# STATE OF U.P v. JAi BIR SINGH

- **Citation:** [2005] Supp. 1 S.C.R. 20
- **Court:** Supreme Court of India
- **Decided:** 2005-05-05
- **Case number:** Civil Appeal No. 897 of2002
- **Bench:** N. Santosh Hegde, K.G. Balakrishnan, D.M. Dharmadhikari, Arun Kumar, B.N. Srikrishna
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-u-p-v-jai-bir-singh-20721
- **Pages:** 29

## Headnote

Industrial Disputes Act, 1947-Section 20) {As amended by Industrial
C Disputes (Amendment) Act, 1982}-Definition of "industry"-Jnterpretation
of-Jn 1978 an expansive meaning was given to the word "industry" with
certain specified exceptions in the Bangalore Water Supply case-Keeping in
view such judicial interpretation the word "industry" was consequently
redefined by the legislature in 1982-But amended definition not brough,t into
force for the past 23 years-Held: 'There is a requirement of re-considering
D where the line should be drawn and what limitations should be reasonably
implied in interpreting the wide words used in S2(j)-Compelling reasons
more than one for making a reference on the interpretation of definition of
"industry" in S.2(j), to a larger Bench and for re-consideration by it, if
necessary, the decision rendered in the case of Bangalor,e Water Supply case.
E
On the question whether 'social forestry' department of State, which
is a welfare scheme undertaken for improvement of the environment,
would be covered by the definition of "industry" under S.2(j) of the
Industrial Disputes Act, 1947, three Judges Bench of this Court in the case
of Chief Consetvator of Forests v. Jagannath Maruti Kondhare and two
F Judges Bench of this Court in the case of State of Gujarat v. Pratamsingh
Narsingh Parmar culled out differently the ratio of the seven Judges Bench
decision of this Court in the case of Bangalore Water Supply & Sewarage
Board v. A. RajapPa. Based on that decision, the Court in the first case
came to the conclusion that 'Social Forestry Department' is covered by
the definition of "industry", but in the second case the Court took a
G different view. The present Bench of five Judges has been constituted on
a reference made due to apparent conflict between the said two judgments.
H
The word "industry" had been given an expansive meaning with
certain specified exceptions in the judgment of Bangalore Water Supply
20
'•
.. ~·,
..
,
,
'4
STATE OF U.P. v.JAI BIR SINGH
21
.1' /--
& Sewarage Board. Keeping in view such judicial interpretation, the word A
"industry" was redefined but the amended definition has not been brought
into force for the past 23 years.
The question which arose for consideration in the present matter is
as to whether the amended definition, which is now a part of the statute,
although not enforced, is a relevant piece of subsequent legislation which B
can be taken aid of to amplify or restrict the ambit of the definition of
"industry" in S. 2(j) of the.Industrial Disputes Act, 1947 as it stands in its
original form.
Referring the matter to a larger Bench, the Court
c
HELD: 1.1. The word "industry" seems to have been redefined under
the Amendment Act keeping in view the judicial interpretation of the word
"industry" in the case of Bangalore Water Supply. The Judges delivered
different opinions in the case of Bangalore Water Supply at different points
of time and .in some cases without going through or having an opportunity D
of going through the opinions of other Judges. ·They have themselves
recorded that the definition clause in the Industrial Disputes Act is so wide
_..
and vague that it is not susceptible to a very definite and precise meaning.
In the opinions of all of them it is suggested that to avoid reference of the
vexed question of interpretation, to larger Benches of the Supreme Court
it would be better that the legislature intervenes and clarifies the legal E
position by simply amending the definition of ~industry". The legislature
did respond by amending the definition of "industry" but unfortunately
23 years were not enough for the legislature to provide Alternative
Disputes Resolution Forums to the employees of specified categories of
industries excluded from the amended definition. The legal position thus F
continues to be unclear and to a large extent uncovered by the decision of
Bangalore Water Supply case as well. [46-B; 34-B, C, DJ
-., ,..
1.2. The legislature has intervened

## Text

_Characters 0–39,564 of 72,916. This is a partial read: ask again with offset=39564 for what follows._

A
STATE OF U.P.
v.
JAi BIR SINGH
MAY 5, 2005
B
[N. SANTOSH HEGDE, K.G. BALAKRISHNAN, D.M.
DHARMADHIKARI, ARUN KUMAR AND B.N. SRIKRISHNA, JJ.]
Industrial Disputes Act, 1947-Section 20) {As amended by Industrial
C Disputes (Amendment) Act, 1982}-Definition of "industry"-Jnterpretation
of-Jn 1978 an expansive meaning was given to the word "industry" with
certain specified exceptions in the Bangalore Water Supply case-Keeping in
view such judicial interpretation the word "industry" was consequently
redefined by the legislature in 1982-But amended definition not brough,t into
force for the past 23 years-Held: 'There is a requirement of re-considering
D where the line should be drawn and what limitations should be reasonably
implied in interpreting the wide words used in S2(j)-Compelling reasons
more than one for making a reference on the interpretation of definition of
"industry" in S.2(j), to a larger Bench and for re-consideration by it, if
necessary, the decision rendered in the case of Bangalor,e Water Supply case.
