# UANGALORE WATER-SUPPLY & SEWERAGE BOARD, ETC v. R. RAJAPPA & OTHERS

- **Citation:** [1978] 3 S.C.R. 207
- **Court:** Supreme Court of India
- **Decided:** 1978-02-21
- **Case number:** Writ Petitions viz. Nos. 868 and 2439 of 1973
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/uangalore-water-supply-sewerage-board-etc-v-r-rajappa-others-7324
- **Pages:** 86

## Headnote

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207
.UANGALORE WATER-SUPPLY & SEWERAGE BOARD, ETC.
A
v.
R. RAJAPPA & OTHERS
February 21, 1978
&
April 7, 1978 *
,fM. H. BEG, C.J., Y. V. CHANDRACHUD, P. N.
BHAGWATI,
V. R.
KRISHNA IYER, JASWANT SINGH, v. D. TULZAPURKAR AND
D. A. DESAI, JJ .]
"INDUSTRY" Industry in Section 2(j) of the Industrial Disputes Act,
1941-Triple test to be applied and the doniinant nature
test-Whether the
statutory Body performing what is in essence regal functions by providing the
basic amenties 'to the citizens is outside the scope of the definition~
'fhe Tespondent employees were fined by the Appellant Board for misconduct and various sums were recovered from them. Therefore, they filed a Claims
Application No. 5 /72 under Section 33C (2) of tho Industrial Disputes Act,
. alleging that the said punishment was imposed in violation of the principles of
natural justice. The appellant Board raised a preliminary objection before the
Labour Court that the Board, a statutory body performing \vhat is in esseilce
a regal function by providing the basic amenities to the citizens, is
not an
industry
within the
meaning of the expression under section 2(j) of the
Industrial Disputes Act and consequently the employees were not workmen
and the Labour Court had no jurisdiction to decide the claim, of the workmen. This cbjection being over-ruled, the appellant Board filed two Writ
Petitions viz. Nos. 868 and 2439 of 1973 before the •Kamataka High Court at
Bangalore.
The Division Bench of that High Court dismissed the petitions
and held that the appellant Board is "industry" within the meaning
of the
expression under section 2(j) of the
Industrial
Disputes Act,
1947. The
appeals by Special Leave, considering "the chances of confusion from the crop
of cases in an area where the common man has to understand and apply the
law and the desirability that there should be
1 t}: comprehensive, clear and conclu-
~ive declaration as to what is an industry under the Industrial Disputes Act
as it stands'' ~·-ere placed for consideration by a larger Bench.
HELD : Per M. H. Beg, C.J. (concurring with Bhag,vati, Krishna Iyer and
Desai, JJ.)
1. The term "analogous to the trade or business" could not cut down the
·~cope of the term "industry". The said words can reasonably mean only activity which results in goods made and manufactured or service rendered which
-are capable of being converted into saleable ones. They must be capable of
entering the \vorld of "res comniercium", although they may be kept out of the
market for some reason. It is not the motive of an activity in making goods
or running a service but the possibility of making them
marketable
if
one
who makes goods or renders service so desires, that should determine ·whether
the activity lies within the domain or circle of industry.
But eveii thls may
not be always a satisfactory test.
By this test the type o[ services which ·are
rendered purely for the satisfaction of spiritual or psychological urges of persons rendering those services
would be
excluded. Wilenever an industrial
dispute \vould arise between either employers and their wo1kmen or between
w·orkmen and \Vorkmen, it should be considered an area whhin the sphere of
~'industry" but not otherwise. In other words, the nature of the nctivity \Vlll
(•be dctermin~d by the conditions W'hich give rise to the likelihood of the occur-
. rence of such disputes and their actual occurrence in the sphere.
[220D, G, 221A-B]
*Judgn1ents published in the order and date as delivered.
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208
SUPREME COURT REPORTS
[1978] 3 S.C.R·
"D. N. Banerje'.s case [1953] SCR 302; -Corporation vf City of Nagpur v.
Its Employees [1960] 2 SCR 942; State of Bombay and Otherr v. The Hospital
Mazdoor Sabha and Others [1960] 2 SCR 866 referred to and followed.
3. The term "sovereign should be reserved technically and more correctly
for the sphere of ultimate decisions. Sovereignty operates on ai sovereign pfane
of its own.
Only those services which are governed by separate
r

## Text

_Characters 0–39,652 of 265,533. This is a partial read: ask again with offset=39652 for what follows._

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207
.UANGALORE WATER-SUPPLY & SEWERAGE BOARD, ETC.
A
v.
R. RAJAPPA & OTHERS
February 21, 1978
&
April 7, 1978 *
,fM. H. BEG, C.J., Y. V. CHANDRACHUD, P. N.
