UANGALORE WATER-SUPPLY & SEWERAGE BOARD, ETC. A v. R. RAJAPPA February 21 & Ors.

Ma11age111ent 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 In the case of liberal professions, the contribution of of such community. 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 bet ween the professional and his employees. [291A-C]

#3. The need for excluding some callings, services and undertakings from 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 G the Judgment and Order dated (Appeals by Special, Leave from 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) - I 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 (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) 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 publish ed in the Calcutta Gazette dated 15-1-1970) A B c CIVIL APPEAL No. 2151 OF 1970 (Appeal by Special Leave from the Order dated 28-2-1970 'of the Additional Industrial Tribunal, Delhi in I.D. No. 23 of 1969) D CIVIL APPEAL No. 898 OF 1976 (Appeal by Special Leave from the Order dated 23-1-1976 of Labour Court Delhi in L.C.I.D. No. 14/72) CIVIL APPEAL Nos. 1132-1135 OF 1977 E (Appeal by Special Leave from the Order dated 25-11-1976 of 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) F S. V. Gupte, Att. Genl., S. V. Subrahmanyam, M. Veerappa, and K. N. Bhat for the appellants in C.A. No. 753-754 • J t .. > M. K. Ramamurthi (in CA753), M. C. Narasimhan 754), N. Nettar and J. Ramamurthi for the respondents (in CA G Intervener R. K. Garg, S. C. Agarwal, V. J. Francis and A. Gupta for the "''!ill G. B. Pai, 0. C. Mathur, D. N. Misra, Shri Narain and K. J. John , for the Interveners (T. B. Hospital) .._ '!' Naunil Lal & Miss Lalita Kohli for the appellant in C.A Nos H 1544-45 . . . P. P. Rao and G. N. Rao for R. 1 in CA 1545 214 SUPREME COURT REPORTS [1978] 3 S.C.R, A B 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 dent in CA No. 1171/72 respon K. Rajendra Chowdhari & E. C. Agarwala for the appellant 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 C No. 2151 in CA V. M. Tarkunde, 0. C. Mathur, Shri Narain, K. J. John for the appellant in CA 898 D E F 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 appel lant 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 respondent in 2119 /70 D. V. Patel, M. V. Goswami & Ambrish Kumar for the peti tioner 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 I would, however, like to add my reasons for this agreement Iyer. 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. G 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 Parliament and then he must supplement the written words so as to give 'force and life' to the intention of should ask himself the question how, if !he makers of legislatnre. A H (!) [1949] 2 All. E. R. 155 at 164. - r - --;~- BANGALORE SEWERAGE BOARD v. RAJAPPA (Beg, C.J.) 215 215 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 legislation more comprehensible. Lord Simonds found ambiguous it to be "'a naked usurpation of the legislative function under 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 cons truction of wills, judges can more frankly step into the shoes of the legislature where an enactment leaves its own intentions in much too In M. Pentiah v. Verramallappa( 1), nebulous or uncertain a state. 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 for mulated 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 conformity with Constitutional objectives and criteria which must impart that reasonable state of predictability and certainty to inter pretations 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) (3) (4) [1953] S.C.R. 302. [1960] 2 S.C.R. 942. [1960] 2 S.C.R. 866. A B c D E F G H 216 SUPREME COURT REPORTS [1978] 3 S.C·R, A B 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 "worker" is defined as one : "employed in any industry to do any skilled or unskill ed 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 Disci pline 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 men sem. Thus, in order to draw the "circle of industry", to use the expres sion of my learned brother Iyer, we do not find even the term "work man" 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 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 inter pretation or construction of a part of an organic whole in which the statute, its objectives, its past and its direction for the 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 future, D E F G H -. - -r-----· ; . ~ . ' -,. I • • 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. Progres sive 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 our times. All this, however, is not really novel, although we may try to say it in a new way. A 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 provisions of the statute, its objects, the preamble, and the functions It may not be of various provisions, the true meaning may emerge. Indeed, even in a modern strictly a dictionary meaning in snch cases. 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 inten It is perhaps difficult to attribute tion of the Legislature. 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 comprehend ed by the phraseology used. It is more reasonable to con fine 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 interpreta tion should be given to the words used to take in new facts and situations, if the words are capable of comprehending them." ) c D E F Jn the Workmen of Dimakuchi Tea Estate v. The Management of Dimakuchi Tea Estate(') it was observed : H (I) [1962! 3 S.C,R. 146. (2) 15-21 ISCJ/7~ [1958] S.0.R. 1156 at 1163. 218 SUPREME COURT REPORTS [1978] 3 s.c.11.. A B c D E F G H "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 dis pute 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 rela tion 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 enact in view. ment and the object which the Legislature has 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, Inter pretation 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 in vestigation and settlement of industrial disputes, and for certain other purposes." The preamble states the 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 bet ween 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 (1) [1953] S.C.R. 302 at 310. ' ' - • ' ' ·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. It is obvious that the limited concept of what an industry meant in early times must now yield place to an enormously wider concept so as to take in various and varied forms of industry, so that disputes arising in connection with them might be settled quickly without much dislocation and disorganisa tiou of the needs of the society and in a manner more adapt ed to conciliation and settlement than a determination of the respective rights and liabilities according to strict legal pro cedure and principles." Again, in Hospital Mazdoor Sabha case(') this Court said: "JI the .object and scope of the statute are considered there would be no difficulty in holding that the relevant words of wide import have been deliberately used by Legislature in defining "industry" in Sec. 2(j). The object of the Act was to make provision for the investigation and settlement of industrial disputes, and the extent and scope of the provisions would be realised if we bear in mind the definition of "industrial disputes" given by Section 2(k), of "wages" by Section 2(rr), "workmen" by Section 2(s), and of "employer" by Section 2(g) ." lt added: "It is obvious that the words used in an inclusive defini- lion denote extension and cannot be treated as restricted in any sense." I may here set out the definition given by the Act of the term •industry' in section 2, sub. s. (j) : "(j) "Industry" means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen;" B c D E F ) It seems to me that the definition was not meant to provide more It raises doubts as to what could be meant by the "than a guide. "calling of employers" even if business, trade, undertaking or manu· G 'facture could be found capable of being more clearly delineated. It is clear that there is no mention here of any profit motive. Obviously, the word "manufacture" of employers could not be interpreted liter ally. It merely means a process of manufacture in which the employ· It is, however, evident that the term 'employer' ers may be engaged. necessarily postulates employees without whom there can be no employers. But, the second part of the definition makes the concept H more nebulous as it, obviously, extends the definition to "any calling, ~I) [1960] 2 S.C.R. ~66 at 875. A B c D 220 SUPREME COURT REPORTS [ 1978] 3 s.c.R. service, employment, handicraft or industrial occupation or avocation I have already examined the meaning of the term of workmen". "workman" which refers us back to what is an "industry". It seems to me that the second part, relating to workmen, must necessarily indicate something which may exclude employers and include an "industry" consisting of individual handicraftsmen or workmen only. At any rate, the meaning of industrial disputes includes disputes bet ween workmen and workmen also. Therefore, I cannot see how we can cut down the wide ambit of last part of the definition by search ing for the pre-dominant meaning in the first part unless we were determined, at the outset, to curtail the scope of the second part some Jf we do that, we will be deliberately cutting down the real how. sweep of the last part. Neither "Noscitur a sociis" "ejusdem generis" rule are adequate for such a case. rule nor There is wisdom in the suggestion that in view of these difficulties in finding the meaning of the term 'industry', as defined in the Act, it is best to say that an industry cannot strictly be defined but can only be described. But, laying down such a rule may again wide a door open for speculation and subjective notions as to what is describable as an industry. It is, perhaps, better to look for a rough rule of guidance in such a case by considering what the con cept of 'industry' must exclude. E I think the phrase 'analogous to industry', which has been used the Safdarjung Hospital case (supra) could not really cut down the scope of "industry". The result, however, of that decision has been that the scope has been cut down. I, therefore, completely agree with my learned brother that the decisions of this Court in Safdarjung Hmpital case and other cases mentioned by my learned brother must It seems to me that the term 'analogous be held to be overruled. to trade or business, could reasonably mean only activity which results in goods made or manufactured or services rendered which are capa- F ble of being converted into saleable ones. They must be capable of entering the world of "res commercium" although they may be It is not the motive of an kept out of the market for some reason. activity in making goods or rendering a service, but the possibillty of making them marketable if one who makes goods or renders services. so desires, tbat should determine whether the activity lies within the domain or circle of industry. But, even this may not be always a satisfactory test. G The test indicated above would necessarily exclude the type of services which are rendered purely for the satisfaction of spiritual or psychological urges of persons rendering those services. These can not be bought or sold. For persons rendering such services may be no 'industry', but, for persons who want to benefit from the services rendered, it could become an "industry". When services are rendered by groups of ·charitable individuals to the111:selves or others out of missionary zeal and purely charitable mol!ves, there would hardly be any need to invoke the provisions of the Industrial H BANGALORE SEWERAGE BOARD V. RAJAPPA (Beg, C.J.) 221 Disputes Act to protect them. Such is not the type of persons who A will raise such a dispute as workmen or employees whatever they may be doing. This leads one on to consider another kind of test. It is that, wherever an industrial dispute could arise between either employers and their workmen or between workmen and workmen, it should be considered an area within the sphere of 'industry' but not otherwise. B In other words, the nature of the activity will be determined by the conditions which give rise to the likelihood of occurrence of such dis putes and their actual occurrence in the sphere. This may be a pragmatic test. For example, a lawyer or a solicitor could not raise a dispute with his litigants in general on the footing that they were his employers. Nor could doctors raise disputes with their patients on such a footing. Again, the personal character of the relationship c between a doctor and his assistant and a lawyer and his clerk may be of such a kind that it requires complete confidence and harmony in the productive activity in which they may be cooperating so that, unless the operations of the solicitor or the lawyer or the doctor trade, take an organised and systematised form of a business or employing a number of persons, in which disputes could arise bet ween employers and their employees, they would not enter the field D of industry. The same type of activity may have both industrial and non-industrial aspects or sectors. I would also like to make a few observations about the so called "sovereign" functions which have been placed outside the field of I do not feel happy about the use of the term "sovereign" industry. here. I think that the term 'sovereign' should be reserved, technically E and more correctly, for the sphere of ultimate decisions. Sovereignty operates on a sovereign plane of its own as I suggested in Keshva nanda Bharati's case(') supported by a quotation from Ernest Barker's "Social and Political Theory". Again, the term "Regal", from which the term "sovereign" functions appears to be derived, seems to be a misfit in a Republic where the citizen shares the political sovereignty in which he has even a legal share, however small, in as much as he exercises the right to vote. What is meant by the use of the term F "sovereign", in relation to the activities of the State, is more accurately brought out by usinl! the term "1wvernmental" functions although there are difficulties here also in as much as the Government has entered largely now fields of industry. Therefore, only those services which are governed by separate rules and constitutional provisions, such as Article 310 and 311 should, strictly speaking, be excluded from the sphere of industry by necessary implication. G I am impressed by the argument that certain public utility services which are carried out by govermnental agencies or corporations are If express treated by the Act itself as within the sphere of industry. ruies under other enactments govern the relationship between the State as an employer and its servants as employees it may be' contend· ed, on the strength of such provisions, that a particular set of employe- H es are outside the scope of the Industrial Disputes Act for that reason. The special excludes the applicability of the general. We cannot (I) 1973 Sup.S. C. R. P l ' ....,_ __ _ ' . ' .. 