Industry

Synopsis
• Introduction
• Meaning and Definition
• Essential ingredients
• Case Laws
• Conclusion
 Introduction
• Trade or manufacturing the general, specific
that concerned with a particular business as
the automobile industry, the steel industry,
diligence in employment, steady attention to
work or business.
• In other word industry means any economic
activity concerned with the processing of raw
materials and manufacturing of goods in
factories.
• The words ‘industry’ in its widest scope and
‘sovereign functions’ within a limited orbit,
industrial adjudication has greatly been
influenced by the aforementioned precepts.
• An enterprise cannot, therefore, be excluded
from the ambit of the Act merely because of
the individual predilection of a judge.
 Meaning and Definition
• Meaning of " industry " is an important question
of law and fact to be decided by the labour court,
industrial tribunal or National Tribunal before
exercising jurisdiction on a reference made to it
by an appropriate government.
• ‘Industry’ Under The Industrial Disputes Act, 1947
Section 2(j) defines the term ‘industry’ “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 is to be mentioned here that according to
the terminology of this definition one can
easily brand any business activity or trade as
an industry in order to attract the provisions
of the Industrial Disputes Act, 1947.
• Normally speaking by industry it is meant
production of goods, and wealth and with the
cooperation of labour and capital, but it is not
so under this Act.
• This definition is in two parts. The first part says
that industry means any business, trade,
undertaking, manufacture or calling of employers
and the second part provides that it includes any
calling, service, employment, handicraft or
industrial occupation or avocation of workmen.
• If the activity can be described as an industry
with reference to the occupation of the
employers, the ambit of industry, under the force
of the second part takes in the different kinds of
activities of employees mentioned in the second
part.
• The Second part of the definitions i.e. any
calling, service, employment, handicraft or
industrial occupation or avocation of
workmen gives the extended connotation to
the definition and views the matter from the
angle of workmen and is designed to include
something more in what the term primarily
denotes.
• The first part of the definition determines an
industry by reference of occupation of
employers in respect of certain activities.
• The activities are specified by five words
namely, ‘Business’, ‘Trade’, ‘Undertaking’,
‘Manufacture’, or ‘Calling’.
• These words determine what an industry is
and what the cognate expression ‘industrial
is intended to convey.
 THE INDUSTRIAL RELATIONS CODE, 2020
NO. 35 OF 2020

