BANGALORE WATER

SUPPLY AND SEWERAGE

BOARD V. A RAJAPPA-1978
AND OTHER CASES
Lecture 4
Facts of the Case
■ An application under Section 33 C (2) was filed by a workman. As per this application, the
Bangalore WATER SUPPLY & SEWERAGE BOARD raised a preliminary objection that
it being a statutory body performing the functions of the state was not an “industry” under
the IDA 1947.
■ The objection was over-ruled by the Labour court.
■ Management appealed to the SC, by special leave, from the order of the Labour Court.
■ The three judge bench which initially heard the petition found it necessary to refer the
question to a larger bench. This led to the constitution of 7 member bench to enter into
detailed examination of earlier decisions with a view to finding out a rational basis of
determining whether the following activities are industry.
1. WHETHER FOLLOWING
ACTIVITIES ARE INDUSTRY?
• Are establishments, run without profit motives, industries?
• Are charitable institutions industries?
• Do undertakings governed by a no-profit-no-loss rule, statutorily or otherwise fastened,
fall within the definition in S. 2 (j)?
• Do clubs or other organisations (like YMCA) whose general emphasis is not on profit-
making but fellowship and self service, fit into definitional circle?
• Is it an alienable ingredient of “industry” that it should be carried with a commercial
object?
2.

1. Should cooperation between employer and employee be direct in so far as

it relates to the basic service or essential manufacture which is the output
of the undertaking?
2. Could a lawyer’s chamber or chartered accountants’ office, a doctor’s
clinic or other liberal profession’s occupation or calling be designated an
industry?
3. Would a University or college or school or research institute be called an
industry?
3.
a)  Is the inclusive part of the definition in S. 2 (j) relevant to the determination of an
industry?
b)  Do domestic service workers who slave without relief become industries by this extended
sense??