1 222 SUPREME COURT REPORTS [1978] 3 s.c.Jt~ A ~orget that we have to detetmine the meaning of the term 'industry! m the context of and for the purposes of matters provided for in the'· Industrial Disputes Act only. I have contented myself with a very brief and hurried outline of my line of thillking: partly because I am in agreement with the conclu sions of my Ieii.rned brother Iyer and I also endorse his reasoning· B allilost wholly, but even more because the opinion I have dictated just now must be given today if I have to deliver it at all. From tomor row I cease to have any authority as a Judge to deliver it. There fore, I have really no time to discuss the large number of cases cited before us, including those on what are known as "sovereign" func tions. , c D E F G H I will, however, quote a passage from State of Rajasthan v. Msh Vidyawati & Anr.(1) where this Court said: "In this connection it has to be remembered that under the Constitution we have established a welfare state, whose functions arc not confined only to maintaining Jaw and order but extend to engaging in all activities including industry, public transport, state trading, to name only a few of them. In so far as the State activities have such wide ramifications involving not only the use of sovereign powers but also its powers as employers in so many public sectors, it is too much to claim that the State should be immune from the conse quences of tortious acts of its employees committed in course of their employment as such." I may also quote another passage from Rajasthan State E/ecrricity Board v. Mohan Lal(') to show that the State today increasingly- undertakes commercial functions and economic activities and services. as part of its duties in a welfare state. The Court said there : "Under the Constitution, the State is itself envisaged as having the rigbt to carry on trade or business as mentioned in Art. 19(l)(g). In Part IV, the State has been given the same meaning as in Art. 12 and one of the Directive Principles laid down in Art. 46 is that the State shall pro mote with special care the educational and economic inter ests of the weaker sections of the people. The State, as defined in Art. 12, is thus comprehended to include bodies created for the purpose of promoting the educational and economic interests of the people. The State, as constituted by our Constitution, is further specifically empowered. under Art. 298 to carry on any trade or business. The circum stances tllat the Board under the Electricity Supply Act is required to carry on some activities of the nature of trade or commerce does not, therefore, give any indication that the Board must be excluded from the scope of the word "State" as used in Art. 12." [1962] Supp, 2 S.C.R. 989 at 1002. (I) (2) [1967] (3) SCR 377 at 385. / ' .. -, ~ ~ • • ) BANGALORE SEWEAAGE BOARD v. RAJAPPA (Krishna Iyer,].) 223 Hence, to artificially exclude State run industries from the sphere A of the Act, unless statutory provisions, expressly or by a necessary implication have that effect, would not be correct. The question is one which can only be soJved by more satisfactory legislation on it. Otherwise, Judges could only speculate and tests of "industry" which cannot satisfy all. Perhaps to seek to sati5fy all is to cry for the moon. formulate For the reasons given above, I endorse the opinion and the con- clnsi&ns of my learned brother Krishna Iyer . B KRISHNA IYER, J.-The rather zigzag course of the landmark cases and the tangled web of judicial thought have perplexed one branch of Industrial Law, resulting from obfuscation of the basic concept of 'industry' under the Indnstrial Disputes Act, 1947 short, the Act). This bizarre situation, 30 years after the Act was passed and industrialization bad advanced on a national scale, could not be allowed to continue longer. So, the urgent need for an autho ritative resolution of this confused position which has survived indeed, has been accentuated by-the judgment of this six-member bench in Safdar Jung('), if we may say so with deep respect, bas led to a reference to a larger bench of this diehard dispute as to what an D 'industry' under Section 2(j) means. (for c Legalese and logomachy have the genius to inject mystique into common words, alienating the laity in effect from the rule of law. What is the common worker or ordinary employer to do if he is bewil dered by a definitional dilemma, and is unsure whether his enterprise say, a hospital, university, a library, a service club, a local body, E a research institute, a pinjarapole, a chamber of commerce, a Gandhi is nervous of Ashram-is an industry at all? Natural meaning acceptance in court where the meaning of meanings is lost in un certain erudition and cases have even cancelled each other out while reading meaning_ "I do not think," said Diplock L.J., that anywhere, except in a court of law, it would be argued with gravity that a Dutch barn or grain and fodder stores or any ordi- nary farm buildings are properly described as repositories. A Gloucestershire farmers would say they were farm build- 'repositories'." ings and would laugh at their being called in the same spirit, Stamp J. rejected the argument that the carrying on of the business of a crematorium involved the "subjection of goods or materials to any process" within section 27l(l)(c) of the Income Tax Act 1952 as a distortion of the English language .... _ . I protest against subjecting the English language. and more particularly simple English phrase, to this kind of process of philology and semasio!ogy." (') F G (!) Management of Safdar Jung Hospital, New Delhi, v. Ku/dip Singh Sethi [l 97 l] H I S.C.R. 177. {2) ·Maxwell on 'The Interpretation of Statutes' 12th Edn. by P. St. J_ Langan pp. 81-82. 224 SUPREME COURT REPORTS [1978] 3 s.c.Jl. · B A Esoterica is anathema for law affecting the common man in the commerce of life, and so the st, arting point for our discussion is the determination to go by the plain, not the possible, sense of words used in the definition, informed by the context and purpose of the statute, illumined by its scheme and setting and conceptuiilly coloured by what is an industry at die current developmental stage In our system of precedents our endeavour musr in our country. be, as urged by counsel, to reconcile prior pronouncements, if possi ble, and to reconsider the question altogether, if necessary. There are no absolutes in law since life, which it serves, is relative. What is an industry in America or the Soviet Union may not be one in India and even in our Country what was not an industry decades ago may well be one now. Our judgment here has so pontifical flavour c but seeks to serve the future hour till changes in the law or industrial culture occur. law, which secure expert Law, especially industrial regulates the rights and remedies of the working class, unfamiliar with the sophistications of definitions and shower of decisions, unable to opinion, what with poverty pricing them out of the justice market D and denying them the staying power to withstand the multi decked Iitigative process, de facto denies social justice if legal drafting vagarious, definitions indefinite and court rulings contradictory. Is it possible, that the legislative chambers are too preoccupied with other pressing business to listen to court signals calling for clarifica tion of ambiguous clauses ? A car~ful, prompt amendment of Sec. 2(j) would have pre-empted this docket explosion before tribu- E nals and courts. This Court, perhaps more than the legislative and Executive branches, is deeply concerned with law's delays and devise a prompt delivery system of social justice. F word Though the tailoring of a definition is the sole forensic job in this batch of appeals, dependent on which, perhaps, a few thousand other cases await decision, the cycloramic semantics of the simple 'industry' and the judicial gloss on it in a catena of cases, have led to an avoidable glut of Jabour litigation where speedy finality and working criteria are most desirable. And this delay in disposal of thousands of disputes and consequent partial paralysis industrial life is partly blamable on the absence of a mechanism of communication between the court and the law-making chambers. G The great American judge, Justice Cardozo, while he was Chief Justice of New York Supreme Court,. made this point: H "The Courts are not helped as they could and ought to be in the adaptation of Jaw to justice. The reason they are not helped is because there is no one whose business it is to give warning that help is needed. . ..... We must have a courier who will carry the tidings of distress ...... . Today courts and legislative work in separation and aloof- ness. The penalty is paid both in the wasted effort of pro duction and in the lowered quality o~ the product. On the one side, the judges, left to fight against anachronism and .. BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 225 injustice by the methods of judge-made law, arc distracted by the conflicting promptings of jnstice and logic, of consis tency and mercy, and the output of their labors bears the tokens of the strain. On the other side, the legislature, in formed only casually and intermittently of the needs and problems of the courts, without expert or responsible or disinterested or systematic advice as to the workings of one rule or another, patches the fabric here and there, and mars often when it would mend. Legislature and courfs move on in proud and silent isolation. Some agency must be found to mediate between them." A B The grave disquiet about arrears in courts must be accompanied by deeper insights into newer methodology than collection of, statistics and minor reforms. Appreciating <:omponent of social justice, as a priority item on the agenda of Law Reforms and suspecting public unawareness of some. essential aspects of the problem, we make these painful observations. the urgency of quick justice a C This obiter exercise is in discharge of the court's obligation inform the community in our developing country where to look for the faults in the legal order and how to take meaningful corrective D measures. The courts too have a constituency -the nation-and a manifesto-the Constitution. That divagation. the validation of even as the bulk of our corpus juris, with a E Back to the single problem of thorny simplicity : what is an ~ndustry' ? Historically speaking, this Indian statute has its begin nings in Australia, law. Therefore, in colonial flavour, is a carbon copy of English interpretation, we may seek light Australasially, and so the precedents of this court have drawn on Australian cases as on English dictionaries. But India is India and law and scciety, is atte.sted by its National Charter, so that statutory construction must be home-spun even if hospitable to alien thinking. individuality. The reference to us runs thus : "One should have thought that an activist Parliament by taking qnick policy decisions and by resorting to amenda tory processes would have simplified, clarified and de-limited the definition of "industry'', and, if we may add "workman". Had this been done with aware and alert speed by legislature, litigation which is the besetting sin of industrial life could well have been avoided to a co'nsiderable degree. That consummation may perhaps happen on a distant day, but this Court has to decide from day to day disputes involv ing thi~ branch of industrial law and give guidance by declar ing w!1at is an industry, tlirough the process of interpretation and re-interpretation, with a murky accumulation of case Jaw. Counsel on both sides have chosen to rely on Safdar lung each emphasising one part or other cif the decision as F G H 226 SUPREME COURT REPORTS (1978] 3 s.c.Jt. A B c D supporting his argument. Ruliugs of this Court before and after have revealed no unanimity nor struck any unison and so, "'.e confess to our ii:tability to .d_iscern any golden thread runrung through the strmg of decisions bearing on the issue at hand." ". . . . the chance of coufusion from the crop of cases in an area where the common man has to understand and apply the ~aw makes it desirable. that there _should be a compre hensive, clear and conclusive declaration as to what is an industry under the Industrial Disputes Act as it now stapds. Therefore, we think it necessary to place this case before the learned Chief Justice for consideration by a larger 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." So, the long and short of it is, what is an industry ? Section 2 (j} defines it : " 'industry' means any business, trade, undertaking, manu facture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of worTmen : " Let us put it plain ! The canons of construction are trite that we must read the statute as a whole to get a hang of it and a holistic perspective of it. We must have regard to the historical background, E objects and reasons, international thoughtways, popular understanding, contextual connotation and suggestive subject-matter. Equally im- portant, dictionaries, while not albsolutely binding, are aids to ascer- tain meaning. Nor are we writing on a tabula rosa. Since Banerjee,(') decided a silver jubilee span of years ago, we have a heavy harvest '{lf rulings on what is an 'industry' and we have