BHAGWATI,
V. R.
KRISHNA IYER, JASWANT SINGH, v. D. TULZAPURKAR AND
D. A. DESAI, JJ .]
"INDUSTRY" Industry in Section 2(j) of the Industrial Disputes Act,
1941-Triple test to be applied and the doniinant nature
test-Whether the
statutory Body performing what is in essence regal functions by providing the
basic amenties 'to the citizens is outside the scope of the definition~
'fhe Tespondent employees were fined by the Appellant Board for misconduct and various sums were recovered from them. Therefore, they filed a Claims
Application No. 5 /72 under Section 33C (2) of tho Industrial Disputes Act,
. alleging that the said punishment was imposed in violation of the principles of
natural justice. The appellant Board raised a preliminary objection before the
Labour Court that the Board, a statutory body performing \vhat is in esseilce
a regal function by providing the basic amenities to the citizens, is
not an
industry
within the
meaning of the expression under section 2(j) of the
Industrial Disputes Act and consequently the employees were not workmen
and the Labour Court had no jurisdiction to decide the claim, of the workmen. This cbjection being over-ruled, the appellant Board filed two Writ
Petitions viz. Nos. 868 and 2439 of 1973 before the •Kamataka High Court at
Bangalore.
The Division Bench of that High Court dismissed the petitions
and held that the appellant Board is "industry" within the meaning
of the
expression under section 2(j) of the
Industrial
Disputes Act,
1947. The
appeals by Special Leave, considering "the chances of confusion from the crop
of cases in an area where the common man has to understand and apply the
law and the desirability that there should be
1 t}: comprehensive, clear and conclu-
~ive declaration as to what is an industry under the Industrial Disputes Act
as it stands'' ~·-ere placed for consideration by a larger Bench.
HELD : Per M. H. Beg, C.J. (concurring with Bhag,vati, Krishna Iyer and
Desai, JJ.)
1. The term "analogous to the trade or business" could not cut down the
·~cope of the term "industry". The said words can reasonably mean only activity which results in goods made and manufactured or service rendered which
-are capable of being converted into saleable ones. They must be capable of
entering the \vorld of "res comniercium", although they may be kept out of the
market for some reason. It is not the motive of an activity in making goods
or running a service but the possibility of making them
marketable
if
one
who makes goods or renders service so desires, that should determine ·whether
the activity lies within the domain or circle of industry.
But eveii thls may
not be always a satisfactory test.
By this test the type o[ services which ·are
rendered purely for the satisfaction of spiritual or psychological urges of persons rendering those services
would be
excluded. Wilenever an industrial
dispute \vould arise between either employers and their wo1kmen or between
w·orkmen and \Vorkmen, it should be considered an area whhin the sphere of
~'industry" but not otherwise. In other words, the nature of the nctivity \Vlll
(•be dctermin~d by the conditions W'hich give rise to the likelihood of the occur-
. rence of such disputes and their actual occurrence in the sphere.
[220D, G, 221A-B]
*Judgn1ents published in the order and date as delivered.
B
c
D
E
F
G
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A
B
c
D
208
SUPREME COURT REPORTS
[1978] 3 S.C.R·
"D. N. Banerje'.s case [1953] SCR 302; -Corporation vf City of Nagpur v.
Its Employees [1960] 2 SCR 942; State of Bombay and Otherr v. The Hospital
Mazdoor Sabha and Others [1960] 2 SCR 866 referred to and followed.
3. The term "sovereign should be reserved technically and more correctly
for the sphere of ultimate decisions. Sovereignty operates on ai sovereign pfane
of its own.
Only those services which are governed by separate
rules _ and
constitutional provisions such as Articles 310 and 311 should, strictly speaking
be excluded fron1 the sphere of industry by a necessary in1plication.
[221E, GI
H. If. Kcsva!landa Bharati Sripathagalavaru v. State of Kera/a [1973] Supple·
-,;
mental S.C.R. Pa.ge-1 referred to.
4. The special excludes the applicability of the
general. Certain
public
utility services which are carried out by governmental agencies or Corporations
are treated by the Act itself as within the sphere of industry. If express rules
under other enactments govern the relationship between the State as an employer and its servants as employees, it may be contended on the strength of such;
provisions that a particular set of employees are outside the scope
of the
Industrial Disputes Act. [221G-H, 222A]
5. The State today increasingly undertakes commercial functions and economic activities and services as part of its duties in a welfare state. Hence to
artificially exclude state-run industry from the sphere of the Act, unless the
statutory provisions
expressly or by necessary
implication
have th<it effect,.
would not be correct. [222F-223A]
Rajasthan State Electricity Board v. Mohan/al [1967] 3 SCR 377; Rajasthan v. Mst. Vidyawanti & Anr. [1962] Supplemental 2 SCR 989 at 1002:
referred to.
Per Cha11drachud J.
E
I. Section 2(j) of the Industrial Disputes Act (1947)
which definesF
G
H
"industry" contains words of wide import, as wide as the Legislature could have
possibly 1nade them. The problem of what limitations could and should be
reasona.b1y read in interpreting the wide words used ln 3ection 2(j) is far too
poliQiY oriented to be satisfactorily settled by judicial decisions. The Parliament
must step in and legislate in ·a manner which will leave no doubt as to its
intention.
