INDUSTRY (SEC.

2(J))
 Definition
"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.

• The aforesaid words are of wide import and transgress the meaning of the term
“industry”.
Position before Bangalore Water Supply Judgement (1978)
 Municipal Bodies- D.N. Banerji v/s P.R. Mukerji, 1953 ILLJ. SC 195.
• The Supreme Court was called upon for the first time to interpret the word “industry”.
• Two questions were raised:
- That there being no industry, the reference to the tribunal is bad, and;
- The Act is nor applicable as the “municipality” was not an industry.
In the Supreme Court, the Municipality pleaded that it is discharging sovereign function under the Bengal
Municipal Act and hence, it is not industry and thus the dispute is not an industrial dispute. The Court
observed that the definition is intended to include even those activities that cannot be called trade or business.
It held that Municipality is an industry because sanitation and conservation is an undertaking which is
comparable to trade and industry. 
Neither investment of capital or profit motive is essential
Hence, the non-profit undertakings of the Municipality were included in the concept of an industry.
Therefore, a Public sector such as railways, telephones and water supply, light or water to the Public may ne
carried on by the private companies or business corporations and if PSU is carried on by Local bodies like
Municipality, they do not cease to be am industry.
Public Corporations- Corporation of City of Nagpur v. It’s Employees
1960 1 LL.J. 523 (SC).
• The issue was again figured in  (The Bench consisted of P.B. Gajendragadkar J. Suuba Rao
J., and Das Gupta JJ).
• The Court in this case made a very significant observations while holding that
“Corporation” is an industry while engaged in the non-regal functions but while
discharging regal functions of sovereign nature , the position is totally different.
• The Regal functions are described as ‘primary’ and inalienable functions of the State
(Strictly as in the role performed by the three organs of the Government), though delegated
to the corporation, are necessarily excluded from the purview of the definition of industry.
Hospitals- State of Bombay v. Hospital Mazdoor Sabha 1960 1
LL.J. 251.
 
• (The Bench consisted of P.B. Gajendragadkar J. Suuba Rao.J. and Das Gupta
JJ.)
• The Supreme Court held the State is carrying on an ‘undertaking’ within Sec. 2(j) when it runs a
group of hospitals for purpose of giving medical relief to the citizens and for helping to impart
medical education. The court observed as follows:
• An activity systematically or habitually undertaken 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 with
the help of employees is an ‘undertaking.
• It is the character of the activity in question which attracts the provisions of Sec. 2 (j), who
conducts the activity and whether it is conducted for profit or not, do not make a material
difference.
• Thus, activities that have no commercial implications, such as hospitals carried on with
philanthropic motives would be covered by the expression ‘undertaking’. The mere fact that
Government runs such activity is immaterial. In case an activity is industry if carried on by a
private person, it would be so, even if carried on by the Government.
Management of Safdarjung Hospital v. Kuldip Singh
AIR 1970 SC 1406
• It was later held by Supreme Court - that a place of treatment of patients run as a
department of the government was not an industry because it was a part of the
functions of the government and hospital which was run and administered by the
Government was a part of its sovereign functions.
• Charitable hospitals run by Government or even private associations cannot be
included in the definition of industry because they have not embarked upon economic
activities analogous to trade or business. If hospitals, nursing home or a dispensary is
run as a business in a commercial way, there may be elements of industry.
• Similarly in Dhanrajgiri Hospital v. Workmen, AIR 1975 SC 2032, the court has held
that the main activity of the hospital was imparting of training in nursing and the beds
in the hospital were meant for their practical training. It was held not to be an industry,
as it was not carrying on any economic activity in the nature of trade or business.
 University- University of Delhi v Ramanath
AIR1963 SC 1873 the SC
The Court held that University is not an industry-because:
• Main scheme of an educational institution is imparting education
• Teaching is not with in the purview of industry as there is no commercial motive
• The subordinate staff play a minor or insignificant role in the process of imparting
education
• Permitting the insignificant role of the subordinate staff to lend the colour of
industry is unreasonable.
