Management Of Safdarjung … vs Kuldip Singh Sethi (With … on 1 April, 1970

Supreme Court of India
Management Of Safdarjung … vs Kuldip Singh Sethi (With … on 1 April, 1970
Equivalent citations: 1970 AIR 1407, 1971 SCR (1) 177
Author: M Hidayatullah
Bench: Hidayatullah, M. (Cj)
           PETITIONER:
MANAGEMENT OF SAFDARJUNG HOSPITAL, NEW DELHI

	Vs.

RESPONDENT:
KULDIP SINGH SETHI (With Connected Appeals)

DATE OF JUDGMENT:
01/04/1970

BENCH:
HIDAYATULLAH, M. (CJ)
BENCH:
HIDAYATULLAH, M. (CJ)
HEGDE, K.S.
GROVER, A.N.
RAY, A.N.
DUA, I.D.

CITATION:
 1970 AIR 1407		  1971 SCR  (1) 177
 1970 SCC  (1) 735
 CITATOR INFO :
 F	    1971 SC1259	 (2,3,4)
 RF	    1971 SC2422	 (18,19,20,21)
 R	    1972 SC 763	 (16,17,20,24)
 F	    1974 SC1527	 (20)
 F	    1975 SC2032	 (3,4,8)
 F	    1976 SC 145	 (5,6,7,9,10,24,29)
 O	    1978 SC 548	 (15,25,37,134,136,150,151,154,
 R	    1988 SC1182	 (6)
 RF	    1990 SC2047	 (7)


ACT:
Industrial Disputes Act (14 of 1947), s. 2(j), (k), n(s) and
First  Schedule--Hospital  when	 an  industry--Inclusion  of
hospitals in the Schedule--Effect of.