• Section 2(p) "industry" means any systematic

activity carried on by co-operation between an
employer and worker (whether such worker is
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, but does not include—
(i) institutions owned or managed by organisations wholly or
substantially engaged in any charitable, social or
philanthropic service; or
(ii) any activity of the appropriate Government relatable to
the sovereign functions of the appropriate Government
including all the activities carried on by the departments
of the Central Government dealing with defence
research, atomic energy and space; or
(iii) any domestic service; or
(iv) any other activity as may be notified by the Central
Government.
 ‘Business’
• ‘Business’ is a word of wide import. This
expression is wider than the term ‘trade’ and
is not synonymous with it and means
practically ‘anything which is not occupation
as distinguished from pleasure.
 ‘Trade’
• ‘Trade’ is not only in the etymological or dictionary
sense, but also in legal usage, a term of widest
scope; it may mean the occupation of a smaller
shopkeeper equally with that of commercial
magnate and may also mean a skilled craft.
• The word ‘trade’ in its primary meaning is
exchange of goods for goods for money’ and in its
secondary meaning it is ‘any business carried on
with a view to profiting whether manual or
mercantile, as distinguished from the liberal arts
or learned professions or from agriculture.
• The occupation of men in buying and selling
barter or commerce is generally considered,
as trade.
• Occasionally the work especially skilled work
is also considered as a ‘trade’, e.g., the trade
of goldsmith.
• But in the other sense ‘trade’ would include
only persons in a line of business in which
persons are employed as workmen.
• An activity whether it is ‘trade’ or ‘business’
will be an industry because both have been
included in the definition of industry.
 ‘Undertaking’
• The word ‘undertaking’ is the most elastic of all used in
the definition. Though the word "undertaking" in the
definition of "industry" is wedged between business and
trade on the one hand and manufacture on the other, and
though therefore it might mean only a business or trade
undertaking, still it must be remembered that if that were
so, there was no need to use the word separately from
business or trade.
• It therefore follows that the word "undertaking," covers
much more than trade or business. This has also been
held by the Supreme Court in D. N. Banerjee v. P. R.
Mukherjee case.
• According to ‘Webster’s Dictionary
‘undertaking means ‘anything undertaken or
any business, work or project which one
engages in or attempts as an enterprise.
• The word ‘undertaking’ lid the context of the
definition has been understood to mean ‘any
business or any work or project which one
engages in or attempts as an enterprise
analogous to business or trade”.
• While the word "undertaking" in the definition of
"industry" is wedged between business and trade
on the one hand and manufacture on the other,
and though therefore it might mean only a
business or trade undertaking, still it must be
remembered that if that were so, there was no
need to use the word separately from business or
trade.
• The wider import is attracted even more clearly by
the latter part of the definition which refer to
"calling, service employment or industrial
occupation or avocation of workmen. "It therefore
follows that the word "undertaking," covers much
more than trade or business.
 ‘Manufacture’
• ‘Manufacture’ is kind of productive activity in
which the making of articles or materials
(often on a large scale) is by physical labour
or mechanical power.
 ‘Calling’
• The wider import is attracted even more
clearly by the latter part of the definition
which refer to "calling, service employment
or industrial occupation or avocation of
workmen.
• The Second part of definition is any calling,
service, employment, handicraft or industrial
occupation or avocation of workmen.
• “Calling”
• The wider import is attracted even more clearly
by the latter part of the definition which refer to
"calling, service employment or industrial
occupation or avocation of workmen.
• “Service”
• Mumbai Tiffin services can also under the term
of industry under the industrial dispute act, 1947
• “Employment”
• “Handicraft”
• In India handicraft is included in the term of
industry after the revaluation of Russia
Marshal Tito was gave a new concept of
industry.
• “Industrial Occupation” or
• “Avocation of Workmen”
• On the basis of Yugoslavia the without any
employer is also include in the term of
industry under Section 2 (j) of Industrial
dispute Act, 1947.
 Essential ingredients:
1. There must be systematic activity.
2. Such activity must be carried on by Co-Operation between
employer and his employees.
3. It is immaterial whether the workmen are employed by the
employer directly or by or through any agency, including a
contractor.
4. The object of the systematic activity must be the production,
supply or distribution of goods or services.
5. The production, supply or distribution of goods or services
must be with a view to satisfy human wants or wishes.
6. it is immaterial whether any capital has been invested for the
purpose of carrying on such activity.
7. it is immaterial whether such activity is carried on with a
motive to make any gain or profit.
 Amended Definition of ‘Industry’ Under the
Industrial Disputes (Amendment) Act, 1982
• ‘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 contract) for the production,
supply or distribution of goods or services
with a view to satisfy human wants or
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 profit or gain and includes; a) Any activity of the
Dock Labour Board established under Section 5-A of
the Dock Workers; b) Any activity relating to the
promotion of sales or business or both carried on by
an establishment,