Clubs-Madras Gymkhana Club Employees Union v/s. Management, AIR 1968 SC
554
•  The Court has noted that:
• “ The guests admitted to the club is irrelevant to determine if the club is an industry. Even with the admission of guests being
open the club remains the same. That is to say, a member'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 as part of trade or business or as an undertaking
anlogous to trade or business. This element is completely missing in a members' club. It is contended that, although there is no
incorporation as such, the club has attained an existence distinct from its members. It may be said that members come and
members go but the club goes on for ever. That is true in a sense. We are not concerned with members who go out. The club
belongs to members for the time being on its list of members and that is what matters. Those members can deal with the club as
they like. Therefore, the club is identified with its members at a given point of time. Thus it cannot be said that the club has an
existence apart from the members.”
• Justice Hidayatullah gave two reasons for withdrawing clubs from the scope of “industry”. Firstly, the activity of the club may be
falling in the second part of the definition i.e. the work of the club is conducted with the aid of the employees who follow a
‘calling’ or ‘avocation’ but it cannot be described as a calling of the members of the club or of the managing committee of the club
within the first part of the definition which is the actual denotation of an “industry”.
• The second reason given by him was that the club was a self-serving institution and the element of ‘undertaking’ analogous to
trade or business is completely missing here. This was again criticized by Justice Iyer who says that it is the employees who work
for wages and hence, produce the goods and services, not the club members. When all the services are rendered by hired
employees, how can the nature of the activity be described as self-service. There is however, confusion here as Justice
Hidayatullah is using “self service” to signify service to the club members only and not to non-members who are considered as
outsiders but Justice Krishna Iyer is taking the word to mean service by the members themselves without assistance of employees.
The Gymkhana case was held to be wrongly decided in the Banagalore Water Supply case
• The Court, therefore held clubs are not an industry within the meaning of 2(j).
 Solicitor Firms- NNUC Employees v. IT (AIR 1960 SC 1080)

• The Court held that the work of solicitors is not an industry within the meaning of s. 2(j) of
the Industrial Disputes Act, 1947,and that, therefore, any dispute raised by the employees of
the solicitor firm cannot be made the subject of reference to the Industrial Tribunal. The
distinguishing feature of an industry is that for the production of goods or for the rendering
of service, cooperation between capital and labour or between the employer and his
employee must be direct. A person following a liberal profession does not carry on his
profession any intelligible sense with the active co-operation 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. Consequently, a liberal profession like that of a
solicitor is outside the definition of "industry" under s. 2(j) of the Act.
Other cases
•  Workmen of Indian Standards Institution v A. Management of Indian Standard of
Institution, AIR 1976 SC 145 – Research Institutes were kept outside the scope
of Industry
•  Bombay Pinjrapole v/s. Their Workmen, (1971) 2 LL.J. 393 (SC) – Charitable
Institution is not an industry.
Bangalore Water Supply Sewerage Board v. A Rajappa and Others 1978 AIR 548
 Disputable definition of “Industry”
•  A seven-judge bench was constituted especially to examine the definition of “industry”
and lay down the law on the subject. (Bench: Beg, M. Hameedullah (Cj),
Chandrachud, Y.V., Bhagwati, P.N., Krishnaiyer, V.R. & Tulzapurkar, V.D., Desai,
D.A. & Singh, Jaswant)
• The Bench was presided over by Justice V. R. Krishna Iyer who assumed the role of a
crusader-legislator and drafted a new definition of the term “industry”.
• The was a result of the various disputes arising in establishments that are not
manufacturing industries but belong to categories of hospitals, educational and research
institutions, Governmental departments, public utility services, professionals and clubs.
• The definition was accordingly expanded to cover those establishments which
involved an employer-employee relationship, irrespective of the objectives of the
organization in question.
Issues raised in the case
1. Whether Bangalore Water Supply and Sewerage Board will fall under the definition of ‘Industry’ and
in fact, particularly the issue was what is an ‘Industry’ under Section 2(j) of the Industrial Dispute Act?