4. Are governmental functions, stricto sensu, industrial and if not. What is the extent of the
immunity of instrumentalities of Government?
5. What rational criterion exists for a cutback on the dynamic potential and semantic sweep of
the definition, implicit in the industrial law of a progressive society geared to greater
industrialization and consequent concern for regulating relations and investigating disputes
between employers and employees as industrial processes and relations become more
complex and sophisticated and workmen become more right-conscious?
6. As the provision now stands, is it scientific to define “industry” based on the nature –the
dominant nature –of the activity, i.e, on the terms of the work, remuneration and conditions of
service which bind the two wings together into an employer-employee complex??
■ Justice Krishna Iyer- Interpretation
1. Read statute as a whole to interpret this definition
2. Dual goals of the Act are contentment of workers and peace in the industry. Hence the
interpretation should be geared to their fulfillment.
3. An industry is a continuity, is an organized activity, is a purposeful pursuit- not any
isolated adventure, desultory excursion or casual, fleeting engagement motivelesssly
undertaken.
4. Same is the common feature of a trade, business, calling, manufacture- mechanical or
handicraft-based-service, employment, industrial occupation or avocation.
5. “The expression “undertaking” cannot be torn off the words whose company it keeps.
Undertaking must be read down to conform to the restrictive characteristic shared by
the society of words before and after. Nobody will torture “undertaking” in S. 2(J) to
mean meditation which are spiritual or aesthetic undertakings.
INTERPRETATION OF
INDUSTRY
• An industry cannot exist without cooperative endeavour between employer and employee
• This cooperation is a necessary postulate of industrial disputes and statutory resolution thereof
• No employer, no industry. No employee, an industry
• Major premise of definition and scheme of the Act
• An industry is not a futility but geared to utilities in which the community has concern
• ECONOMIC UTILITIES- MATERIAL GOODS AND SERVICES (Functional Focus of the
industry)
 INTERPRETATION OF INDUSTRY
■ Plain reading of the purpose and provision of the legislation
■ The relevant constitutional entry speaks of industrial and labour disputes.
■ The preamble of the Act refers to the investigation and settlement of industrial disputes
■ So definition of industry need to be decoded in this background
■ Industrial Peace, collective bargaining, strikes, lockouts, industrial adjudications, works committees
of employers and employees and the like connote organized systematic operations and collectivity
of workmen cooperating with their employer in producing goods and services for the community
■ The betterment of the workmen’s lot, the avoidance of out breaks blocking production and just and
speedy settlement of disputes concern the community. In trade and business, goods and services are
for the community, not for self consumption.
■ Merely because the employer is a Government Department or a local body the
enterprise does not cease to be an “industry”.
■ Likewise, what the common man does not consider an industry need not necessarily
stand excluded from the statutory concept
■ Absence of capital does not negative industry
■ Even charitable institutions does not necessarily cease to be industries definitionally
although popularly charity is not industry
■ In short “trade” embraces functions of local authorities, even professions thus departing
from popular notions
■ Sovereign functions of the State cannot be included although what such functions are
has been aptly termed “the primary and inalienable functions of a constitutional
government”.
THE WORKING PRINCIPLE
• 1. 'Industry', as defined in Sec, 2 (j) and explained in Banerji, has a wide import.
• (a) Where (i) systematic activity, (ii) organized by co- operation between employer and
employee, (the direct and substantial element is chimerical) (iii) for the production and/or
distribution of goods and services calculated to satisfy human wants and wishes (not 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 venture in the public,
joint private or other sector.
• (c) The true focus is functional and the decisive test is the nature of the activity with special
emphasis on the employer-employee relations.
• (d) If the Organisation is a trade or business, it does not cease to, be one because of
philanthropy animating the undertaking.
■ Although sec. 2(j) uses, words of the widest amplitude in its two limbs, their meaning
cannot be magnified to overreach itself.
a) 'Undertaking' must suffer a contextual and associational shrinkage as explained in
Banerji and in this 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 adventure
'analogous to the carrying on of trade or business'. All features, other than the
methodology of carrying on the activity viz. in organizing the co-operation between
employer and employee may be dissimilar. It does not matter, if off the employment
terms there is analogy.
III. Application of these guidelines should not stop short of their logical reach by invocation of creeds, cults
or inner sense of incongruity or other sense of motivation for or resultant of the economic operations. The
ideology of the Act being industrial peace, regulation and 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) co-operatives, (v)
research institutes (vi) charitable projects and (vii) other kindred adventures, if they fulfil the triple tests listed
in I (supra), cannot be exempted from the scope of sec. 2 (j).
(b) A restricted category of professions, clubs, co- operatives and even Gurukulas and little research labs, may
qualify for exemption if in simple ventures substantially and going by the dominant nature criterion
substantatively, in single simple ventures, 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 them- selves, free or for small honoraria, or likely return
mainly 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 or ashramites 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.
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 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 or 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) Constitutional and competently enacted legislative provisions may well remove from the scope of
the Act categories which otherwise may be covered thereby.
PHYSICAL RESEARCH LABORATORY V K.G. SHARMA (1997)
FACTS OF THE CASE:
■ Shri K.G, Sharma (respondent) was appointed as Scientific Glass Blower by the Piiysical Research Laboratory (PRL), a public trust, engaged in
pure research in space and allied science.

■ PRL is financed mainly by the Department o f Space o f the Government o f India with nominal contri­bution from the Government of Gujarat and
two educational institutions.

■ After having worked in that capacity for about 28 years he was transferred to a non-technical and administra­tive post.

■ On attaining the age of 58 he was retired. Aggrieved by his retirement at the age o f 58 years and not 60 years as in case o f technical staff he filed a
writ petition in the high court but this was withdrawn. He then filed a complaint before the Labour Commissioner who made a reference to the
labour court.

■ Before the labour court it was contended by the appellant that PRL is not an industry. The labour court rejected the contention.

