# THE AHMEDABAD TEXTILE INDUSTRY'S RESEARCH ASSOCIATION v. THE STATE OF BOMBAY AND OTHERS - **Citation:** [1961] 2 S.C.R. 480 - **Court:** Supreme Court of India - **Decided:** 1961 - **Case number:** Civil Appeal No. 22 of 1959 - **Bench:** P. B. Gajendragadkar, A. K. Sarkar, K. N. Wanchoo - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-ahmedabad-textile-industry-s-research-association-v-the-state-of-bombay-and-1965 - **Pages:** 9 ## Headnote Industrial Dispute-Research Institute, if an industry- "lndustry", Meaning of-Test-Industrial Disputes Act, z947 (I4 of z947J, s. Z(J). The appellant association was founded in 1947 and the object of the founders was to establish a textile research institute for the purpose of carrying on research and other scientific work in connection with the textile trade or industry and other trade and industry allied therewith or necessary thereto. The cost of maintaining the association was met partly by members and partly by grants from Government and other sources. The activity of the association was systematically undertaken; its object was to render material services to a part of the community, namely, member-mills, the material services being the discovery of process of manufacture etc., with a view to secure greater efficiency, rationalisation and reduction of costs of the member-mills; it was being carried on with the help of employees some of whom were technical personnel on payment of remuneration, they had no rights in the results of the research carried on by them as employees of the Association which were the property of the Association and it was organised or arranged in the manner in which a trade or business is generally orgamsed. Disputes arose between the appellant and its workmen which related to wage-scale and dearness allowance and payment of house-rent allowance which was referred for adjudication. The appellant questioned the reference on the ground that the appellant was not an industry and that the Tribunal was wrong in holding that the appellant was included within the definition of theword "Industry" of s. 2(j) of the Industrial Disputes Act, and contended that it was a research centre in the nature of educational activity and therefore had no analogy with activities in the nature of trade or business. The question therefore was whether appellant was an undertaking within the meaning of s. 2(j) of the Industrial Disputes Act and its activities satisfied the tests laid down in State of Bombay v. Hospital Mazdoor Sabha. HelrJ, that the manner in which the activity in question was organised or arranged, the condition of the co-operation between employer and employee necessary for its success and its object to 2 S.C.R. SUPREME COURT REPORTS 481 render material service to the community could be regarded as 1960 some of the features which would be distinctive activities to which s. 2 (j) of the Act could be applied. The Ahmedabad h . h . h" h h . t" Te,.We Industry's In t e lllStant case, t e manner m w ic t e associa ion was R h organised clearly shows that the undertaking as a whole was in eseare · Association the nature of business and trade organised with the object of discovery of ways and means by which member-mills may obtain Th 5 ~· 1 larger profits in connection with their industries. The activity n be ; e 0~{ of the association was clearly within the definition of the word °"' ay ers "Industry" in s. 2(j) of the Industrial Disputes Act and could not be assimilated to a purely educational institution and satisfies th.e test laid down in the State of Bombay v. Hospital Mazdoor Silhha.. Thus the Association is an undertaking within the meaning of s. 2(j) of the Act. When this dispute arose between the Association and its employees it was an industrial dispute and could be properly referred for adjudication under the Act. Tiu; State of Bombay v. The Hospital Mazdoor Sabha, [1960) 2 S.C.R. 866 followed. The Federated States School Teachers' Association v. The State of Victoria, (1929) 41 C.L.R. 569 not applicable. ## Text November I7. 480 SUPREME COURT REPORTS [1961] THE AHMEDABAD TEXTILE INDUSTRY'S RESEARCH ASSOCIATION v. THE STATE OF BOMBAY AND OTHERS (P. B. GAJENDRAGADKAR, A. K. SARKAR and K. N. WANCHOO, JJ.) Industrial Dispute-Research Institute, if an industry- "lndustry", Meaning of-Test-Industrial Disputes Act, z947 (I4 of z947J, s. Z(J). The appellant association was founded in 1947 and the object of the founders was to establish a textile research institute for the purpose of carrying on research and other scientific work in connection with the textile trade or industry and other trade and industry allied therewith or necessary thereto. The cost of maintaining the association was met partly by members and partly by grants from Government and other sources. The activity of the association was systematically undertaken; its object was to render material services to a part of the community, namely, member-mills, the material services being the discovery of process of manufacture etc., with a view to secure greater efficiency, rationalisation and reduction of costs of the member-mills; it was being carried on with the help of employees some of whom were technical personnel on payment of remuneration, they had no rights in the results of the