PETITIONER: COIR BOARD, ERNAKULAM COCHIN & ANR. Vs. RESPONDENT: INDIRA DEVI P.S. & ORS. DATE OF JUDGMENT04/03/1992 BENCH: SUJATA V.MANOHAR, D.P. WADHAWA ACT: HEADNOTE: JUDGMENT:
J U D G M E N T
Mrs. Sujata V.Manohar.J.
In these appeals from a judgment of the Full Bench of
the Kerala High Court, we have to examine whether the
appellant-Coir Board is an industry as defined in the
Industrial Disputes Act, 1947. The appellant-Coir Board,
Ernakulam, Cochin, had been set up under the Choir Industry
Act, 1953. In the Statement of Objects and Reasons for the
Act, it is scatted “(1) The Choir Industry has definite role
to play in our national economy. It is of very great
economic importance to Travancore Cochin where it is
concentrated and also, from the point of view of earning
foreign exchange, of importance to the whole country. It
has, however, been passing through acute depression since
the middle of 1952 as a result of the marked decline in
experts. With a view to controlling production, improving
its quality, weeding out the undesirable elements in the
export trade and developing the internal marked so as to
reduce the industry’s dependence on exports, it is
considered necessary to establish a Statutory Board on the
lines of Boards set up for other plantation industries.
(2) In order to finance the development of this
industry it is proposed that a duty up to Rs. 1/- per cwt.
should be levied on Choir biro, Choir yarn as well as Choir
mats and matting exported…….” The Preamble to the Act
states that it is an Act to provide for the establishment of
a Board for the development of the Choir industry and for
that purpose to leave a customs duty on Choir fibre, Choir
yarn and Choir products exported from India and for matters
connected therewith. Section 10 of the Choir Industry Act,
1953
lays down the functions of the Board:-
Section 10:
“Functions of the Board:- (1) It
shall be the duty of he Board to
promote by such measures as it
thinks fit the development under
the control of the Central
Government of the Choir industry.
(2) Without prejudice to the
generality of the provisions of
sub-sec. (1), the measures referred
to therein may related to –
(a) promoting exports of Choir yarn
and Choir products, and carrying on
propaganda for that purpose:
(b) regulating under the
supervision of the Central
Government the production of husks,
Choir yarn and Choir products by
registering Choir spindles and
looms for manufacturing Choir
products as also manufactures of
Choir products, licensing exporters
of Choir, Choir yarn and Choir
products and taking such other
appropriate steps as may be
prescribed;
(c) undertaking, assisting or
encouraging scientific,
technological and economic research
and maintaining and assisting in
the maintenance of one or more
research institutes;
(d) collecting statistics from
manufacturers of, and dealers in,
Choir products and from such other
persons as may be prescribed, on
any matter relating to the Choir
industry; the publication of
statistics so collected or portions
thereof or extracts therefrom;
(e) fixing grade standards and
arranging when necessary for
inspection of Choir fibre, Choir
yarn and Choir products;
(f) improving the marketing of
coconut husk, Choir fibre, Choir
yarn and Choir products in India
and elsewhere and preventing unfair
competition:
(ff) setting up or assisting in the
setting up of factories for the
production of Choir products with
the aid of power.
(g) promoting co-operative
organization among producers of
husks, coir fibre and coir yarn and
manufacturers of coir products:
(h) insuring remunerative returns
to producers of husks, coir fibre
and coir yarn and manufacturers of
coir products;
(i) licensing of resting places and
warehouses and otherwise regulating
the stocking and sale of coir
fibre, coir yarn and coir products
both for the internal market and
for exports;
(j) advising on all matters
relating to the development of the
coir industry;
(k) such other matters as may be
prescribed.
(3) The Board shall perform its
functions under this section in
accordance with and subject to such
rules as may be made by the Central
Government.”
For the purpose of improving the marketing of coir
products and for promoting exports the Coir Board, inter
alia, maintains show rooms and sales depots. The function of
the shirr rooms is to exhibit quality samples of coir and
coir products, and make intends for products and, receive
consignments from manufacturers and/or merchants of coir
products. The products are sold through the show rooms for
which the Coir Board charges a commission. The consignors of
such products have to be registered with the Coir Board and
these are private co-operatives of coir manufacturers. The
marketing personnel in each of the slow rooms or sale depots
helps in promoting their sale.
The Coir Board had employed certain temporary clerks
and typists who were discharged. They claim that their
services could only be terminated in accordance with the
provisions of the Industrial Disputes Act, 1947.