■ It also held that (i) the respondent, having worked for a long period from 1948 to 1976 on a technical post, could not have been treated as a person
working on the administrative side merely because towards the fag end o f his career he was transferred to a post on the administrative side and at
the time of attaining the age o f 58 years he was working on such a post and ii) the respondent was entitled to continue in service up to the age of 60
years. It therefore held that the order, retiring him earlier was bad and consequently he was entitled to reinstate­ment with fiill back wages.

■ However as the respondent had already completed the age o f 60 years by then no order o f reinstatement was passed but only back wages for
those two years were ordered to be paid.

■ Against this order the appellant approached directly the Supreme Court as the Gujarat High Court had already taken the view that PRL was an
“industry” and different high courts and tribunals had expressed conflicting views on the question whether research institutes run by the
Government could be said to be “industry” under Section 2(j) of the Industrial Disputes Act.
ISSUE?

■ With respect to research institutes this Court in Bangalore Water Supply has observed as under:
■ “Does research involve collaboration between employer and employee? It does.
■ The employer is the institution; the employees are the scientists, para- scien­tists and other personnel. Is scientific
research service? Undoubtedly it is. Its discoveries are valuable contributions to the wealth of the nation. Such
discoveries may be sold for a heavy price in the industrial or other markets. Technology has to be paid for and
technological inventions and innovations may be patented and sold.
■ In our scientific and technological age nothing has more case value, as intan­gible goods and invaluable services, than
discoveries.
■ Research ben­efits industry. Even though a research institute may be a separate entity discon­nected from the many
industries which funded the institute itself, it can be regarded as an organization, propelled by systematic activity,
modelled on cooperation be­tween employer and employees and calculated to throw up discoveries and inven­tions
and useful solutions which benefit individual industries and the nation in terms of goods and services and wealth. It
follows that research institutes, albeit run without profit motive, are industries.”
HOLDING
■ PRL is an institution under the Government of India s Department of Space. It is engaged in pure research in space science.
■ What is the nature of its research work -The purpose of the research is to acquire knowledge about the formation and evolution of the universe
but the knowledge thus acquired is not intended for sale.
■ The Labour Court has recorded a categorical finding that the research work carried on by PRL is not connected with production supply or
distribution of material goods or services. The material on record further discloses that PRL is conducting research not for the benefit or use of
others. Though the results of the research work done by it are occasionally published they have never been sold. There is no material to show
that the knowledge so acquired by PRL is marketable or has any commercial value.
■ It has not been pointed out how the knowledge acquired by PRL or the results of the research occasionally published by it will be useful to
persons other than those engaged in such type of study. The material discloses that the object with which the research activity is undertaken by
PRL is to obtain knowledge for the benefit of the Department of Space. Its object is not to render services to others nor in fact it does so except
in an indirect manner.
■ It is nobody’s case that PRL is engaged in an activity which can be called business trade or manufacture. Neither from the nature of its
organisation nor from the nature and character of the activity carried on by it, it can be said to be an undertaking analogous to business or
trade.
■ It is not engaged in a commercial industrial activity and it cannot be described as an economic venture or a commercial enterprise as it is not
its object to produce and distribute services which would satisfy wants and needs of the consumer community. It is more an institution
discharging Governmental functions and a domestic enterprise than a commercial enterprise.
■ SC was of the opinion that PRL is not an industry even though it is carrying on the activity of research in a systematic manner with the help of
its employees as it lacks that element which would make it an organisation carrying on an activity which can be said to be analogous to the
carrying on of a trade or business because it is not producing and distributing services which are intended or meant for satisfying human wants
and needs, as ordinarily understood.
 General Manager Telecom v A Srinivasa Rao