• But it does not include: a) any agricultural operation

except where such “agricultural operation” is carried
on in an integrated manner with any other activity
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 Plantation Labour
Act, 1951; or
1. Hospitals or dispensaries; or
2. Educational, scientific, research or training
institutions; or
3. Institutions owned or managed by organization
wholly or substantially engaged in any
charitable, social or philanthropic service; or
4. Khadi or village industries; or
5. 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
6. Any domestic service;
7. Any activity, being a profession practised by an individual or
body of individuals, if the number of persons employed by
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 also in relation to such
activity is less than ten; The Industrial Disputes
(Amendment) Act, 1982 enacts altogether different
definition of industry. This amended definition has not been
enforced till now.
• It nullifies the effect of many judicial decisions
and attempts to clarify conflicting views arising
out of different interpretations of the word
‘industry’ adopted by the Supreme Court in
various cases.
• On account of conflicting judicial decisions it had
become difficult to understand the meaning of
the word industry.
• The amended definition incorporates to a greater
extent the views of the Supreme Court expressed
in the case of Bangalore Water Supply v. A.
Rajappa.
• AIR 1978 SC 548.
• The Bombay Province v. W. I. Automobile
Association A.I.R. 1949 Bom. 141 was the first
case which required the understanding of the
term ‘industry’ as used in the Industrial
Disputes Act was faced with a problem to
decide whether an association of automobile
owners which simply rendered services to its
members and had motive to make profit
could be held an industry for the purposes
the Industrial Disputes Act, 1947.
• The Bombay High Court held that the Automobile
Association was an industry though it no motive
to make profit. Interpreting the statutory
language section 2 (j) of the Act, the court
pointed out that profit motive be essential for a
business, trade or manufacture but, observed
Chagla, G.J. “there is no indication in the section
itself that the under taking referred to in this
definition clause must be undertaking carried on
for the purpose of making profit.
• The expression ‘calling’ is also sufficiently wide to
include in its activities not necessarily concerned
with profit motive.”
• In V. S. Marwari Hospital v. Its Workmen 4 F.J.R. 295
(L.A.T. Calcutta) (1952), the Labour Appellate
Tribunal held that section 2(j) of the Industrial
Disputes Act, 1947, is of wide amplitude and is not
ejusdem generis with the word “business or trade”
used in the section.
• It was held that if judged by the object and scope of
the Act and the other provisions of the Act, the plain
meaning of the word could not be cut down to limit
it to profit making enterprises only.
• Hence charitable institutions like hospitals,
universities, free schools or colleges or public bodies
like municipalities would come within the concept
of "undertaking" as used in section 2(j) of the Act.
• In D. N. Banerjee v. P. R. Mukherjee A.I.R. 1953 S.C. 58.
• case the Chairman of Budge Municipality dismissed two of its
employees, namely, Mr. P.N. Ghose the sanitary inspector and
Mr. Pc. Mitra the head clerk, on complain against them for
negligence, insubordination and indiscipline. The Municipal
Workers' Union questioned the propriety of the dismissal and
claimed that they should be reinstated. The matter was
referred by the Government to the Industrial Tribunal for
adjudication under the I.D. Act.
• The Tribunal directed reinstate but the municipality challenged
the award before the High Court and ultimately before the
Supreme Court on the grounds that municipality in discharging
its normal duties connected with local self government was
not engaged in any industry. So the provisions of the I.D. Act
were not applicable dispute was not an Industrial Dispute and
therefore could be no reference to Industrial Tribunal.
• The Supreme Court was faced with the
problem whether a municipality is covered
by the term “industry” as defined under
section 2 (j) of the Act.
• The court held that the conservancy service
rendered by the municipality was an industry
and the dispute between the municipality
and the employees of the conservancy
department was an industrial dispute within
the meaning of the Industrial Disputes Act.
• In State of Bombay v. Hospital Mazdoor Sabha AIR 1960
SC 610the fact of the case were, Mrs. Vatsala Naryan and
Mrs. Isaac were employed in J.J. Group of Hospital. The
superintendent terminated the services of these
employees after serving a notice. Later on two state
servants discharged from civil supplies department were
appointed in their place.
• The Hospital Mazdoor Sabha was a registered Trade Union
of the employees of hospital in the State of Bombay.
• The Union filed a writ petition in the Bombay High Court
claiming mandamus directing the State of Bombay to
reinstate these employees in their post.
• It was contended that the retrenchment of the employees
was illegal as it did comply with the mandatory provision
of Section 25 F and 25-H of the I.D. Act, 1947.
• The Bombay High Court reject the objections
raised by the state of Bombay and decided in
favour of the employees, the writ of
mandamus was issued in favour of the
employees holding that JJ. Hospital Group to
be industry within meaning of Sec. 2 (j) of I.D.
Act, 1947.
• State of Bombay filed an appeal in the
Supreme Court argued under Art. 133 of the
Constitution of India, 1950 on the ground that
there involved a substantial question of law.
 The Supreme Court realised the difficulty in stating the
possible attributes of industry. The Supreme Court observed
that:
1. An activity, systematically or habitually undertaken
(A) For the production or Distribution of goods;
(B) For rendering of martial service to community at large, or
a part of such community with the help of employees as an
undertaking.
2. Such activity generally involves the co-operation of
employers and Employees.
3. The object is the satisfaction of martial human needs.