A Full Bench of the Kerala High Court considered the
question of application of the Industrial Disputes Act to
the appellant-Coir Board along with a similar question
raised in respect of a large number of Government
Departments, Government Companies, other statutory
corporations and local bodies, in the impugned judgment.
After extensively dealing with the various decisions of this
Court on what is an `industry’ and who is a `workman’ under
the Industrial Disputes Act, the High Court has come to the
conclusion, inter alia, that Coir Board is an `industry’ as
defined in the Industrial Disputes Act. Hence Chapter V-A of
the Industrial Disputes Act would be applicable in respect
of termination of the services of its temporary clerks and
typists.
`Industry’ is defined in Section 2(j) of the Industrial
Disputes Act, 1947 as “any business, trade, undertaking,
manufacture or calling of employers and includes any calling
service, employment handicraft or industrial occupation or
avocation of workmen”. The term `employer’ is defined in
Section 2(g) to mean “(f) in relation to an industry carried
on by or under the authority of any department of the
Central Government or a State Government, the authority
prescribed in this the department; (ff) in relation to an
industry carried on by or on behalf of a local authority,
the chief executive officer of that authority.” The term
`workman’ in Section 2(s) is defined to mean “any person any
manual, unskilled, skilled, technical, operational, clerical
or supervisory work for hire or reward, whether the terms of
employment be express or implied; and for the purposes of
any proceeding under this Act in relation to an industrial
dispute, includes any such person who has been dismissed,
discharges, or retrenched in connection with, or as a
consequence of, that dispute, or whose dismissal, discharge
or retrenchment has led to that dispute, but does not
include any such person……”
Thus, while employer is defined in the contact of an
industry and the workman is also defined as a person
employed in any industry, the term `industry’ itself has
been defined to mean business, trade, manufacture, or
calling’ are fairly clear, the term `undertaking which
accompanies these four words has given scope for judicial
expansion of the meaning of the word `industry’. The words
`service, employment and avocation of workmen’ also being
somewhat imprecise, like the word `undertaking’, have led to
varying definitions of `industry’ being given from time to
time by judicial pronouncements when the courts were called
upon to decide whether any particular organisation could be
considered as an industry or not.
In one of the early cases before this Court, D.N.
Banerji v. P.R. Mukherjee (AIR 1953 SC 58), a Bench of five
judges considered the question whether a municipal
corporation could be considered as an industry and the
dispute of its employees with it could be considered as an
Industrial dispute. The Court observed (para 13) that the
words `Industrial dispute’ convey the idea of a dispute that
would affect large groups of workmen and employers ranged
on opposite sides, on some general questions on which each
group is bound together by a community of interests – such
as wages, bonus, allowance, working hours and so on. In
branches of work of a municipality analogous to carrying on
of a trade or business, the dispute can be considered as an
Industrial dispute. A similar view was taken in the case of
the The Corporation of the City of Nagpur v. Its Employees
(1960 (2) SCR 942). In the State of Bombay & Ors. v. The
Hospital Mazdoor Sabha & Ors. (AIR 1960 SC 610) the word
`undertaking; in the definition of an industry was held to
connote an activity symptomatically and habitually
undertaken for production or distribution of goods or for
rendering material services to the community at large or a
part of such community with the help of employees. Profit
motive was considered as not eleventh. This view of an
industry covered organisations which would not have normally
been considered as industries. But this Court observed that
the conventional meaning of trade and business had lost some
its validity for the Industrial Disputes Act which was a
welfare measure for the benefit of workers.
Thus, by eliminating the purpose of an industrial
activity as earning of profits or income or recurs, the
Court brought into the sweep of an industry, activities such
as charities, Government hospitals giving free medicines and
medical care or other philanthropic activities. Even
activities such as eduction, recreation, research and the
like that benefit the community as a whole came under the
label of `industry’. In fact, by considering the term
`undertaking’ in this fashion, all kinds of organised
activities which would ordinarily not have been considered
as industries at all and which would not have been otherwise
considered as industries even under the Industrial Disputes
Act were now `industries’ under the Industrial Disputes Act.
Because if we look at the language of the definition of
`industry’ in the Industrial Disputes Act and interpret the
word `undertaking’ appearing along with the words `trade,
business and manufacture or calling’ by applying the
principle of notice a societies, `undertaking; would cove
activities similar to trade, business, manufacture of goods
calling, and not other kinds of activity.
However, the same non-conventional interpretation was
reiterated in the case of The Workmen on Indian Standards
Institution v. The Management of Indian Standards
Institution (AIR 1976 SC 145) by saying that the widest
possible connotation should be given to the word `industry’
since Industrial Disputes Act was a welfare legislation for
the welfare of workers. Therefore, Indian Standards
Institution was held to be an industry.