HEADNOTE:
(1) The definition of industry in s. 2(j) of the  Industrial
Disputes Act, 1947 is in two parts.  But it must be read  as
a  whole.   So read it denotes a  collective  enterprise  in
which  employers and employees are associated.	It does	 not
exist either by employers alone or by employees, alone.	  It
exists	only when there is a relationship between  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.	 But
every case of employment is not necessarily productive of an
industry.  A workman is to be regarded as one employed in an
industry  only	if  he is following  one  of  the  vocations
mentioned  in conjunction with his employers engaged in	 the
vocations  mentioned in relation to the	 employers,  namely,
any  business, trade, undertaking manufacture or calling  of
employers.   In	 the  collocation of  the  terms  and  their
definitions these terms have a definite economic content  of
a particular type and on the authorities of this Court	have
been  uniformly	 accepted as excluding professions  and	 are
only   concerned  with	the  production,  distribution	 and
consumption of wealth and the production and availability of
material services.  Industry has thus been accepted to	mean
only   trade  and  business,  manufacture,  or	 undertaking
analogous  to  trade  or  business  for	 the  production  of
material  goods or wealth and material	services.   Material
services involve an activity carried on through co-operation
between	 employers  and employees to provide  the  community
with  the  use of something such as electric  power,  water,
transportation, mail delivery, telephones and the like.	  In
providing these services there may be employment of  trained
men  and even professional men, but the emphasis is  not  on
what  they  do	but  upon  the	productivity  of  a  service
organised  as  an  industry and	 commercially  valuable,  in
which, something is brought into existence quite apart	from
the  benefit  to  particular  individuals;  and	 it  is	 the
production  of	this  something which is  described  as	 the
production  of	material services.  Thus,  the	services  of
professional men involving benefit to individuals  according
to   their  needs,  such  as  doctors,	teachers,   lawyers,
solicitors, etc. are easily distinguishable from an activity
such as transport service.  They are not engaged in an occu-
pation	in  which employers and employees cooperate  in	 the
production  or	sale of commodities or arrangement  for	 the
production or sale or distribution and their services cannot
be described as material services and are outside the  ambit
of   industry.	 It,  therefore,  follows  that	 before	  an
industrial  dispute  can  be raised  between  employers	 and
employers  or  between employers and  employees	 or  between
employees  and	employees in relation to the  employment  or
non-employment	or  the	 terms of  employment  or  with	 the
conditions of labour of any person, there must first
178
be  established	 a relationship of employers  and  employees
associating   together,	 the  former  following	  a   trade,
business,  manufacture, undertaking or calling of  employers
in  the production of material goods and  material  services
and  the attack following any calling, service,	 employment,
handicraft or industrial occupation or avocation of  workmen
in  aid	 of the employers enterprise.  It is  not  necessary
that there must be profit motive, but the enterprise must be
analogous  to trade or business in a commercial sense.	[183
H; 184 G-H; 185 C, H; 186 H; 187 A-B, E-G; 188 F-H]
(2)  The  decision in State of Bombay  v.  Hospital  Mazdoor
Sabha,	[1960]	2  S.C.R.  866	holding	 that  a  Government
hospital was an industry took an extreme view of the  matter
and  cannot be justified, because : (a) it  was	 erroneously
held  that the second part of the definition  of  'industry'
was  an extension of the first part, whereas, they are	only
the two aspects of the occupation of employers and employees
in an industry; (b) it was assumed that economic activity is
always	related	 to capital or profit-making  and  since  an
enterprise  could be an industry without capital or  profit-
making	it  was	 held that even economic  activity  was	 not
necessary;  and (c) it was held that since a hospital  could
be  run as a business proposition and for profit by  private
individuals  or	 groups	 of individuals a  hospital  run  by
Government without profit must also bear the same character.
This  test  was	 wrongly evolved from  the  observations  in
Federated Municipal and Shire Council Employees of Australia
v. Melbourne Corporation, 26 C.L.R. 508, which only indicate
that  in  those	 activities  in	 which	Government  take  to
industrial ventures the motive of profit-making and  absence
of  capital  are  irrelevant.	The  observations,  on	 the
contrary,  show	 that  industrial  disputes  occur  only  in
operations  in	which employers and employees  associate  to
provide	 what  people  want  and desire,  that	is,  in	 the
production  of	material  goods or  services,  and  not	 the
'satisfaction  of  material  human  needs'.  If	 however   a
hospital,  nursing home or dispensary is run as a  business,
in  a  commercial  way there may be  found  elements  of  an
industry  there.   Then the hospital is more  than  a  place
where  persons	can get treated for their  ailments  and  it
becomes a business. [189 D-H; 190 E-F]
Hospital Case [1960] 2 S.C.R. 866 over-ruled.
(3)  Under s. 2(n)(vi) any industry specified in  the  First
Schedule  to  the Act could be notified by  the	 appropriate
Government  as a public utility service.  But what could  be
declared  had  to be an industry in the	 first	place.	 The
original  entries  in the Schedule were five  and  obviously
only general headings were given.  For example 'coal' is not
an  industry but certain aspects of dealing with coal  would
be  'industry'	and that is what is intended.	The  dealing
must  be  an  industry in which.  there	 arc  employers	 and
employees  cooperating in the production of  material  goods
for material services.	Similarly, cotton, textiles or	food
stuffs	or  iron and steel, as the entries  stand,  are	 not
industries.   Therefore, the heading of the  First  Schedule
and  the  words of cl. (vi) presuppose the existence  of  an
industry which may be notified as a public utility  service,
for special protection under the Act. [191 F-H]
When the list was expanded in the First Schedule and certain
services  were mentioned, the intention could not have	been
otherwise.   It could not have been intended  by  Parliament
that  the entire concept of 'industry' in the Act  could  be
ignored and anything could be brought in as industry.	Most
of  the	 new entries are items in which an  industry  proper
involving   trade,   business.	manufacture   or   something
analogous to business can be found% Therefore, to apply	 the
notification. the condition precedent of the existence of an
industry has to be satisfied.  If there is an industry
179
which  falls  within the item named in the  first  Schedule,
then  alone  can it be notified to be classed  as  a  public
utility	 service.   To hold otherwise would  largely  render
useless	 all the definitions in the Act regarding  industry,
industrial  disputes  etc.,  in relation  to  the  scheduled
items..	 It is hardly to be thought that  notifications	 can
issue in respect of enterprises which are not 'industry'  to
start with.  Parliament could not have attempted to  declare
that   notwithstanding	 the  definitions   of	 'industry',
'industrial dispute', workman' and 'employer' every hospital
is  to be regarded as an industry, by including 'service  in
hospitals and dispensaries' in the First Schedule. [192 B-C,
F-H]
(4)  The  activities  in  the  cases  of  Secretary   Madras
Gytmkhana Club Employees Union v. Management of the Gymkhana
Club  [1968] 1 S.C.R. 742, University of Delhi	v.  Ramnath,
[1964] 2 S.C.R. 703 and National
Union of Commercial Employees v. M. R. Meher, [1962] Supp. 3
S.C.R. 157 were rightly held not be industries, because,  in
the  first the management was a non-profit  making  members'
club  not employed in trade or industry, and the  other	 two
were  cases in which the services rendered by the  employees
were  in  aid  of professional men  and	 not  productive  of
material wealth or services. [188 C-F]
Hotel  and Catering Industry Training Board  and  Automobile
Proprietary  Ltd. (1969) 1 W.L.R. 697 H.L.; S.C.;  (1968)  1
W.L.R. 1526 and [1968]3 All.  E.R. 399 C.A., referred to.
Therefore,  the	 Safdarjung  Hospital  which  is  run  as  a
department  of	the Government,	 the  Tuberculosis  Hospital
which is a charitable and research institute. and the  Kurji
Holi  Family Hospital which is entirely charitable, are	 not
industries  within  the meaning of the	Industrial  Disputes
Act. 1947. [193 C; 194 B-E]



JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1705 of1969.
Appeal by special leave from the order dated February 21,
1959, of the Central Government Labour Court, Delhi in
I.C.A. No. 2 of 1968 and Civil Appeal No. 1781 of 1969.
Appeal by special leave from the order dated February 24,
1969 of the Additional Industrial Tribunal, Delhi in I.D.
No. 73 of 1968 and Appeal from the judgment and order dated
February 21, 1969 of the Patna High Court in Civil Writ
Jurisdiction Case No. 730 of 1968.

Niren De, Attorney-General and S. P. Nayar, for the
appellant (in C. A. No. 1705 of 1969).

M. K. Ramamurthi, E. C. Agarwala, R. P. Agarwala and M. V.
Goswami, for the respondent (in C. A. No. 1705 of 1969).
H. R. Gokhale, Jitendra Mahajan, for the appellant (in C.A.
No. 1781 of 1969).