• The Supreme Court thus dismissed the appeal of the State of

Bombay and decided in favour of ward servants approving
the decision of the Bombay High Court, Hospital is an
undertaking under Sec. 2 (j) of I.D. Act, 1947
• In the case of Osmania University v. Industrial Tribunal
18 F.J.R. 440 (H.C. Andhra) (1960) the High Court of
Andhra Pradesh held that Osmania University was not
an “industry” within the meaning of section 2(j).
• The court insisted on the co-operation of capital and
labour (rather than employer and employees) and the
activities connected directly with or attendant upon,
the production or distribution of wealth, as the
essential requisites for the test of an industry.
• The court held the co-operation between labour and
capital being the significant and distinctive test it
follows that any educational institution where the co-
operation does not exist would not be covered by the
definition of an industry.
• In Baroda Borough Municipality v. Its Workmen
A.I.R. 1957 S.C. 110 case the workmen employed
in the electricity department of the Baroda
Municipality demanded bonus. The electricity
undertaking of Baroda Municipality was held to
be an industry.
• In D. N. Banerjee v. P. R. Mukherjee and Baroda
Borough Municipality v. Its Workmen two cases
it has been finally and authoritatively held that
those branches of municipality are included in
the definition of an Industry, which can be
regarded as analogous to the carrying on of a
trade or business.
• But after three years in Corporation of Nagpur v. It
Employees A.I.R. 1960 S.C. 675 case has given a new
interpretation and scope of “industry” to those branches
of municipality not be analogous to the carrying on of a
trade or business.
• The court rejected this argument that only those
activities of municipalities analogous to trade or business
would be industry within the meaning of the definition
of “industry” in the Act, with a remark that it was “the
result of an incorrect reading of the earlier two decisions
D. N. Banerjeev. P. R. Mukherjee and Baroda Borough
Municipality cases. Rao, J., for the court, observed “we
have already indicated our view on the section having
regard to the clear phraseology the section cannot be
confined to trade or business trade or business”.
• In the case, Ahmedabad Textile Industry 's
Research Association v. State of Bombay, AIR
1961 SC 484 case the issue was whether an
association for research, setup and
maintained by the textile industry and
employing technical and other staff, was an
'industry'.
• In University of Delhi v. Ramnath 1963 II LLJ 335 SC
case the Supreme Court says that any dispute
between the employees and the University would
be outside the Scope of the Act.
• It was held that educational institutions would not
fall within the meaning of 'industry' because their
aim was education and the teachers' profession
was not to be equated with industrial workers.
• The work in the university was primarily carried on
with the help of teachers who were not covered by
the definition of "workman" and, therefore,
educational institutions like the University of Delhi
were not 'industry'.
• Reading Sections 2 (s), 2 (j) and 2 (g) together,
it meant that the work of education carried on
by educational institution cannot be said to be
an Industry within the meaning of the Act.
• Therefore, the educational institution viz.
University, colleges, schools etc. Are expressly
excluded from the scope of industry,
irrespective of who runs them and whether
they run with or without the profit motive.
• In Madras Gymkhana Club Employees Union v.
Madras Gym AIR 1968 SC 554 case the Madras
Gymkhana Club a member club, were engaged
multifunctional activities like accommodation,
catering, sale of alcohol and non alcoholic beverages
games, etc. J. Hidayattulla was member of this club.
• In this case dispute arose between the management
of the Madras Gymkhana Club and its workmen
regarding the payment of bonus for the year 1962.
• The Government referred the dispute to the
industrial tribunal for adjudication.
• The tribunal held that the Madras Gymkhana Club
was not an industry and was, therefore, not liable to
pay bonus to its workmen.
• Against this order the aggrieved workmen filed an appeal before
the Supreme Court on these facts a question arose for
determination before the Supreme Court whether a club was an
industry.
• In this case the Supreme Court limited the scope of Industry in for
different ways:
1. The court held that the cardinal was to find out whether there was
an industry according to the denotation of the words in the first
part of the definition.
2. The second part of the definition of industry gave no extended
connotation.
3. The emphasis on the production and distribution of a material
goods, was giving an economic content to the first part of the
definition.
4. The court define the word ‘undertaking’ as any business or any
work or project which one engages in or attempts as an enterprise
analogous to business or trade and which results, in material
goods or material services.
• The Supreme Court revisited the earlier decisions and in the process
commented on each of them without bringing any material objectivity
or uniformity in the principles laid down earlier.
• The court in this case was faced with the question whether the
activities of the Madras Gymkhana Club which was a members club
fell within the definition of ‘industry’.
• The court, after laying down the principle as to what is ‘industry’, held
that, though the activity of the club might be falling in the second part
of the definition inasmuch as the work of the club was conducted with
the aid of the employees who followed a 'calling' or an 'avocation', it
could not be described as ‘trade’, ‘business’, ‘manufacture’ or ‘calling’
of the members of the managing committee of the club.
• It was also held that the activity of the club was not an ‘undertaking’
‘analogous to trade or business’ as this element was completely
missing in a members club. This non-proprietary club, therefore, was
held to be not ‘industry’.
• In Cricket Club of India v. Bombay Labour Union
(1969) I LLJ 775 (SC) case club was incorporated
with a view to encouraging and promoting
various games and sports and to conduct sports
and matches, particularly of cricket.
• The club involved in various activities like
recreation and entertainment, provided
residence and catering services etc.
• The club also made investment in immovable
property. On these facts a question arose
whether the activities carried on by the club
were ‘industry’.
• The court observed that:
1. It was a member club without any share holders it was
wrong to equate it with the activity of a hotel.
2. The opening of club stall to general public to buy snakes,
etc. On few occasions in a year could not be held to be an
‘undertaking’ of the nature of business or trade.
3. Income from the rent of the building did not accrue with
aid and cooperation of employees.
4. Club’s income from the stadium was not of the nature of
industry.