E
On the question whether 'social forestry' department of State, which
is a welfare scheme undertaken for improvement of the environment,
would be covered by the definition of "industry" under S.2(j) of the
Industrial Disputes Act, 1947, three Judges Bench of this Court in the case
of Chief Consetvator of Forests v. Jagannath Maruti Kondhare and two
F Judges Bench of this Court in the case of State of Gujarat v. Pratamsingh
Narsingh Parmar culled out differently the ratio of the seven Judges Bench
decision of this Court in the case of Bangalore Water Supply & Sewarage
Board v. A. RajapPa. Based on that decision, the Court in the first case
came to the conclusion that 'Social Forestry Department' is covered by
the definition of "industry", but in the second case the Court took a
G different view. The present Bench of five Judges has been constituted on
a reference made due to apparent conflict between the said two judgments.
H
The word "industry" had been given an expansive meaning with
certain specified exceptions in the judgment of Bangalore Water Supply
20
'•
.. ~·,
..
,
,
'4
STATE OF U.P. v.JAI BIR SINGH
21
.1' /--
& Sewarage Board. Keeping in view such judicial interpretation, the word A
"industry" was redefined but the amended definition has not been brought
into force for the past 23 years.
The question which arose for consideration in the present matter is
as to whether the amended definition, which is now a part of the statute,
although not enforced, is a relevant piece of subsequent legislation which B
can be taken aid of to amplify or restrict the ambit of the definition of
"industry" in S. 2(j) of the.Industrial Disputes Act, 1947 as it stands in its
original form.
Referring the matter to a larger Bench, the Court
c
HELD: 1.1. The word "industry" seems to have been redefined under
the Amendment Act keeping in view the judicial interpretation of the word
"industry" in the case of Bangalore Water Supply. The Judges delivered
different opinions in the case of Bangalore Water Supply at different points
of time and .in some cases without going through or having an opportunity D
of going through the opinions of other Judges. ·They have themselves
recorded that the definition clause in the Industrial Disputes Act is so wide
_..
and vague that it is not susceptible to a very definite and precise meaning.
In the opinions of all of them it is suggested that to avoid reference of the
vexed question of interpretation, to larger Benches of the Supreme Court
it would be better that the legislature intervenes and clarifies the legal E
position by simply amending the definition of ~industry". The legislature
did respond by amending the definition of "industry" but unfortunately
23 years were not enough for the legislature to provide Alternative
Disputes Resolution Forums to the employees of specified categories of
industries excluded from the amended definition. The legal position thus F
continues to be unclear and to a large extent uncovered by the decision of
Bangalore Water Supply case as well. [46-B; 34-B, C, DJ
-., ,..
1.2. The legislature has intervened and amended the definition of
"industry" in 1982 but for more than 23 years the amended provision not
having been brought into force, the Ul\amended definition with the same G
vagueness and lack of precision continues to confuse the courts and the
/
parties. The inaction of the legislative and executive branches has made
it necessary for the judiciary to reconsider the subject over and over again
in the light of the experience of the working of the provisions on the basis
of the interpretation in the judgment of Bangalore Water Supply case
H
' -"""
rendered as far back as in the year 1978. (37-A, BJ
22
SUPREME COURT REPORTS [2005] SUPP. I S.C.R.
A
1.3. The decision of Bangalore Water Supply is also not a unanimous
decision. Of the five Judges who constituted majority, three have given a
common opinion but two others have given separate opinions projecting
a view partly different from the views expressed in the opinion or the other
three Judges. Beg CJ, having retired had no opportunity to see the opinions
B delivered by the other Judges subsequent to his retirement. Krishna Iyer,
J., and the two Judges who spoke through him did not have the benefit or
the dissenting opinion of the other two Judges -and the separate, partly
dissenting opinion of Chandrachud, J. as those opinions were prepared
and delivered subsequently. (38-G, ff; 39-A]
C
1.4. In such a situation, it is difficult to ascertain whether the opinion
of Krishna Iyer, J. given on his own behalf and on behalf of Bhagwati
and Desai, JJ. ·can be held to be an authoritative precedent which would
require no re-consideration even though the Judges themselves expressed
the view that the exercise of interpretation done by each one of them was
tentative and was only a temporary exercise till the legislature stepped
D in. The legislature subsequently amended the definition of the word
"industry" but due to the lack of will both on the part of the Legislature
and the Executive, the amended definition, for a long period of 13 years,
has remained dormant. (39-A, B, CJ
1.5. There are compelling reasons more than one for making a
E reference on the interpretation of definition of "industry" in S.l(j) of the
Act, to a larger Bench and for re-consideration by it, if necessary, the
decision rendered in the case of Bangalore Water Supply and Sewerage
Board. (41-H; 41-A]
F
Bangalore Water Supply and Sewerage Board v. A. Rajappa, (1978] 2
SCC 113; Chief Conservator of Forests v. Jagannath Maruti Kondhare, (1996)
1SCC193; State of Gujarat v: Pratamsingh Narsinh Parmar, (2001] 9 SCC '
713; Aeltemesh Rein v. Union of India, (1988] 4 SCC 54; State of Bombay v.
