# MANAGEMENT OF SAFDARJUNG HOSPITAL, NEW DELHI v. KULDIP SINGH SETHI

- **Citation:** [1971] 1 S.C.R. 177
- **Court:** Supreme Court of India
- **Decided:** 1971
- **Case number:** Civil Appeal No. 1705 of 1969
- **Bench:** M. Hidayatullah, J.C. Shah, K. S. Hegde, A. N. Grover, A. N. Ray, I. D. Dua
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/management-of-safdarjung-hospital-new-delhi-v-kuldip-singh-sethi-4981
- **Pages:** 18

## Headnote

Industrial Disputes Act
(14 of 1941), s. 2(i), (k), n(s)
and First
Schedule-Hospital when an industry-Inclusion of hospitals in
the
Schedule-Effect of.
(I) 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 reaa 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 occupati.on or avocation.
But every
case of employment is not necessarily productive of an industry.
A
\vorkrnan 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," unde:rtaking 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
t'rade
and
business, manufacture, or undertaking analogous to trade or business for
the production of material goods or \vealth and material services.
\laterial services involve an activity carried on throi;e>h co-operation
between employers and employees to provide the community with the
use of something such as electric po"'·er, 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 c:ommercially valuable, in \\hich, 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 .occupation in which employers md 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, there '.ore, 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
SUPREME COURT REPORTS
( 1971 J I S.C.R.
De established a relationship of cn1ploycrs an<l employees associating
logethcr, the former following a trade, business, manufacture, undertaking or calling of employers in the production of material goods and
material services and the Jatt2r tallowing any calling, service, employn1cnt, handicraft or industri<ll occupation or avocation of \vorkmcn in
11iJ of the employe·rs·' enterprise. It is not necessary that there
must
be
profit motive, but the enterprise n1ust 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-HJ
(2) The decision in Suuc of Bo111hay v. Hospital Mazdoor Sabha,
j 1960] 2 S.C.R. 866 holding that a Government hospital was an industry
look an extreme view of the matter and cannot be justified, because :
{a) it was erroneously held that the s

## Text

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MANAGEMENT OF SAFDARJUNG HOSPITAL,
NEW DELHI
v.
KULDIP SINGH SETHI
(With Connected Appeals)
April l, 1970
177
(M. HIDAYATULLAH, C.J., J.C. SHAH, K. S. HEGDE, A. N. GROVER,
A. N. RAY AND I. D. DUA, JJ.]
Industrial Disputes Act
(14 of 1941), s. 2(i), (k), n(s)
and First
Schedule-Hospital when an industry-Inclusion of hospitals in
the
Schedule-Effect of.
(I) 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 reaa 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 occupati.on or avocation.
But every
case of employment is not necessarily productive of an industry.
A
\vorkrnan 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," unde:rtaking 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
t'rade
and
business, manufacture, or undertaking analogous to trade or business for
the production of material goods or \vealth and material services.
\laterial services involve an activity carried on throi;e>h co-operation
between employers and employees to provide the community with the
use of something such as electric po"'·er, 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 c:ommercially valuable, in \\hich, 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 .occupation in which employers md 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, there '.ore, 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
SUPREME COURT REPORTS
( 1971 J I S.C.R.
De established a relationship of cn1ploycrs an<l employees associating
logethcr, the former following a trade, business, manufacture, undertaking or calling of employers in the production of material goods and
material services and the Jatt2r tallowing any calling, service, employn1cnt, handicraft or industri<ll occupation or avocation of \vorkmcn in
11iJ of the employe·rs·' enterprise. It is not necessary that there
must
be
profit motive, but the enterprise n1ust 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-HJ
(2) The decision in Suuc of Bo111hay v. Hospital Mazdoor Sabha,
j 1960] 2 S.C.R. 866 holding that a Government hospital was an industry
look 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 indl1stry; (b) it was assumed that economic activity is ahvays related to
capital or profit-making and since an enterprise could be an
industr~'
\\.'ithout capital or profit-making it was held that even economic activity
was not necessary; and (c) it \vas 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 san1e character.
This test \vas \1/rongly evolved from the
1
ohscrvations in Federated fl,,f11nicipal a11d Shire Council E111p/oyecs of
A 11.Hrt.f frt v. ;1;/ l:'lhourne Corporation. 26 C.L.R. 508, \Vhich only indicate
that in those activities in \1,:hich Government take to ind1ntfiai ventures
the motive of profit-n1aking rind absence of capital a're irrelevant.