to be F guided by the variorum of criteria stated therein, as far as possible, and not spring a creative surprise on the industrial community by a stroke of freak originality. Another sobering sign. In a world of relativity where law and' life interface, a search for absolutes is a self-condemned exercise. Legal concepts, ergo, are relativist, and If} miss this rule of change and G developmental stage is to interpret oneself into error. Yet a third signpost. The functional focus of this industrial legis lation and the social perspective of Part IV of the Paramount Law drive us tp hold that the dual goals of the Act are contentment of workers and peace in the industry and judicial interpretation should be geared to their fulfilment, not their frustration. A worker-oriented statute must receive a construction where conceptna11y. the keynote thought must be the worker and the community, as the Constitution has shown concern for them, inter-alia, in Articles 38, 39 and 43. H (I) [1953) S.C.R. 302. -- /~ , '- BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 227 ; A look at the definition, dictionary in hand, decisions in head and A Constitution at heart, leads to some sure characteristics of an 'industry', narrowing down the twilit zone of turbid controversy. An industry is a continuity, is an "rganized activity, is a purposeful pursuit-not any isolated adventure, desultory excursion or casual, fleeting engagement trade, motivelessly undertaken. Such is the common feature of a business, calling, manufacture-mechanical or handicraft-based service, employment, industrial occupation or avocation. For those B who know English and are not given to the luxury of splitting semantic hairs, this conclusion argues itself. The expression 'undertaking' can If birds of a not be torn off the wotlls whose company it k;eeps. feather flock together !Jnd noscitur a sociis is a commonsense guide to construction, 'undertaking' must be read down to conform to restrictive characteristic shared by the society of words before and after. Nobody will torture 'undertaking in Section 2(j) meditation or musheira which are spiritual and aesthetic undertakings. Wide meanings must fall in line and discprdance must be excluded From Banerjee to Safdar Jung and beyond, from a sound system. this limited criterion has passed muster and we see no reason, after all the marathon of argument, to shift from this position. to mean C Likewise, an 'industry' cannot exist without co-operative endea- D vour between employer and employee. No employer, no industry; no employee, no industry-not as a dogmatic proposition in econo mics but as an articulate major premise of the definition and schema of the Act, and as a necessary postulate of industrial disputes and statutory resolution thereof. An industry is not a futility but geared to utilities in which the E community has concern. And in this mundane world where law lives now) economic utilities-material goods and services, not transcenden- tal flights nor intangible achievements-are the functional focus of industry. Therefore, no temporal utilities, no statutory industry, is axio matic. realities and assigns values to them, jurisprudence may reach out to such collective good. Today, not tomorrow, is the first charge of pragmatic law of F western heritage. So we are confined to material, not ethereal end prodncts. If society, in its advance, experiences subtler This much flows from a plain reading of the purpose and provi sion of the legislation and its western origin and the ratio of all the rulings. We bold these triple ingredients to be unexceptionable. ) The relevant constitutional entry speaks of industrial and labour G disputes (Entry 22 List I Sch. VII). The Preamble to the Act refers to 'the investigation and settlement of industrial disputes'. The defi nition of industry has to be decoded in this background and our hold- ing is reinforced by the fact that industrial peace, collective bargaining, strikes and lock-outs, industrial adjudications, works committees of employers and employees and the like connote organised, systematic II operations and collectivity of workmen co-operating with their emplo- yer in producing goods and services for the community. The better ment of the workmen's lot, the avoidance of out-breaks blocking pro- 228 SUPREME COURT REPORTS (1978] 3 s.c.R. A duction and just and speedy settlement of disputes concern the commu In trade and business, goods and services are for the commu nity. nity not for self-consumption. The penumbra! area arrives as we move on lo the other essentials B n.eeded to mah an organized, systematic activity, oriented pn produc industry as tive collabora!Ion between employer and employee, an defined in Section 2(j). Here we have to be cautious not to fall into the trap of definitional expansionism bordering on reducio ad absurdum nor to truncate the obvious amplitude of the provision to fit it into our mental mould of beliefs and prejudices p'r social philosophy condi tioned by class interests. Subjective wish shall not be father to the c forensic thought, if credibility with a pluralist community is a value to be cherished. "Courts do not substitute their social and economic beliefs for the judgment of legislative bO\lies''. [See (Constitution of the United States of America) Corwin p. xxxi]. Even so, this legisla tion has something to do with social justice between the 'haves' and the 'have-nots, and naive, fugitive and illogical cut-backs on the import of 'industry' may do injustice to the benignant enactment. Avoiding D Scylla and Charybdis we proceed to decipher the fuller import of the definition. To sum up, the personality of the whole statute, be it remembered, has a welfare basis, it being a beneficial legislation whicb protects Labour, promotes their contentment and regulates situations of crisis and tension where production may be impe.ril!ed by untenable strikes and blackmail lock-outs. The mechanism of the Act is gear resolution, ed to conferment of regulated benefits to workmen and E according to a sympathetic rule of law, of the conflicts, actual or potential, between managements and workmen. Its goal is ameliora tion of the conditions of workers, tempered by a practical sense of peaceful co-existence, to the benefit of both-not a neutral position but restraints on laissez faire and concern for weaker lot. Empathy with the statute is necessary to understand not merely its spirit, but also its sense. One of the vital concepts dn F which the whole statute is built, is 'industry' and when we appro!!Ch the definition in Section 2 (j), we must be informed by these values. This certainly does not mean that we should strain the language of the definition to import into it what we regard as desirable in an industrial legislation, for we are not legislating de nova but construing an existing Act. Crusading for a new type of legislation with dynamic ideas or humanist justice and industrial harmony cannot be nnder the 'G nmbrellal of interpreting an old, imperfect enactment. Nevcrtheles;;, statutory diction speaks for today and tomorrow; words are semantic seeds to serve the futnre hour. Moreover, as earlier highlighted, it is legitimate to project the value-set of the Constitution, especially Part IV, in reading the meaning of even a pre-Constitution ~at'!te. The paramount law is paramount and Part IV sets out Directtve Principles of State Policy which mnst guide the judiciary, like other l:I instrumentalities, in interpreting all legislation. Statutory construction is not a petrified process and the old bottle may, to the extent language and realism permit be filled with new wine. Of course, the bottle should not break or lose shape. the welfare of -,

#1. BANGALORE SEWERAGE BOARD v. RAJAPPA, (Krishna Iyer, J.) 229 Lord Denning has stated the judge's task in r.eading the meaning A of enactments : "Tl1e English language is not an instrument of mathematical precision. Our literature would be much poorer if it were . . . . . . . . He must set to work in the constructive task of finding the intention m Parliament, and he must do this not only from the language of the statute, but also from a consi dera1 i0n of the social conditions which gaw rise to it and of the mischief which it was passed to remedy, and then he must supplement the written word so as to give 'force and life' tci' the intention of the legislature ................. . A judge should ask himself the question, how, if the makers of the Act had themselves come across this ruck 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." • • • * • The duty of the court is to interpret the words that the legis lature has used; those words may be ambiguous, but. eve!lj if they are, the power and duty of the court to travel outside them on a voyage of discovery are strictly limited." The Industrial Disputes-Malhotra, Vol. I pp. 44 & 45) We may start the discussion with the leading case. on the point, which perhaps may be treated as the mariner's compass tor judicial navigation B. N. Banerji v. R. P. Mukherjee & Others. (1954) S.C.R. 302)· But before setting sail, let us map out briefly the range of dfspufe around the definition. Lord Denning in Automobile Proprie- tary Ltd. observed : - "It is true that 'the industry' is defined; but a definition is not to be read in isolation. It must be read in the context Of the phrase which it defines, realising that the function of a definition is to give precision and certainty to a word or phrase which would otherwise be vague and uncertain-but not to contradict it or supplant it altogether." Hotel and Catering Industry Training Board v. Automobile Proprietary Ltd. (1968) 1 W.L.R. 1526 at 1530. A definiti.o'n is ordinarily the crystallisation of a legal concept promot ing precision and rounding off blurred edges but, alas, the definition in S. 2(j), viewed in retrospect, has achieved the opposite. Even so, we must try to clarify. Sometimes active interrogatories tell better than bland affirmatives and so marginal omissions notwithstanding, we will string the points together in a few questions oh which we have been addressed. c D E F G H • - ) A ·C D E F ·G 1H 230 SUPREME COURT REPORTS (1978] 3 s.c.R. A cynical jurist surveying the forensic scene may make unhappy comments. Counsel for the respondent Unions sounded that note. A pluralist society with a capitalist backbone, notwithstanding innocuous adjective 'socialist' added to the Republic by the Constitu tion ( 42nd Amendment Act, 1976) regards profit-making as a sacros anct value. Elitist professionalism and industrialism is sensitive to the 'worker' menace and inclines to exclude such sound and fury as 'labour unrest' from its sanctified precincts by judicially de-industrblising the activities of professional men and interest groups to the extent feasible. Governments in a mixed economy, share some of the habits of thought of the dominant class an.d doctrines like sovereign Tuncti6ns, which pull out economic enterprises run by them, come in bandy. The latent love for club life and charitable devices and escapist insti structure, tutions bred by clever capitalism and hierarchical interpretatively shows up as inhibitions labour by carving out immunities from the 'industrial' demands of labelling many enterprises 'non-industries'. Universities, clubs, insti tutes, manufactories and establishments managed by eleemosynary or holy entities, are instances. To objectify doctrinally subjective cons ternation is casuistry. transmuted as dclctrines, social A counter-critic, on the other hand, may acidly ciontend that judicial interpretation, uninformed by life's realities, were to go wild, every home will be, not a qµiet castle but tumultuous industry, every research unit will grind to a halt, every god will face new demands, every service club will be the venue of rumble and every charity choked off by brewing unrest and the salt of the earth as well as the struck Jowliest and the lost will suffer. Counsel fo'r the appellants this pessimistic note. it not obvious from these rival thoughtways that law is value-loaded, that social philosophy is an inarticulate inter pretative tool ? This is inescapable in any school of jurisprudence. Is y Now. Jet us itemise, illustratively, the po'sers springing from competimi submissions, so that the contentions may be concretised. 1. {a) Are establishments, run without profit motive. indus tries? (b) Are Cha.ritable institutions industries ? (c) Do undertakings governed by a no-profit-no-loss rule. statutorily or otherwise fastened, fall within the defi nition in Sec. 2(j) ? ( d) Do clubs or other organisations (like the Y.M.C.A.) whose general emphasis is not on profit-making but fellowship and self-service, flt into the definitional circle? (e) To go to the c,o're of the matter, is it an inalienable in gredient of 'industry' that it should be plied with a commercial object ?

#2. (a) Should co-operation between employer and employee be direct in so far as it relates to the basic service BANGALORE SEWERAGE BOARD v. RA.TAPPA, (Krishna Tyer, !.) 231 or essential manufacture which is the output of the undertaking? · (b) Could a lawyer's chambers or chartered accountant's .office,. a doctor's clinic or other liberal profession's occupation or calling be designated an industry ? (c) Would a University or college or school or research institute be called an industry ?

#3. (a) Is the inclusive part of the definition in Sec. 2(j) relevant to the determination or an industry? If so, what impact dp'es it make on the categories ? (b) Do domestic service drudges who slave without res pite-become 'industries' by this extended sense ?

#4. Are governmental functions, stricto sensu, industrial and if not, what is the extent of the immunity of instrumentali- ties of government ?

#5. What rational criterion exists for a cut-back on dynamic po'tential and semantic sweep of the definition, implicit in the industrial law of a progressive society geared to greater industrialisation and consequent concern for regulating relations and investigating disputes between employers and employees as industrial processes and rela- tions become more complex and sophisticated and workmen become more right-conscious?