Hospital Mazdoor Sabha, AIR (1960) SC 866; Coir Board v. Indira Devi,
(1998) 3 SCC 259; Coir Board v. Indira Devi, (2000) 1 SCC 124; Central
G Board of Dawoodi Bohra Community v. State of Maharashtra, (2005] 2 SCC
673; Yogender Nath Naskar v. CIT, (1969) 3 SCR 742; Kajri Lal Agarwal v.
UOJ, AIR (1966) SC 1538-41; State of Bihar v. SK Roy, AIR (1966) SC
(1995); Thiru Manickam and Co. v. State ofTamilnadu, AIR (1977) SC 518
and A.K. Roy v. Union of India, (1982] 1 SCC 271, referred to.
H
K. Brandy v. England Revenue Commissioner, (1921) 2 Kings Bench
ST A TE OF U. P. v. JAi BIR SINGH
23
-~ ~
403 and Regina v. Secretary of State for the Home Department (1995) 2 WLR A
2, referred to.
Statutory Interpretation, by FAB Bennion 3rd Edn., referred to.
2.1. The statute under consideration cannot be looked at only as a
worker-oriented statute. Law and particularly industrial law needs to be B
so.interpreted as to ensure that neither the employers nor the employees
are in a position to dominate the other. Both should be able to cooperate
.A
for their mutual benefit in the growth of industry and thereby serve public
good. (42-DI
,.
2.2. A worker oriented approach in construing the definition of c
industry, unmindful of the interest of the employer or the owner of the
industry and the public, who are ultimate beneficiaries, would be a one
sided approach and not in accordance with the provisions of the Act.
(44-H; 45-A)
3.1. The Judges in the Bangalore Water Supply and Sewerge Board D
case seem to have confined only such sovereign functions outside the
<'
purview of 'industry', which can be termed strictly as constitutional
functions of the three wings of the State i.e. executive, legislature and
judiciary. (45-BJ
E
3.2. Had there. been no such expansive definition of 'industry' given
in Bangalore Water Supply case, it would have been ·open to the Parliament
to bring in either a more expansive or a more restrictive definition of
industry by confining it or not confining it to industrial activities other
than sovereign functions .and public welfare activities of the State and its
departments. Similarly, employment generated in carrying on of liberal F
professions could be clearly included (Ir excluded depending on social
.....
conditions and demands of social justice. Comprehensive change in law
and/or enactment of new law had not been possible because of the
interpretation given to the definition of 'industry' in Bangalore Water
Supply case. The judicial interpretation seems to have been one of the G
inhibiting factors in the enforcement of the amended definition of the Act
for the last 23 years. (46-B, C, DI
4.1. In the Bangalore Water Supply case, not all the Judges in
interpreting the definition clause invoked the doctrine of noscitur-a-sociis.
~
Keeping in view the other provisions of the Act and words used in the H
24
SUPREME COURT REPORTS [2005] SUPP. I S.C.R.
A definition clause, although 'profit motive' is irrelevant, in order to
-encompass the activity within the word 'industry', the activity must be
'analogous to trade or business in a commercial sense'. Further mere
enumeration of 'public utility services' in Section 2(n) read with the First
Schedule should not be held decisive. Unless the public utility service
answers the test of it being an 'industry' as defined in clauseU) of Section
B 2, the enumeration of such public utility service in the First Schedule to
the Act would not make it an 'industry'. (46-E, F]
.4.2 .. In construing the definition clause and determining. its ambit,
one cannot lose sight of the fact that in activities like hospitals and
C education, concepts like right of the workers to go on 'strike' or the
employer's right to 'close down' and 'lay ofr are not contemplated because
they are services in which the motto is 'service to the community'. If the
patients tfr students are to be left to the mercy of the employer and
employees exercising their rights at will, th~ very purpose of the service
activity would be frustrated. [47-E, F)
D
· Management of SafdarjungHospital, New Delhi v. Ku/dip Singh Sethi,
[ 1971) 1 SCR 177, relied on.
·
Secretary, Madras Gymkhana Club Employees' Union v. Management
."'.
.
•
t
.'•
. '
.
of the Gymkhana Club, [1968] 1 SCR 742, referred to.
E
5. This Court must reconsider where the line should be drawn and
what limitations can and should be reasoriabiy implied in interpreting the
\vide words used in Section 2(j). Pressing demands of the competing sectors
or'employers and employees and the helplessness of legislature and
executive in bringing into force the Amendment Act compel making of
F this reference. (48-C, E)
G
H
Harinagar Cane Farm v. State of Bihar, AIR (1964) SC 903 and State
of Bombay v. Hospital Mazdoo-r Sabha and Ors., AIR 1960(2) SCR 866,
relied on.
•
I
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 897 of2002.
'~'
.
'
.
.
