the clubs, on the present definition is weaker still. The definition 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 core of the problem. [290A-B] Per Iyer J. (on behalf of Bhagwati, J. J. Desai J. and himself.) (1)'Industry as defined 'in Sec. 2(j) and explained in Banerji's case has a wide import. [282A] I.(a) Where (i) systematic activity, (ii) organized by cooperation 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 spiritual 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 venturein 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 becauseof philanthropy animating the undertaking. [282A-C] II. Although section 2(j) uses words of the widest amplitude in its two limbs, their meaning cannot be magnified to overreach itself. [282D] 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 activity, 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] III.Application of these guidelines should not stop short of their logical reachby invocation of creeds, cults or inner sense of incongruity or outer senseof motivation for or resultant of the economic operations. The ideology of the Act being industrial peace, regulation and resolution of industrial disputes between employer and workmen, the range of this statutory ideology must inform the reach of the statutory definition. Nothing less, nothing 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 (supra), cannot be exempted from the scope of section 2(j).
(b)A restricted category of, professions, clubs, cooperatives and even gurukulas and little research labs, may qualify for exemption if, in simple ventures, substantially and going by the dominant nature criterion, substantively no employees are entertained but in minimal matters, marginal employees are hired. without destroying the non-employee character of the unit.
(c)If, in a pious or altruistic mission, many employ themselves, free or for small honoraria or like return, mainly drawn by sharing in 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 medical centre on asramites working at the bidding of the holiness, divinity or like central personality, and the services are supplied free or at nominal cost and those who serve are 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, developmental passion or project. [282F-H, 283A-C] 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 'productive of goods and services 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 the true test. The whole undertaking will be 'industry' although those who are not 'workmen' by definition may not benefit by the status.
(b)Notwithstanding the previous clauses, sovereign functions, strictly understood, (alone), qualify for exemption, not the welfare activities of economic adventures undertaken by Government or statutory bodies.
(c)Even in departments discharging sovereign functions if there are units which are industries and they are substantially severable, then they can be considered to come within 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. [283C-F] 212 Management of Safdarjung Hospital, 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 Employees & Anr. V. M. R. Meher, Industrial Tribunal, Bombay AIR [1962] S.C. 1080. Rabindranath 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] 1 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).
1.Despite the width of the definition it could not be the intention of the legislature that categories 2 and 3 of the charities alluded. to in the leading judgment, hospitals run on charitable basis or as a part 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 like that of doctors, lawyers and teachers, the pursuit of which is dependent upon an individuals own education, intellectual attainments and special expertise should fall within the pale of the definition.
[290G-H, 291A] 2.The definition in s. 2(j) of the Act is limited to those 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 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 between the professional and his employees. [291A-C] 3.The need for excluding some callings, services and undertakings from 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".
[291C-D] OBSERVATION :
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 which crops up from time to time in relation to the meaning of the aforesaid term rendering it necessary for larger Benches of this Court to be constituted which 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 (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) 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 No. 1171 OF 1972 (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) 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 published in the Calcutta Gazette dated 15-1-1970) CIVIL APPEAL No. 2151 OF 1970 (Appeal by Special Leave from the Order dated 28-2-1970 'of the Additional Industrial Tribunal, Delhi in I.D. No. 23 of 1969) CIVIL APPEAL No. 898 OF 1976 (Appeal by Special Leave from the Order dated 23-1-1976 of the Lab-our 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 (1) 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 M.K. Ramamurthi (in CA753), M. C. Narasimhan (in CA 754), N. Nettar and J. Ramamurthi for the respondents R.K. Garg, S. C. Agarwal, V. J. Francis and A. Gupta for the Intervener G.B. Pai, O. C. Mathur, D. N. Misra, Shri Narain and K. J. John for the Interveners (T. B. Hospital) Naunit Lal & Miss Lalita Kohli for the appellant in C.A.
Nos. 1544-45 P. P. Rao and G. N. Rao for R. 1 in CA 1545 214 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 Jha & B. Ra. Rakhiani for the respondent 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 Ashoka 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 No. 2151 V.M. Tarkunde, O. 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. Agarwala, 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. Gokhale, P. H. Parekh, Manju Sharma, Kailash 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 lyer. I would, however, like to add my reasons for this agreement and to indicate my approach to a problem where relevant legislation leaves so much for determination by the Court as to enable us 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(1), 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 legislature. A judge should ask himself the question how, if the makers of the (1) [1949] 2 All. E. R. 15 5 at 164.
215 Act had themselves come across this rock 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 Denning, 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 construction 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 formulated 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(3), and State of Bombay & Ors. v. The Hospital Mazdoor Sabha & (OrS.) (4), to their pristine 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 interpretations 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 (1)A.I.R. 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.
216 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 provisions.