#6. As the provision now stands, is it scientific to define 'industry' based on the nature-the dominant nature of the activity, i.e. on the terms of the work, remuneration and conditions of service which bond the· two wings together intp an employer-employee complex ? A B c D E Back to Banerji, to begin at the very beginning. Technically, this Bench that hears the appeals now is not bound by any of the earlier F decisions. But we cannot agree with Justice Roberts of the U. S. Supreme Court that 'adjudications of the court were rapidly gravitat- ing into the same class as a restricted railroad ticket, good for this day and train only' (See Corwin XVII). The present-even the revolutionary present-does not break wholly with the past but breaks bread with it, without being swallowed by it O:nd may eventually swallow it. While it is true, academically speaking, that the court G should be ultimately right rather than consistently wrong, the social inter£st in the certainty of the law is a valne which urges continuity where possible, clarification where sufficient and correction where derailment, misdirection or fundamental flaw defeats the statute or creates considerable industrial confusion. Shri M. K. Ramamurthy, encored by Shri R. K. Garg, argued emphatically that after Safdar ju~g. the law is in trauma and so a fresh look at the problem is ripe. H The learned Attorney General and Shri Tarkunde, who argued at effective, illuminating length, as well as Dr. Singhvi and Shri A. K. Sen who briefly and tellingly supplemented, did not hide ----- • .- -L-i.- ) A B c D E F G H 232 SUPREME COURT REPORTS [1978] 3 s.c.a. In this situation, it that the Jaw. is _in Que~r Street but s~ught tel discern a golden thread of sound pnnc1ple which could explain the core of the rulings which is not peripherally had contradictory thinking. wise, in our view, to reject everything ruled till date and fabricate new tests, armed with lexical wisdom or reinforced by vintage judicial thought from Australill. Banerji we take as good, and, anchored on its authority, we will examine later decisions tc;> stabilize the law on the firm principles gatherable therefrom, rejecting erratic excur· sions. To sip every flower and change every hour is J¥)t realism but Justice romance which must not enchant the court. Chandrasekhara Iyer, speaking for a unanimous Bench, has sketched the guidelines perceptively, if we may say so respectfully. Later cases have only added their glosses, not overruled it and the fertile source of conflict has been the bashyams rather than the basic decision. is not to supplant the ratio of Banerji but to Therefore, our task from different straighten and strengthen it in its application, away deviations and aberrations. Indeed, Sri Banerji. The Budge Budge Municipality dismissed two employees whose dispute wa& sponsored by the Union. The award o[ the Industrial Tribunal directed re-instatement but the Municipality challenged the award before the High Court and this Court on fundamental ground that a municipality in discharging its normal duties connected with local self-government is not engaged in any industry as defined in the Act. A paaoramic view of the statute and its jurisprudential bearings has been projected there and the essentials of. an industry decocted. The definitions of employer [Sec. Z(g)], industry [Sec. 2(j)], indus trial dispute [Sec. 2(k)] workman [Sec. 2(a) ], are a statutory dic- It is plain that merely because the tionary, not popular parlance. employer is a government department or a local body (and, a fortiori, a statutory board, society or like entity) the enterprise does not cease to be an 'industry'. Likewise, what the common man does not consider as 'industry' .need not necessarily stand excluded from is deliberately statutory concept. drawn wider, and in some respects narrower, as Chandrasekhara Aiyer,)., has emphatically expressed : (And vice versa.) The Jattef the shape of goods, machines, "In the ordinary or non-technical sense, according to what is understood by the man in the street, industry or business means as undertaking where capital and labour co-operate the purpose of producing wealth with each other for tools etc., and for making profits. The concept of industry in this ordinary sense applied even to agriculture, horticulture, pisciculture and so pn and so forth. It is also clear that every aspect of activity in which the relationship of employer and em· ployee exists or arises does not thereby become an industry as common! y understood. W c hardly think in terms of an industry, when we have regard, for instance, to the rights and duties of master and servant, or of a Government and its secretariat, or the members of the medical profession ------ ' ~ • -' ' l BANGALORE SEWERAGE BOARD v. RAJ APP A (Krishna Tyer, J.) 2 3 3 workil.lg in. a hospital. It would be regarded as absurd to think ro; at any rate the layman unacquainted with advanc- ing legal concepts of what is meant by industry would rule out such a connotation as impossible. There is noth- ing however to prevent a statute from giving the word "industry" and the words "industrial dispute" a wider and more comprehensive import in order to meet the require ments of rapid industrial progress and to bring about in the interests. qj industrial peace and economy, a fair and sati3- factory adjustment of relations between employers and work- men in a variety of fields of activity. It is obvious that the limited concept of what an industry meant ·in early time~ must now yield place to an enormously wider concept so a' to take iu various and varied forms of industry, dispute arising in connection with them might be settled quickly without much dislocation and disorganisation of the needs of society and in a manner more adapted to concilia- tion and settlement than a determination of the respective rights and liabilities according to strict legal procedure and principles. The conflicts between capital and labour have now to be determined more from the standpoint of status than of contract, Withont such an approach, the numerous problems that now arise for solution in the shape of indus- trial disputes cannpt be tackled satisfactorily, and this 1~ why every civilised government has thought of the machinery of conciliation officers, Boards and Tribunals for the effec- tive settlement of disputes." (emphasis added) A c D The dynamics of industrial. law, even if incongruous with popular understanding, is this first proposition we derive from Banerji : E "Legislation had to keep pace with the march of times and to provide for new situations. Social evolution is a pro cess of constant growth, and the State cannot afford to standstilltwithout taking adequate measure by means of legis lation to sdlve large and momentous problems that arise in the industrial field from day to day almost." The second, though trite, guidance that we get is that we should not be beguiled by similar words in dissimilar statutes, contexts, subject-matters or socio-economic situations. The same words may mean one thing in one context and another in a different context. This is the reason why decisions on the meaning of particular words or collection of words found in other statutes are scarcely of much value when we have to deal with a specific statute of our own; they may persuade, but cannot pressure. We would \)nly add that a developing country preserve the smooth flow of goods and services, and interdict undue is enacted exploitation and, towards those ends and must receive liberal construction to fulfil its role. legisiation labour is anxious Let us get down to the actual amplitude and circumscription of the statutory concept of 'industry'. Not a narrow but an enlarged accept ation is intended; This supported by several considerations. Chandrasekhara Aiyar, J. observes : 16-.Zl lSCI/78 F G H 234 SUPREME COURT REPORTS [1978) 3 S.C·R. A c "Do the definitions of 'industrial dispute' and 'industry', 'workman' taken in the extended significance, or exclude it 1 Though the word 'undertaking' in the · definition of 'indus try' is wedged in between business and trade on- the one hand and manufacture on the other, and though therefore it might mean only a business or trade undertaking, must be remembered that if that were so, there was no need ·· to- use the word separately from business or trade. The wider import. is attracted even more clearly when we loo'k: at the latter part of the definition which refers io "calling, service, employment, or industrial occupation of avocation "Undertaking" in the first .part of the defi of workmen". nition. and 'industrial occupation or avocation in the second part obviously mean much more than what is ordinanly . understood by trade or business. The definition was apparently int;:nded to include within its scope what might not strictly be called a trade or business venture." So 'industry' overflows trade and · business.~_ Capital, ordinarily assumed to be a component of 'industry', is an .expendable item so far as statutory 'industry' is concerned. To reach this conclusion, the Court referred to 'public utility service' [Sec. 2(n)l and argued: "A public utility service such as railways, telephones and· the supply of power, light or water to the public may be carried on by private· companies or business corporations. Even conservancy or sanitation may be so carried on, though after the introduction of local self-gdvernment this work has in almost every country been assigned as a duty to local bodies like our Municipalities or District Boards or Local Boards. A dispute in these services between employers llnd workmen is an industrial dispute, and the provisd to section 10 lays down that where such a dispute arises ·and a notice under section 22 has been given, the appropriate Govern ment shall make a reference under the sub-section. If the public utility service is carried on by a corporation like a Municipality which is the creature of a statute, and which functions under the limitations imposed by the statute. does it cease to be an industry filr this reason ? The only ground on which one could say that what would amount · · carrying on of an industry if it is done by a private person ceases to be so if the same· work is carried on by a local body is that in the letter there is nothing like a Municipality like the investment of any capital or the existence of a profit earning motive as there generally is in a business. But neither the one nor the other seems a sine qua non or necessary element in the modern conception of indusry ? (emphasis added) Ab•ence of capital does not negative 'industry'. Nay, eveR ·chari table services do not necessarily cease to be 'industries' deflniti, on!illy although populady charity is not industry. Interestingly, the Learned Judge dealt with the point. After enumerating typical municipo] llcti :viti~s he concluded : '. D F ·.(; H • • . - • • - . ) J BA~GALORE SEWERAGE BOARD v. RAJAPPA. (Krishna Iyer, J.) 235 "Some of these functions may appertain to and partake of the natu.re of an industry, while others may not. For instance, there is a necessary element of distinction between the supply of power and light to the inhabitants of a Muni- the running of chgritable hospitals and dis cipality and In ordinary parlance, penJaries for the aid of the poor. the former might be regarded as an industry but not the latter. The very idea underlying the entrustment of such duties or functions to local bodies is not to take them out of the sphere of industry but to secure the substitution of public authorities in the place of private employers and to eliminate the motive of profit-making as far as possible. The levy of for the maintenance pf the services of sanitation and the conservancy pr the supply of light and water is a method adopted and d~vised to make up for the service will a.l;>sence of capital. The undertaking or the still remain within the al!,lbit of what we understand by an industry though it is cauied on with !he aid of taxation, and no immediate material gain by way <Xf profii is envisag- ed." (emphasis added) ' A B C The contention that charitable undertakings are not industries is, D by this token, untenable. Another argument pertinent to our discussion is the sweep of tlte expr~sion 'trade'. The Court refers, with approval, to Lord Wright in Bolton Corporation (143 A.C. 166) where the Law Lord had ()f}served : "Indeed 'trade' is not only in the etymological or dic tionary sense, but. in the legal usage, u term of the widest scope. It is connected originally with the word 'tread' and indicates a way of life or an occupation. In ordinary usage it may mean the occupation of a small shopkeeper equally It may also mean a with that of a commercial magnate. ·skilled craft. It is true that it is often used in contrast with a profession. A professional worker would not ordinarily be called a tradesman, but the word 'trade' is used in the widest application to the appellation 'trade unions'. Professions have their trade unions. It is also used in the Trade Boards Act to include industrial undertakings. I see no reason to ·exclude from the operation of the Industrial Courts Act the activities of local authorities, even without taking into account the fact that these authorities now carry on in most cases im portant industrial undertakings. The order expressly states in its definition section that 'trade' or 'industry' includes the performance of its functions by a 'public local authority'. It is true that these words are used in Part III, which deals with 'recognized terms and conditions of employment', and in Part IV, which deals with 'departures from trade prac tices' in 'any industry or undertaking' and not in Part I . which deals with 'national arbitration' and is the part material illustrating what modern in this case, bnt I take them as E F G H A B c D E F G H 236 SUPREME COURT REPORTS [1978] 3 S.CR. conditions involve-the idea that the functions of local autho rities· may come under the expression 'tra~e or industry'. I think the ·same may be said of the Industnal Courts Act and of Reg. 58-AA, in both of which the word 'trade' is used in the very wide connotation which it bears in the modern legis lation dealing with conditions of employment, particularly in relation to matters of collective bargaining and the like". (emphasis added) In short, 'trade' embraces functions of local authorities, even pro fessions, thus departing from popular notions. Another facet of !he controversy is next touched upon-i.e. profit-making motive is not a sine quo non of 'industry', functionally or definitionally. For this, Powers J, in Federated Municipal and Shire Employees' Union of Australia v. Melbourne Corporation(') was quoted with . emphatic approval where the Australian High Court considered an industrial legislation : --~ "So far as the question in this case is concerned, as the argument proceeded the ground mostly relied upon (after the Councils were held not to be exempt as State instru mentalities) was that the work was not carried on by the municipal corporations for profit in the ordinary serise of the term, although it would generally speaking be carried on by the Councils themselves to save contractors' profits. If that argument were sufficient, then a philanthropist who the same em acquired a clothing factory and employed ployees as the previous owner had employed would not be engaged in an occupation about which an industrial dispute could arise, if he distributed the clothes made to the poor free of charge or even if he distributed them to the poor at If the contention of the res the bare cost of production. pondent is correct, a private cp'nlpany carrying on a ferry would be engaged in an industrial occupation. If a muni cipal corporation carried it on, it would not be industrial. The same argument would apply to baths, bridge-building, quarries, sanitary contracts, gas-making for lighting streets and public halls, municipal building of houses or halls, and industrial undertakings. Even coal many other similar mining for use on municipal railways or tramways would not be industrial work if the contention of the respondents is correct. If the works in question are carried out by con tractors or by private individuals it is said to be industrial, but not industrial within the meaning of the Arbitration Act or Constitution if carried out by municipal corporations. I cannot accept that view". (emphasis added) - The negation of profit motive, as a telling test against 'industry', is clear from this quote. --.: , . '-. (!) 