'
From the Judgment and Order dated 30.1.200 l of the Allahabad High
Court in Civil Misc. Writ Petition No. 3282 of:2001.
WITH
C.A. No. 2506 of 2002, SLP (C) No. 20982 of 2002, C.A. No. 8597
j
I,
STA TE OF U.P. v. JAi BIR SINGH [DI-IARMADI-IIKARI, J.]
25
of2001, C.A. No. 6114 of2001, C.A. No. 6471 of2002, SLP (C) No. 14127 A
of2004, C.A. No. 1279 of2001, C.A. No. 1278 of2001, C.A. No. 2409 of
2002, SLP (C)·Nos. 11291 and 14085 of2004, C.A. No. 1276 of2001, C.A.
No. 7994 of2004, C.A. No. 6108 of2002, C.A. No. 5101 of2002, C.A. No.
4569 of 2002, C.A. No. 812 of 2005, C.A. Nos. 355-358 of 2004 and SLP
(C) No. 4139 of 2005.
Ms. Harvinder Kaur, A.A.G. of Punjab, Rakesh Dwivedi, Mrs. Shobha
Dikshit, Indira Jaisingh, T.R. Andhyarujina, S.K. Dholkia, A.K. Sriwastava
B
and Colin Gonsalvase, Kamlendra Mishra, Rajeev Kumar Dubey, Javed M.
Rao, Ms. Rashmi Singh, Niranjana Singh, Vimla Sinha, Abhishek Chaudhary,
Gaurav Bhatia, Avanish Tripathi, Pradip Misra, Pramod Dayal, Gaurav C
Librahan, Bharat Sangal, Ms. Sangeeta Panicker, R.R. Kumar, S. Chatterjee,
S.B. Upadhyay, Shiv Mangal Sharma, Pawan Upadhyay, Manjeet Singh, T.V.
George, Harikesh Singh, Ms. Kavita \\fadia, Bhargava V. Desai, Sanjeev
Kumar Singh, Pradeep Kumar' Malik, Ms.Sheenam Parwanda, Jai Chandra,
Arun Kumar Sinha, S.V. Dehspande, S.S. Shinde, Mukesh K. Giri,
Ms.Hemantika Wahi, Ms. Sadhana Sandhu, Sanjay R.Hegde, Ravi Prakash D
Mehrotra, Garvesh Kabra, Mrs. Deepti R. Mehrotra, M.K. Garg, Ms. Aparna
Bhat, Vipin M. Benjamin, P.Ramesh Kumar, Dinesh Verma, Umesh Narang,
A.P. Mohanty, Dharam Bir Raj Vohra, Ms. Madhu Sikri, Subhash Sharma,
Yash Pal Dhingra,, Mrs. K. Sarada Devi, E.C. Vidya Sagar, Ashok Kr.
Upadhyam, S. Wasim A.Qadri, Mohd. Saud, Mrs. K.S. Mehlwal, K.L. Janjani, E
·Vidya Dhar Gaur, S.U.K. Sagar, D. Mahesh Babu and S.N. Bhat with them
for the appearing parties.
The Judgment of the Court was delivered by
DHARMADHIKARI, J. This present Appeal along with other F
connected cases has been .listed before this Constitution Bench of five judges
on a reference made by a Bench of three Honourable judges of this Court
·finding an apparent conflict between the decisions of two Benches of this
.court in the cases of <;hie/ Conservator of Forests v. Jagannath Maruti
Kondhare, [1996] 2 SCC 293 of three judges and State of Gujarat v.
Pratamsingh Narsinh Parmar, [2001] 9 SCC 713 of two judges.
G
On the questiqn of whether 'social forestry' department of State, which
is a welfare scheme undertaken for improvement of the environment, would.
be covered by the definition of "Industry" under S. 2U) of the Industrial
Disputes Act, 1947, the aforesaid Benches (supra) of this Court c:ulled out
differently the ratio of the seven judges' Bench decision of this Court in the H
26
SUPREME COURT REPORTS [2005) SUPP. I S.C.R.
- A case of Bangalore Water Supply and Sewerage Board v. A. Rajappa, [1978)
2 SCC 213 (shortly hereinafter referred to as the Bangalore Water case). The
Bench of three judges in the case of Chief Conservator of Forests v. Jagannath
Maruti Kondhare, (supra) based on the decision of Bangalore Water case
came to the conclusion that 'Social Forestry Department' is covered by the
B definition of 'industry' whereas the two judges Bench decision in State of
Gujarat v. Pratamsingh Narsinh Parmar, (supra) took a different view.
As the cleavage of opinion between the two Benches of this Court
seems to have been on the basis of seven judges' Bench decision of this
Court in the case of Bangalore Water, the present case along with the other
C connected cases, in which correctness of the decision in the case of Bangalore
Water is doubted, has been placed before this Bench.
Various decisions rendered by this Court prior to and after the decision
in Bangalore Water, (supra) on interpretation of the definition of the word
'industry' under the Industrial Disputes Act, 1947 have been cited before us.