That alone can afford a satisfactory solution to the question which.
has agitated and perplexed the judiciary at all levels. [284H, 286A-B]
2. flospital Mazdoor Sabha was correctly decided in so far as it held that
the JJ Group of hospitals W<IB an industry but the same cannot be said in regard
to the view of the Court that certain· activities ought to be tr-2n.ted as falling outside the definition clause. [287C-D1
3. There is no justification for excepting the categories of public utility
activities underaken by the Government in the exercise of its inalieitable furictions under the constitution, call it regal or sovereign or by any other ni.me,
from the definition of "industry"~ It it be true that one must have regard to
the nature of the activity and not to who engages in it1 it is beside the poiilt to·
enq1uire whether the activity is undertaken by the State, and further,
if su,
wb1:ther it is undertaken in fulfilment of the State's constitutional obligatiorus
or in discharge of its constitutional functions.
In fact, ,to concede the benefit
of an exception to the. State's activities which are in the nature of sovereign
functioils is really to have regard not so much to the nature of the activity as
to the consideration who engages in that activity; for, sovereign functions can
only be disch3.rged by the State and not by a private person. If the State's.
ina:lienable functions are excepted from. the sweep of the definition contained
in section 2(j), one shall have unwittingly rejected the fundamental test that
it is the nature of the activity which ought to determine whether the activity
is an industry.
Indeed, in this respect, it should make no difference whether,
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BANGALORE SEWERAGE BOARD V. RAJAPPA
209
on the one hand, an activity is undertaken by a corporate body in the
discharge of its statutory functions or, on the other, by the State itself in the
exercise of its inalienable functions.
If the
water
supply
and
sewerage
schemes or fire fighting establishments run by a Municipality can be
industries, so ought to be the manufacture of coins and currency, arms and ammunition and the winning of oil and uranium.
The fact that these latter kinds ot
activities are, or can only be, undertaken by the· State does not furnish
any
answer to the question whether these activities are industries. When undertakt!n by a private individual they are
industries,
therefore,
when
undertaken by the State, they are industries. The nature of the activity is the deter·
mining factor and that does not change according to who undertakes it.
Items
8, 11, 12, 17 and 18 of the First Schedule read with section 2(n)(vi) of the
lndustrial Disputes Act render support to this view.
These provisions
which
were described in Hospital Mazdoor Sabha as 'very significant' at least show
that, conceivably, a Defence Establishment, a Mint or a Security Press can be
an industry even though these activities are, ought to be and can only be undertaken by the State in the discharge of its constitutional obligations
or functions. The State does not trade when it prints a currency note or strikes o:t
coin. And yet, considering the nature of the activity, it is
engaged
in
an
industry when it does so. [287E-H, 288A-B]
4. A systematic activity which is organised or arranged in a
manner
1n
which the trade or business is generally organised or arranged would be
an
ind\il.StTY despite the fact that it proceeds from charitable motives. It is in the
nature of the activity that one has to consider and it is upon the application of
that test that the State's inalienable functions
fall within
the definition of
industry. The very same principles must yield the result that just as the consideration as to who conducts the activity, is irrelevant for determining whether
the activity is an industry so is the fact that the activity is charitable in nature
or is unc,lertaken with a charitable motive.
The status or capacity corporate
or constitutional, of the employer would have, if at all, closer nexus, than his
motive on the question whether the r.-ctivity is an industry. The motive which
propels the activity is yet another step removed and ex liypothesi can have
no relevance on the question as to what is the nature of the activity. It is
never true to say that the nature of the activities is charitable. The subjective
n1otive force of an activity can be charity but for the purpose of deciding
\vhether an activity is an industry one has to look at the process involved in
the activity, objectively. The jural foundation of any
attempt
to
except
charitable enterprises from the scope of the definition can only be that such
enterprises are not undertaken for profit.
But then, that clearly, is to introduce
the profit concept by a, side wind, a concept which has b~en rejected consistently
over the years.
If any principle can be said to be settled law in
this vexed
field it is this : the twin consideration of profit n1otive and capital investm~nt JS
irrelevant for determining whether an activity is an industry. Therefore, activities which are don1inated by charitable motives either in the sense that they
fnvolve the rendering of free or near free services or in the sense that the profits which they yield are diverted to charitable purposes, are not beyond the
pale of the definition of section 2(j). It is as much beside the point to inquir"
who is the ernployer as it is to inquire, \1.'hy is the activity undertaken a-nd
\\'hat the ernployer does with the profits, if any. [288C-H, 289A]
5. By this test a Solicitor's establishment \1.'ould be an industry. A Solicitor
undoubtedly does not carry on a trade or business when he acts for his client
or advises hi111 or plends for him. if and when pleading is permissible to him.
He pursues a profession which is variously and justifia·bly described as learried,
liberal or noble.