The
nbservations, on the contrary. show that industrial disputes occur only
in 'operations in \Vhich cmploycn;: and en1ployces associate to provide
v.'hat people want and desire. that is. in th~ production of n1atcrial goods
or services, and not the 'satisfaction c,f material human needs'.
If hoy,·~
e•.1er a hospital, nu;·sing: hon1e o'; di.spcnsary is run as a business. in a
commcrci<~l way there may be found elements of an industry there.
Then the hospital is more than :i
plac~ where persons can· get treated
for their ailments and it bec·omes" busine5'. [189 D-H; 190 E-F]
Hospfra/ Case [1960] 2 S.C.R. 866 ~Ver-ruled.
(3) Under s. 2(n)(vi) ;,ny industry specified in the First Schedule
to the Act could be notified by the appropriate Government as a public
utility service.
But what co·11Td he declared had to he an industry in li11e
fir.H place.
The original entries in the Schedule were five and obviou·s]y
only general headings were given.
For ex;in1plc 'coal' is not an industry
but certain aspects of dealing with coal would be 'industry' and thc1t
is \Vhat is intended. The de<:.ling n1ust be an industry in which there arc
e;nploycrs and employees cooperating in the production of material goods
Jr material services.
Similarly. cotton. textiles or food stuffs or iron and
steel. as the entries stand. arc not industries.
Therefore, the heading
of the Ffrst Schedule and the \Vords of cl. (vi) oresupoose the axistence
of an industry which
may be notified as a public
utility
service,
for
special protection under the Act. J 191 F-H]
When the list was expanded in the First Schedule and certain service':
,vere mentioned, the intention could not have been otherwise.
It couh'.
not t.ave 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 whic:~1 an industry proper involving
trade. business. manufacture or so01ething analogo_us to business can be
found.
Therefore, to apply the notification. the condition precedent of
the existence of an industry ha~ to be satisfied.
If there is an industrv
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SAFDARJUNG HOSP. v. K. s. SETHI (Hidayatul/ah; C.J.)
179
which fails 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 F:rst Schedule.
[192 B-C, F-Hl
(4) The activities in the cases of Secretary, Madras Gymkhana Club
Employees Union v. Ma""gement 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' dub not employed in trade or
industry, and the other two \\lere 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. 15l6 and
,jl968]3 All. E.R. 399 C.A., referred to.
Therefore, the Safdar_iung Hospital which is run as a department of
the Government, the Tuberculosis Hospital which is a charitable and
research institute. and the Kurji Hcli Family Hospital which is entirelY' -
· charitahle, are not industries within the meaning of the Industrial Disputes
Act. 1947. [193 C; 194 B-E]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1705 of
1969.
Appeal by special leave from the order dated February 21,
1959, of the Central Government Labour Court, Delhi in LC.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 l.D. No._ 73 of 1968
and Appeal from the judgment and order dated February 21, 1969
of the Patna High Court ii!l Civil Writ Jurisdiction Case No. 730 of
1968 .
. Niren De, A ttorney·General and S. P. Nayar, for th" appellant
(in C. A. No. 1705 of 1969).
M. K. Ramamurthi, E. C. Agarwa1a, 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, fur
the resp~ndents (in C. A. No. 1781 of 1969).
H. R. Gokha/e, M. C. Bhandare, for the intervener.
SUPREME COURT REPORTS
(l97!] 1 S.C.R.
A. K. Sen, Ranen Roy and A. K. Nag, for the appellant (in
A
C. A. No. 1777of1969).
D. Goburdhun, for respondent No. 1 (in C. A. No. 1777 of
1969).
P. N. Tiwari and Shiva Pujan Singh, for respondent No. 3 (iμ
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, 1781of1969 and 1777 of
1969. The first is an appeal by the Management of Safdarjung
I!ospital, New Delhi. The second by the Management of Tuberculosis 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 Offrcer, Additional Industrial Tribunal, Delhi dated 24th February, 1969 and
the judgment and order dated 2 lst February, 19C9 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 thre~ cases may be noticed briefly before we
begin to examine the common qtiestion of law mentioned above.
C.A. No. 1705 of 1969.
The Management of Safdarjung Hospital, New Delhi was rhe
respondent in a petition under s. 33C(2) of the Industrial Disputes
Act, 194 7 in a petition by the present respondent Ku!dip Singh
Sethi, a Lower Division Clerk in the Hospital, for computation of
the amount c.f salary etc. due to him in the pay scale of store keepers. Kuldip Singh Sethi was appointed as a Store-keeper on October
26, t 956 in the pay scale of Rs. 60-5-75. This scale was
revised to Rs. 110-180 on July I, 1959 in accordance with the
recommendations of the Second Pay Commission.