2. Whether Charitable Institutions Are Industries?
3. Do clubs and other organizations whose general emphasis is not on profit-making but fellowship and
self-service fit into the definitional circle?
4. Would a university or college or school or research institute be called an industry?
5. Could a lawyer’s chamber or chartered accountant’s office, a doctor’s clinic or other liberal
profession’s occupation or calling be designated an industry?
6. Are governmental functions, strict sense, industrial and if not, what is the extent of the immunity of
instrumentalities of government?
7. Whether Sovereign or Regal functions will be industry? 8. Whether Municipal Corporations Industry?
9. Whether Hospital is Industry?
10. What is the meaning of the term ‘industry’?
Judgement
• The judgement of the Hon’ble Supreme Court in the matter of Bangalore Water Supply
consists of 182 paragraphs and has considered all the previous cases on the subject.
The Court laid down the following definition of industry:
a) Where (I) Systematic activity (II) Organized by Co-operation between employer and
employee (III) For the production and/or distribution of goods and services calculated to
satisfy human wants and wishes (inclusive of material things or services geared to celestial
bliss i.e. making on large scale or Prasad or food ) is an industry. (Triple Test)
b) Absence of profit motive or gainful objective is irrelevant, be the venture in the public,
joint, private or other sector.
c) If the nature of activity is with special emphasis on employer, employee relationship and
true focus is functional.
d) If the organization is trade or business, it will be covered by the definition of Industry
though organization is philanthropic.
Continued
• The landmark judgement is the Bangalore Water Supply case, enlarged the definition to a large extent
and over-ruled case precedents which were a part of narrow interpretation, that is to say, before
the Bangalore Water Supply case clubs , hospitals , universities , solicitor firms, government departments
were excluded from the definition of industry but after the Bangalore judgement they have been declared
as industry.
• The triple test of the Bangalore case forms the quintessential part of the amended definition of industry
in 1982.
• However, this test was subjected to exceptions, namely, industry does not include spiritual or religious
services; absence of profit motive or gainful objective is irrelevant (although an organization will not
cease to be a trade or business because of philanthropy animating the undertaking)
• The main test is the nature of activity with emphasis of employer-employee relationship therefore all
organized activities that satisfy the triple test will constitute industry including  undertakings, callings
and services, adventures’ analogous to the carrying on of trade or business.
• Thus, professions, clubs, educational institutions, cooperatives, research institutes, charitable projects
and (vii) other kindred adventures will not be exempted from Section 2(j) of the Act, 1947 provided the
triple test is fulfilled. 
 Dominant nature criterion or test
The Court also enunciated the dominant nature test and explained that:
• 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 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.
• Further, a limited category of professions, clubs, co-operatives little research labs, and even gurukulas may qualify for exemption if substantively no
employees are hired but only in minimal matters some marginal employees are hired without disturbing the non-employee character of the unit. Also,
lawyers volunteering to run a free legal services clinic or doctors serving in their spare hours in a free medical centre or if such services are supplied at a
nominal cost and the those who serve are not paid remuneration based on master servant relationship then such an institution would not constitute industry
even if servants, manual or technical, are hired.
• Notwithstanding the previous clauses, sovereign functions, strictly understood, alone qualify for exemption, not the welfare activities or economic
adventures undertaken by government or statutory bodies.
• 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 Section 2(j).
• Constitutional and competently enacted legislative provisions may well remove from the scope of the Act categories which otherwise may be covered
thereby.”
• Thereby Safdarjung, Solicitors’ case, Gymkhana, Delhi University, Dhanrajgirji Hospital and other rulings whose ratio runs counter to the principles
in this case were overruled, and Hospital Mazdoor Sabha was rehabilitated.