M. K. Ramamurthi, J. Ramamurthy and Madan Mohan, for the
respondents (in C. A. No. 1781 of 1969).

H. R. Gokhale, M. C. Bhandare, for the intervener.

180

A. K. Sen, Ranen Roy and A. K. Nag, for theappellant (in
C. A. No. 1777 of, 1969).

D. Goburdhun, for respondent No. 1 (in C. A. No. 1777 of
1969).

P. N. Tiwari and Shiva Pujan Singh, for respondent No. 3 (in
C. A. No. 1777 of 1969).

The Judgment of the Court was delivered by
Hidayatullah, C.J. This judgment will dispose of Civil
Appeals Nos. 1705 of 1969, 1781 of 1969 and 1777 of 1969.
The first is an appeal by the Management of Safdarjung
Hospital, New Delhi. The second by the Management of Tuber-
culosis Hospital, New Delhi and the third by the Kurji Holy
Family Hospital, Patna. The first two are filed by special
leave and the third by certificate. They call in question
respectively the order of the Central Government Labour
Court, Delhi dated 21st February, 1969 on an application
under s. 33C(2) of the Industrial Disputes Act, 1949, the
order of the Presiding Officer, Additional Industrial
Tribunal, Delhi dated 24th February, 1969 and the judgment
and order dated 21st February, 1969 of the Patna High Court.
They raise a common question of law whether these several
hospitals can be regarded as industries within the meaning
of the term in the Industrial Disputes Act. They also raise
different questions on merits which will be considered
separately. The facts of the three cases may be noticed
briefly before we begin to examine the common question of
law mentioned above.

C.A. Nc.. 1705 of 1969.

The Management of Safdarjung Hospital, New Delhi was the
respondent in a petition under s. 33C(2) of the Industrial
Disputes Act, 1947 in a petition by the present respondent
Kuldip Singh Sethi, a Lower Division Clerk in the Hospital,
for computation of the amount of salary etc. due to him in
the pay scale of store keepers. Kuldip Singh Sethi was
appointed as a Store-keeper on October 26, 1956 in the pay
scale of Rs. 60-5-75. This scale was revised to Rs. 110-180
on July 1, 1959 in accordance with the ,recommendations of
the Second Pay Commission. Two or three months later the
pay was re-fixed and the time scale was Rs. 110-131 with
usual allowances. On July 1, 1962 his basic pay was fixed
at Rs. 131. On November 26, 1962 the Government of India in
the Ministry of Health re-revised the pay scales of Store-
keepers to Rs. 130-5-160-8-200-EB-8-280-10-300 with the
usual allowances. The order was to lake effect from the
date of issue. Kuldip Singh Sethi complained by his
petition that the Management of the Hospital had failed to
give him pay in this scale and claimed Rs. 914 for the
period November 26, 1,962 to May 31, 1968.

181

In rely to his petition the Management contended that Kuldip
p Singh Sethi was not a workman but a Government servant
governed by the Conditions of Service for Government
Servants and hence he could not invoke the Industrial
Disputes Act since the Safdarjung Hospital was not an
industry. The Tribunal following the decision of this Court
in State of Bombay v. Hospital Mazdoor Sabha(1) has held
that the Hospital is an ‘industry’, that Kuldip Singh Sethi
is a ‘workman’ and hence he is entitled to take recourse to
s. 3 3C (2) of the Industrial Disputes Act. On merits his
claim is found sustainable and he is given an award for Rs.

914. We need not mention at this stage the grounds on which
the merits of his claim are resisted. The point of law that
arises in the case is whether the Safdarjung Hospital can be
properly described as an ‘industry’ as defined in the
Industrial Disputes Act.

C.A. No. 1781 of 1969.

In this case there is a dispute between the Management of
the Tuberculosis Hospital, New Delhi and its workmen
represented by the Aspatal Karamchari Panchayat regarding
pay scales, and other facilities demanded by the workmen.
The Management has taken the preliminary objection that the
Industrial Disputes Act does not apply since the Hospital is
not an industry and is not run as such. The Management.,
therefore, questions the reference to the Tribunal under s.
10(1) (d) of the Industrial Disputes Act. A preliminary
issue is raised :

“Is T.B. Hospital an industry or not?”

In support of the case that the Hospital is not an industry,
the Management emphasises the functions of the Hospital. It
is pointed out that the Hospital is run by the Tuberculosis
Association of India as a research institute where training
is given to Medical ,,graduates of the Delhi University for
the D.T.C.D. and D.C.H. Courses, and postgraduates and
undergraduates of the All India Institute of Medical
Sciences are also provided training and nurses from the
Delhi- College of Nursing, Safdarjung, Lady Hardinge, and
Holy Family Hospitals receive training. The Hospital, it is
admitted, has paid and unpaid beds but it is submitted that
treatment of tuberculosis is a part of research and training
and education, and, therefore, the Hospital has affinity to
a University and, not to a Hospital proper. It is,
therefore, contended that this ,Hospital is not an industry.
The Tribunal holds that neither the research carried on, nor
the training imparted, nor the existence .of the
Tuberculosis Association of India with which the Hospital is
affiliated makes any difference and the case falls within
the ruling of this Court in the Hospital Mazdoor Sabha(1)
case. The
(1) [1960] 2 S.C.R. 866.