Each of us is likely to have a subjective notion about "industry". For objectivity, we have to 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 unskilled 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 Discipline 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 mensem.
Thus, in order to draw the "circle of industry", to use the expression of my learned brother Iyer, we do not find even the term "workman" 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 socioeconomic ethos and aspirations and needs of the times in which the Act was passed.
The method which has been followed, whether it be called interpretation 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 217 degree of subjectivity. But our attempt should be not to break with the wellestablished principles of interpretation in doing so. Progressive rational and beneficial modes of interpretation 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 adictionary meaning in such cases. Indeed, even in a modern statute the meaning of a term such 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(1) "The legal position may be summarized thus :
The 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 modem one, namely, what is the expressed intention 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 comprehended by the phraseology used.. It is more reasonable to confine 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 about in social, economic, political and scientific and other fields of human activity. Indeed, unless a contrary intention appears, an interpretation should be given to the words used to take in new facts and situations, if the words are capable of comprehending them." In the Workmen of Dimakuchi Tea Estate v. The Management of Dimakuchi Tea Estate(2) it was observed (1) [1962] 3 S.C.R. 146.
(2) [1958] S.C.R. 1156 at 1163.
15-21 1SCI/78 218 "A little careful consideration will show, however, that the expression "any person".
occurring in the third part of, the definition clause cannot mean anybody and everybody in this wide world. First of all the subject matter of dispute must relate to (i) employment or non-employment or (ii) terms of employment or conditions of labour of any person; these necessarily import it limitation in the sense that a person in respect of whom the employer-employee relation 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 consistently 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 enactment 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 Municipality case(1) this Court said :
"When our Act came to be passed, labour disputes had already assumed big proportions and there were clashes between 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 words "industrial dispute" a wider and more comprehensive import in order to (1) [1953] S.C.R. 302 at 310.
219 meet the requirements of rapid industrial progress and to bring about in the interests of industrial peace and economy, a fair and 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 dis-organisation of the needs of the society and in a manner more adapted to conciliation and settlement than a determination of the respective rights and liabilities according to strict legal procedure and principles." Again, in Hospital Mazdoor Sabha case(1) this Court said:
"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 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)." It added :
"It is obvious that the words used in an inclusive definition 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;" 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 manufacture 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- al1y. It merely means a process of manufacture in which the employers 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 more nebulous as it, obviously, extends the definition to any calling, (1) [1960] 2 S.C.R. 866 at 875.
220 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 It consisting of individual handicraftsmen or workmen only. At any rate, the meaning of industrial disputes includes disputes between workmen and workmen also. Therefore, I cannot see how we can cut down the wide ambit of last part of the definition by searching for the predominant meaning in the first part unless we were determined, at the outset, to curtail the scope of the second part somehow. If 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 concept 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 the scope of "industry". The result, however, of that decision has been that the scope has been cut down. 1, therefore, completely agree with my learned brother that the decisions of this Court in Safdarjung Hospital 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 capable 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 possibility of making them marketable if one who makes goods or renders services, so desires, that should determine whether the activity lies within the domain or circle of industry. But, even this may not be always a, satisfactory test.
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 cannot 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 themselves or others out of missionary zeal and purely charitable motives, there would hardly be any need to invoke-the provisions of the industrial 221 Disputes Act to protect them. Such is not the type of persons who 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 In other words, the nature of the activity will lie determined by the conditions which give rise to the likelihood of occurrence of such disputes 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 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 between employers and their employees, they would not enter the field 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 and more correctly, for the sphere of ultimate decisions.
Sovereignty operates on a sovereign plane of its own as I suggested in Keshvananda Bharati's case (1)- 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 "sovereign", in relation to the activities of the State, is more accurately brought out by using the term "governmental" 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.
I am impressed by the argument that 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 employer 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 for that reason. The, special excludes the applicability of the general. We cannot (1) 1973 Sup.S. C. R. P 1 222 forget that we have to determine the meaning of the term 'industry in the context of and for the purposes of matters provided for in the Industrial Disputes Act only.
I have contented myselfwith a very brief and hurried outline of my line of thinking partly because I am in agreement with the conclusions of mylearned brother Iyer and I also endorse his reasoning almost whollybut even more because the opinion I have dictated just now must be given today if I have to deliver- it at all. From tomorrow I cease to have any authority as a Judge to deliver it.
Therefore, I have really no time to discuss the large number of cases cited before us, including those on what are known as "sovereign" functions.
I will, however, quote a passage from State of Rajasthan v. Mst. 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 are not confined only to maintaining law 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 consequences of tortious acts of its employees committed in the course of their employment as such." I may also quote another passage from Rajasthan State Electricity Board v. Mohan Lal(2) to show that the State today increasingly undertakes commercial functions and economic activities and services, as part of its duties in a welfare state. The Court said there :
"Under the Constitution, the State is itself envisaged as having the right to carry on trade or business as mentioned in Art. 19(1) (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 interests 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 that 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." (1) [1962] Supp. 2 S.C.R. 989 at 1002.