These observations reveal the difference of thought among different Judges who gave the diverse reasoning in the earlier rulings and the ones who gave
the decision in the Bangalore Water Supply case, where to sum up it can be said that the definition of “industry” for the purposes of the Industrial Disputes
Act was expanded to cover those establishments which involved an employer-employee relationship including hospitals, educational and research
institutions, Governmental departments, public utility services, professionals and clubs, irrespective of the objectives of the organization in question.
Position after Bangalore Water Supply
Judgement
Position after the Judgement
• In the aftermath of the Bangalore case, the legislature intervened tried to amend the
definition of industry which although re-iterated the ratio of the Bangalore case but also
excluded certain public utility services and welfare activities from its domain.
• Employers in many service establishments and Government departments, aggrieved by the
ruling in the Bangalore Water Supply case raised demands for their exclusion from the
ambit of the IDA.
• Parliament subsequently passed in 1982 an amendment to the IDA, which sought to exclude
many kinds of establishments from the definition.
• The amendment did receive the President’s assent but the final notification has not been
issued till today due to the reason that the workmen employed in the excluded activities
have no forum for the redressal of their grievances.
• So the amended definition was even today not brought into force. Hence, we are
governed by the Rajappa definition of industry under section 2(j) of the Act.
 1982 Amended definition under Section 2(j)- For your reference
• Clause (j) shall stand substituted as follows when clause (c) of section 2 of the Industrial Disputes (Amendment) Act, 1982 (46 of 1982) will come into force:
—
• (j) “industry” means any systematic activity carried on by co-operation between an employer and his workmen (whether such workmen are employed by
such employer directly or by or through any agency, including a contractor) for the production, supply or distribution of goods or services with a view to
satisfy human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature), whether or not,—
(i) any capital has been invested for the purpose of carrying on such activity; or (ii) such activity is carried on with a motive to make any gain or profit, and
includes—
(a) any activity of the Dock Labour Board established under section 5A of the Dock Workers (Regulation of Employment) Act, 1948 (9 of 1948); (b) any
activity relating to the promotion of sales or business or both carried on by an establishment, but does not include—
(1) any agricultural operation except where such agricultural operation is carried on in an integrated manner with any other activity (being any such activity as
is referred to in the foregoing provisions of this clause) and such other activity is the predominant one. Explanation:—For the purposes of this sub-clause,
“agricultural operation” does not include any activity carried on in a plantation as defined in clause (f) of section 2 of the Plantations Labour Act, 1951 (69
of 1951); or
(2) hospitals or dispensaries; or
(3) educational, scientific, research or training institutions; or
(4) institutions owned or managed by organisations wholly or substantially engaged in any charitable, social or philanthropic service; or
(5) khadi or village industries; or
(6) any activity of the Government relatable to the sovereign functions of the Government including all the activities carried on by the departments of the
Central Government dealing with defence research, atomic energy and space; or
(7) any domestic service; or (8) any activity, being a profession practised by an individual or body of individuals, if the number of persons employed by the
individual or body of individuals in relation to such profession is less than ten; or
(8) any activity, being an activity carried on by a co-operative society or a club or any other like body of individuals, if the number of persons employed by
the co-operative society, club or other like body of individuals in relation to such activity is less than ten;
 Judgements after the Amendment
• Physical Research Laboratory v. K.G. Sharma ([1997] 4 SCC 257)- Court, after discussing the
definition of industry as propounded in the Bangalore Water Supply, held that a research institute, of the
Government department, was not an industry although it carried out systematic activities with the help
of employees but did not produce or distribute services to satisfy human wants and therefore there was
absence of commercial motive. Also, the Apex Court has held that the Bangalore case is the law of the
land.
• Sub-Divisional Inspector of Post, Vaikam & Ors. V. Theyyam Joseph & Ors. (1996 8 SCC 489)- The
establishment of the Sub-Divisional Inspector of Post was held not to be an industry but as an exercise
of a showering function.