• It accordingly, held that club was not an industry under

Section 2 (j) of Industrial Dispute Act, 1947.
• The court Safdarjung Hospital v. Kuldeep Singh
(1970) 1 SCC 735 case it was held that the
definition had read as a whole and when so read
it denoted a collective enterprise which employers
and employees were associated. It did not exist by
employers or by the employees alone.
• It was held that an industry is to be found when
the employees are caring on any ‘business, trade,
undertaking, manufacture or calling of employers’
it they are not, there is no industry as such.
• It was also held that employees in a Government
Health Department are not workmen engaged in
an Industry.
 Triple Test laid down in
Bangalore Water Supply v. A. Rajappa
AIR 1978 SC 548.
• In Bangalore Water Supply v. A. Rajappa; a
seven judge’s bench of the Supreme Court
exhaustively considered the scope of industry
and laid down the following test which has
practically reiterated the test laid down in
Hospital Mazdoor Sabha case.
 Triple Test:
1. Where there is systematic activity;
2. Organized by co-operation between employer
and employee;
3. for the production and distribution of goods
and services calculated to satisfy human
wants and wishes, prima facie, there is an
“industry” in that enterprise.
• The following points were also emphasized in the case:
1. Industry does not include spiritual or religious services or services
geared to celestial bliss, example, making, on a large scale, Prasad
or food. It includes material services and things.
2. Absence of profit motive or gainful objective is irrelevant, be the
venture in the public, joint, private or other sector.
3. The true focus is functional and the decisive test is the nature of
the activity with special emphasis on the employer-employee
relations.
4. If the organisation is a trade or business it does not cease to be
one because of philanthropy, animating the undertaking.