But it is difficult to infer from the language of the definition
in section 2(j) that the Legislature could not have intended to bring in a
liberal profession like that of an Attornev within the ambit of the definition
of 'industry". [289A-B]
-
National Union of Cornn1ercial Etnployees & Another v. M. R. Meher.
Industrial Tribunal Bornbav & Ors. [1962] Supplemental 3 SCR 157 dissented
fron1.
·
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210
SUPREME COURT REPORTS
[1978] 3 s.c.R.
6. In Hospital Mazdoor Sabha the Court while evolving a working principle
stated that an industrial activity generally involves, inter alia, the cooperation
of the employer and the employees. That the production of goods or the
rendering of material services to the community must be the direct and proximate result of such cooperation is a further extension of that principle and it
is broadly by the application thereof that a Solicitor's establishment is held
not to attract the definition clause.
These refinements are, with respect not
warranted by the words of the definition, apart from the consideration that in
practice they make the application of the definition to concrele cases dependent upon a factual assessment so highly subjective as to Jead to confusion :ihQ
uncerta-inty in the understanding of the true legal position.
Granting that the
language of the definition is so \Vide that some limitation ought to be read
into it, one niust stop at a point beyond v,:hich the Jefinition will skid into
a domain too rarefied to be realistic.
Whether the cooperation between the
employer and the employee is the proximate cause of the ultimate product and
bears direct nexus with it is a test which is a-lmost impossible of application
with any degree of assurance or certitude.
It will be as 1nuch true to say that
the Solicitor's Assistant, Managing Clerk, Librarian and the Typist do not
directly contribute to the intellectual end product which is a crea~ion of his personal
professional skill, as that, without their active assistance and cooperation it
will be impossible for him to function effectively.
The unhappy
state of
affairs in which the law is marooned will continue to baffie the skilled professional and his employees alike as also the Judge who has to perform the unenviable task of sitting in judgment over the directness of the cooperation between
the employer and the employee, until such time as the Jegislature decides to
manifest its intention by the use of clear and indubious language.
Beside the
fact that this Court has so held 'in l\'ational Union of Comn1ercial. Employes
the legislature will find a plausible case for exempting the ]earned and liberal
professions of Lawyers, Solicitors, Doctors, Engineers, Chartered Accountants
and the like from the operation of industrial laws.
But until that happens.
in the present state of the law it ill difficult by judicial interpretation to
create exemptions in favour of any particular class. [289C-H]
7. The case of the c1ubs, on the present definition is weaker still. The definition squarely covers them and there is no justification for amending the law
so as to exclude them from the operation of the industrial laws.
The fact
that the running of clubs is not a calling of the club or its managing committee,
that the club has no existence apart from its members that it exists for its
members though occasionally strangers take the benefit of its services and that
even after the admission of guests, the club remains a members' self-serving
institution does not touch the cor:e of the problem. f290:\-BJ
Per lyer ]. (on behalf of Bhagwati, }. J. Desai ]. and hi111self.)
(1) 'Indu~try as defined in Sec. 2(j) and explained in Banerji's case has a
wide import. [282A]
·
I. (a) \Vhere (i) systematic activity, (ii) organized by cooperation oetwecn
employer and en1ployee (the direct and substantial elern(:nt is chimerical); (iii)
for the production and/or distribution of goods
and services
calculated to
satisfy human wants and wishes (not
sprituql or religious,
but iri.clusive of
material things or services geared to celestial bliss e.g. making, on a
larg~
-G
scale prasad or food), prima facie there is an 'industry' in that enterprise.
(b) Absence· of profit motive or gainful objective 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 the employer·employee relations.
(d) If the organisation is a trade or business it does not cease to be one
because of philanthropy animating the undertaking. [282.A.·C]
II. Although section 2(j) uses words of the widest amplitude i~ its two
Jimbs, their meaning cannot be magnified to overeach itself. [28201
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BANGALORE SEWERAGE BOARD V. RA.JAPPA
211
(a) 'Undertaking' must suffer a contextual and associational shrinkage as
explained in Banerji and in this judgment; so also, service, calling and the
like. This yields the inference that all organized activity possessing the triple
.elements in I (supra), although not trade or business, may still be 'industry'
provided the
nature of the
actirity,
viz.
the employer-employee
basis~
bears resemblance to what we find in trade or business. This takes into the
fold of 'industry' undertakings, callings and services, adventures' analogous to
the carrying on of trade or business'. All features, other than the methodology
-of carrying on the activity viz. in organizing the cooperation between employer
and employee, may be dissimilar. It does not, matter, if on the employment
terms there is analogy. [282D-E]
A
B
ill. Application of these guidelines should not stop short of their logical
reach by invocation of creeds, cults or inner sense of incongn1ity or outer
·sense of n1otivation for or resultant of the economic operations. The ideology
·of the Act being
industrial peace,
regulation and
resolution of industrial
disputes bctv;·een en1ployer and \VOrkmen, the range of this statutory ideolo-
-gy must inform the reach of the statutory definition. Nothing
less,
nothing
C
more.