182

Tribunal holds the Tuberculosis Hospital, New Delhi to be an
industry.

C.A. No. 1777 of 1969.

The appeal arises from a writ petition filed in the High
Court of Patna. The Kurji Holy Family Hospital took
disciplinary action against two of its employees and the
matter was taken up by the Kurji Holy Family Hospital
Employees Association and the State of Bihar made a
reference to the Labour Court, Patna under S. 10 of the
Industrial Disputes Act. Before the Tribunal, the
Management of the Hospital took the objection inter alia
that a hospital was neither a trade nor a business, nor an
industry as defined in the Industrial Disputes Act and as
such the provisions of the Industrial Disputes Act were not
applicable and the reference was incompetent. The High
Court holds this point against the Management, following the
Hospital Mazdoor Sabha(1) case. The later case of this
Court reported in Secretary, Madras Gymkhana Club Employees
Union v. Management of the Gymkhana Club
(2) is held not to
have weakened the effect of the decision in the case relied
upon.

It is thus that the three cases came before us and were
heard together. Counsel in these cases submit that the
ruling in the HospitalMazdoor Sabha(1) case has now been
considerably shaken by the pronouncement in the Madras
Gymkhana Club (2) case where it was I observed that the
Hospital Mazdoor Sabha(‘) case was one which might be said
to be on the verge and that there were reasons to think that
it took an extreme view of an industry. Relying on this
observation, counsel in the three appeals asked for a
reconsideration of the Hospital Mazdoor Sabha(1) case
although they conceded that it was not yet overruled. We
accordingly heard arguments on the general question whether
a hospital can be said to be an industry falling within the
Industrial Disputes Act and under what circumstances. We
also heard arguments on the merits of the appeals to
determine whether the decisions rendered therein could be
upheld even if the Hospital Mazdoor Sabha(1) case was held
applicable. We shall follow the same course here. We shall
first consider the general proposition whether a hospital
can be considered to fall within the concept of industry in
the Industrial Disputes Act and whether all hospitals of
whatever description can be covered by the concept or only
some hospitals under special conditions. We shall then
consider the merits of the individual cases in so far as may
be necessary.

The Industrial Disputes Act was construed in the past on
more than one occasion by this Court. A fairly
comprehensive summary of the various cases with the rationes
decidendi of those
(1) [1960] 2 S.C.R. 866.

(2) [1968] 1 S.C.R. 742.

183

cases is to be found in the Gymkhana Club(1) case., The
tests applied to find out whether a particular establishment
falls within the definition of ‘industry’ or not were not
found to be uniform and disclosed a pragmatic approach to
the problem. This Court, ,therefore, in Gymkhana Club(1)
case fell back upon the statute for guidance pointing out
that they were not concerned with a popular phrase but one
which the statute, had with ‘great particularity defined
itself. Examining the content of the definitions this Court
came to certain conclusions and held in their light that a
non-proprietary members’ club was not an industry.
The reasoning in the Gymkhana Club(1) case formed the basis
of an attack on the former ruling in the, Hospital Mazdoor
Sabha(2) case by the Managements of the three Hospitals
which are appellants here. The other side relied. upon the
ruling and the amendment of the Industrial Disputes Act by
which ‘Service in hospitals and dispensaries’ has now been
added as item No. 9 in the First Schedule, as one of the
industries which may be declared to be public utility
services under sub-cl . (vi) of cl. (n) of s. 2 of the Act.
It is claimed that this is a legislative determination of
the question whether hospital is an industry or not. It
has, therefore, become necessary to cover some of the ground
covered,in the Gymkhana Club(1) case. To begin with we may
once again refer to the relevant definitions contained in
the Act for they must necessarily control our discussion.
The Industrial Disputes Act, as its title and indeed its
whole tenor disclose, was passed to make provision for the
investigation and settlement of industrial disputes and for
certain other purposes appearing in the Act. The term
‘industrial dispute’ is defined by S. 2(k) in the following
words
” ‘industrial dispute’ means any dispute or
difference between employers and employers or
between employers and workmen, or between
workmen and workmen, which is connected with
the employment or non-employment or the terms
of employment or with the conditions of
labour, of any person.”

The definition discloses that disputes of particular kinds
alone are regarded as industrial disputes. It may be
noticed that this definition does not refer to an industry.
But the dispute, on the grammar of the expression itself,
means a dispute in an industry and we must, therefore, turn
to the definition of ‘industry’ in the Act. The word is
defined in cl. (j) and reads :

” ‘industry’ means any business, trade,
undertaking, manufacture or calling of
employers and includes any
(1) [1968] 1 S.C.R. 742.

(2) [1960] 2 S.C.R. 866.

184

calling, services, employment, handicraft, or industrial
occupation or avocation of workman.”

This definition is in two parts. The first part says that
it means any business, trade, undertaking, manufacture or
calling of ,employers and then goes on to say that it
includes any calling, service, employment handicraft or
industrial occupation or avocation of workmen.
In dealing with this definition this Court in the Gymkhana
,Club case(1) attempted to keep the two notions concerning
employers and employees apart and gave the opinion that the
denotation of the term ‘industry’ is to be found in the
first part relating to ,employers and the full connotation
of the term is intended to include the second part relating
to workmen. It was, therefore, concluded:

“If the activity can be described as an
industry with reference to the occupation of
the employers, the ambit of the industry,
under the force of the second part, takes in
the different kinds of activity of the
employees mentioned in the second part, But
the second part standing alone cannot define
‘industry……… By the inclusive part of
the definition the labour force employed in an
industry is made an integral part of the
industry for purposes of industrial disputes
although industry is ordinarily something
which employers create or undertake.”