• Similarly, discarding the implication of the amendment, the Bangalore Judgement seemed prevalent in
cases like All India Radio and Doordarshan – wherein it was held that it cannot be said to be confined to
sovereign functions as they carry on commercial activity for profit by getting commercial
advertisements telecast i.e. except the sovereign function all other activities of employers would be
covered within the sweep of term ‘industry’ as defined under Section 2(j) of the Act, 1947- All India
Radio v Shri Santosh Kumar & Anr, Etc (05/02/1998)
Dissent towards the Bangalore Judgment-Post the failed Amendment
• Assuming that the amended definition would put all noises to rest and be an absolute
enabler to India’s growth story. It has been decades since the definition was not made
effective.
• Meanwhile, dissent continued at the corridor of Supreme Court. 
• In the year 1990, Coir Board Case of 1990, apex Court was faced with whether Coir Board
of Ernakulam, set up to support the Coir Industry, would be industry. The Court was of
view that the Coir Board is delivering sovereign function and hence it is not industry. It
differed with the judgment of Bangalore Water Supply Case and requested a larger Bench
to review the judgment. 
• Again in 2005, Jai Bir Singh’s case rebelled with the Bangalore Water Supply Case. The
Court held that the social forestry Department of a State is a sovereign function and not
industry. Let a larger bench review Bangalore Water Supply Case. 
Bangalore Judgement- Need for Review
The Court expressed the difficulty and uncertainty in the Sweeping test laid down in the
Bangalore Judgement in Coir Board, Ernakulam Cochin & Anr v Indira Devi P.S. & Ors on
04/03/1992. The Court expressed the dilemma in the following statement:
In the present case the function of the Coir Board is to promote coir industry, open markets for it
and provide facilities to make coir industry's products more marketable. It is not set up to run any
industry itself. Looking to the predominant purpose for which it is set up we would not call it an
industry. However, if one were to apply the tests laid down by Bangalore Water Supply and
Sewerage Board's case (supra), it is an organization where there are employers and employees.
The organization does some useful work for the benefit of others. Therefore, it will have to be
called an industry under the Industrial Disputes Act.
We do not think that such a sweeping test was contemplated by the Industries Disputes Act, nor
do we think that every organization which does useful service and employs people can be
labelled as industry. We, therefore, direct that the matter be placed before the Hon'ble the Chief
Justice of India to consider whether a larger Bench should be constituted to re-consider the
decision of this Court in Bangalore Water Supply and Sewerage Board
 State of U.P. v. Jai Bir Singh (2005) 5 SCC 1
• State of Uttar Pradesh v. Jai Bir Singh is a direct challenge to the interpretation of industry
given by the Bangalore Water case.
• Jai Bir Singh had been hired by the State of Uttar Pradesh as part of a welfare scheme for
‘social forestry’. The Court has expressed doubt as to whether such welfare schemes can be
considered an ‘industry’ under the Act. As a consequence, the Court seeks to reconsider the
definition and the Bangalore Water case.
• The court in this case has pointed out that the definition laid down in Bangalore water
supply is not balanced and is pro-workman centric.
Continued
• The Court has expressed its difficulty in the following statement:
In construing the definition clause and determining its ambit, one has not to lose sight of the fact that in
activities like hospitals like hospitals and education, concepts like right of the workers to go on `strike' or
the employer's right to `close down' and `lay off' are not contemplated because they are services in which
the motto is `service to the community'. If the patients or students are to be left to the mercy of the employer
and employees exercising their rights at will, the very purpose of the service activity would be frustrated.
Though section 2(j) used words of very wide denotation, a line would have to be drawn in a fair and just
manner so as to exclude some calling service or undertakings. ...'' [Emphasis supplied] This Court must,
therefore, reconsider where the line should be drawn and what limitations can and should be reasonably
implied in interpreting the wide words used in section 2(j). That no doubt is rather a difficult problem to
resolve more so when both the legislature and executive are silent and have kept an important amended
provision of law dormant on the statute book.
The Case was therefore dismissed and has been placed before a larger bench.
Therefore, from the aforesaid decisions, it is clear that the definition of the word “industry” needs a review
and the limits of the definition under the Bangalore judgment requires re-defining.