D lt has been strenuously urged on behalf of the employers that the expansive
meaning given to the word 'industry' with certain specified exceptions carved
out in the judgment of Bangalore Water, (supra) is not warranted by the
language used in the definition clause. It is urged that the Government and
its Departments while exercising its 'sovereign functions' have been excluded
from the definition of 'industry'. On the question of 'what is sovereign
E function', there is no unanimity in the different opinions expressed by the
judges in the Bangalore Water case. It is submitted that in a constitutional
democracy where sovereignty vests in the people, all welfare activities
undertaken by the State in discharge of its obligation under the Directive
Principles of State Policy contained in Part IV of the Constitution are
F 'sovereign functions'. To restrict the meaning of 'sovereign functions' to
only specified categories of so called 'inalienable functions' like Law and
Order, Legislation, Judiciary, Administration and the like is uncalled for. It
is submitted that the definition of 'industry' given in the Act is, no doubt,
wide but not so wide· as to hold it to include in it all kinds of 'systematic
organized activities' undertaken by the State and even individuals engaged in
G professions and philanthropic activities.
On behalf of the employers, it is also pointed out that there is no
unanimity in the opinions expressed by the judges in the Bangalore Water
case on the ambit of the definition of 'industry' given in the Act. Pursuant
H to the observations madt: by the judges in their different opinions in the
STATE OF U.P. v. JAi BIR SINGH [DHARMADHIKARI, J.]
27
judgment of Bangalore Water, (supra), the legislature responded and amended A
the Act by Industrial Disputes (Amendment) Act 1982. In the amended
definition, certain specified types of activities have been taken out of the
purview of the word 'industry'. The Act stands amended but the amended
provision redefining the word 'industry' has not been brought into force
because notification to bring those provisions into effect has not been issued B
· in accordance with sub-section (2) of Section I of the Amendment Act. The
amended definition thus remains on the statute unenforced for a period now
of more than 23 years.
On behalf of the employers, it is pointed out that all other provisions
of the Amendment Act of 1982, which introduced amendments in various C
other provisions of the Industrial Disputes Act have been brought into force
by issuance of a Notification, but the Amendment Act to the extent of its
substituted definition of 'industry' with specified categories of industries
taken out of its purview, has not been brought into force. Such a piecemeal
implementation to the Amendment Act, it is submitted, is not contemplated
by sub-section (2) of Section I of the Amendment Act. The submission made D
is that if in response to the opinions expressed by the seven judges in Bangalore
Water, case (supra), the legislature intervened and provided a new definition
of the word 'industry' with exclusion of certain public utility services and
welfare activities, the unamended definition should be construed and
understood with the aid of the amended definition, which although not brought E
into force is nonetheless part of the statute.
On behalf of the employees, learned counsel vehemently urged that the
decision in the case of Bangalore Water, (supra) being in the field as binding
precedent for more than 23 years and having been worked to the complete
satisfaction of all in the industrial field, on the principle of stare decisis, this F
Court should refrain from making a reference to a larger Bench for its
reconsideration. It is strenuously urged that upsetting the law settled by
Bangalore Water is neither expedient nor desirable.
It is pointed out that earlier an attempt was made to seek enforcement
of the amended Act through this Court [see: Aeltemesh Rein v. Union of G
India, [1988] 4 sec 54]. The Union came forward with an explanation that
for employees of the categories of industries excluded under the amended
definition, no alternative machinery for redressal of their service disputes,
-· has been provided by law and therefore, the amended definition was not
brought into force.
H
28
SUPREME COURT REPORTS [2005] SUPP. l S.C.R.
A
We have heard the learned counsel appearing on behalf of the employers
and on the other side on behalf of the employees at great length. With their
assistance, we have surveyed critically all the decisions rendered so far by
this Court on the interpretation of the definition of 'industry' contained in
Section 20) of the Act. We begin with a close examination of the decision
B in the case of Bangalore Water for considering whether a reference to a
larger Bench for reconsideration of that decision is required.
Justice Krishna Iyer who delivered the main opinion on his own behalf
and on behalf of Bhagwati and Desai 11 in his inimitable style has construed
the various expressions used in the definition of 'industry'. After .critically
C examining the previous decisions, he has recorded his conclusions thus:
D
E
F
G
H
"So we proceed to formulate the principles, deducible from our
discussion, which are decisive, positively a,nd negatively, of the identity
of 'industry' under the Act. We speak, not exhaustively, but to the
extent, covered by the debate at the bar and, to that extent,
authoritatively, until overruled by a la,rger Bench or superseded by
the legislative branch.
140. 'Industry', as defined in Section 20) and explained in Banerji,
(supra), has a wide import.
(a) Where (i) systematic activity, (ii), organized by co-operatio'n
between employer and employee (the direct and substantial element
is chimerical) (iii) for the production and/or distribution of goods and
services calculated to satisfy human wants and wishes (not spiritual
or religious but inclusive of material things. or services geared to
celestial bliss i.e. making, on a large scale or prasad or food), prima
facie, there is an 'industry' in that enterprise.
(b) Absence of profit motive or gainful ~bjective is irrelevant, be the
venture in the public, joint, private or other sector.