These observations need to be somewhat qualified. It is to
be noticed that this definition modifies somewhat the
definition, of “industry’ in s. 4 of the Commonwealth
Conciliation and Arbitration Act 1909-1970) (Acts Nos. 13 of
1904 and 7 of 1910) of Australia where the definition reads
“‘industry’ means business, trade,
manufacture, undertaking, calling, service or
employment, on land or water, in which persons
are employed for pay, hire, advantage or
reward, excepting only persons engaged in
agricultural, viticultural, horticultural, or
dairying pursuits.”

Although the two definitions are worded differently the
purport of both is the same. It is not necessary to view
our definition in two parts. The definition read as a whole
denotes a collective enterprise in which employers and
employees are associated. It does not exist either by
employers alone or by employees alone. It exists only when-
there is a relationship between employers and employees, the
former engaged in business, trade, undertaking, manufacture
or calling of employers and the latter engaged in any
calling, service,
(1) [1968] 1 S.C.R. 742.

185

employment, handicraft or industrial occupation or
avocation. There must, therefore, be an enterprise in which
the employers follow their avocations as detailed in the
definition and employ workmen who follow one of ‘the
avocations detailed for workmen. The definition no doubt
seeks to define ‘industry’ with reference to employers’
occupation but includes the employees, for without the two
there can be no industry. An industry is only to be found
when there are employers and employees, the former relying
upon the services of the latter to fulfil their own
occupations.

But every case of employment is not necessarily productive
of an industry. Domestic employment, administrative
services 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. This follows from the definition of ‘workman’
in the Act defined in cl.(s) which reads
“workman’ means any person (including an ap-
prentice) employed in any industry to do any
skilled or unskilled manual, supervisory,
technical or clerical work for hire or reward,
whether the terms of employment be express or
implied, and for the purposes of any proceed-
ing under this Act in relation to an
industrial dispute, includes any such person
who has been dismissed, discharged or
retrenched in connection with, or as a conse-
quence of, that dispute, or whose dismissal,
discharge or retrenchment has led to that
dispute, but does not include any such person-

(i) who is subject to the Army Act, 1950, or
the Air Force Act, 1950 or the Navy
(Discipline) Act, 1934; or

(ii) who is employed in the police service, or
as an officer or other employee of a prison;
or

(iii) who is employed mainly in a managerial
or administrative capacity; or

(iv)who, being employed in a supervisory
capacity,draws wages exceeding five hundred
rupees per mensem or exercises, either by the
nature of the duties attached to the office or
by reason of the powers vested in him,
functions mainly of a managerial nature.”
The word ‘industry’ in this definition must take its colour
from the definition and discloses that a workman is to be
regarded as one employed in an industry if he is following
one of the vocations mentioned in conjunction with his
employers engaged in the vocations mentioned in relation to
the employers.

Sup.Cl/70-13
186
Therefore an industry is to be found when the employers are
carrying on any business, trade, undertaking, manufacture or
calling of employers. If they are not, there is no industry
as such. What is meant by these expressions was discussed
in a large number of cases which have been considered
elaborately in the Gymkhana Club(1) case. The conclusion in
that case may be stated :

“Primarily, therefore, industrial disputes
occur when the operation undertaken rests upon
cooperation between employers and employees
with a view to production and distribution of
material goods, in other words, wealth, but
they may arise also in cases where the co-
operation is to produce material services.
The normal cases are those in which the
production or distribution is of material
goods or wealth and they will fall within the
expressions trade, business and manufacture.”

The words ‘trade’, ‘business’, ‘manufacture’ and ‘calling’
were next explained thus :

“The word ‘trade’ in this context bears the
X X
meaning which may be taken from Halsbury’s
Laws of England, Third Edn. Vol. 38 p. 8-

(a) exchange of goods for goods or goods for
money;

(b) any business carried on with a view to
profit, whether manual, or mercantile, as
distinguished from the liberal arts or learned
professions and from agriculture; and business
means an enterprise which is an occupation as
distinguished from pleasure. Manufacture is a
kind of productive industry in which the
making of articles or material (often on a
large scale) is by physical labour or
mechanical power. Calling denotes the
following of a profession or trade.”

It may be added here that in National Association of Local
Government Officers v. Bolton Corporations(2) at page 183 et
seq Lord Wright observes that ‘trade’ is a term of the
widest scope. This is true. We speak of the occupation of
men in buying and selling, barter or commerce as trade. We
even speak of work, especially of skilled work as, trade,
e.g. the trade of goldsmiths. But the word as used in the
statute must be distinguished from professions although even
professions have ‘trade unions’. The word ‘trade’ includes
persons in a line of business in which persons are employed
as workmen. Business too is a word of wide import. In one
sense it includes all occupations and professions. But in
the collocation of the terms. and their definitions these
terms have a definite economic content of a particular type
and on the
(1) [1968] 1 S.C.R. 742.