• Therefore the consequences of the decision in this case are that

professions, clubs, educational institutions cooperatives, research
institutes, charitable projects and other kindred adventures, if
they fulfil the triple test stated above cannot be exempted from
the scope of section 2(j) of the act.
• In Hari Nagar Cane Farm v. State of
Bihar AIR 1964 SC 903 case where a
sugar factory purchased a cane farm and
worked it as a department for
agricultural operations of the firm, it
was held to be 'industry' on the facts of
the case, but it was made clear by the
court that agriculture could not under
all circumstances be called an ‘industry’.
• In Desh Raj v. State of Punjab (1988) 2 SCC 537
case which was had by applying the dominant
nature test, held that the irrigation department
clearly came within the ambit of 'industry'.
• But in Executive Engineer, State of Karnataka v.
K. Somasetty (1997) 5 SCC 434 a subsequent
case, two-judge bench held that the irrigation
department was performing regal function' and,
therefore, not an 'industry'.
• One hoped that the Court would adopt an
approach consistent with Bangalore Water
Supply, but judicial vacillation was clearly
discernible in this case.
• In All India Radio v. Santosh Kumar AIR 1998
SC 941 case it was held that All India Radio
and Doordarshan carry on commercial
activity for profit by getting commercial
advertisements telecast or broadcast.
• These functions carried on by them cannot
be said to be of purely sovereign nature and
hence these are industries within the
definition of this Act.
• In Coir Board, Ernakulam, Cochin v. Indira Devi P.S., (1998) 3
SCC 259 case however, a division bench of two judges of the
court felt that the case-law on the question of 'industry' had
left uncertainty and it was necessary that the decision in
Bangalore Water Supply be re-examined by a larger bench, as
it had the effect of bringing in various organisations in the
fold of 'industry' which, in their opinion, were quite possibly
not intended to be covered by the machinery set up under
the Act.
• The division bench felt that Bangalore Water Supply might
have done more damage than good not merely to the
organisations but also to the employees by curtailing of
employment opportunities.
• It is submitted that the sweeping observations of the division
bench of the court that the decision in Bangalore Water
Supply might have done more damage than good are not
based on any study or research.
• Subsequently, a three judge bench headed by
the Chief Justice of India in Coir Board,
Ernakulam v. Indira Devi observed that the
judgment delivered by the seven judge bench
of the court in Bangalore Water Supply did
not require any reconsideration on the
reference being made by the two judge
bench which was bound by the judgment of
the larger bench.
• Court, therefore, directed that the appeal of
the Coir Board, Ernakulam listed before the
appropriate bench for further proceedings.
• The two judges bench of the Supreme Court in
State of Gujarat v. Pratamsingh Parmar (2001) 9
SCC 713 Case took the view that ordinarily
departments of a government cannot be held to
be an 'industry' and rather it is a part of the
sovereign function.
• The court observed that in the absence of any
assertion by the petitioner in the writ petition
indicating the nature of the duties discharged by
him, as well as the job at the establishment
where he has been recruited, it would not be
correct to hold that the Forest Department of
the State of Gujarat is an 'industry'.
• The court distinguished this case from Chief Conservator of
Forests v. Jaganath Maruti Kondhra (1996) 2 SCC case In
this case court observed that the dichotomy of the levels
such as sovereign and non- sovereign, or regal or non-regal,
or state functions or non-government functions really did
not exist.
• Therefore, to extend the concept of sovereign functions to
include all welfare activities would erode the ratio of
Bangalore Water Supply.
• Hence, except the strictly understood sovereign functions,
other activities of the state such as welfare activities would
fall within the purview of the definition ‘industry’.
• Not only this, even within the wider circle of the sovereign
functions there may be an inner circle encompassing some
units which could be considered as 'industry', if
substantially severable.
• It was held that there was sufficient material
on record and specific averments made in the
petition and affidavits to show that social
forestry department of a state could not be
regarded as part and parcel of the sovereign
function of the state.
• It is important to note that in both the
judgments reference was made to Bangalore
Water Supply to cull out differently the ratio
of the said judgment.
• In case of Parmanand v. Nagar Palika, Dehradun
(2003)9 SCC 290 Case it is well established in a catena
of cases decided by the Supreme Court that
municipality is an industry under 2 (j) of the I. D. Act,
1947, yet an attempt was made in 2003 Parmanad v.
Nagar Palika Dehradun case to reopen the position
and re-examined the decisions of the Supreme Court in
view of inclusion of municipalities in the constitution.