research carried on by them as employees of the Association which were the property of the Association and it was organised or arranged in the manner in which a trade or business is generally orgamsed. Disputes arose between the appellant and its workmen which related to wage-scale and dearness allowance and payment of house-rent allowance which was referred for adjudication. The appellant questioned the reference on the ground that the appellant was not an industry and that the Tribunal was wrong in holding that the appellant was included within the definition of theword "Industry" of s. 2(j) of the Industrial Disputes Act, and contended that it was a research centre in the nature of educational activity and therefore had no analogy with activities in the nature of trade or business. The question therefore was whether appellant was an undertaking within the meaning of s. 2(j) of the Industrial Disputes Act and its activities satisfied the tests laid down in State of Bombay v. Hospital Mazdoor Sabha. HelrJ, that the manner in which the activity in question was organised or arranged, the condition of the co-operation between employer and employee necessary for its success and its object to 2 S.C.R. SUPREME COURT REPORTS 481 render material service to the community could be regarded as 1960 some of the features which would be distinctive activities to which s. 2 (j) of the Act could be applied. The Ahmedabad h . h . h" h h . t" Te,.We Industry's In t e lllStant case, t e manner m w ic t e associa ion was R h organised clearly shows that the undertaking as a whole was in eseare · Association the nature of business and trade organised with the object of discovery of ways and means by which member-mills may obtain Th 5 ~· 1 larger profits in connection with their industries. The activity n be ; e 0~{ of the association was clearly within the definition of the word °"' ay ers "Industry" in s. 2(j) of the Industrial Disputes Act and could not be assimilated to a purely educational institution and satisfies th.e test laid down in the State of Bombay v. Hospital Mazdoor Silhha.. Thus the Association is an undertaking within the meaning of s. 2(j) of the Act. When this dispute arose between the Association and its employees it was an industrial dispute and could be properly referred for adjudication under the Act. Tiu; State of Bombay v. The Hospital Mazdoor Sabha, [1960) 2 S.C.R. 866 followed. The Federated States School Teachers' Association v. The State of Victoria, (1929) 41 C.L.R. 569 not applicable. CIVIL APPELLATE JURISDICTION. Civil Appeal No. 22 of 1959. Appeal by Special Leave from the Award dated the 31st October, 1957, of the Industrial Tribunal, Bombay in Reference (I. T.) No. 141 of 1957. M. C. Setalvad, Attorney-General for India, J. B. Melda and J. N. Shroff for the Appellant. Vidya Dhar Mahajan, K. L. Hathi and R.H. Dhebm· for Respondent No. 1. N. C. Shah, President, Engineering Mazdoor Sabha for Respondent No. 3. 1960. November 17. The Judgment of the Court was delivered by WANCHOO, J.-This is an appeal by special leave wanehoo J. against the award of the Industrial Tribunal, Bombay. There was a dispute between the appellant and its workmen, which was referred by the Government of Bombay for adjudication. It related to the wagescale and dearness allowance Of certain employees of the appellant and also to the payment of house-rent 61 482 SUPREME COURT REPORTS [1961] '9~ 0 allowance. The main contention of the appellant The Ahm•dabad before the Tribunal was that the reference was not T•xtile fodus,,y's competent under the Industrial Disputes Act, No. XIV Rma•·c.h of 1947 (hereinafter called the Act), as the appellant Association was not an industry within the meaning of the Act. The ;;ate of The Tribunal reject~d this contention. and held th.at Bombay & Others the reference was vahd. It then wont mto the merits of the dispute, with which we are however not conWanchoo /. cerned in the present appeal. The only point urged before us on behalf of the appellant is that the Tribunal was wrong in holding that the appellant was included within the definition of the word "industry" and therefore the reference was competent. "Industry" is defined in s. 2(j) of the Act as meaning any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen. The main question canvassed before the Tribunal was whether the appellant was an undertaking within the meaning of s. 2(j). The question as to what is an undertaking for the purpose of s. 2(j) has come up for consideration before this Court in a number of cases, the last of which is The State of Bombay v. The Hospital Mazdoor Sabha('), where a question arose whether a hospital run by government was an undertaking within the meaning of s. 2(j). It was pointed out in that case that though s. 2(j) used words of very wide denotation, a line would have to be drawn in a fair and just manner so as to exclude some callings, services or undertakings. If all the words used therein were given their widest meaning, all services and all callings would come within the purview of the definition including those services rendered by a servant purely in a personal or domestic matter and even in a casual way. It had therefore to be considered where the line should be drawn and what limitations should