( c) The true focus is functional and the decisive test is the nature of
the activity with special emphasis on employer-employee relations.
.
'
(d) lfthe organization is a t~ade or business it does not cease to be.
one because of philanthropy animating the undertaking.
II
141. Although Section 2(j) uses words of the widest amplitude in its
/
..
,
STATE OF U.P. v. JAi BIR SINGH [DHARMADHIKARI, J.]
29
two limbs, their meaning cannot be magnified to over reach itself.
A
(a) 'Undertaking' must suffer a contextual and associational shrinkage
as explained in Banerji (supra) a!1d in this judgment; so also, service,
calling and the like. This yields the inference that all organized activity
possessing the triple ~lements in I (supra), although not trade or
business, may still be 'industry' provided the nature of the activity, B
viz..the employef-employee basis, bears resemblance to what we find
in trade or business. This takes into the fold of 'industry' undertakings,
callings and services, iidventures 'analogoos to the carrying on of
trade or business'. All features, other than the methodology of carrying
on the activity viz. in organizing the co-operation between employer C
and employee may be .dissimilar. It does not matter, if on the
employment terms there is analogy.
III
142. Application of these guidelines should not stop short of their D
logical reach by invocation of creeds, cults or inner sense of
, incongruity or outer sense of motivation for or resultant of the
economic operations. The ideology of the Act being industrial peace,
regulation and resolution of industrial disputes between employer and
workman, the range of this statutory ideology must inform the reach
or the statutory definition. Nothing less, nothing more.
E
(a) The consequences are (i) professions, (ii) clubs, (iii) educational
institutions, (iv) co-operative, (v) research institutes (vi) charitable
projects and (vii) other kindred adventure, if they fulfil the triple tests
listed in I (supra), cannot be exempted from the scope of Section 20).
(b) A restricted category of professions, clubs, co~operative and even F
· gurukulas and title research labs, may qualify for exemption if, in
imple ventures, substantially and, going by the dominant nature
criterion, substantively, no employees are 'entertained but in minimal
matters, marginal employees are hired without destroying the nonemployee character of the unit.
G
(c) If, in a pious or altruistic mission many employ themselves, free
or for small honoraria or like return, mainly drawn by sharing in the
purpose or cause, such as lawyers volunteering to run a free legal
services clinic or doctors serving in their spare hours in a free medical
centre or ashramites working at the bidding o{,-the holiness, divinity H
or like central personality, and the services are supplied free or at
30
SUPREME COURT REPORTS (2005] SUPP. I S.C.R.
A
nominal cost and those who serve are not engaged for remuneration
or on the basis of master and servant relationship, then, the institution
is not an industry even if stray servants, manual or technical, are
hired. Such eleemosynary or like undertaking alone are exempt - not
other generosity, compassion, developmental passion or project.
B
IV
c
D
E
F
143. The dominant nature test:
(a) Where a complex of activities, some .of which qualify for
exemption, others not, involves employees on the total undertaking,
some of whom are not 'workmen' as in the University of Delhi case
(supra) or some departments are not productive of goods and services
if isolated, even then, the predominant nature of the services and the
integrated nature of the departments as explained in the Corporation
of Nagpur (supra), will be the true test. The whole undertaking will
be 'industry' although those who are not 'workmen' by definition
may not benefit by the status.
(b) Notwithstanding the previous clauses, sovereign functions, strictly
understood, (alone) qualify for exemption, not the welfare activities
or economic adventures undertaken by government or statutory bodies.
(c) Even in departments discharging sovereign functions, if there are
units which are industries and they are substantially severable, then
they can be considered to come within Section 2G).
(d) Constitutional and competently enacted legislative provisions may
well remove from the scope of the Act categories which otherwise
may be covered thereby.
v
144. We overrule Safdarjzmg, (supra), Solicitors', case (supra),
Gymkhana, (supra), Delhi University, (supra), Dhanrajgirji Hospital,
G
(supra) and other ruling whose ratio runs counter to the principles
enunciated above, and Hospital Mazdoor Sabha, (supra) is hereby
rehabilitated."
[Underlining for emphasis]
H
What is to be noted is that the opinion of Krishna Iyer J on his own
\ .. ,
STA TE OF U.P. v. JAi BIR SINGH [DHARMADHIKARI, J.]
31
behalf and on behalf of Bhagwati and Desai JJ was only generally agreed to A
by Beg CJ who delivered a separate opinion with his own approach on
interpretation of the definition of the word 'industry'. He agreed with the
conclusion that Bangalore Water Supply and Sewerage Board is an 'industry'
and its appeal should be dismissed but he made it clear that since the judgment
was being delivered on his last working day which was a day before the day B
he was to retire, he did not have enough time to go into a discussion of the
various judgments cited, particularly on the nature of sovereign functions of
the State and whether the activities in discharge of those functions would be
covered in the definition of 'industry'. What he stated reads thus:
"165. I have contended myself with a very brief and hurried outline C
of my line of thinking partly because I am in agreement with the
conclusions of my learned brother Krishna Iyer and I also endorse his
reasoning almost wholly, but even more because the opinion l have
dictated just now must be given today if I have to deliver it at all.