26 C.L.R. 508. . - -:..-·- • llANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 237 All the indicia of 'industry' are packed into the judgment which A condenses the conclusion tersely to hold that 'industries' will cover 'branches of WIYl'k that can be said to be analogous to the carrying out of a trade or business'. The case, read as a whole, contributes to reference to the Act, a few industrial jurisprudence, with special positive facets and knocks down a few negative fixations. Govern ments and municipal and statutory bodies may run enterprises which do not for that reason cease to be industries. Charitable activities may also be industries. Undertakings, sans profit motive, may well be indn.;tries. Professions and not ipso facto out of the pale of in dustries. Any operation carried on; in a manner analogous to trade or business may 'industry'. The popular limitations -0n the concept of industry do not amputate the ambit of legislative generosity in Sec.2 (j). Industrial peace and the smooth supply to the community are among the aims and objects the Legislature had in view, as also the nature, variety range and areas of disputes between employers and employees. These factors must inform the construction of the provision . legitimately be statutory The limiting role of Banerji must also be noticed so that a total view is gained. For instance, 'analogous to trade or business' cuts fantastic sweep. Spiritual under down 'undertaking', a word of takings, casual undertakings, domestic undertakings, war waging, policing, justicing, legislating, tax collecting and the like are, prima fade, pushed out. Wars are not merchantable, nor justice saleable, nor divine grace marketable. So, the problem shifts to what fs 'analogous to trade or business'. As we proceed to the next set of cases, we come upon the annotation of other expressions like 'calling' and get to grips with the specific organisations which call for ide)itifi -cation in the several appeals before us. At thi6 stage, a close-up of the content and contours of the contro versial words 'analogous etc.', which have consumed considerable time of counsel, may be taken. To be fair to Banerji. With the path finding decision which conditioned and canalised and fertilised 5uf5se quent juristic-humanistic ideation, we must show fidelity to the termi nological exactitude of the seminal expression used and search care fully for its import. The prescient words are : branches of work lhat can be said to be analogous to the carrying out of a 'trade or liusi for profit ness'. The same judgment has negatived motive and included charity impliedly, has virtually equated private sector and public sector operations and has even perilously hinted at 'professions' being 'trade'. In this perspective, the comprehensive reach of 'analogous' activities must be measured. The similarity stressed relates to 'branches of work'; and more; the analogy with trade or business is in the 'carrying out' of the economic adventure. So, the parity is in the modus operandi, in the working-not in the. purpose of the project nor in the disposal of the proceeds but in tile organisation of the venture, including the relations between the two 1imbs viz. labour and management. If the mutual the necessity relations, B c D E F G H 238 SUPREME COURT REPORTS [1978] j SC·R .. - · ; A B c D F G method of employment and the process of co-operation in the carrying: out of th~ work b~ar ci.ose resemblance to the organization, method, remu~1e~at~on, relat1onsh1p of employer and employee and the like,. then it 1s mdustry, otherwise not. This is the kernel of the decision. An activity oriented, not motive based, analysis. leading The landmark Australian case in 26 C.I.R. 508 (Melbourne Cor poration).' which 'Yas h.eavily re lie? on in Banerji may engage us. That rulmg contams dicta, early m the century, which make Indian forensic fabianism, sixty years after in the 'socialist' Republic, blush. That apart, the discussion in the judgments dealing with 'industry' from a constitutional angle but relying on statute similar to ours. is instructive For instance, consider the promptings ,of profit 'industry'. Higgins J. crushes that credo thus : as a condition of If it "The purpose of profit-making can hardly be the criterion. were, the labourers who excavated the underground passage for the· Duke of Portland's whim, or the labourers who build (for pay) a tower of Babel or a Pyramid, could not be parties to an 'industrial dis pute'. The worker-oriented perspective is underscored by Isaacs and It is at the same time, as is perceived, contended on the Rich JJ. oart of labour, that matters even indirectly prejudicially affecting the ~orkers are within the sphere of dispute. For instance, at P. 70 (par. 175 ( 4) (a) one of the competing contentions is thus stated : "Long hours proceed from the competition of employer with employer in· the same trade. Employers ought to be prevented from competing in this way at the expense of their workmen." (emphasis added) As a fact, in a later year, Lord James of Hareford, in an award', held that one employer in a certain trade must conform to the practice of others. What must be borne steadily in mind, as evidenced by the nature of the claims made, is that the object of obtaining a large share of the product of the industry and of exercising a voice as to the general conditions under which it shall be carried on (par. l 00) covers all means direct and incidental without which the main object cannot be fully or effectively attained. Some of these will be particularizecr but in the meantime it should be said that they will show in them selves, and from the character of the disputants this will be confirmed that so long as t.he operations am of capital and labour in co-operation for the satisfaction of material human needs, the objects and demand~ of labour are the same whether the result of the operations be money· The inevitable conclusion,. as it seems to us, from or n1011ey's-worth. this is that in 1894 it was well understood that "trade disputes". which at one time had a limited scope of action, without altering their in herent and essential nature, so developed as to be recognised bette1 under the name of "industrial disputes' 'or "labour disputes," and to be more and more founded on the practical view that human labour was not a mere asset of capital but was a co-operating agency of equal dignity-a working partner-and entitled to qonsideration as. such". The same two judges choose to impart a wide construction to the: word 'industry', for they ask : 'How can we, conformably to recog- ' MN-0ALORE SEWERAGE BOARD v. RA.TAPPA (Krishna Iyer, !.) 239 nizeu rules of legal construction, attempt to limit,· in an instrument of self-government for this Continent, the simple and comprebensi'.'.'e words "industrial disputes" by any apprehension of what we mignt imagine would be the eJl'ect of a full literal construction, or by con jecturing what was in the minds of the framers of the Constitution, recently assumed~ or by the forms industrial disputes have more "Industria! warfare" is no mere figure of speech. It is not the mere It is recognized by the law as the correct des phrase of theorists. cription of internal conflicts in industrial matlers. It was adopted by Lord Loreburn L.C. in Conway v. Wade (A) (1909) A.C., at p. 511. Strikes and lock-outs are, by him, correctly described as Indian industrial "weapons".' These arguments hold good for statute, and so, Sec. 2(j) must receive comprehensive force, limited only by some cardinal criteria. One such criterion, in the monarchical vocabulary of English Jurisprudence, is Crown exemp tion, re-incarnating in a Republic as inalienable functions of consti tutional government. No government, no order; no order, no law no rule of law, no industrial relations. So, core functions of the State are paramount and paramonntcy is paramountcy. But this doctrinal exempli6n is not expansionist bnt strictly narrowed to necessltm\s Isaacs and Rich JJ., dwell on this topic and, after quot functio'Gs. ing Lord Watson's test of inalienable functions of a ConstitL1tional government, state : "Here we have the discrimen of Crown exemp tion. If a municipality either [(1897) 1 Q.B., at pp. 70-71] ii legally empo'wered to perform and does perform any function whatever for the Crown, or [(1897) 1 Q.B., at p. '71] is lawfully empowered to perfoi; tn and does perform any function which constitntionally is in alienably a Crown function-as, for instance, the adminiStration of justic<>--'-tlle municipality is in law presumed to represent the Crown, and the exemption applies. Otherwise, it is outside that exemption, and, if impliedly exempted at all, some other principle must be re sorted to. The making and maintenance of streets in the munici polity is not within either proposition". (Italics supplied). literal A c D E Now, the cornerstone of industrial law is well laid by Banerji, F supported by Lord Mayor of the City of Melbourne. A chronological survey of post-Banerji decisions 1o~ this Court, with 'accent on the juristic contribution registered by them, may be meth9dical. Thereafter, cases in alien jurisdictions and derivation of guidelines may be atten1pted. Even here, we may warn ourselves that the literal latitude of the words in the definition cannot be allowed grotesqnely inflationary play but musf"be read down to accord with the broad industrial sense of the nation's economic community of which Labour is an integral part. To bend beyond credible limits is to break with facts, unless language leaves no optio!i. Forensic inflation of the sense of words shall not lead to an adaptational break-down out raging the good sense of even radical realists. After all, tlie Act bas been drawn on an industrial canvas to solve the problems of industry, not of chemistry. A functional focus and social control desideratum mnst be in the mind's eye of the judge. G H 240 SUPREME COURT REPORTS [1978] 3 S.CR. A B The two landmark cases, The Corporation of the City 'of Nag pur v. Its Employees(') and State of Bombay and Others v. The Hospital Mazdoor Sabha & Ors.(') may now be analysed in the light of what we have just said. Filling the gaps in the Banerji decision and the authoritative connotation of the fluid phrase 'analogous to trade and business' were attempted in this twin decisions. To be analO·· gous is to resemble in functions relevant to the subject, as between some kinship like features of two apparently different through resemblance to trade or business, is the key to the problem, if Banerji is the guide star. Partial similarity postulates selectivity of characteristics for comparability. Wherein lies the analogy to trade or business, is then the query. things. So, c Sri Justice Subba Rao, with uninhibited logic, chases this thought and reaches certain tests in Nagpur Municipality, speaking for a un animous Bench. We respectfully agree with much of his reasoning If the ruling were right, as and proceed to deal with the decision. we think it is, the riddle of 'industry' is resolved in some measure. Although foreign decisions, words and phrases, lexical plenty and ·definitions from other legislations, were read before us to stress the D necessity of direct co-operation between employer and employees in ·the essential product of the undertaking, of the need for . the com mercial motive, of service to the community etc., as implied inarti culately in the concept of 'industry', we bypass them as but margi nally persuasive. The rulings of this Court, the language and scheme of the Act and the well-known canons of construction exert real pres- sure on our judgment. And, in this latter process, next to Bmierji comes Corporation of Nagpur which spreads the canvas wide anCI illumines the expression 'analogous to trade or business', although it comes a few days after Hospital Mazdoor Sabha decided by the same Bench. E To be sure of our approach on a wider basis let us cast a glance at internationally recognised concepts vis-a-vis iudustry. The Inter national Labour Organisation has had occasion to consider freedom of association for labour as a primary right and collective bargaining followed by strikes, if necessary, as a derivative right. The question has arisen as to whether public servants employed in the. crucial func tions of the government fall outside the orbit of industrial conflict. Convention No. 98 concerning the Application of the Principles of the Right to Organise and to Bargain Collectively, in . Article 6 states : F G "This Convention does not deal with the position of Public servants engaged in the aaministration of the State, nor shall it be construed as prejudicing rights or status in any way." H ' (1"I (21 [1960] 2 S.C.R. 942. [1960] 2 S.C.R. 866. .r -~-- BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 24! Thus, it is well-recognised that public servants in the key sectors of Administration stand out of the industrial sector. The Committee of Experts of the ILO had something to say about the carving out of the public servants from the general category. A Incidentally, it may be useful to note certain clear statements made by ILO on the concept of industry, workmen and industrial dis- B pute, not with clear-cut legal precision but with sufficient particu larity for general purposes althougb looked at from a different angle. We quote from 'Freedom of Association', Second edition, 1976, which is a digest of decisions of the Freedom of Association Committee of the Governing Body of the !LO : "2. Civil servants and other workers in the employ of the State.

#250. Convention No. 98, and in particular Article 4 thereof concerning the encouragement and promotion of collective bargaining, applies both to the private sector and to nationalised undertakings and public bodies, it being possible to exclude from such application public servants engaged in the administration of the State. 141st Report, Case No. 729, para. 15.

#251. Convention No. 98, which mainly concerns . col lective bargaining, permits (Article 6) the exclusion of "public servants engaged in the administration of the Stale". In this connection, the Committee of Experts on the Appli cation of Conventions and Recommendations has pointed out that, while the concept of public servant may vary to some degree under the various national legal systems, the · exclusion from the scope of the Convention of persons employed by the State or in the public sector, who do not act as agents of the public authority (even though they may be granted a status identical with that of public officials engaged in the administration of the State) is contrary to the meaning of the Convention. The distinction to be drawn, accordingly to the Committee, would appear to be basically between civil servants employed in various capa cities in governmen1 ministries or comparable bodies on the one hand and other persons employed by the government, by public undertakings or by independent public corpora tions. 116th Report, Case No. 598, para. 377; !21st Report, Case No. 635, para. 81; 143rd Report, Case No. 764, para. 87.