(2) [1943] A.C. 166, 183.

187

authorities of this Court have been uniformly accepted as
excluding professions and are only concerned with the
production, distribution and consumption of wealth and the
production and availability of material services. Industry
has thus been accepted to mean only trade and business,
manufacture, or undertaking analogous to trade or business
for the production of material goods or wealth and material
services.

Why professions must be held outside the ambit of industry
may be explained. A profession ordinarily is an occupation
requiring intellectual skill, often coupled with manual
skill. Thus a teacher uses purely intellectual skill while
a painter uses both. In any event, they are not engaged in
an occupation in which employers and employees co-operate in
the production or sale of commodities or arrangement for
their production or sale or distribution and their services
cannot be described as material services.
What is meant by ‘material services’ needs some explanation
too. Material services are not services which depend wholly
or largely upon the contribution of professional knowledge,
skill or dexterity for the production of a result. Such
services being given individually and by individuals are
services no doubt but not material services. Even an
establishment where many such operate cannot be said to
convert their professional services into material services.
Material services involve an activity carried on through co-
operation between employers and employees to provide the
community with the use of something such as electric power,
water, transportation, mail delivery, telephones and the
like. In providing these services there may be employment
of trained men and even professional men, but the emphasis
is not on what these men do but upon the productivity of a
service organised as an industry and commercially valuable.
Thus the services of professional men involving benefit to
individuals according to their needs, such as doctors,
teachers, lawyers, solicitors etc. are easily
distinguishable from an activity such as transport service.
The latter is of a commercial character in which something
is brought into existence quite apart from the benefit to
particular individuals. It is the production of this
something which is described as the production of material
services.

Mr. Ramamurti arguing against the Hospitals drew our atten-
tion to Citrine’s book ‘Trade Union Law’ (3rd edn. p. 609)
where the author observes :

“However, whilst the words ‘trade’ and
‘industry’ are separately capable of a wide
interpretation, when they occur in conjunction
the tendency of the courts is to give them a
narrow one.”

188

He cites the House of Lords case to which we have referred
and criticises the tendency of the court to narrow the
meaning of the expressions ‘industry’ and ‘workman’. He
says that this narrow interpretation unnecessarily excludes
from workmen ‘teachers employed by local authorities,
university employees, nurses and others employed under the
National Health Service, the domestic staff of the Houses of
Parliament and Civil Servants who are not employed in
‘trading’ or ‘industrial undertaking’. He includes all
these in the definitions because a person doing the same
type of work for a commercial undertaking is within the
definition. According to him any person gainfully employed
must be within the definition. On the strength of this
definition Mr. Ramamurthi also contends that not the
Hospital Mazdoor Sabha(1) case but the earlier cases off
this Court such as University of Delhi and Anr. v.
Ramnath(2) and National Union of Commercial Employees v.
M. R. Meher
(3) must be reconsidered and overruled.
The reason for these cases, as also the Gymkhana Club(4)
case lies in the kind of establishment with which we are
concerned. The Gymkhana Club(4) case of this Court
(followed and applied in Cricket Club v. Labour Union(5) has
held that non-profit making members’ clubs are not employed
in trade or industry and their employees are not entitled to
engage in trade disputes with the clubs. This view finds
support from Hotel and Catering Industry ‘Training Board and
Automobile Proprietary Ltd (6). The Solicitors case cited
by Mr. Ramamurti was so decided because there the services
rendered by the employees were in aid of professional men
and not productive of material goods or wealth or material
services. The other case of University was also decided, as
it was, for the same reason.

It, therefore, follows that before an industrial dispute can
be raised between employers and their employees or between
employers and employers or between employees and employees
in relation to the employment or non-employment or the terms
of employment or with the conditions of labour of any
person, there must be first established a relationship of
employers and employees associating together, the former
following a trade, business, manufacture, undertaking or
calling of employers in the production of material goods and
material services and the latter following any calling,
service, employment, handicraft, or industrial occupation or
avocation of workmen in aid of the employers’ enterprise.
It is not necessary that there must be a profit motive but
the enterprise must be analogous to trade or business in a
commercial sense.

(1) [1960] 2 S.C.R. 866. (2) [1964] 2 S.C.R. 703.
(3) [1962] Supp. 3 S.C.R. 157. (4) [1968] 1 S.C.R. 742.
(5) A.I.R. 1969 S.C.R. 276.

(6) (1969) 1 W.L.R. 697 H.L. S.C.; (1968) 1 W.L.R. 1526 and
[1968] 3 All. E.R 399 C.A.

189

We do not find it necessary to refer to the earlier cases of
this Court from which these propositions have been deduced
because they are all considered in the Gymkhana Club
case(1). We accept the conclusion in that case that :

“…….. before the work engaged in can be
described as an 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.”