At the same, there has been another set of cases of
this Court and a number of High Court where a slightly more
restricted and conventional meaning has been given top the
term `industry’ as defined in he Industrial Disputes Act.
For example, in National Union of Commercial Employees &
Anr. v. M.R. Meher, Industrial Tribunal, Bombay & Ors, (AIR
1962 SC 1080) the case of State of Bombay v. Hospital
Mazdoor Sabha (supra) was distinguished and it was held that
a liberal profession such as that of an attorney was to an
industry because that attorney does not carry on his
profession with the active co-operation of his employees. He
brings to bear his intellectual equipment on the work he
does. Similarly in the case of University of Delhi and Anr.
v. Ram Nath and Ors. ([1963] 2 L.L.J. 335) this Court had
held that an educational institution was not an industry.
In the case of the Secretary, Madras Gymkhana Club
Employees’ Union v. The Management of the Gymkhana Club (AIR
1968 SC 554) this Court held that every activity which
involves the relationship of an employer and employee is not
necessarily an industry. After examining the vast range of
human activities, this Court held that in an industry co-
operation between employers and employees was with a view to
production and distribution of material goods or material
services. A club was not an industry since its services wee
to the members themselves for their own pleasure and
amusement and material goods were for their own consumption.
It was a self-serving organisation and was not an industry.
Following the same judgment, in the Cricket Club of India v.
Bombay Labour Union and Anr. (AIR 1969 SC 276), the Cricket
Club of India was held not to be an industry.
In the next year, in the case of The Management of
Safdar Jung Hospital, New Delhi v. Kuldip Singh Sethi (AIR
1940 SC 1407) a Bench of six judges of this Court
unanimously followed the ratio of the Madras Gymkhana Club’s
case (supra) and held that the Safdar Jung Hospital was not
an industry. In the case of Safdar Jung Hospital (supra), a
Bench of six judges unanimously held that an industry as
defined in Section 2(j) exists only when there is a
relationship of employers and employees, the former engaged
in business, trade, undertaking, manufacture or calling of
employers and the latter engaged in any calling service,
employment, handicraft or industrial occupation or
avocation. There must, therefore, be an enterprise in which
the employers follow their avocation as detailed in the
definition and employ workmen who follow one of the
avocations detailed for workmen. But every case of
employment is not necessarily productive of an industry.
Domestic employment, administrative service of public
officials, service in aid of occupations of professional men
also disclose relationship of employers and employees but
they cannot be regarded as in the course of industry. It
must bear the definite character of trade or business or
manufacture or calling or must be capable of being described
as an undertaking resulting in material goods or material
services. If a hospital, nursing home or dispensary is run
as a business in a commercial was there may be found
elemental of an industry there. Hospitals run by Government
and even by provide associations not on commercial lines but
on charitable lines, or as part of the functions of
Government Debatement of Health cannot be included in the
definition of industry. The first and second parts of the
definition ar not to be read in isolation as if they were
different industries but only as aspects of the occupation
of employers and employees in an industry. The are two
counterparts in one industry.
The same position had been earlier reiterated by a
three judge Bench of this Court in the case of Madras
Gymkhana Club (supra) where also this Court had interpreted
the definition of industry as being in two parts. In its
first part, it means any business, trade, undertaking
manufacture or calling of employers. This part of the
definition determines an industry by reference to occupation
of employers n respect of certain activities. There
activities are specified by five words and they determine
what an industry is and what the connote expression
“industrial” is intended to convey. The second part views
the matter from the angle of employees and is designed to
include something more in what the term primarily denotes.
By the second part of the definition, any calling, service,
employment, handicraft or industrial occupation or avocation
of workmen is included in the concept of an industry. This
part gives the extended connotation. This Court also said
that the word `undertaking’ must be defined as any business
or any work or project which one engages in or attempts as
an enterprise analogous to business or trade. It did not
accept as correct the extension of the definition as laid
down in The Corporation of the City of Nagpur v Its
employees (supra).
However, this view which was reaffirmed in Safdar Jung
Hospital’s case (supra), by a decision of six judges of this
Court, as well as the University of Delhi’s case (supra)
were overruled in 1978 by a decision of a Bench of seven
judges of this Court in the case of Bangalore Water Supply &
Sewerage Board etc. v. A.Rajappa & Ors. etc. ([1978] 2 SCC
213) by a majority of five with two dissenting.