#254. With regard to a complaint concerning the right of teachers to engage in collective bargaining, the Committees, in the light of the principles contained in Convention No. 98 drew attention to the desirability of promoting voluntary c D E F G H - 242 SUPREME COURT REPORTS (19781 3 s.c.R. col!ective bargaining, according to national conditions, with a view to the regulation of terms and conditions of employ ment. 118th Report, Case No. 573, para. 194. 255. The Committee has pointed out that Convention No. 98, dealing with the promotion of collective bargaining, covers all public servants who do not act as agents of public authority, and consequently, among these, empioyers of the postal and telecommunicntions services. 139th Report, Case No. 725, para. 278. 256. Civil aviation technicians working under the juris diction of the armed forces cannot be considered, in view of the nature of their activities, as belonging to the «rmed forces and as such liable to be excluded from the guarantees laid down in Convention No. 98; the rule contained in Article 4 of the convention concerning collective bargainings should be applied to them. 116th Report, Case No. 598, paras. 375-378. 'industry'. The wings of This divagation was calculated only to emphasise certain funda mentals in international industrial thinking which accord with a wider the word conceptual acceptation for 'industry' have been spread wide in section 2(j) and this has been brought out iu the decision in Corporation of Nagpur (supra). That case was concerned with a dispute between a municipal body a1.1d its employees. The major issue considered there was the meaning of the much disputed expression 'analogous to the carrying on of a trade or business''. Municipal undertakings are ordinarily Baroda Borough Municipality(!) held. Even so the scope of 'indus try' was inv~stigatcd by the Bench in the City of Nagpur which affirm ed Banerji and Baroda. The Court took the view that the words used in the definition were prima facie of the widest import and declined to curtail the width of meaning by invocation of noscitur a sociis. Even so, the Court was disinclined to spread the n~'t too wide by expanding the elastic expressions calling, service, employment and handicraft. To be over-inclusive may be impractical and so while accepting the enlargement of meaning by the device of inclusive defi nition the Court cautioned : industries "But such a wide meaning appears objects for which the Act was passed. It is, therefore, neces sary to limit its scope on permissible grounds, having regard to the aim, scope and the object of the whole Act." to over-reach After referring to the rule in Heydon's case, Subba Rao, J. pro - ceeded to outline the ambit of industry thus : "The word 'employers' iu and the wo~d 'employees' in cl. (b) indicate that the fundamental basIS for the application of the definition is the existence of that (c) cl. B c D E G H (I) [1957] S.C.R. 33. BANGALORE SEWERAGE BOARD v. RA.JAPPA. (Krishna Iyer,!.) 243 relationship. The cognate definitions of 'industrial dispute', 'employ'er', 'employee', also support. The Jong title of the Act as well as its preamble show that the Act was passed to rnake provision for the promotion of industries and peace ful and amicable settlement of disputes between employers and employees in an organised activity by conciliation and arbitration and for certain other purposes. If the preamble is read with the historical background for the passing of the Act, it is manifest that the Act was introduced as an impor tant step in achieving social justice. The Act seeks ameliorate the service conditions of the workers, to provide a machinery for resolving their conflicts and to encourage co-operative effort in the service of the community. The history of labour legislation both in England and India also shc, ws that it was aimed more to ameliorate the conditions of service of the labour in organised activities than to any thing else. The act was not intended to reach the personal service which do not depend upon the employment of a . labour force." I> E Whether the exclusion of personal services is warranted may be examined a little later. The Court proceeded to carve out the negative factors which, not withstanding the literal width of the language of the definition, must, industry. for other compelling reasons, be kept out of the scope of For instance, sovereign functions of the State cannot be included altboutJi what such functions are has been aptly termed 'the primary and inalienable functions of a constitutional government'. Even here we may point out the inaptitude of relying on the doctrine of regal powers. That has reference, in this context, to the Crown's liability in tort and has nothing to do with Industrial Law. In any case, it h open to Parliament to make law which governs the State's relations with its employees. Articles 309 to 311 of the Constitution of India, the enactments dealing with the Defence Forces and other legislation dealing with employment under statutory bodies may, expressly or by necessary implication, exclude the operation of the Industrial Disputes Act, 1947. That is a question of interpretation and statutory exclu sion; but, in the absence of such provision of law, it may indubitably be assumed that the key aspects of public administration like public justice stand out of the circle of industry. Even here, as has been brought put frotn the Cxccrpts of ILO documents) it is not every is excluded but only certain categories primarily employee who engaged and supportively employed in the discharge of the essential In a limited way, this head functions of constitutional government. of exclusion has been recognised throughout. Although we are not concerned in this case with those categories of employees who particularly come under departments charged with the responsibility for essential constittrtionat functions of government, it is appropriate to state that if there are industrial units severable from the essential functions and possess an entity of their own it may be plausihle to hold that the employees of tlrose units are workmen H - 244 SUPREME COURT REPORTS (1978] 3 s.c.R. A B c and those undertakings are industries. A blanket exclusion of every one. of the host of employees e~gag~ J;>Y govermnent in departments falling under general rubncs like, JUStlce, defence, taxation legisla ture, may not necessarily be thrown out of the umbrella of tbe Act. We say no mow except to observe that closer exploration, not sum· mary rejection, is necessary. The Court proceeded, in the Corporation of Nagpur case, to pose for itself the import of the words 'analogous to the carrying out of a trade or business' and took the view that the emphasis was more on 'the nature of the organised activity implicit in trade or business than to equate the other activities with trade or business'. Obviously, non-trade operations were in many cases 'industry'. Relying on the Fabricated Engine Drivers(') Subba Rao, J., observed : "It is manifest from this decision that even activities of a municipality which cannot be described as trading activi ties can be the subject-matter of an industrial disputes." The true test, according to the Learned Judge, was concisely expressed by Isaacs J., iu his dissenting judgment in the Federated State School Teachers' Association of Australia v. State of Victoria.(') D "The material question is : What is the nature of actual function assumed-is it a service that the State could have left to private enterprise, and, if so fulfilled, could such a dispute be 'industrial' ?". Thus the nature of actual function and of the pattern of ' organised activity is decisive. We will revert to this aspect a little later. E /,,.. It is useful to remember that the Court rejected the test attempted by counsel in the case : F G H "It is said that unless there is a quid pro quo the· service it cannot be an industry. This is the same argument, namely, that the service must be in the nature of trade ,in a different garb." - We agree with this observation and with the further observation that there is no merit in the plea that unless the public who are benefited by the services pay in cash, the services so rendered cannot be indus try. Indeed, the signal service rendered by the Corporation of Nagpur is to dispel the idea of profit-making. Relying on Australian cases which held that profit-making may be important from the income tax point of view but irrelevant from an industrial dispute point of view, the Court approved of a critical passage in the dissenting judgment of Isaacs J., in the School Teachers' Association case (supra) :' "The contention sounds like an echo from the dark ages of industry and political economy. . . . . . . . . . Such disputes are not simply a claim to share the material wealth. ,, ' : .. " (1) (2) (1913) 16 C.L.R. 245. (1929) 41 C.L.R. 569. • • j llANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 245 'Monetary considerations for service is, therefore, not · an essential characteristic of industry in a modern State." Even according to the traditional concepts of English Law, profit is a has to be .disregarded when ascertaining whether an enterprise business : ' "3. Disregard of Profit. Profit or the intention to make profit' is not an essential part of the legal definition of a trade or business; and payment or profit does not constitute a trade or business that which would not otherwise be such". (Halsbury's Laws of England, Third Edition, Vol. 38, p. 11). A B Does the badge of industrialism, broadly understood, banish, from its fold, education ? This question needs fuller consideration, as it has been raised in this batch of appeals and has been answered i"n favour of employers by this Court in the Delhi University case.(') But since Subba Rao, J., has supportively cited Isaacs J. in .Techers' Association (supra), which relates to the same problem, we may, even here, prepare the ground by dilating on the subject with special refe rence to the Austrnlia:n case. That learned Judge expressed surprise at the very question : School c D "The basic question raised by this case, strange as it may seem, is whether the occupation of employees engaged in edu cation, itself universally recognized as the key industry to all skil:ed ·occupations, is 'industrial' within the meaning of the Constitution". · The employers argued that it was fallacious to spin out 'industry' doctrine. from 'education' and the logic was a specious economic Issacs J., with unsparing sting and in fighting mood, stated and futed the plea : "The theory was that society is industrially organised for the production and distribution of wealth in the sense of tan gible, ponderabJ.;, corpuscular wealth, and "industrial dispute" cannot possibly occur except where there is furnished to the public-the consumens-by the combined efforts of employers and employed, wealth of that "nature. not being Consequently, say the employers, "education" "wealth" in that sense, there never can be an "industrial dis~ pute" b<~tween employers and employed engaged in the avoca tion of education, regardless of the wealth derived by the employers from the joint co-operation. therefore The contention sounds like an echo from the dark ages of industry and political economy. It not merely ignores the constant currents of life around us, which is the real danger in deciding questions of this nature, but it also forgets the memorable industrial organization of the nations, not for the production or distribution of material wealth, but for ser- (1) [1964] 2 S.C.R. 703. E F G H • ·~ ' 246 SUPREME COURT REPORTS [1978] 3 s.c.1. vices, national service as the service of organized industry must always be. Examina\ion of this contention will not onlf completely dissipate it, but will also serve to throw material light on the question in hand generally. Th0 contention is radically unsound for two great reasons. It erroneonsly conceives the object of national industrial organization and thereby unduly limits the meaning of the terms "production" and. "wealth" when used in that connection. But it further neglects the fundamental character of "industrial disputes" as a distinct and i'nsistent phenomenon of modern society. Such disputes arc not simply a claim to share the material wealth jointly produced and capable of nogistration in statis tics. At heart they are a struggle, constantly becoming more intense on the part of the employed group engaged in co operation with tho employing group in renderi'ng services to the community essential for a higher general humanwelfarc, to share in that welfare in a greater degree. . . . . . . . . . . .. . That contention, if acced·~d to, would be revolutionary ... . . . . . . . . . . . . . . . . . . . . . . . How could it reasonably be saiol that a comic song or a jazz performance, or the representa tion of comedy, or a ride in tramcar or motor-bus, pilot ing a ship, lighting a lamp or showing a moving picture is more "materiar' as wealth than instruction, either cultural or v,oca tional ? Indeed, to take one instance, a workman who travels is not in a tramcar a mile from his home to his factory more efficient for his daily task than if he walked ten yards, whereas his technical training has a direct effect in increasing If music or acting or personal transportation is ad output. mitted to be "industrial" because each is productive of wealth to the employer as his businer;s undertaking, then an educa tional establishment stands on the same footing. But if edu cation is excluded for the reason advanced, how are V<'e to admit barbers, hair-dressers, taxi-car drivers, furniture re suggest them movers, and other occupations that readily selves ? And yet the doctrine would admit manufactures of intoxicants and producers of degrading literature and pic tures, because these are considered to be "wealth" ·J The doctrine would concede, for instance, that establishments for the training of performing dogs, or of monkeys simulating human behaviour, would be "industrial," because one would have increased ma~erial wealth, that is, a more valuable dog or monkey, in the sense that one could exchange it for more money. If parrots are taught to say "Pretty Polly" and to dance on their perch, that is, by concession, industrial, be cause it is the production of wealth. But if Anstrialian youths are trained to read and write their language correctly and in other necessary elements of culture and vocation making them more efficient citizens, fitting them with more or less directness to take their place in the general industrial ranks of the nation and to render the services required by the commnnity, that training is said not to be wealth and the work done by teachers employed is said not to be industrial." JI G JI BANGALORE SEWERAGE B.OARD v. RAJAPPA (Krishna Iyer,!.) 247 So long as services are part of the wealth of a nation-and it obscurantist to object to it-educational services arc wealth, are 'indust- rial'. We agree with Isaacs J. is A More closely analysed, W\l may ask ourselves, as Isaacs J. did, whe ther, if private scholastic establishments carried on teaching on the same Jines as the State schools, giving elementary education free, and charging fees for the higher subjects, providing the same curriculum and so on, by means of employed teachers, would such dispute as we have here be an industrial dispute ? ................ "I have already indicated my view", says Isaacs J. "that education so provided consti tutes in itself an independent industrial operation as a service rendered to the community. Charles Dic!Nhs evidcnt:y thought so when ninety y~ars ago Squeers called his school "the shop" anJ prided himself on Nickleby's being "cheap" at £ 5 a year and commensurat~ living condi tions. The world has not turned back since then. Committee on Industry and Trad"'- in their report to the British Prime It Minister, ~ncluded among "Trade Unions" those called "teaching." the.re appoars that in 18.97 there were six unions with a total member ~hip of 45,319 and in 1924 thep, were seventeen unions with a mem bership of 1,94,946. The true position of education in relation to the actively oporative trades is not really doubtful. Education, cultural ::ind vocational, is now and is daily becoming as much the artisan's capital and tool, and to a great extent his safeguard against unemploy ment, as the employers' banking credit and insurance policy are part of his meaoo to carry on the business. There is at least as much rea son for includi'ng the educational establishments in the constitutio.nal power as "labour" services, as there is to include insurance companies as "capital" servio.;:s." In 1926 B c D E We have extensively excerpted from the vigorous dissent because the same position holds good for India which is emerging from feudal Jn Gandhi's India basic education illiteracy to industrial education. and handicraft merge and in the latter half of our century higher edu cation involves field studies, factory training, house surgeoncy and clini cal education, and, sans such technological training and education in If education and humanities, industrial progress is self-condemned. · training are integral to industrial and agricultural activities, such services are part of industry even if highbrowism may be unhappy to acknow ledge it. It is a class-conscious, inegalitaria'n outlook with an elitist aloofness which makes some people shrink from we accepting educa tional institutions, vocational or other as industries. The definition is wide, embraces training for industry which, in truth, ensconces all pro cesses of producing goods and services by employer-employee co operation. Education is the nidus of industrialization and industry. itself F G We may consider certain aspects of this issue while dealing with later cases of our Court. Suffice. it to say, the unmincing argument of Isaacs J. has been specifically approved in Corporation of Nagpur and Hospital Mazdoor Sabha (supra) in a different aspect. H Now we revert to the more crucial part of Corporation of Nagpur. It is meaningful to notice that in that case, the Court, in its incisive • .• ... ~ • • • ' l • ~ , - ,...,..__ ... 248 SUPREME COURT REPORTS [1978] 3 s.c.R. A analysis, department by department of variform municipal services, specifically observed : ,,_. "Education Department : This department looks after the primary education, i.e., compulsory primary education within (See the evidence of Witness the limits of the Corporatio'n. No, 1). This service can equally be done. by private persons. This department satisfies the other tests. The employees of this department coming under the definition of "employees" under the Act would o~rtainly be entitled to the benefits of the Act."