We may now consider closely the Hospital Mazdoor Sabha(2)
case and the reasons for which it was held that the workmen
employed in a hospital were entitled to raise an industrial
dispute. We may say at once that if a hospital, nursing
home or dispensary is run as a business in a commercial way
there may be found elements of an industry there. Then the
hospital is more than a place where persons can get treated
for their ailment. It becomes a business.
In the Hospital Mazdoor Sabha(2) case, hospitals run by Gov-
ernment and even by a private association, not on commercial
lines but on charitable lines or as part of the functions of
Government Department of Health were held included in the
definition of industry. The reason given was that the
second part of the definition of industry contained an
extension of the first part by including other items of
industry. As we have pointed out the first and the second
parts of the definition are 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. They
are two counterparts in one industry. The case proceeds on
the assumption that there need not be an economic activity
since employment of capital and profit motive were
considered unessential. It is an erroneous assumption that
an economic activity must be related to capital and profit-
making alone. An economic activity can exist without the
presence of both. Having rejected the true test applied in
other cases before, the test applied was ‘can such activity
be carried on by private individuals or group of indivi-
duals’? Holding that a hospital could be run as a business
proposition and for profit, it was held that a hospital run
by Government without profit must bear the same character.
With respect, we do not consider this to be the right test.
That test was employed to distinguish between the
administrative functions of Government and local authorities
and their functions analogous to business but it cannot be
used in this context. When it was emphasised in the same
case that the activity must be analogous to business and
trade and that it must be productive of goods or their
distribution or for producing material services to the
community at large
(1) [1968] 1 S.C.R. 742.

(2) [1960] 2 S.C.R. 866.

190

or a part of it, there was no room for the other proposition
that privately run hospitals may in certain circumstances be
regarded as industries. The expression ‘satisfying material
human needs’ was evolved which bore a different meaning.
These observations were apparently based on the observations
of, Isaacs and Rich JJ. in Federated Municipal and Shire
Council Employees of Australia v. Melbourne Corporation(1),
but they were :

“Industrial disputes occur when, in relation
to operations in which capital and labour are
contributed in cooperation for the-
satisfaction of human wants and desires, those
engaged in co-operation dispute as to the
basis to be observed, by the parties engaged,
respecting either a share of the produce or
any other terms and conditions of their co-
operation. . . . The question of profit making
may be important from an income-tax point of
view, as in many municipal cases in England;
but, from an industrial dispute point of view
it cannot matter whether the expenditure is
met by fares from passengers or from rates.”

The observations in the Australian case only indicate that
in those activities in which government takes to industrial
ventures, the notion of profit-making and the absence of
capital in the true sense of the word are irrelevant. The
passage itself shows that industrial disputes occur in
operation in which employers and employees associate to
provide what people want and desire in other words where
there is production of material goods or material services.
In our judgment the Hospital Mazdoor Sabha (2) case took an
extreme view of the matter which was not justified.
It is argued that after the amendment of the Industrial Dis-
putes Act by which ‘service in hospitals and dispensaries’
is included in public utility services, there is no scope
for saying that hospitals are not industries. It is said
that Parliament has accepted that the definition is suited
to include a hospital. This contention requires close
attention in view of the fact that it was noticed in the
Hospital Mazdoor Sabha(2) case although that arose before
the amendment.

A public utility service is defined in the Act by merely
naming certain services. It will be noticed that these
services are

(i) any railway service or any transport service for the
‘Carriage of passengers or goods by air;

(1) 26 C.L.R. 508.

(2) [1960] 2 S.C.R. 866.

191

(ii) any section of any industrial
establishment on the working of which the
safety of the establishment or the workmen
employed therein depends;

(iii) any postal, telegraph or telephone
service;

(iv) any industry which supplies power, light
or water to the public;

(v) any system of public conservancy or
sanitation; After namingthese services the
definition adds :

(vi) any industry specified in the First
Schedule which the appropriate Government may,
if satisfied that public emergency or public
interest so requires, by notification in the
official gazette, declare to be a public uti-
lity service for the purposes of this Act, for
such period as may be specified in the
notification.

Provided that the period so specified shall
not, in the first instance, exceed six months
but may, by a like notification, be exceeded
from time to time, by any period not exceeding
six months, at any one time if in the opinion
of the appropriate Government public emergency
or public interest requires such extension.
The intention behind this provision is obviously to cassify
certain services as public utility services with special
protection for the continuance of those services. The named
services in the definition answer the test of an industry
run on commercial lines to produce something which the
community can use. These are brought into existence in a
commercial way and are analogous to business in which
material goods are produced and distributed for consumption.
When Parliament added the sixth clause under which other
services could be brought within the protection afforded by
the Act to public utility services, it did not intend that
the entire concept of industry in the Act, could be ignored
and anything brought in. Therefore it said that an industry
could be declared to be a public utility service. But what
could be so declared had to be an industry in the first
place. We are concerned with the addition of item 9
‘service in hospitals and dispensaries. The heading of, the
First Schedule speaks again of industries which may be de-
clared to be public utility services. The original entries
were five and they read:

1. Transport (other than railways) for the
carriage of passengers or goods, by land,
water or air (now air is omitted).

2. Coal
192

3. Cotton textiles.

4. Food stuffs

5. Iron and steel.

It is obvious that general headings are given here. Coal is
not an industry but certain aspects of dealing with coal is
an industry and that is what is intended. That dealing must
be in an industry in which there are employers and employees
cooperating in the production of material goods or material
services. Similarly, cotton, textiles or food stuffs or
iron and steel, as the entries stand, are not industries.
Therefore the heading of the First Schedule and the words of
clause (vi) presuppose the existence of an industry which
may be notified as a public utility service, for special
protection under the Act.