be reasonably implied in interpreting the wide words used in s. 2(j). Further, the contention that the word "undertaking" used in s. 2(j) should be treated as ,analogous to trade or business and therefore the undertaking in question must involve an economic activity in which capital is invested c•l [196oJ 2 s.c.R. 866. • 2 S.C.R. SUPREME COURT REPORTS 483 and which is carried on for profit or for the producr96o tion or sale of goods by the employment of labour was Th Al a b a not accepted in full and it was pointed out that an Tex;ile ;;;;u~t:y's activity could and must be regarded as an industry Research even though in its carrying on profit motive might be Association absent. Further it was held that absence of investv. ment of any capital would not necessarily mean that The State of d t k. t . l d d 'th' 2(') Bombay & Others an un er a. mg was no me n e w1 m s. J . That case then proceeded to consider what kinds of wanchoo J. activities could be excluded from the meaning of "undertaking" for purposes of s. 2(j). It was pointed out that activities of government which could be properly described as sovereign activities were outside the scope of s. 2(j), as they were functions which a constitutional government could and must undertake for governance and which no private citizen could undertake. These sovereign activities were defined in the words of Lord VVatson as "the primary and inalienable functions of a constitutional government" but would not necessarily include an activity undertaken by government in pursuit of its welfare policies. It was also pointed that though in the absence of profit motive an activity might be regarded as an undertak-. ing, the presence of such motive would be a relevant circumstance in considering whether the undertaking was an industry within the meaning of s. 2(j). The case then went on to consider the attributes the presence of which would make an activity an undertaking under s. 2(j) on the ground that it was analogous to trade or business. It was pointed out that it was difficult to state these attributes definitely or exhaustively but as a working principle it was said that an activity systematically or habitually undertaken for the production or distribution of goods or for the rendering of material services to the community at large or a part of such community with the help of employees would be an undertaking within the meaning of the Act provided it was carried on in an organised manner like trade or business. Thus the manner in which the activity in question is organised or arranged, the condition of the co-operation between employer and employee necessary for its success ./ 2 S.C.R. SUPREME COURT REPORTS 485 maintain laboratories, work-shops or factories and r96o conduct and carry on experiments; to prepare, edit, Th Ah d b d print,. publish, issue, acquire and circulate books, Tex:ile 1:;u:t;y's papers, periodicals etc. and to establish, form and Research maintain museums, libraries and collections of literaAssociation ture, statistics, scientific data and other information v. relating to the industry and to disseminate the same The State 01 b f d. d 1. fl . Bombay & Others y means o rea mg papers, e ivery o ectures, gwing of advice and the appointment of advisory officers; wanchoo 1. to employ or retain skilled, professional or technical advisers or workers in connection with the objects of the association on payment of such fees or remuneration as might be thought expedient; to found, aid or maintain schools or colleges for textile research and endow scholarships and bursaries, to support students engaged in research work; and to encourage the discovery of, and investigate and make known the nature and merits of inventions, improvements, processes, materials and designs whfoh may be capable of being used· by members of the association for any of the purposes of the said industry. It will thus be seen that though the object of the association was research, that research was direc.ted with the idea of helping the member mills to improve methods of production in order to secure greater efficiency, rationalisation and reduction of costs. The basis therefore of the research carried on by the appellant was to help the textile industry and particularly the member mills in making larger profits and ,this was to be done primarily by the employment of technical personnel .on payment of remuneration. Reference in this connection may be made tor. 13 of the Rules and Regulations of the appellant-association, which lays down that any member of the association who considers that its interests are prejudicially affected by any research proposed to be undertaken by the association may object to government against the undertaking of the proposed research. Rule 13 read with r. 45 also envisages that if such an objection is taken the proposed research will not be carried on till the objection is decided by the government, though it is provided that the government may direct the research to be carried 486 SUPREME COURT REPORTS [1961] i96o on during the time the objection is pending consideration of government. The administration of the appelThe Ahmedabad ]ant-association is vested in a council in which the Tex file Industry's · •t · t f th t t · f th 'l Resea>eh maJon y cons1s s o e