The definition of industry under the Industrial
Disputes Act was held to cover all professions, clubs,
educational institutions, co-operatives, research
institutions, charitable projects and anything else which
could be looked upon as organised activity where there was a
relationship of employer and employee and goods were
produced or service was rendered. Even in the case of local
bodies and administrative organisations the court evolved a
`predominant activity’ test so that whenever the predominant
activity could be covered by the wide scope of the
definition as propounded by the court, the local body or the
organisation would be considered as an industry. Even in
those cases where the predominant activity could not be so
classified, the court included in the definition all those
activities of that organisation which could be so included
as industry, departing from its own earlier test that one
had to go by the predominant nature of the activity. In
fact, Chandrachud, J. (as he then was) observed that even a
defence establishment or a mint or a security press could,
in a giver case, be considered as an industry. Very
restricted exemptions were given from the all embracing
scope of the definition so propounded. For example, pious or
religious missions were considered exempt even if a few
servants were hired to help the devotees. Where normally no
employees were hired but the employment was marginal the
organisation would not qualify as an industry. Sovereign
functions of the State as traditionally understood would
also not be calcified as industry though Government
departments which could be served and labelled as industry
would not escape the Industrial Disputes Act.
The majority laid down the `dominant nature’ test for
deciding whether the establishment is an industry or not
(see paragraph 143, Krishna Iyer, J.):
“Para 143: The dominant nature
test:
(a) Where a complaint of
activities, some of which qualify
for exemption, others not, involves
employees of the total
undertakings, some of whom are not
`workmen’ as in the University of
Delhi case (supra) 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 whole undertaking will be
`industry’ although those who are
not `workman’ 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 adventure
undertaken by the 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 Section 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.”
Two judges dissented from this view. They said that
bearing in mind the collocation of terms in which a
definition is couched and applying the doctrine of notice a
socials as pointed out in the Hospital Mazdoor Sabha’s case
(supra), when two or more words are coupled together they
have to be understood as being used in their cognate sense
taking their color from each other. Meaning of a doubtful
word may be ascertained by reference to the meaning of the
words associated with it. Therefore, desire the width of the
definition of `industry’ in Section 2(j) it could not have
been the intention of the legislature that hospitals run on
charitable basis or as a part of the functions of the
Government of local bodies like musicalities, and education
and research institutions whether run by private entities or
by Government, and liberal and learned professions like
doctors, lawyers etc, the pursuit of which is dependent upon
the individual’s own education, intellectual attainments and
special expertise, should fall within the pale of the
definition. There were of he view that the definition is
limited to those activities systematically or habitually
undertaken on commercial lines by private entrepreneurs with
the co-operation of employees for the production or
distribution of goods or for rendering material service to
the community at large or a part of such community. They
observed that this Court had also in previous decisions felt
the necessity of excluding some callings, services and
undertakings from the purviews of the definition. Even the
variety was of the view that legislative exercise was
necessary to settle the position.
The subsequent decisions of this Court have left some
uncertainty on the question of activities and organisations
that can be labelled as industries under the Industrial
Disputes Act. To take only a few recent cases, in the case
of Physical Research Laboratory v. K.G. Sharma ([1997] 4 SCC
257) this Court, after discussing the definition of
industry as propounded in the Bangalore Water Supply Case
(supra) and other cases ultimately came to the conclusion
that a Physical Research Laboratory was to an industry. This
Court emphasised that the principles which were formulated
in the Bangalore Water Supply Case (supra) and other cases
ultimately came to the conclusion that a Physical Research
Laboratory was not an industry. This Court emphasised that
the principles which were formulated in the Bangalore Water
Supply Case (supra) were formulated in because this Court
found the definition of the word `industry’ vague.
Therefore, while applying the `traditional’ test approved by
this Court in the Bangalore Water Supply’s Case (supra) to
determine what can be regarded as sovereign functions of a
constitutional Government which involved varied functions
had to be kept in mind. The activity of a Physical Research
Laboratory would not be covered by the definition of an
industry under Industrial Disputes Act.
In an earlier Judgment in the case of 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. In the case of Bombay
Telephone Canteen Employees’ Association, Prabhadevi
Telephone Exchange v. Union of India & Anr. ([1997] 6 SCC
723), this Court, after examining the case law, held that
workmen employed in the departmental canteen of Telephone
Nigam Limited and admittedly holding civil posts were not
workmen within the meaning of the Industrial Disputes Act.
However, a Bench of three judges of this Court in Civil
Appeal NO: 7845 of 1779, General Manager, Telecom v. S,
Srinivasa Sub-Divisional Inspector of Post (supra) were not
correctly decided in view of the ratio laid down by a Bench
of seven judges of this Court in the case of Bangalore water
Supply and Sewerage Board (supra).