(2) [1967] (3) SCR 377 at 385.
223 Hence, to artificially exclude State run industries from the sphere 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 solved by more satisfactory legislation on it. Otherwise, Judges could only speculate and formulate tests of ,"industry" which cannot satisfy all. Perhaps to seek to satisfy all is to cry for the moon.
For the reasons given above, I endorse the opinion and the conclusions 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, Industrial Disputes Act, 1947 (for 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 authoritative resolution of this confused position which has survived indeed, has been accentuated by-the judgment of this six-member bench in Safdar Jung(1), if we may say so with deep respect, has led to a reference to a larger bench of this diehard dispute as to what an '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 bewildered by a definitional dilemma, and is unsure whether his. enterprise say, a hospital, university, a library, a service club, a local body, 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 uncertain 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 that a Dutch barn or grain and fodder stores or any ordinary farm buildings are properly described as repositories. A Gloucester shire farmers would say they were farm buildings 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 section 271 (1) (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 semasiology." (2) (1)Management of Safdarjung Hospital, New Delhi, v. Kuldip Singh Sethi [1971] 1 S.C.R. 177.
(2)Maxwell on 'The interpretation of Statutes" 12th Edn. by P. St. J. Langan pp. 81-82.
224 Esoterica is anathema for law affecting the common man in the commerce of life, and so the starting point for our discussion is the determination to go by the plain, not the possible, sense of the words used in the definition, informed by the, context and purpose of the statute, illumined by its scheme and getting and conceptually coloured by what is an industry at the current developmental stag& in our country. In our system of precedents our endeavour must be, as urged by counsel, to reconcile prior pronouncements, if possible, 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 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 and denying them the staying power to withstand the multi decked litigative 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 clarification of ambiguous clauses ? A careful, prompt amendment. of Sec.
2(j) would have preempted this docket explosion before tribunals 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 word 'industry' and the judicial gloss on it in a catena of cases, have led to an avoidable glut of labour 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.
The great American judge, Justice Cardozo, while he was Chief Justice of New York Supreme Court., made this point:
"The Courts are not helped as they could and ought to be in the adaptation of law 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 aloofness. The penalty is paid both in the wasted effort of production and in the lowered quality of the product. On the one side, the judges, left to fight against anachronism and 225 injustice by the methods of judge-made law, are distracted by the conflicting promptings of justice and logic, of consistency and mercy, and the output of their labors bears the tokens of the strain. On the other side, the legislature, informed 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 courts 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 by deeper insights into newer methodology than collection of, statistics and minor reforms. Appreciating the urgency of quick justice a component 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 measures. The courts to 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 'industry' ? Historically speaking, this Indian statute has its beginnings in Australia, even as the bulk of our corpus juris, with a colonial favour, 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 society, is attested 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 quick policy decisions and by resorting to amendatory 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 considerable degree. That consummation may perhaps happen on a distant day, but this Court has to decide from day to day disputes involving this branch of industrial law and give guidance by declar- ing what is an industry, through the process of interpretation and reinterpretation, with a murky accumulation of case law.
Counsel on both sides have chosen to rely on Safdar Jung each emphasising one part or other of the decision as 226 supporting his argument. Rulings of this- Court before and after have revealed no unanimity nor struck any unison and so, we confess to our inability to discern any golden thread running through the string of decisions bearing on the issue at hand." ".... the chance of confusion from the crop of cases in an area where the common man has to understand and apply the law makes it desirable that there should be a comprehensive, clear and conclusive declaration as to what is an industry under the Industrial Disputes Act as it now stands. 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, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen:" 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, objects and reasons, international thought ways, popular understanding, contextual connotation and suggestive subject-matter.
Equally important, dictionaries, while not absolutely binding, are aids to ascertain meaning. Nor are we writing on a tabula. rosa. Since Banerjee,(1) decided a silver jubilee span of years ago, we have a heavy harvest of rulings on what is an 'industry' and we have to be 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 I where law and life interlace, a search for absolutes is a self- condemned exercise. Legal concepts, ergo, are relativist, and to miss this rule of change and developmental stage is to interpret oneself into error.
Yet a third signpost. The functional focus of this industrial legislation and the social perspective of Part IV of the Paramount Law drive us to 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 conceptually. the keynote thought must be the worker and the community, as the Constitution has shown concern for them, inter-alia, in Articles 38, 39 and 43.
(1) [1953] S.C.R. 302.
227 A look at the definition, dictionary in hand, decisions in head and 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 or