Therefore when the list was expanded in the First Schedule
and certain services were mentioned, the intention could not
be otherwise. The list was extended to 10 items by
amendment of the Act by Act 36 of 1956 with effect from
March 10, 1957. The new items are (a) Banking, (b) Cement,

(c) Defence Establishments, (d) Service in hospitals and
dispensaries, and, (e) Fire Brigade Service. Later by
notifications issued under s. 40 of the Act nine more items
were added. Section 40 gives to governments the power to
add to the Schedule. They are (a) Indian Government Mints,

(b) India Security Press, (c) Copper Mining, (d) Lead
Mining, (e) Zinc Mining, (f) Iron ore mining, (g) Service in
any oil field, (h) Any service in, or in connection with,
the working of any major port or dock and (i) Service in the
Uranium Industry. It is easy to see that most of them are
items in which an industry proper involving trade, business,
manufacture or something analogous to business can be found.
It is hardly to be thought that notifications can issue in
respect of enterprises which are not industries to start
with. It is only industries which may be declared to be
public utility services.

Therefore to apply the notification, the condition precedent
of the existence of an industry has to be satisfied. If
there is an industry which falls within the items named in
the First Schedule, then alone can it be notified to be
classed as a public utility service. The law does not work
the other way round that every activity connected with coal
becomes an industry and therefore on notification that
activity becomes a public utility service. The same is true
of all items including all the services mentioned. They
must first be demonstrated to be industries and then the
notification will apply, to them. To hold otherwise would
largely render useless all the definitions in the Act
regarding industry, industrial disputes etc., in relation to
the scheduled items. Parliament has not attempted to
declare that notwithstanding the definitions of
193
‘industry’, ‘industrial disputes, ‘workman’ and ’employer’,
every hospital is to be regarded as an industry. All that
has been provided is that an ‘industry’ may be notified as a
public utility service. That is insufficient to convert
non-industries under the Act to industries.
We now take up the individual cases.

C.A. No. 1705 of 1969.

It is obvious that Safdarjung Hospital is not embarked on an
economic activity which can be said to be analogous to trade
or business. There is no evidence that it is more than a
place were persons can get treated. This is a part of the
functions of Government and the Hospital is run as a
Department of Government. It cannot, therefore, be said to
be an industry.

In this case the petitioner chose to be a Lower Division
Clerk. The amount of security which he had to furnish in
the job of a Store-keeper was also refunded to him. He had
applied for the post on May 31, 1962. On July 14, 1962 he
again drew attention to his application. His application
was recommended on August 9, 1962. It was only after
November 26, 1962 when the scale of Store-keepers was raised
to Rs. 130-300 that he changed his views. On December 12,
1962 he made a representation but in forwarding it the
Medical Superintendent said that the incumbents of the posts
of Store-keepers could not be given the upgraded scale of
Rs. 130-300. In addition there were certain matters pending
against him which precluded his appointment in that scale.
On August 11, 1966 the Director General wrote:

“With reference to your letter No. 1-20/62-
Estt., dated the 4th Jan, 1966 and subsequent
reminder of even number dated the 24th May,
1966 on the subject noted above, I am directed
to say that a reference was made to the
Government of India in the Ministry of Health
and Family Planning, New Delhi who have stated
that it was not intended that the revised
scale of Rs. 110-131 (previous scale of Rs.
60-75) should be further revised to Rs. 130-
300 as all incumbents of the posts carrying
the pay scale of Rs. 110-131 were promoted
from Class IV and did not possess the
requisite qualifications prescribed for posts,
carrying pay scale of Rs. 130-300.
In view of the position stated above further
action in the matter may kindly be taken in
the light of the above remarks and
storekeepers concerned informed accordingly.

In view of these facts it is hardly necessary to refer to
the reports about the work of Kuldip Singh Sethi and other
matters which
194
came in his way of promotion. Both on the question of law
decided by us and on the merits of his case, Kuldip Singh
Sethi was not entitled to the pay scale of store-keepers and
the award of Rs. 914/- in his favour was wrong. The appeal
is allowed. The order is set aside but there will be no
order about costs.

C.A. No. 1781 of 1969.

The Tuberculosis Hospital is not an independent institution.
It is a part of the Tuberculosis Association of India. The
hospital is wholly charitable and is a research institute.
The dominant purpose of the Hospital is research and
training, but as research and training cannot be given
without beds. in a hospital, the hospital is run. Treatment
is thus a part of research and training. In these
circumstances, the Tuberculosis Hospital cannot be described
as an industry. The order of the Additional Industrial
Tribunal, Delhi on the preliminary point must be reversed.
The reference to the Tribunal under S. 10(1)(d) of the
Industrial Disputes Act was incompetent. The appeal is
allowed but we make no order about costs.

C.A . No. 1777 of 1969.

The objects of the Kurji Holy Family Hospital are entirely
charitable. It carries on work of training, research and
treatment. Its income is mostly from donations and
distribution of surplus as profit is prohibited. It is,
therefore, clear that it is not an industry as-laid down in
the Act. The reference made by the State Government, Bihar
was thus incompetent. The appeal will be allowed. There
will be no order about costs, except in the first case (C.A.
1705 of 1967) in which the earlier order of this Court shall
be given effect to.

V.P.S.		      Appeals allowed.
195



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