represen a ives o e text1 e Association industry. The research is carried on, as already indiv. cated, under the supervision of a Director of Rene State of search, by technical pernonnel, who are generally paid Bombay & Othm employees of the appellant.association; but all such technical personnel employed by the association have Wanchoo ]. . d k" b to give an un erta mg to o serve strict secrecy in respect of all researches undertaken. They are also to give an undertaking not to use or take advantage in their private capacity of special knowledge so obtained or put into operation any invention or process of which they might have obtained knowledge as aforesaid. It is also provided that any invention or process can be put into operation to the extent to which, and as and when it may be permitted to be so done in common with all members of the association in strict accordance with the Hules and Hegulations made by the council. The effect of this provision in r. 42 of the Hules and Regulations is that the result of research is the properLy not of the person making the research but of the association, to be used by its members in accorrlance with the Hules and Regulations made by the Council. Then r. 44 provides that every employee of the association engaged on research shall contract in writing that he will in consideration of his employment hold exclusively for the benefit of and assigned to the association at the cost of the association all rights and ownership in any discoveries, inventions, designs or other results arising in the course of such employment upon such research. These provisions make it clear that though the appellant. association has been established for purposes of research, the main object of the research is the benefit of the members of the association. Tho cost of maintaining the association is met partly by members and partly by grants from government and other sources. lt will thus be clear that in effect the association has been established to carry on research with respect to textile industry jointly for the benefit of its members; .... / I \ ' 2 s.c.R. SUPREME COURT REPORTS 487 but for this, each member-mill might have had to 7960 establish its o~n res~a;ch depai:tment,. which would The Ahmedabad be a part of its activity. Can it be said under these Textile Industry's circumstances that this is an undertaking which is Research purely of educational character and therefore covered Association by the Australian case mentioned above? We are of v. opinion, considering the objects and the Rules and The State of R 1 t. f th 11 t · t• th t •t Bombay &- Others egu a 10ns o , e appe an -associa ion, a i answers the tests laid down in the Hospital case (1) and wanchoo J. must be held to be an undertaking within the meaning of s. 2(j). It is an activity systematically undertaken; its object is to render material services to a part of the community (namely, member-mills)-the material services being the discovery of processes of manufacture etc. with a view to secure greater efficiency, rationalisation and reduction of costs of the member-mills; it is being carried on with tbe help of employees (namely, technical personnel) who have no rights in the results of the research carried on by them as employees of the association; it is organised or arranged in a manner in which a trade or business is generally organised; it postulates co-operation between employers (namely, the association) and the employees (namely, the technical personnel and others) which is necessary for its success, for the cn'lployers provide monies for carrying on the activities of the association and its object clearly is to render material service to a part of the community by discovery of processes of manufacture etc. with a view to secure greater efficiency, rationalisation and reduction of costs. The activities of this association therefore have in our opinion litt.le in common with the activities of what may be called a purely educational institution. It is true that the employees who have raised the present industrial dispute do not actually contribute to the research, which is carried on under the appellant-association; but the manner in which the association is organised and the fact that the technical personnel who carry on the research are also employees who have no rights in the results of their research, clearly 8how that the undertaking as a whole is in the nature of (1) [1960] 2 S.C.R. 866. 488 SUPREME COURT REPORTS (1961) '960 business and trade organised with the object of Th• Ahmedabad di~covering w~ys and means _by which the memberTextile Industry's ~mlls m~y obtam large~ profits m connection with their Research mdustrres. In these circumstances we have no hesiAssociation tation in coming to the conclusion that the appellantv. . association is carrying on an activity which clearly The State 01 comes within the definition of the word "industry" in Bombay &- Others 2( ') d h" h t b . .1 d _ s. J an w ic canno e ass1m1 ate to a purely wanchoo 1. educational institution. In this view of the matter, when a dispute arose between the appellant and some of its employees, it was an industrial dispute and could be properly referred for adjudication under the Act. November r7. The appeal fails and is hereby dismissed with