T.vo or three
months later the pay was re-fixed and the time scale was Rs. 110131 with usual allowances.
On July L 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 pav scales of Storekeepers to Rs. 130-5-160-8-200-EB-8:-280--10--300
with the usual allowances. The order was to take effect from the
date of issue. Kuldip Singh Sethi complained by his petition that
the Management of the Hospital had failed to give him nay in
this scale and claimed Rs. 914 for the period November 26, 1962
to May 31, 1968.
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sAii:uARJUNG HOSP. v. K. s. SETHI (Hidayatullah, C.1.)
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In reply to hi! petition the Management contcrn1ed that Kuldip
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 Ma~
door 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. 33C(2) of the Industrial Disputes Act. On merits
his claim is found sustainable and he is given an aw:1rd for Rs. 914.
We need not mention at this stage the grounds on which the :nerits
of his claim are resisted. The point of law that ar!ses in the case
is whether the Safdarjung Ho;pital can be prop~rly 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 ';lanagement of
the Tuberculosis Hospital, New Delhi and its workmen represented
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by the Aspatal Karamchari Panchayat regarding pay scales, and
other facilities demanded by the workmen. The Management has
taken th.: preliminary objection that the Industrd Disputes Act
does not apply since the Hospital is not an industry and is not
run as such. The Management. therefore, questions the refer~nce
to the Tribunal under s. 10 (1) ( d) of the Industrial Disputes Act.
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A preliminary issue is raised :
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"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 postgraduate.s and undergraduates of the All India
Institute of Medical Sciences are also provided training and r.urses
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 Uni-. ~rsity and
not to a Hospital proper.
It is, therefore, contended that this
Hospital is not an industry. Th.e .Tri~unal holds that neit~er the
research carried on, nor the trammg imparted. nor the existence
of the Tuberculosis Association of India with which the Hospital
is affiliated makes any difference and the case fall~ within the
ruling of this Court in the Hospital Mazdoor Sabha(') case. The
(1) [1960] 2 S.C.R. 866.
182
SUPREME COURT REPORTS
[1971] l S.C.R.
Tribunal holds the Tuberculosis Hospital, New Delhi to be an
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mdustry.
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 ~wo 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(') case.
The later case of this .Court reported in Secretary, .lvladras Gymkh{lfl{l Club Employees Union v. Management of the Gymkhana
Club('> 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
Hospital Mazdoor Sablia(1 )
case has now been considerably
shaken by the pronouncement in the Madras Gymkhana r!ub(')
case where it was observed that the Hospital Mazdoor Sabha (1)
c::.se wa~ 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 )
qse 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
~ame
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 hospita!S
of whatever descriμtion can be covered by the concept or only
some hospitals under special conditions. We shall then consider
the merits of the indiv1dual cases in so (ar 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
(I) [1960] 2 S.C.R. 866.
(2) [1968] l S.C.R. 742.
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SAF,DARJUNG HOSP. v. K. s. SETHI (Hidayatullah, C.J.)
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\cases is to be found in the Gymkhana Club(') case.
The tests
applied to find out whether a particular establishment falls with in
the definition of 'industry' or not were not found to be uniform
and disclos.ed a pragm: .ic approach to the problem. This Court,
,therefore, m Gymkhana Club(') case fell b<ick upon the statute
for guidance pointing out that they were not concerned with a
popular phrase but one which the statute had with great particu-
:larity defined itself. Examining the content of the definitions this
~::ourt 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 fonned the basis
of an attack on the former ruling in the /-Io.i1;i1al
Mazdoor
Sabha(') 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. (vil of cl. (n)
of s. 2 of the Act. It is claimed that this is a legislative determination of the question wheth!!r hospital is an industry or not. It
has, therefore, become necessary to cover s0me of the ground
~overed,in the Gymkhana Club(') 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 particul~r kinds al~ne are
regarded as industrial dispute~. It may be notJced. that this definition does not refer to an mdustry.
But the dispute, on the
grammar of the expression 'itself, means ~. disput7. in an i,n~ustry
and we must,. therefore, turn to the definitlon of mdustry m the
Act. The word is defined in cl. (j) and reads :
" 'industry' means a'ny business, trade, !1ndertaking,
manufacture or calling of employers and mcludes any
(I) [1968) 1 S.C.R. 742.
(2) [1960] 2 S.C.R. 866.
184
SUPXEME COURT REPORTS
'[1971] 1 S.C.R.