#1. The substantial break-through achieved by this decffiion in laying bare the fundamentals of 'industry' in its wider sense deserves mention. The 'analogous' species of quasi The ruling tests are clear. trade quailly for becoming 'industry' if the najure of the organized activity implicit in a trade or business is shared by them. (See p. 960. It is not necessary to 'equate the the entire organisational activity). other activities with trade or business'. The pith and substance of the matter is ' that the structural, organisational, engineering aspect, the cr.ucial industrial relations like wages, leave and other service condi tions as well as characteristic business methods (not motives) in run ning the enterprise, govern the conclusion. Presence pf profit motive is expressly negated as a criterion. Even the quid pro quo theory which is the same monetary object in a milder version-has been dismis sed. The· subtle distinction, drawn in lovely lines and pressed with emphatiC effect by Sri Tarkunde, between gain a"nd profit, lxotween no profit no-loss basis having different results in the private and public sectors, is fascinating but, in the rough and tumble, and sound and fnry of industrial life, snch nnances break down and nice refinements defeat. For the same reason, we are disinclined to chase the differential ambits of the first and the second parts of Sec. 2(j). Both read tog, ther and each viewed from the angle of employer or employee and applied in its sphere, as the barned Attorney General pointed out, will make sense. If the nature of the activity is para-trade or quasi-business, it is of no moment that it is undertaken in the private sector, joint sector, public <ector, philanthropic sector or labour sector 'it is industry'. It is the human sector, the way the employer-employee a relations are set up and processed that gives rise to claims, demands, tensions, adjudica That is the raison tions, settlements trnce and peace in industry. d' etre pf industrial law itself. Two seminal guidelines of great moment flow from this decision 1. the primary and predpminant activity test; and 2, the integrated The concrete application of the~, two-fold tests is illus activity test. trated in the very case. We may set out in the concise·words of Subba Rao J., the sum-up : "The result of the discnssion may be summarised thus : (1) The definition of "?ndustry" in the Act is very compre hensive. It is in two parts : one part defines it from the stand point of the employer and the other from the standpoint of If an activity falls under either part of the the employee. B c D E F G H BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, 1.) 249 definition, it will be an industry within the meaning of the Act. (2) The history of industrial disputes and the legislation recognizes the basic concept that the activity shall be an or- ganised one and not that which pertains to private or personal (3) The regal functions described as primary employment. and inalienable functions of State though statutorily delegated to a corporation are necessarily excluded from the purview of the defiinition. Such regal functions shall be confined to legislative power, administration of law and judicial power. ( 4) If a service rendered by an individual or private person would be an industry, it would equally be an industry iu the hands of a Corporation. ( 5) If a service rendered by a cor- poration is an industry, the employees in the departments connected with that service, whether financial, administrative or eirecutive, would be entitled to the benefits of the Act ( 6) If a department of a municipality discharged many functions, some pertaining to industry as defined in the Act and other non-industrial activities, the predominant functions of the de- partment shall be the criterion for the purpose of the Act." By these tokens, which find assent from us, the tax department of the local body is 'industry'. The reason is this. "The scheme of the Corporation Act is that taxes and tees are collected in order to enable the municipality to discharge If the functions so discharged are its statutory functions. wholly or predominantly covered by definition of "indus try", it would be illogical to exclude the tax department from the definition. While in the case of private individuals or firms services are paid in cash or otherwise, in the case of public institutions, as the services are rendered to the public, the taxes collected from them constitute a fund for perform ing those services. As most of the services rendered by the municipality come under the definition of "industry", we should hold that the employees of the tax department are · also entitled to the benefits under the Act. The health department of the municipality too is held in that case to be 'industry'- a fact which is pertinent when we deal later with hospitals, dispensaries and health centres. "This. department looks after scavenging, sanitation, con trol of epidemics, control of food adnlteration and running of public dispensaries. Private institutions can also render these services. It is said the contml of food adulteration and the control of epidemics cannot ·be done by private individuals and institutions. We do not see why. There can be pri vate medical units to help in the control of epidemies Individuals may get the food articles pur remuneration. chased by them examined by the medical unit aud take neces sary action against guilty merchants. So too, they can take advantage of such a unit to prevent epidemics by having 17--21lSCI/78 A B c D E F G H - • - L ' 1- 250 SUPREME COURT REPORTS [1978] 3 S.C·R. A B c This department also necessary inoculations and advice. satisfies the other tests laid down by us, and is an industry within the meaning of the definition of 'industry" in the Act." Even the General Administration Department is 'indus try'. Why? "Every big company with different sections will have a If the various depart general administration department. thii> industries, ments collated with the department are department would also be a part of the industry. Indeed the efficient rendering of all the services would depend upon the proper working of this department, for, pther wise there would be confusion and chaos. The Industrial Court in this case has held that all except five of the departments of the Corporation come under the defi nition of "industry" and if so, it fp'llows that this depart ment, dealing predominantly with industrial departments, is also an industry. Hence the employees of this depart ment are also entitled to the benefits of this Act." D Running right through are three tests : (a) the paramount and predominant duty criterion (p. 971); (b) the specific service being (P. 960) and an integral, non-severable part of (c) the irrelevance of the statutory duty aspect. the same activity functions p'f this department are "It statutory and no private individual can discharge statutory functions. The question is not whether the dis charge of certain functions by the Corporation have statutory hacking, but whether those functions can equally be performed by private individuals. The provisions of the Corporation Act and the bye-Jaws prescribe certain specifications for submission of plans and for the sanction of the authorities concerned before the building is put up. The same thing can be done by a co-operative society or · a private individual. Co-operative societies and private individuals can allot lands for building houses in accord ance with the conditions prescribed by law in this regard. The services of. this department are therefore analogous to those of a private individual with the difference that o'nc has the statutory sanction behind it and the other is gov erned by terms of contracts." E F G He it noted that even co-operatives are covered by the learned Judge although we may deal with that matter a little later. H The same Bench decided both Corporation of Nagpur and Hospital Mazdoor Sabha. This latter case may be briefly consider ed now. It repels the profit motive and quid pro, quo theory as having any bearing on the question .. The wid~r imP?J! .of Sec. 2(_j) is accepted but scope. it expels essential 'sovereign act1v1t1es from BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Tyer, J.) 251 It is necessary to note that the hospital concerned m that case was run by ·Government for medical relief to the people. Nay more. It had a substantial educational and training role. "This group serves as a clinical training group tor students of the Grant Medical College which is a Government Medical College run and managed by the appellant for im parting medical sciences leading to the Degree of Bachelor of Medicine and Bachelor of Surgery of the Bombay University as well -as var\o'us Post-Graduate qualifications of the said University and the College of Physicians and Surgeons, Bombay; the group is thus run and managed by the appellant to provide medical relief and to promote the health of the people of Bombay." And yet the holding was that it was an Industry. Medical educa It has no vulgarising tion, without mincing words, is 'industry'. import at all since the term 'industry' as a technical one purpose of the Act, even as a master-piece of painting is priceless art but is 'goods' under the Sales Tax Law, without any philistinic things and import. Law abstracts certain attributes of persons assigns juridical values without any pejorative· connohtion about other aspects. The Court admonishes that : .ar . - \ - l - ' "( importance and "'Industrial adjudication has necessarily to be aware of the current of socio-economic thought ground; it must recog industrial nise that in the modern welfare State healthy relations are a matter of paramount ;ts essential function is to assist the State by helping a solu tion of industrial disputes which constitute a distinct and persis!ent phenomenon of modern industrialised States. In attempting to solve industrial disputes industrial adjudica tion does not and should not adopt a doctrinaire approach. It must evolve some working principles and should gene rally avoid formulating or adopting abstract generalisations. Nevertheless it cannot harm back to old age notions about the relations between -employer and employee or doctrine of laissez faire which then governed the regulation of the said relations. That is why, we think in construing the wide words used in Section 2 (j) it would be erroneous to attach undue importance to attributes associated with business or trade in the popular mind in days gone by." (pp. 875-6) Again, this note is reported on a later page : "Isaacs J. has uttered a note of caution that in dealing with industrial dispufes industrial adjudicators !'lust be con versant with the current knowledge on the subject and they shi:luld not ignore the constant current~ of !ife ar.oun.d the':" for otherwise it would introduce a senous rnfirm1ty m their the general characteristics of approach. Dealing with industrial enterprise the learned. Judge observed . that contribute more or less to the general welfare of the com munity." p. 883) A B c D E F G H ).__ - • I •• , A B c D E F G 252 SUPREME COURT REPORTS [1978] 3 s.c.a. A conspectus of the clauses has induced Gajendragaclkar J. take note of the impact ,of provisions regarding public utility service also: the statute are considered "If the object and scope of there would be no difficulty in holding that relevant words of wide import have been deliberately used by Legislature in defining "industry" in Sec. 2(j). The object of the Act was to make provision for the investigatidn and settlement of industrial disputes, and the extent and scope of its provisions would be realised if we bear in mind the definition of "industrial dispute" given by Sec. 2(k), of "wages" by Sec. 2(rr), "workman" by s. 2(s), and of "employer" by s. 2(g). Besides, the definition of a public significant. utility service prescribed by s. 2(m) is very One has merely tj.l glance at the six categories of public utility service mentioned by s. 2(m) to realise that the rule of construction on which the appellant relies is inapplicable in interpreting the definition prescribed bys. 2(j) ." (p. 875) The positive delineation of 'indusry' is set in these terms : ". . . . . . as a working principle it may be stated that an activity systematically or habitually undertaken for the pro duction or distribution of goods or for the rendering of material service to the community at large or a part of such community with the help of employees is an under taking. Such an activity generally involves the coopera tion of the employer and the employees; and its Object It must be orga the satisfaction of material human needs. nised or arranged in a manner in which trade or business It must not be casual is generally organised or arranged. nor must it be for oneself nor manner in which the activity in question is (ltganised or arranged, the condition of the co-operation between em ployer and the employee necessary for its success and its object to render material service to the community can be regarded as some of the features which are distinctive of acti Judged by this test there vities to which s. 2(j) applies. would be no difficulty in holding that the State is carrying on an undertaking when it runs the group of Hospitals question." (p. 879) for pleasure. Thus Again, "It is the character of the activity which decides the ques tion as to whether the activity in question attracts the pro vision of Sec. 2(j); who conducts the activity and whether it is conducted for profit or not do not make a material difference." (p. 878) H By these tests even a free or charitable hospital is an industry. That the court intended such a conclusion is evident : "If that be so, if a private citizen runs a hospital with out charging any fees from the patients treated in it, it would BANGALORE SEWERAGE BOARD v. RAJAPPA. (Krishna Iyer,/.) 253 nevertheless be an undertaking under s. 2 (j). Thus character of the activity involved in running a hospital brings the institution of the hospital within s. 2(j)" The 'rub' with the ruling, if we may with great deference say so, begins when the Court inhibits itself from effectuating the logical thrust of its own crucial ratio : " ........ though s. 2(j) uses words of very wide del\otation, a line would have to be drawn in a fair and ;ust manner, so as to exclude some callings, services or undertak ings. 1f all the words used are given their widest meaning, all services and all callings would come within the purview of the definition; even service rendered by a servant purely in a personal or domestic matter or even in a casual way would fall within the definition. It is not and cannot be suggested that in its wide sweep the word "service" is intend ed to include service howsoever rendered in whatsoever capa city and for whatsoever reason. We must, therefore, consi der where the line should be drawn and what limitations can and should be reasonably implied in interpreting the wide words used in s. 2(j); and that no doubt is a somewhat diffi cult problem to decide."