(a) The consequences are (i)
professions, (ii) clubs (iii) educational
:institutions (iv) cooperatives, (v) research institutes (vi) charitable projects
and (vii) other kindred adventures, if they fulfil the triple tests listed in 1
{supra), cannot be exempted from the scope of section 2(j).
(b) A restricted category of professions, clubs,
cooperatives and even
gurukular and little research labs, may qualify for exemption if, in
simple
ventures, substantially and going by the dominant nature criterion, substantively no :mployees are entertained but in minimal matters, marginal employees
.are hired without destroying the non-employee character of the unit.
( c) lf, in a pious or altruistic mission, many employ themselves, free or
for sm~1ll hono1aria or like return, n1ainly drawn by ~ha.ring 1n 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 nledical centre on asramites working at
the bidding of the holiness, divinity or like central personality, and the services are supplied free or at nominal cost and those who serve &re 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 undertakings alone are exempt-not other
generosity, compassion, deveolpmental passion or project. [282F-H, 283A-C]
IV. The don1inant nature test :
D
E -
F
(a) Whe~e a complex of activities, some of which qualify for exemption,
others not, 1n\•olves employees on the total undertaking some of whom are
not 'workmen' as in the University of Delhi case or som~ departments are not
productive of goods and services if isolated, even then, the predominant nature
of the servic.es and the integ_rated nature of the departments as explained in
the Corporation of Nagpur, will be tbe true test.
The vrhole undertaking will be
'industry' although those who are not 'workmen' by definition may riot benefit
by the status.
G
(b) Notwithstanding the previous clauses, sovereign functions, strictly understood, (alone), qualify for exemption, not the welfare activities of economic
adventures undertaken by Government or statutory bodies .
. (c) Ev~n in ~epartments discharging soYereign functions if there are units
which are industnes and they are substantially severable then they can be considered to come witbin sec. 2(j).
'
(d) Constitutionally and competently enacted legislative
provisions may
well remove from .the scope of the Act categories which otherwise may be
covered thereby. [28JC-F]
H
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c
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212
SUPREME COURT REPORTS
[1978] 3 s.c.RMa11age111ent of Safdarjung Hospila[, New Delhi v. Kuldip Singh Sethi
[1971] 1 SCR 177=AIR (1970) S.C. 1407 Dhanrajgiri Hospital v. Workmen
AIR 1975 S.C. 2032, National Union of Commercial E1nployees & Anr. v.
M. R. Meller, Industrial Tribunal, Bombay AIR, [1962] S.C. 1080. I?abindranath
Sen & Ors. v. First Industrial Tribunal, West Bengal AIR -[1963}: Cal. 310;
University of Delhi & Anr. v. Ramnath & Ors. AIR [1963] S.C. 1873; Madras
Gymkhana Club v. Employees' Union v. Management AIR 1968] S.C. 554.
Cricket Club of India v. Bombay Labour Union & Anr. [1969] I SCR 600=
AIR [1969] SC 276 over-ruled;
Hospital Mazdoor's case AIR 1960 S.C. 610 approved.
Per Jaswant Singh J. (on behalf of Tulzapurkar J and himself).
l. Despite the width of the definition it could not be the intentien of the
legislature that categories 2 and 3 of the charities alluded to in the 1ead1ng
judgipent. hospitals run on charitable basis or as a pa.rt 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 Jike that of doctors, lawyers and teachers, the
pμrsvit of ·which is dependant up0n an individual's own education, intellectual
atta•inmcnts and special expertise should fall within the pale of the definition.
[290G·H, 291A}
2. The definiton in s. 2(j) of the Act is limited to those activities systemati~
cally or habitually undertaken on commercial lines by private entrepreneurs
with the cooperation of employees 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. In the case of liberal professions, the contribution of
the usual type of employees employed by the professionals to the 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. [291A-C]
E
3. The need for excluding some callings, services and undertakings from
F
G
the purview of the aforesaid definition has been felt and recognised by this
Court from time to time while explaining the scope of the definition of
"industry". [29 IC-DJ
OBSERV AT/ON :
4. It is high time that the Legislature steps in with a comprehensive bill
to clean up the fog and remove the doubts and set at rest once for all the
controversy v1hlch crops up from time to tin1e in relation to the meaning of
the aforesaid term rendering it necessary for larger Benches of this Court to be
constituted v.,hich are driven to the necessity of evolving a working formula
to cover particular cases. [292 A-B)]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 753-754 of
1975
(Appeals by Special, Leave from the Judgment and Order dated
5-7-1974 of the Karnataka High Court in Writ Petition Nos. 868 and
2439 of 1973)
CIVIL APPEAL Nos : 1544-1545 OF 1975
H (Appeals by Special Leave from the Judgments and
Order dated"
15-4-75 and 11-6-1975 of the Andhra Pradesh High in Writ Appeals
Nos. 205 and 231 of 1975)
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BANGALORE SEWERAGE BOARD V. RAJ APPA
213
SPECIAL LEAVE PETITION (CIVIL) No. 3359 OF 1977
(From the Award dated 9-3-1977 of the Industrial Tribunal Gujarat
in Ref. I.T. No. 183 of 1973 published in the Gujarat Govt. Gazette
dated 14-4-1977)
CIVIL APPEAL N 0. 1171 OF 1972
• J
(Appeal by Special Leave from the Judgment and Order dated
18-8-71 of the Madhya Pradesh High Court Gwalior Bench in Misc.