■ The question that arose for determination before the three-judge bench 'of the Supreme Court was whether the Telecom
Department of the Union of India was 'an “industry” under section 2(j) of the Industrial Disputes Act, 1947
■ This matter comes up before a three Judge Bench because of a Reference made by a two Judge Bench which doubted the
correctness of an earlier two Judge Bench decision of this Court in Sub Divisional Inspector of Post, Vajkam v. Theyyam
Joseph, (1996 (8) SCC 489 : 1996 AIR SCW 1365). It was stated at the Bar that a later two Judge Bench decision reported as
Bombay Telephone Canteen Employees' Association v. Union of India, AIR 1997 SC 2817 also takes the same view as in the
case of Theyyam Joseph.
■ Only point for decision in this appeal is whether the Telecom Department of the Union of India is an industry within the meaning
of the definition of 'industry' in S.2(j) of the Industrial Disputes Act, 1947. It may here be observed that the amendment made in
that definition in 1982 has not been brought into force by the Central Government by issuance of notification required for the
purpose. It is, therefore, not necessary for us to consider whether the Telecommunication Department of the Union of India
would be an 'industry' within the meaning thereof in the amended provision which is not yet brought into force. We are, in this
matter, concerned with the earlier definition of 'industry' which continues to be in force and which was subject of consideration
by a seven Judge Bench in Bangalore Water Supply and Sewerage Board v. A Rajappa
■ The question had to be answered according to the decision of this Court in Bangalore Water
Supply case, which is a binding precedent. The dominant nature test for deciding whether the
establishment is an “industry”.
■ Accord­ing to this test the Telecommunication Department of the Union of India is an
“industry” within that definition because it is engaged in a commercial activity and the
Department is not engaged in discharging any of the sovereign functions o f the State.
■ In Theyyam Joseph case held that the func­tions of the Postal Department are part of the
sovereign functions of the state and it is, therefore, not an “industry” within the definition o f
Section 2(j) of the Indus­ trial Disputes Act, 1947. Incidentally, this decision was rendered
without any refer­ence to the seven-Judge Bench decision in Bangalore Water Supply.
■ In a later two- Judge Bench decision in Bombay Telephone Canteen Employees’Assn. case this
decision was followed for taking the view that the Telephone Nigam is not an “industry”.
Reliance was placed in Theyyam Joseph case for that view.
HOLDING
■ With respect, we are unable to subscribe to this view for the obvious reason that it is in
direct conflict with the seven-Judge Bench decision in Bangalore Water Sup­ply case by
which we are bound. It is needless to add that it is not permissible for us, or for that
matter any Bench of lesser strength, to make a view contrary to that in Bangalore Water
Supply or to bypass that decision so long as it holds the field. Moreover, that decision was
rendered long back- nearly two decades earlier arid we find no reason to think otherwise.
Judicial discipline requires us to follow the decisions in Bangalore Water Supply case.
We must, therefore, add that the deci­sion in Theyyam Joseph and Bombay Telephone
Canteen Employees ’Assn. cannot be treated as lying down the correct law. This being the
only point for decision in
■ The appeal failed.
All India Radio v Santosh Kumar (1998)

Facts of the case:

■ The appellant All India Radio terminated the services of respondent
■ The employ­ees who were working as clerks, linemen/watchmen and other casual or
daily-rated workmen in All India Radio/Doordarshan Kendras.
■ The respondent raised an in­dustrial dispute which was referred to the labour court. The
labour court set aside the order of termination o f services of the respondent.
■ Appellant after unsuccessfully approaching the high court in a writ petition filed an
appeal before the Supreme Court.
■ The question arose whether the appellant All India Radio and Doordarshan are
industries under section 2(j) o f the Industrial Disputes Act, 1947?
■ The solitary contention of the appellants was that All India Radio and Doordarshan
Kendra dis­charge sovereign functions of the State and hence they are not industries
within the meaning o f Section 2(j) o f the Act.
■ SC was of the view that as held in the case o f Bangalore Water Supply and Sewerage
Board v. A. Rajappa, (1978) except the sovereign functions all other activities of
employers would be covered within the sweep o f term “industry” as defined under
Section 2(j) o f the Act.
■ The functions which are carried on by All India Radio and Doordarshan cannot be said
to be confined to sovereign functions as they carry on commercial activity for profit
by getting commercial advertisements telecast or broadcast through their various
kendras and stations by charging fees.
HOLDING
■ The functions of Doordarshan cannot be said that the functions carried on by them are of a purely
sovereign nature. Advertisements are being telecasted and even serials are being telecasted on payment of
appropriate charges and on which there cannot be any dispute. Same is the position with All India Radio.
■ The appellants relied upon a decision of this Court in the case of Bombay Telephone Canteen Employees'
Assn., Prabhadevi Telephone Exchange Union ofIndia, (1997) where Bench of two learned Judges took
the view that the telephone exchanges run by the Central Government were discharg­ing sovereign
functions and, therefore, the employees working in the canteen run by such telephone exchanges cannot be
said to be working in an “industry” as defined under Section 2(j) of the Act.
■ However, the said decision has been ex­pressly overruled by a judgment of three-Judge Bench o f this
Court in the case o f GM, Telecom v. A. Srinivasa Rao(1997)
■ It has been held in the said decision that the ratio of the Constitution Bench judgment in Bangalore Water
Supply holds the field and the amendment to the definition of Section 2(j) as made in 1982 is not yet
brought in force and so long as the amending definition does not come into force the decision in Bangalore
Water Supply hold the field.
■ Consequently, it must be held that the appellant- All India Radio as well as Doordarshan are industries
within the meaning of Section 2(j) of the Act and the said definition is operative being appli­cable at
present and as existing on the statute-book as on date.
 Coir Board, Ernakulam and Cochin v Indira Devi (1998)

FACTS OF THE CASE:

■ The Coir Board (appellant) was set up for the development of the coir industry and for the purpose of levy
custom duty on coir fiber, coir yam and coir products exported from India and for matter connected
therewith.
■ For the purpose of improv­ing the marketing of coir products and for promoting exports the Coir Board,
inter alia, maintains showrooms and sales depots. The function of the showrooms is to exhibit quality
samples of coir and coir products, and make indents for products and, receive consignments from
manufacturers and/or merchants of coir products. The products are sold through the showrooms for which
the Coir Board charges a commission. The Coir Board terminated the services of respondents, who were
employed by them as temporary clerks and typists. On a writ petition filed by the respondents the Full
Bench of the Kerala High Court held that Coir Board, was an “industry” and, therefore, chapter V-A of the
Industrial Disputes Act, 1947 was applicable in respect of termination of services of temporary clerks and
typists.
■ Aggrieved by this decision the Coir Board filed a special leave petition before the Supreme Court.
The Supreme Court in its decision in the Bangalore Water Supply and Sewer­age Board v. Rajappa,
had, while interpreting the definition of ‘industry’ as con­tained in the Act, observed that the
Government might restructure this definition by suitable legislative measures.
It is accordingly proposed to redefine the term ‘industry’. While doing so, it is proposed to exclude
from the scope of this expres­sion, certain institutions like hospitals and dispensaries, educational,
scientific, research or training institutes, institutions engaged in charitable, social and philan­thropic
services etc., in view of the need to maintain in such institutions an atmo­sphere different from that
in industrial and commercial undertaking and to meet the special needs o f such organizations.
It is also proposed to exclude sovereign func­tions of Government including activities relating to
atomic energy, space and de­fence research from the purview of the term ‘industry’. However,
keeping in view the special characteristics of these activities and the fact that their workmen also
need protection, it is proposed to have a separate law for the settlement of indi­vidual grievances as
well as collective disputes in respect of the workmen of these institutions. All these have been
taken into account and the term ‘industry’ has been made more specific while making the coverage
wider.
HOLDING