• It was urged the municipality should not be held to be

an industry under Section 2 (j) of the I.D. Act, 1947
after:
• It becomes creature of the Constitution.
• It has been elevated to the status of state and
• It is carrying on certain government functions.
• The Supreme Court rejected the contention
by holding the inclusion of municipalise in
the constitution by itself would not dilute the
effect of its decision in Corps. of City of
Nagpur v. Employees and Bangalore Water
Supply case wherein the Supreme Court held
that municipality is an industry under the I.D.
Act.
• The Constitution Bench of five judges in State of U.P. v. Jai Bir Singh 2005 (5)
SCC 1 case after considering the rival contentions and closer examination of
the decision in Bangalore Water Supply held that a reference to a larger bench
for reconsideration of the decision was required for the following amongst
other, reasons:
• The judges delivered different opinions in the case of Bangalore Water Supply
at different times and in some cases without going through, or having had an
opportunity of going through, the opinion of some of the judges on the
Bench. They have themselves recognized that the definition clause in the Act
is so wide and vague that it is not susceptible to a very definite and precise
meaning.
• In the opinion of all of them it would be better that the legislature intervenes
and clarifies the legal position by simply amending the definition of ‘industry’.
The legislature did respond by amending the definition of ‘industry’, but
unfortunately 23 years were not enough for the legislature to provide
Alternative Dispute Resolution Forums to the employees of specified
categories of industries excluded from the amended definition.
• The legal position thus continues to be unclear and to a large extent
uncovered by the decision of the Bangalore Water Supply case. In its opinion
the larger Bench will have to necessarily go into legal questions in all
dimensions and depth, keeping in view all these aspects.
• Further, the Court in Jaibir Singh case
expected the larger Bench which would
review Bangalore Water Supply to look at the
statute under consideration not only from
the angle of protecting workers’ interests but
also of other stake holders in the industry-
the employer and the society at large.
• The Court also stressed the need to reconsider where
the line should be drawn and what limitation can and
should be reasonably implied in interpreting the wide
words used in section 2 (j).
• It stated that no doubt it is rather a difficult problem to
resolve more so when both the legislative and the
executive branches are silent and have kept an
important amended provision of law dormant on the
statue book.
• It observed that pressing demands of the competing
sectors of employers and employees and the
helplessness of the legislative and the executive
branches in bringing into force the Amendment Act
compelled it to make the present reference for
constituting of a suitable bench for reconsidering
Bangalore Water Supply’s case.
• In State of Rajasthan v. Ganeshi Lal 2008 I.L.L.J. 670
(SC) case the labour court had held the law
department of Government is an industry. This view
has been upheld by the single judge and division
bench of the High Court. It was challenged by the
state before the Supreme Court.
• It was held that the Law Department of Government
could not be considered as an industry. Labour Court
and High Court have not indicated as to how the Law
department is an industry.
• They merely stated in some cases certain departments
have been held to be covered by the expression
industry in some decisions. It was also pointed out
that a decision is a precedent on its own facts.