Petition No. 45 of 1970)
t
CIVIL APPEAL No. 1555 OF 1970
(Appeal by Special Leave from the Award dated 6-12-1969 of the
4th Industrial Tribunal West Bengal in Case No. 428 of 1966 published in the Calcutta Gazette dated 15-1-1970)
CIVIL APPEAL No. 2151 OF 1970
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B
c
(Appeal by Special Leave from the Order dated 28-2-1970 'of the
Additional Industrial Tribunal, Delhi in I.D. No. 23 of 1969)
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CIVIL APPEAL No. 898 OF 1976
(Appeal by Special Leave from the Order dated 23-1-1976 of the
Labour Court Delhi in L.C.I.D. No. 14/72)
CIVIL APPEAL Nos. 1132-1135 OF 1977
(Appeal by Special Leave from the Order dated 25-11-1976 of the
Industrial Tribunal (II) U.P. at Lucknow in Adj. Case Nos. 3-6/76)
CIVIL APPEAL No. 2119 OF 1970
(Appeal by Special Leave from the Award dated 16-4-1970 of the
Industrial Tribunal (I) U.P. Allahabad in Reference No. 15 of 1968
published in the Uttar Pradesh Gazette dated the 18th July, 1970)
S. V. Gupte, Att. Genl., S. V. Subrahmanyam, M. Veerappa, and
K. N. Bhat for the appellants in C.A. No. 753-754
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M. K. Ramamurthi (in CA753), M. C.
Narasimhan
(in CA
754), N. Nettar and J. Ramamurthi for the respondents
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R. K. Garg, S. C. Agarwal, V. J. Francis and A. Gupta for the
Intervener
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"''!ill
G. B. Pai, 0. C. Mathur, D. N. Misra, Shri Narain and K. J. John
for the Interveners (T. B. Hospital)
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Naunil Lal & Miss Lalita Kohli for the appellant in C.A Nos
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1544-45
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P. P. Rao and G. N. Rao for R. 1 in CA 1545
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SUPREME COURT REPORTS
[1978] 3 S.C.R,
P. P. Rao & T. V. S. N. Chari and Ashwani Kumar for R. 3 in CA
1545
I. N. Shroff and H. S. Parihar for the Appellant in CA No. 1171/
72
S. K. Gambhir, Mohan !ha & B. Ra. Rakhiani for the respondent in CA No. 1171/72
K. Rajendra Chowdhari & E. C. Agarwala for the appellant in
CA 1555/1970
L. M. Singhvi, H. K. Puri, Miss Aslwka Jain, M. L. Dingra, Vivek
Seth & H. L. Kumar for the appellant in CA No. 2151
A. K. Gupta & Aruneshwar Gupta for the respondent in CA
C No. 2151
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V. M. Tarkunde, 0. C. Mathur, Shri Narain, K. J. John for the
appellant in CA 898
Madan Mohan for the respondent in CA 898
In person : For the Applicant/Intervener ·in CA 898
A. K. Sen & E. C. Agarwala for the appellant in CA 1132-35
Urmila Kapoor, Sobha Dikshit & Kamlesh Bansal for the appellant in CA Nos. 1132-1135
A. K. Ganguli & D. P. Mukherjee for the appellant in CA 2119/
70
R. K. Garg, S. C. Agarwa/a, V. J. Francis & A. Gupta for the
respondent in 2119 /70
D. V. Patel, M. V. Goswami & Ambrish Kumar for the petitioner in SLP No. 3359/77
P. G. GO'khale, P. H. Parekh, Manju Sharma, Kai/ash Vasdev &
C. B. Singh for the respondent in SLP No. 3359.
The following Judgments were delivered
BEG, C.J.
I am in general agreement with the line of thinking
adopted and the conclusions reached by my learned brother Krishna
Iyer.
I would, however, like to add my reasons for this agreement
and to indicate my approach to a problem where relevant legislation
leaves so mnch for determination by the Court as to enable ns to
perform a function very akin to legislation.
My learned brother has relied on what was considered in England
a somewhat unorthodox method of construction in Seaford
Court
Estates Ltd. v. Asher(!), where Lord Denning, L.J., said :
"When a defect appears a judge cannot simply fold his
hands and blame the draftsman. He must set to work on
the constructive task of finding the intention of Parliamentand then he must supplement the written words so as to give
'force and life' to the intention of legislatnre.
A judge
should ask himself the question how, if !he makers of the
(!) [1949] 2 All. E. R. 155 at 164.