■ The primary function of the Coir Board, it is just to promote the business for coir
industry products, by providing opportunities in the market for it and since there is no
profit motive, it shouldn’t be classified as an industry, but if we look at the law applied
in the Bangalore case, then it would in fact constitute an industry as it fulfills the triple
test as there is systematic functioning, organized by cooperation between employers and
employees and that has led to some useful product which would satisfy human wants.
■ The court said that we cannot give such an exhaustive definition to an industry where
every activity which would employee a certain number of people and lead to some
useful product would constitute an industry as in that case every other business activity
would call themselves an industry.
 Agricultural Produce Market Committee v Ashok Harikuni
(2000)
FACTS OF THE CASE:
■ The Agricultural Produce Market Committee (appellant) established under the State Act regulates the marketing
of agricultural produce for the benefit of the agriculturist. It is not intended to make any profit but the whole
object is only to regulate the agricultural produce both for protecting the interest of agriculturists and public at
large.
■ It is a body corporate, which has perpetual succession and a common seal. The Committee has no power either
to appoint or regularise the services of its employees which vests with the State Government. Its employees are
civil servants and provisions of the Karnataka Civil Services (Conduct Rules), 1966 and the Karnataka Civil
Services (Classification, Control and Appeal) Rules, 1957 are applicable to them.
■ The appellant terminated the services of certain of its temporary employees, who had not become government
servants under the provisions of the State Act. Consequently, they raised an industrial dispute. The labour court
allowed their applications by setting aside their order of termination and directed reinstatement.
■ Aggrieved by this order the appellant filed a writ petition before the high court. The high court dismissed the
petition. Thereupon the appellant filed an appeal by spe­cial leave before the Supreme Court.
■ The question was appellant, whether an Agriculture Produce Market Committee was an “industry” under the
Industrial Disputes Act, 1947
■ After scanning the whole Act and perusing the Preamble and Statement of Objects and Reasons of the
Act, it reveals that this Act deals with various facets of regulating activities within the market area with
respect to the trading in agricultural produce. It includes establishment of various committees including
charging of fees for service rendered to the traders of agricultural produce.
■ Any enactment, scheme or project which sponsors help in the trading activity is one of the State’s
essential functions towards welfare activities for the benefit of its subject. Such activities can be
undertaken even by any non-governmental organisation or a private person, corporate or company.
■ Thus none of these functions could be construed to be sovereign in nature or inalienable in character.
■ Thus merely an enterprise being a statutory corporation, a creature under a statute, would not take it
outside the ambit of “industry” as defined under the Central Act. We do not find the present case falling
under any exception laid down in the Bangalore Sewerage Board case.
■ The mere fact that some employees of the appellant are government servants would make no difference as
the true test to find — has to be gathered from the dominant object for which functionaries are working.
 HOLDING
■ It cannot be doubted that the appellant is an undertaking performing its duties in a systematic and
organised manner, regulating the marketing and trading of agricul­tural produce, rendering services
to the community. In the present case, as we have recorded earlier, we are concerned only with
those employees who are not govern­ment servants. Testing the dominant object as laid down in
Bangalore Sewerage Board case we reach to inescapable conclusion that none of the activities of
the Agriculture Produce Market Committee could be construed to be sovereign in nature. Hence
we have no hesitation to hold that this Corporation falls within the definition o f “industry”.
■ In view of the aforesaid settled legal principle the width of “industry” being of widest amplitude
and testing it in the present case, in view o f the Preamble, Objects' and Reasons and the Scheme
of the Act, the predominant object clearly being regulation and control of trading of agricultural
produce,... the appellant Committee including its functionaries cannot be said to be performing
functions which are sovereign in character.
■ Most of its functions could be undertaken even by private persons. Thus the appellant would fall
within the definition of “industry” under Section 2(j) of the Central Act.
 State of UP v Jai Bir Singh (2005) -- three reasons for reconsidering banglore water
supply– i) no unanimity on the decision---what constituted industry, ii)over emphasis on the right of workers,
and iii) not wide enough to include all systemic activity undertaken by the state