Looking to the uncertainty prevailing in this area and
in the light of the experience of the last two decades in
applying the test laid down in the case of Bangalore Water
Supply and Sewerage Board (supra) it is necessary that the
decision in Bangalore Water Supply and Sewerage Board’s case
(supra) is re-examined. The experience of the last two
decades down not appear to be entirely happy. Instead of
leading to industrial peace and welfare of the community
(which was the avowed purpose of artificially extending the
definition of industry), the application of the Industrial
Disputes Act to organisations which were, quite possibly,
not intended to be so covered by the machinery set up under
the Industrial Disputes Act, might have done more damage
than good, not merely to the organisations but also to
employees by the curtailment of employment opportunities.
Undoubtedly, it is of paramount importance that a
proper law is framed to promote the welfare of labour
employed in industries. It is equally important that the
welfare of labour employed in other kinds of organisations
is also promoted and protected. But the kind of measures
which may be different, and may have to be tailored to suit
the nature of such organisations, their infrastructure and
their financial capacity as also the needs of their
employees.
The elimination of profit motive or a desire to
generate income as the propose of industrial activity has
led to a large number of philanthropic and charitable
activities being affected the Industrial Disputes Act. In a
number of causes where the organisation is run by voluntary
social workers, they are unable to cope with the
requirements of Industrial Disputes Act., This has the
requirement of Industrial Disputes Act. This has led to a
cessation of many welfare activities previously undertaken
by such organisations which has deprived the general
community of considerable benefit and the employees of their
livelihood. There are many activities which are undertaken
not with a view to secure any monetary returns – whether one
labels it as livelihood, income or profit, but for other
more gandered or different motives. Such activities would
not normally be labelled as Industrial activities, but for
the wide interpretation given judicially to the term
`industry’ in the Industrial Disputers Act. For example, a
number of voluntary organisations used to run workshops in
order that the poor, and more particularly poor or destitute
women may earn some income. Voluntary welfare organisations
organised activities like preparation of species, nasals,
pickles or they would secure small orders from industries
for poor women. A small number of persons were employed to
assist in the activities. The income earned by the see
activities was distributed to the women who were given such
work. Other voluntary organisations organised tailoring or
embroidery classes or similar activities for poor women and
provided an outlet for the sale of the work produced by
them. These persons would otherwise have found it impossible
to secure a market for their products. Such organisations
are not organised like industries and they do not have the
means or manpower to run them as industries. A large number
of such voluntary welfare schemes have had to be abandoned
because of the wide interpretation given to the term
industry.
Apart form such activities, there may be other
activities also which are undertaken in the spirit of
community service, such as charitable hospitals where free
medical services and free medicines may be provided. Such
activities many be sustained by free services, given by
professional men and women and by donations. Sometimes such
activities may be sustained by using the profits in the paid
section of that activity for provided free services in the
free section. Doctors who work in these hospitals may work
for no returns or sometimes for very nominal fees.
Fortunately, philanthropic instinct is far from extinct. Can
such philanthropic organisations be called industries? The
definition needs re-examination so that, while the workers
in an industry have the benefit of industrial legislation,
the community as such is not deprived of philanthropic and
other vital services which contribute so much to its well-
being. Educational services and the work done by teachers in
educational institutions, research organisations,
professional activities, or recreational activities, amateur
sports, promotion of arts – fine arts and performing arts,
promoting crafts and special skills, all these and many
other similar activities also require to be considered in
this context.
In fact, in 1982, the Legislature itself decided to
amend the definition of `industry’ under the Industrial
Disputes ACT, 1974 by enacting the Amending Act 46 of 1982.
In the Statement of Objects and Reasons for the Amending
Act 46 of 1982, Clause 2 expressly refers to the decision of
this Court in Bangalore water Supply and Sewerage Board
(Supra) and the wide interpretation given to the definition
of the term industry in the Industrial Disputes Act. The
Statement of Objects and Reasons states, inter alia, as
follows :-
“The Supreme Court in its decision
in the Bangalore Water Supply and
Severage Board v. Rajappa, [(1978)
2 SCC 213; 1978 SCC (L & S) 215 :
AIR 1978 SC 548] had, while
interpreting the definition of
“industry” as contained into he
Act, observed that 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 atmospheres
different from that in industrial
undertaking and to meet the special
needs of such organisations., 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……”
Unfortunately, despite the legislative mandate the
definitions not been notified by the Executive as having
come into force.
Since the difficulty has arisen because of the judicial
interpretation given to the definition of `industry’ in the
Industrial Disputes Act, there is no reason why the matter
should not be judicially re-examined. 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 (supra).