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BANGALORE SEWERAGE BOARD v. RAJAPPA (Beg, C.J.)
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Act had themselves come across this ruck· in the texture of
it, they would have straightened it out ? He must then do
as they would have done. A judge must not alter the material
of which the Act is woven, but he can and should iron
out the creases".
When this case went up to the House of Lords it appears that the
Law Lords disapproved of the bold effort of Lord Denning to make
ambiguous legislation more comprehensible. Lord Simonds found
it to be "'a naked usurpation of the legislative function under the
thin disguise of interpretation".
Lord Morton (with whom Lord
. Goddard entirely agreed) observed : "These heroics are out of place"
and Lord Tucker, said "Your Lordships would be acting in a legislative
rather than a judicial capacity if the view put forward by Deuning,
L.J., were to prevail".
Perhaps, with the passage of time, what may be described as the
extension of a method resembling the "arm chair rule" in the construction of wills, judges can more frankly step into the shoes of the
legislature where an enactment leaves its own intentions in much too
nebulous or uncertain a state. In M. Pentiah v. Verramallappa( 1),
Sarkar, J. approved of the reasoning, set out above, adopted by Lord
Denning.
And, I must say that, in a case where the definition
of
"industry" is left in the state in which we find it, the situation perhaps
calls for some judicial heroics to cope with the difficulties raised.
In his heroic efforts, my learned brother Krishna Iyer, if I may
say so with great respect, has not discarded the tests of industry formulated in the past. Indeed, he has actually restored the tests laid
down by this Court in D. N. Banerji"s case(2), and, after that, in the
Corporation of the City of Nagpur v. Its Employees('), and State of
Bombay & Ors. v. The Hospital Mazdoor Sabha & (Ors.) (4), to their
prestine glory.
My learned brother has, however, rejected what may
appear, to use the word employed recently by an American Jurist,
"excrescences" of subjective notions of judges which may have blurred
those tests.
The temptation is great, in such cases, for us to give
expression of what may be purely subjective personal predilections.
It has, however, to be resisted if law is to possess a direction
in
conformity with Constitutional objectives and criteria which must
impart that reasonable state of predictability and certainty to interpretations of the Constitution as well as to the laws made under it
which citizens should expect.
We have, so, to speak, to chart what
may appear to be a Sea in which the ship of law like Noah's ark may
have to be navigated.
Indeed, Lord Sankey on one occasion, said
that law itself is like the ark to which people look for some certainty
and security amidst the shifting sands of political life and vicissitudes
of times.
The Constitution and the directive principles of State policy,
read with the basic fundamental rights, provide us with a compass.
This Court has tried to indicate in recent cases that the meaning of
(I) A.LR. 1961 S.C. 1107 @ 1115.
(2) [1953] S.C.R. 302.
(3) [1960] 2 S.C.R. 942.
(4) [1960] 2 S.C.R. 866.
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SUPREME COURT REPORTS
[1978] 3 S.C·R,
what could be described as a basic "structure" of the Constitution
must necessarily be found in express provisions of the construction
and not merely in subjective notions about meanings of words. Similar
must be the reasoning we must employ in extracting the core
of
meaning hidden between the interstices of statutory provisious.
Each of us is likely to have a subjective notion about "industry".
For objectivity, we have tQ look first to the words used in the statutory
provision defining industry in an attempt to find the meaning. If that
meaning is clear, we need proceed no further.
But, the trouble here
is that the words found there do not yield a meaning so readily. They
refer to what employers or workers may do as parts of their ordinary
avocation or business in life.
When we turn to the meaning given
of the term "worker" in Sec. 2(s) of the Act, we are once more
driven back to find it in the bosom of "industry", for
the
term
"worker" is defined as one :
"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
connection with, or as a consequence of that dispute, or
whose dismissal, discharge or retrenchment has led to that
dispute".
The definition, however, excludes specifically those who are subject
to the Army Act 1950 or the Air Force Act 1950, or the Navy Discipline Act 1934, as well as those who are employed in the Police
Service or Officers and other employees of a Prison, or employed in
mainly managerial or administrative capacities or who, being employed
in supervisory capacity, draw wages exceeding Rs. 500/- per mensem.
Thus, in order to draw the "circle of industry", to use the expression of my learned brother Iyer, we do not find even the term "workman" illuminating.
The definition only enables us to see that certain
classes of persons employed in the service of the State are excluded
from the purview of industrial dispute which the Act seeks to provide
for in the interests of industrial peace and harmony between
the
employers and employees so that the welfare of the nation is secured.
The result is that we have then to turn to the preamble to find the
object of the Act itself, to the legislative history of the Act, and to
the socio-economic ethos and aspirations and needs of the times in
which the Act was passed.
The method which has been followed, whether it be called interpretation or construction of a part of an organic whole in which the
statute, its objectives, its past and its direction for the future,
its
constitutional setting are all parts of this whole with their correlated
functions.