■ The judgment of five-judge bench of the Supreme Court on reconsid­eration of the decision of seven-judge
bench of Supreme Court in Bangalore Water Supply & Severage Board v. Rajappa,
■ On the question of whether “Social Forestry Department” of State, which is a welfare scheme undertaken for
improvement of the environment, would be covered by the definition of “industry”’ under Section 2(J) of the
Industrial Disputes Act, 1947, the Benches of this Court culled out differently the ratio of the seven-Judge
Bench decision of this Court in the case of Bangalore Water Supply & Sewerage Board v. A. Rajappa
■ It is urged that the Government and its departments while exercising its “sovereign functions” have been
excluded from the definition of “industry”.
■ On the question of “what is sovereign function”, there is no unanimity in the different opinions expressed by
the Judges in Bangalore Water case. It is submitted that in a consti­tutional democracy where sovereignty
vests in the people, all welfare activities undertaken by the State in discharge of its obligation under the
Directive Principles of State Policy contained in Part IV of the Constitution are “sovereign functions”
REASONS FOR RECONSIDERATION OF
DECISION IN BANGALORE WATER
SUPPLY CASE:
■ It is submitted that the definition of “industry” given in the Act is, no doubt, wide but
not so wide as to hold it to include in it all kinds of "systematic organised activities"
undertaken by the State and even indi­viduals engaged in professions and philanthropic
activities.
■ Decision on Bangalore Water Supply Case was not unanimous
■ Opinions expressed by the Majority was temporary & tentative
■ One sided approach (Worker/employee oriented approach)
■ Over emphasis on the rights of the workers
■ Other reasons
AMENDED DEFINITION OF ‘INDUSTRY’

Section 2(j) "industry" means any systematic activity carried on by cooperation 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 satisfying 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;
b) Any activity relating to the promotion of sales business or both carried on by an establishment, club or other like body
of individuals in relation to such activity is less than ten;
EXCLUDED FROM THE
DEFINITION
■ Any agricultural operation
■ Hospitals/Dispensaries
■ Educational, Scientific and Research or Training Institutes
■ Charitable Organisations
■ Khadi or village industries
■ Activities carried out by departments of the Central Government
■ Any Domestic services
■ An individual/body of individual practicing profession employs less than 10 person
■ Any co-operative society having individuals less than 10
■ On behalf of the employers, it is pointed out that all other provisions of the
Amendment Act of 1982, which introduced amendments in various other provi­sions of
the Industrial Disputes Act have been brought into force by issuance of a notification,
but the Amendment Act to the extent of its substituted definition of “industry” with
specified categories of industries taken out of its purview, has not been brought into
force
■ The court expressed its opinion in a language which left no doubt as to its meaning, the
Court went on to observe that though Section 2(j) used words of a very wide
denotation, ‘it is clear’ that a line would have to be drawn in a fair and just manner so
as to exclude some callings, services or undertakings from the scope of the definition.
This was considered necessary because if all the words used in the definition were
given their widest meaning, all services and all callings would come within the
purview of the definition including services rendered by a person in a purely personal
or domestic capacity or in a casual manner.
■ “ In view of the difficulty experienced by all of us in defining the true denotation of the term ‘industry’ and
divergence of opinion in regard thereto — as has been the case with this Bench also — we think, it is high
time that the legisla­ture steps in with a comprehensive Bill to clear 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 "
■ The court felt that the case strayed away from the main objective of the Act, which was to regulate this
employer-employee relation without giving preference to any one class. The court went on to say that
there was a need to correct the definition of an industry and reduce its scope to comply with the wishes of
the employers as well as the employees.
■ Jai Bir Singh case looks progressive as it looks to find a balance between the relationship of the employer
and the employees and it does not want to broaden the ambit of industry by giving it such an exhaustive
definition.