From tomorrow I cease to have any authority as a Judge to deliver
it. Therefore, I have really no time to discuss the large number of D
cases cited before us, including those an what are known as
"sovereign" functions'.
Beg CJ clearly seems to have dissented from the opinion of his other
three brethren on excluding only certain State - run industries from the purview
of the Act. According to him, that is a matter purely of legislation and not E
of interpretation. See his observations contained in paragraph 163:
"163. I would also like to make a few observations about the socalled "sovereign" functions which have been placed outside the
field of industry. I do not feel happy about the use of the term
"sovereign" here. I think that the term 'sovereign' should be reserved, F
technically and more correctly, for the sphere of ultimate decisions.
Sovereignty operates on a sovereign plane of its own as I suggested
in Keshavananda Bharat/ 's case supported by a quotation from Earnest
Barker's Social and Political Theory. Again, the term "Regal", from
which the term ''sovereign'' functions appears to be derived, seems G
to be a misfit in a Republic where the citizen shares the political
sovereignty in which he has even a legal share, however small,
inasmuch as he exercises the right to vote. What is meant by the use
of the term "sovereign", in relation to the activities of the State, is
more accurately brought out by using the term "governmental"
functions although there are difficulties here also inasmuch as the H
32
A
B
SUPREME COURT REPORTS [2005) SUPP. l S.C.R.
Government has entered largely new fields of industry. Therefore,
only those services which are governed by separate rules and
constitutional provisions, such as Articles 310 and 311 should, strictly
speaking, be excluded from the sphere of industry by necessary
implication. ''
[Emphasis supplied]
Since Beg CJ was to retire on 22.2.1978, the Bench delivered the
judgment on 21.2.1978 with its conclusion that the appeal should be dismissed.
The above conclusion was unanimous but the three Hon. Judges namely
Chandrachud Jon behalf of himself and Jaswant Singh J. speaking for himself
C and Tulzapurkar JJ., on the day the judgment was delivered i.e. as on
21.2.1978, had not prepared their separate opinions. They only declared that
they would deliver their separate opinions later. This is clear from paragraph
170 of the judgment which reads thus:
D
E
"We are in respectful agreement with the view expressed by Krishna
Iyer, J. In his critical judgment that the Bangalore Water Supply and
Sewerage Board appeal should be dismissed. We will give our reasons
later indicating the area of concurrence and divergence, if any, on
the various points in controversy on which our learned Brother has
dwel('.
1
On the retirement of Beg CJ, Chandrachud J., took over as the CJ and
he delivered his separate opinion on 7.4.1978 whkh was obviously neither
seen by Beg CJ nor dealt with by the other three judges:' Krishna Iyer,
Bhagwati and Desai JJ. As can be seen from the contents of the separate
opinion subsequently delivered by Chandrachud CJ, (as he then was), he did
F not fully agree with the opinion of Krishna Iyer J. that the definition of
'industry' although of wide amplitude can be restricted to take out of its
purview certain sovereign functions of the State limited to its 'inalienable
functions' and other activities which are essentially for self and spiritual
attainments. Chandrac~ud J. seems to have projected a view that all kind's of
G organized activities giving rise to employer and employee relationship are
covered by the wide definition of 'industry' and its scope cannot be restricted
by identifxin& and including certain types of industries and leaving some
other types impliedly outside its purview.
A separate opinion was delivered much later by Jaswant Singh J. for
H himself and Tulzapurkar J., after they had gone through the separate opinion
·" J
l
-~
·f
I
(
STATE OFU.P. v. JAi BIR SINGH [DHARMADHIKARI, J.]
33
given by Chandrachud CJ (as he then was). The opinion of Jaswant Singh for A
himself and Tulzapurkar J. is clearly a dissenting opinion in which it is said
that they are not agreeable with categories 2 and 3 of the Charities excluded
by Brother Krishna Iyer J.
In the dissenting opinion of the two judges, the definition covers only
such activities 'systematically and habitually carried on commercial lines for B
production of goods or for rendering material services to the community. '
The dissenting opinion is on the lines of the opinion of Gajendragadkar J. in
the case of State of Bombay v. Hospital Mazdoor Sabha, AIR(1960) SC 866
where it was observed that although the definition in the Act is very wide,
'a line has to be drawn in a fair and just manner' to exclude some callings C
of services or undertakings which do not fit in with the provisions of the Act.