Perhaps it is impossible, in adopting such a method of
interpretation, which some may still consider unorthodox, a certain
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BANGALORE SEWERAGE BOARD V. RAJAPPA (Beg, C.J.)
217
degree of subjectivity. But, our attempt should be not to break with
the well established principles of interpretation in doing so.
Progressive rational and beneficial modes Of interJ)retation import and fit into
the body of the old what may be new. It is a process of adaptation
for giving new vitality in keeping with the progress of thought in
our times. All this, however, is not really novel, although we may
try to say it in a new way.
)
If one keeps in mind what was laid down in Heydon's case (supra)
referred to by my learned brother Iyer, the well known principle that
a statute must be interpreted as a whole, in the context of all
the
provisions of the statute, its objects, the preamble, and the functions
of various provisions, the true meaning may emerge. It may not be
strictly a dictionary meaning in snch cases.
Indeed, even in a modern
statute the meaning of a term snch as "Industry" may change with a
rapidly changed social and economic structure. For this proposition
I can do no better than to quote Subba Rao J. speaking for this Court
in The Senior Electric Inspector v. Laxmi Narayan Chopra(') :
"The legal position may be summarized
thus :
Tlie
maxim contemporanea expositio as laid down by Coke was
applied to construing ancient statutes but not to interpreting
Acts which are comparatively modern.
There is a good
reason for this change in the mode of interpretation.
The
fundamental rule of construction is the same whether the
Court is asked to construe a provision of an ancient statute
or that of a modern one, namely, what is the expressed intention of the Legislature.
It is perhaps difficult to attribute
to a legislative body functioning in a static society that its
intention was couched in terms of considerable breadth so as
to take within its sweep the future developments comprehended by the phraseology used. It is more reasonable to confine its intention only to the circumstances obtaining at the
time the law was made.
But in a modern progressive society
it would be unreasonable to confine the intention of a
Legislature to the meaning attributable to the word used
at the time the law was made, for a modern Legislature
making laws to govern a society which is fast moving must
be presumed to be aware of an enlarged meaning the same
concept might attract with the march of time and with the
revolutionary changes brought abont in social, economic,
political and scientific and other fields of human activity.
Indeed, unless a contrary intention appears, an interpretation should be given to the words used to take in new facts
and situations, if the words are capable of comprehending
them."
Jn the Workmen of Dimakuchi Tea Estate v. The Management of
Dimakuchi Tea Estate(') it was observed :
(I) [1962! 3 S.C,R. 146.
(2) [1958] S.0.R. 1156 at 1163.
15-21 ISCJ/7~
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[1978] 3 s.c.11..
"A little careful consideration will show, however, that
the expression "any person" occurring ill the third part of
the definition clause cannot mean anybody and everybody
in this wide world.
First of all the subject matter oi dispute must relate to (i) employment or non-employment or
(ii) terms of employment or conditions of Jabour of
any
person; these necessarily import a limitation in the sense that
a person in respect of whom the employer-employee relation never existed or can never possibly exist cannot be the
subject matter of a dispute between employers and workmen.
Secondly, the definition clause must be read in the context
of the subject matter and scheme of the Act, and consistent- .
ly with the objects and other provisions of the Act. It is ,
well settled that "the words of a statute, when there is a
doubt about their meaning are to be understood in the sense
in which they best harmonise with the subject of the enactment and the object which the Legislature has
in
view.
Their meaning is found not so much in strictly grammatical
or etymological propriety of language, nor even in its popular
use, as in the subject or in the occasion on which they
are used, and the object to be attained." (Maxwell, Interpretation of Statutes, 9th Edition, p. 55),
It was also said there :
"It is necessary, therefore, to take the Act as a whole
and examine its salient provisions.
The long title shows
that the object of the Act is "to make provision for the investigation and settlement of industrial disputes, and for
certain other purposes." The preamble states the
same
object and s. 2 of the Act which contains definitions states
that unless there is anything repugnant in the subject or
context, certain expressions will have certain meanings."
Thus, it is in the context of the purpose of the Act that the meaning
of the term 'industry' was sought.
Again dealing with the objects of the Act before us in Budge Budge
Municipality case(') this Court said :
"When our Act came to be passed, labour disputes had
already assumed big proportions and there were clashes between workmen and employers in several instances.
We can
assume that it was to meet such a situation that the Act was
enacted, and it is consequently necessary to give the terms
employed in the Act referring to such disputes as wide an
import as reasonably possible."
In that very case this Court also said (at p. 308) :
"There is nothing, however, to prevent a statute from
giving the word "industry" and the,wor~s "indus!rial dispute"
a wider and more comprehensive import m order to
(1) [1953] S.C.R. 302 at 310.
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·BANGALORE SEWERAGE BOARD v. RAJAPPA (Beg, C.J.)
219
meet the requirements of rapid jndustrial progress and to
bring about in the interests of industrial peace and economy,
a fair ang satisfactory adjustment of
relations
between
employers and workmen in a variety of fields of activity.