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,
manufactur~ 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 1 Gymkhana
Club case(') 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 fuJI connotatiOn Otf the term is intended to include
the second part rel~ting to workmen. It was, therefore, concluded:
"If the activity can be l'.lescribed as an industry with
reference to the occupation of the employers, the ambit
of the industry, urider the force of the second part, takes
in the different kinds of activity of the employees mentioned in foe 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 purp0ses of industrial disputes although industry is ordin~ri
ly something which employers create or undertake."
These observations need to be somewhat qualified. It is to be
no,ticed 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 pur~
suits."
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.
(!) [1953] 1 S.C.R. 742.
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SAFDARJUNG HOSP, v. K. s. SETH' (Hidayatullah, C.J.) 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 employm~nt, administrative services of
C . 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 :
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" 'workman' means any person (including an apprentice) 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 proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in conneetion 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-
(i) who is subject to the Army Act, 1950, or the Air
Force Act, 1950 or the Navy (Discipline) Act,
1934; or
F
(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
G
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 fr-;!Il the
H
definition and discloses that a workman is to be regarded as one
employed in an industry if he is foUowing one of the vocations men·
tioned in conjunction with his employers engaged in the vocations
mentioned in relation to the employers.
Ll!Sup.Cl/7!}-13
186
SUPREME COURT REPORTS
[1971] I S.C.R.
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 coQsidered elaborately in the
Gymkhan~ 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 cooperation is to produce l!laterial services. The normal
cases are those in which the p;oduction or distribution is
of material goods or wealth and !hey 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 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 pleusure. Manufacture is a kind
of productive indus1ry i11 "'hich the making of articles or
material (often on a large 'cale) is by physical labour
or mechanical power. Cali,cg denotes the following of
a profession or trade."
It may be added here that in ,\,,,,· 'll<r/ Association of Local
Government Officers v. Bolton Corrorations( 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 a 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 d~linite economic content of a particular type and on the
(l) [1968] 1 S.C.R. 742.
(2) [1943] A.C. 166. 183.
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SAFJ)ARJUNG HOSP. v. K. s. SETHI (Hidayatullah, C.J.)
187
authorities of this Court have been uruformly accepted as excmding professions and are only concerned Witli 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 crade or business for the production of material goods
or wealth and material services.
Why professions must be held outside the ambit of industry
m!!y 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 em¢oyees co-operate in the production or sale of
coiμmodities 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 commer:ial 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 attention 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 conjunr.tion the tendency of the courts is to give
them a narrow one."
188
SUPREME .COURT REPORTS
[1971] l S.C.R.
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, nursP-s and others
employed under the National Heal.th 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(') case but the
earlier cases of this Court such as University of Delhi and Anr. v.
Ramnath(2) and National Union of Commercial Employees v.
M. R. Meher(') 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(') case of this Court (followed and applied in
Cricket Club v. Labour Union(') 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
Trainifli't Board and Automobile Proprietary Lid.(6 ). The Solicitors case cited by Mr. Ramamurti was so decid~d 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 tem1s of employment
or with the conditions of Jabour of any person, there must be first
established a relationship of employers and employees assbciating
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.
(I) [1960) 2 S.C.R. 866.
(2) [1964] 2 S.C.R. 703.
(3) [1962] Supp. 3 S.C.R. 157.
(4) [1968] I S.C.R. 742.
(5) A.LR. 1969 S.C.R. 276.
(6) (19,9) I W.LJl. 697 R.L. S.C.; (1968) I W.L.R.1526 and [1968] 3 AH.
E.R 399 C.A.
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SAF1DARJUNG HOSP. v. K. s. SETHI (Hidayatullah, C.J.)
189
We do not find it necessarv to refer to the earlier cases of this
Court from which these prop0sitions have been deduced because
they are all considered in the Gymkhana Club case(').
We accel't 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 resultin¥ 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 Mm;door Sabha(') case, hospitals run by Government and even by a private association, not on commercial
lines but on charitable Jines or as part of the functions of Government Department of Health were held included in the defin!tion
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 ihat 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 individuals' ? 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 emohasised 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
(I) [1968] l S.C.R. 742.
(2) [1960] 2 S.C.R. 866.
190
SUPREME COURT REPORTS
[1971) 1 S.C.R.
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 Emplo.vees of A ustra/ia
.v. Melbourne Corporation('), 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 Australia~ 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(') case
took an extreme view of the matter which u1as,~ot justified.
It is argued that after the amendment of the Industrial Disputes 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(')
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 :
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(i) any railway service or any transport service for
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the carriage of passengers or goods hr-air;
(I) 26 C.L.R. 508.
(2) [1960] 2 S.C.R. 866.
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SAFDARJUNG HOSP. v. K. s.