We may quote from the dissenting opinion of Jaswant Singh J. (for -himself
arid for Tulzapurkar J,):
"However, bearing in mind the collocation of the terms in which the
definition is couched and applying the doctrine of noscitur-a-sociis D
(which as pointed out by this Court in State of Bombay v. The Hospital
Mazdoor Sabha, means that, when two or more words which are
susceptible of analogous meaning are coupled together they are
understood to be used in their cognate sense. They take as it were
their colour from each other, that is, the more general is restricted to
a sense analogous to a less general. Expressed differently, it means E
that the meaning of a doubtful word may be ascertained by reference
to the meaning of words associated with it), we are of the view that
despite the width of the definition it could not be the intention of the
Legislature that categories 2 and 3 of the charities alluded to by our
learned brother Krishna Iyer in his judgment, hospitals run on F
charitable basis or as a part of the functions of the Government or
local bodies like municipalities and educational and research
institutions whether -run by private entities or by Government and
liberal and learned professions like that of doctors, lawyers and
teachers? the pursuit of which 1s dependent upon an individual's own
education, intellectual attainments and special expertise should fall G
within the pale of the definition. We are inclined to think that the
definition is limited to those activities systematically 'or habitually
undertaken on commercial lines by private enterpreneurs with the
cooperation of employe,es for the production or distribution of goods
or for the rendering 'of material services to the community_ at large or H
A
B
34
SUPREME COURT REPORTS [2005] SUPP. l S.C.R.
a part of such community. It is needless to emphasize that in the case
ofliberal professions, the contribution of the usual type of employees
employed by the professions to be value of the end product (viz.
advice and services rendered to the client) is so marginal that the end
product cannot be regarded, as the fruit of the cooperation between
the professional and his employees.''
The judges delivered different opinions in the case of Bangalore Water,
(supra) at different points of time and in some cases without going through
or having an opportunity of going through the opinions of other judges. They
have themselves recorded that the definition clause in the Act is so wide and
C vague that it is not susceptible to a very definite and precise meaning. In the
opinions of all of them it is suggested that to avoid reference of the vexed
question of interpretation to larger Benches of the Supreme Court it would
be better that the legislative intervenes and clarifies the legal position by
simply amending the definition of 'industry'. The legislature did respond by
amending the definition of 'industry' but unfortunately 23 years were not
D enough for the legislature to provide Alternative Disputes Resolution Forums
to the employees of specifies categories of industries excluded from the
amended definition. The legal position thus continues to be unclear and to a
large extent uncovered by the dedsion of Bangalore Water case as well.
Krishna Iyer J. himself, who delivered the main judgment in the
E Bangalore Water case, at various places in his opinion expressed that the
attempt made by the Court to impart definite meaning to the words in the
wide definition of 'industry' is only a workable solution until a more precise
definition is provided by the legislature. See the following observations:
F
"Our judgment here has no pontifical flavour but seeks to serve the
future hour till changes in the law or in industrial culture occur.
G
H
3. Law, especially industrial law, which regulates the rights and
remedies of the working class, unfamiliar with the sophistications of
definitions and shower of decisions, unable to secure expert legal
opinion, what with poverty pricing them out to the justice market and
denying them the staying power to withstand the multi-decked litigative
process, de facto denies social justice if legal drafting is vagarious,
definitions indefinite and Court rulings contradictory. ls it possible,
that the legislative chambers are too pre-occupied with other pre~sing
business to listen to Court signals ca/ling/or clarification ambiguous
..
STA TE OF U.P. v. JAI BIR SINGH [DHARMADHIKARI, J.]
35
clauses? A careful, prompt amendment of Section 20) would have A
pre-empted this docket explosion before tribunals and Courts. This
Court, perhaps more than the legislative and Executive branches, is
deeply concerned with law's delays and to devise a prompt delivery
system of social justice.''
{Emphasis added] B
It is to be noted further that in the order of reference made to the seven
judges' Bench in the Bangalore Water Supply and Sewerage Board Case, the
judges referring the case had stated thus:
" ... the chance to confusion from the crop of case in an area where C
the common man has to understand and apply the law makes it
desirable that there should be a comprehensive, clear and conclusive
declaration as to what is an industry under the Industrial Disputes
Act as it now stands. Therefore, we think it necessary to place this
case before the learned Chief Justice for consideration by a larger D
• Bench. If in the meantime the Parliament does not act, this Court
may have to illumine the twilight area of law and help the industrial
community carry on smoothly. "
[Emphasis supplied}
In the separate opinion of other Hon. Judges in Bangalore Water case, E
similar observations have been made by this Court to give some precision to
the very wide definition of 'industry'. It was an exercise done with the hope
of a suitable legislative change on the subject which all the judges felt was
most imminent and highly desirable. See the following concluding remarks:-
" We conclude with diffidence because Parliament, which has the
commitment to the political nation to legislate promptly in vital areas
like Industry and Trade and articulate the welfare expectations in the
'conscience' portion of the Constitution, has hardly intervened to restructure the rather clumsy, vaporous and tall-and-dwarf definition or
F
tidy up the scheme although judicial thesis and anti-thesis, disclosed G
in the two-decades-long decisions, should have produced a legislative
synthesis .becoming of a welfare state and socialistic society, in a
world setting where I.L.O. norms are advancing and India needs
updating."
H
36
SUPREME COURT REPORTS (2005] SUPP. I S.C.R.
A
The separate opinion of Beg J. has the same refrain and he also observes
that the question can be solved only by more satisfactory legislation.
Chandrachud CJ (as he then was) in his separate opinion delivered on 7.4.1978
concurred partly but went a step further in expanding the definition of
'industry'.