(p.876) A B c D is a 'fair and just manner' ? It must be founded on grounds What justifiable by principle derived from the statute if it is not to be sublimation of subjective phobia, rationalization of interests or judici alisation of non-juristic negatives. And this bunch, in our respectful view, has been proved true not by positive pronouncement in the case but by twq points suggested but left open. One relates to education E and the other to professions. We will deal with them in due course. Liberal Professions When the delimiting line is drawn to whittle down a wide defini tion, a principled working test, not a projected wishful thought, should be sought. This conflict surfaced in the Solicitor's case ( 1962 Supp . (3) S.C.R. 157). Before us too, a focal point of contest was as to F whether the liberal professions are, ipso facto, excluded from 'industry'. Two grounds were given by Gajendragadkar, J. for over-ruling Sri A. S. R. Chari's submissions. The doctrine of direct co-operation and the features of liberal professions were given as good barric~de professional enterprises from the militant clamour for more by lay labour. The learned judge expressed himself on salvational plea : reasons G "When in the Hospital case this Court referred to organisation of the undertaking involving the co-operation of capital and labour or the employer and his employees, obviously meant the co-operation essential and necessary for the purpose of rendering material service or for the purpose It would be realised that the concept of of production. industry postulates partnership between capital and labour or between the employer and his employ~es. It ~s un~er this partnership that the employer contnbutes his capital H -... -· ' .. '-- r_ ___ \ .. 254 SUPREME COURT REPORTS [1978] 3 s.c.a. A B c D E F It cannot be suggested and the employees their labour and the joint contribution of capital and labou~ leads directly to the production which the mdustry ~as m view. In other words, the co-operation bet ween capital and labour or between the employer and his employees wl; tich is treated as a working test in determining ~hether. an)'. activity amounts to an industry, is the co-opera t10n which 1s directly involved in the production of goods or in the rendering of service. every form or aspect of human activity in which capital and labour co-operate or employer and employees assist each other is an industry. The distinguishing feature of an indus try is that for the production of goods or for the rendering of service, co-operation between capital and labour or between the employer and his employees must be direct and must be essential." pp. 163-164 Co-operation to which the test refers must be co-operation between the employer and his employees which is essential for carrying out the purpose of the enter prise and the service to be rendered by the enterprise should be the direct outcome of the combined efforts of the employer and the employees. · The second reason for exoneration is qualitative. 'Look ing at this question in a broad and general way, it is not easy to conceive that a liberal profession like that of an attorney could have been intended by the Legislature to fall within the definition of "industry" under s. 2(j). The very con- cept of the liberal professions has its own special and dis tinctive features which do not readily permit the inclusicm of the liberal professions into the four corners of industrial law. a The essential basis of an industrial dispute is that it is dispute arising between capital and labour in enterprises where capital and labour combine to produce commodities or to render service. This essential basis would be absent following a in the case of liberal professions. A person liberal profession does not carry on Ws profession of his employees and the principal, if not the sole, capital which he brings into his profession is his special or peculiar intellectual and educational equipment. That is why on broad and general considerations which cannot be ignored, a liberal profession like that of an attorney must, we think, be deemed to be outside the definition of "industry" under section 2(j)". pp. 167-168 Let us examine these two tests. In the sophisticated, subtle, com plex, assembly-line operations of modern enterprises, the test of 'direct' and 'indirect', 'essential' and 'inessential', will snap In an American automobile manufactory, everything from shipping iron 'Ofe into and shipping care out of the vast complex takes place with myriad H major and minor jobs. A million administrative, marketing and adver tising tasks are done. Which, out of this maze of chores, is direct? A battle may be lost if winter-wear were shoddy. Is the army tailor a direct contributory ? easily. • I • .; I .. --- -· \ BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, !.) 255 An engineer may lose a competitive contract if his typist typed wrongly or shabbily or despatched late. He is a direct contributory to the disaster. No lawyer or doctor can impress client or court if his public relations job or ]¥nne work were poorly done, and that part depends on smaller men, adjuncts. Can the great talents in administra tion, profession, science or art shine if a secretary fades or faults ? The whole theory of direct co-operation is an improvisation which, with great respect, hardly impresses . Indeed, Hidayatullah, C.J., in Gymkhana Club Employee Union( 1) scouted the argument about direct nexus, making specific reference to the Solicitors' case : '' ...... The service of a solicitor was regarded as indivi- dual depending upon his personal qualifications and ability, to which the employees did not contribute directly or essentially. Their contribution, it was held, had no direct or essential nexus In this way learned professions with the advice or services. were excluded." To nail this essential nexus theory, Hidayatullah, C.J., argued : "What partnership can exist between the company and/or Board of Directors on the one hand and the menial staff em- ployed to sweep floors on the other'? What direct and essen- tial nexus is there between such employees and production ? This proves tfiat what must be established is the existence of an industry viewed from the angle of what the employer is doing and if the definition from the angle of the employer's occupation is satisfied, all who render service and fall within the definition of workman come within the fold of industry irrespective of what they do. There is then no need to estab- lish a partnership as such in the production of material goods or material services. Each person doing his appainted task in an organisation will be a part of industry whether he attends to a loom or merely polishes door haudles. The fact of em- ployment as envisaged in the second part is enough provided there is an industry and the employee is a workman. The learned professions are not industry not because there is ab- sence of such partnership but because viewed from the angle of the employer's occupation, they do not satisfy the test." A B c D E F Although Gajendragadkar J. in Solicitor's case and Hidayatullah, G J. in Gymkhana case agreed that the learned professions must be ex :c!uded, on the question of direct or effective contribution in partner lship, they flatly contradicted each other. The reasoning on this part of the case which has been articulated in the Gymkhana Club Employees Vnion (supra) appeals to us. There is no need for insistence upon the ~rinciple of partnership, the doctrine of direct pexns or the contribu tion of value.s by employees. Every employee in a professional office, H ibe he a para-legal assistant or full-fledged professional employee or, {l) [1968] i s.c.R. 742. 256 SUPREME COURT REPORTS [1978] 3 S.C.lt. A down the ladder, a mere sweeper or janitor, every-one makes for the success of the office, even the mali who collects flowers and places a beautiful bunch in a vase on the table spreading fragrance and plea santness around. The failure of anyone can mar even the success of everyone else. Efficient collectivity is the essence of profess\onal success. We reject the plea that a member of a learned or liberal profession, for that sole reason, can self-exclude himself from opera tion of the Act. B • The professional immunity from Labour's demand for social justice because learned professions have a halo also stands on sandy founda tion and, perhaps, validates G. B. Shaw's witticism that all professions are conspiracies against the laity. After aU, let us be realistic and re cognise that we live in an age of experts alias professionals, each having his ethic, monopoly, prestige, power and profit. Proliferation of professions is a ubiquitous phenomenon and none but the tradition bound will agree that theirs is nO'! a liberal profession. Lawyers have their code. So too medicos swearing by Hippocrates, chartered accountants and company secretaries and other autonomous nidi of know-how. Sociological critics have tried to demythologize the learned profes sions. Perhaps they have exaggerated. Still it is there. The politics of skill, not service of the people, is the current orientation, according to a recent book on 'Professions For the People': "The English professions in the eighteenth century were an acceptable successor to the feudal ideal of landed pro perty as a means of earning a living. Like landed property, a professional "competence" conveniently "broke the direct connection between work and income .... " (Reader, 1966, p. 3) for the gentryman. A professional career provided effects, aristocratic, protective coloration, and at the same time enabled one to make a considerable sum of money with out sullying his hands with a "job" or "trade". One could carry on commerce by sleigh of hand while donning the vestments of professional altrnism. To boot, one could also work without appearing to derive income directly from it. As Reader explains : "The whole subject of payment .... seems to have caused professional men acute embarrassment, making them take re fuge in elaborate concealment, fiction, and artifice. The root of the matter appears to lie in the feeling that it was not fitting for one gentleman to pay another for services rendered, parti cularly if the money passed directly. Hence, the device of pay ing a barrister's fee to the attorney, not to the barrister himself. Hence, a1so the convention that in many professional dealings the matter of the fee was never openly talked about, which could be very convenient, since it precluded the client or patient from arguing about whatever sum his advisor might eventually indicate as a fitting honorarium (1966, p. 37). The c D E F G H . BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, 1.) 257 established professions-tlie law, medicine, and the clergy-held (or continued to hold) estate-like positions : The three 'liberal professions' of the eighteenth century were the nucleus about which the professional class of the niue teenth century was to form. We have seen that they were united by the bond of classical education; that their broad and ill-defined functipns covered much that later would crystallise out into new, specialised, occupations; that each, ultimately, derived much of its standing with the established order in the State .... (1966, p. 23)," In the United States, professional associations are gnilds in modern dress. "Modern professional associations are organizational counterparts of the gnild.Ji. They are occupational self-interest In as much as the professions still perform organisations. custom work and exercise a monopoly of 1raining and skill, the guild analogy is plausible. However, aspects of economic history lead to a different conclusion. There has been a shift of emphasis on the part of professionals from control over the quality of the product or service, to control of price." Indeed, in America, professionals advertise, hold a strict monopoly, charge heavy fees and wear humanitarianism as an altruist mask. In England a Royal Commission has been appointed to go into certain as pects of the working of the legal profession. The observer, in a leading article 'WIGS ON THE GREEN" dated 15 February, 1976, wrote : "In preparing for the challenge of a Royal Commission, lawyers ought to realise how deep public disillusionment goes, how the faults of the legal system are magnified by the feeling that the legal profession is the most powerful pressure group--some would say a mutual protection society-in the land, with its loyal adherents in Westminster, Whitehall, and on the bench, like a great freemasonry designed to protect the status quo. • * • • It robs the client of the benefits of free competition among barristers for his custom. It confirms his impression that Her Majesty's courts, which he rightly regards as part of the service the State offers to all its citizens, are a private benefit society for lawyers. * • . \he fees that lawyers are paid, and the services that they give m retu!n, must. al?o be studied. A recent_ survey sug gested that m one cnmmal court 79 per cent of barristers in contested cases and 96 per cent in uncontested cases saw their • A B c D E F G H 258 SUPREME COURT REPORTS (1978] 3 S.C.ll. A B c D E G clients only on the morning of the hearing. How much is that worth? • • • . . . . . . . . For Britain at present bas a legal system which often looks as anachronistic as its wigs and gowns, a system in which solicitors are plentiful in well-to-do areas, and inaccessi ble in less fashionable districts; in which t!Je law appears suited only to the property rights of the middle class, bnt oblivious of the new problems of poorer and less well-educated peo ple, who need help with their broken marriages or their land lord-and-tenant disputes. Sooner rather than later, the legal system must be made to appear less like a bastion of privilege, more like a defender of us all." * The American Medical Association has come in for sharp social criti cism and litigative challenge. Which architect, engineer or auditor has the art to make huts, landscape little villages or bother about small units ? And which auditor and company secretary has not been pres sured to break with morals by big business ? Our listening posts are raw life. * * The Indian Bar and Medicine have a high social ethic upto now. Even so, Dabolkar(l) cannot be ignored as freak or recondite. Doctors have been criticised for unsocial conduct. The halo conjured up in the Solicitor's case hardly serves to 'de-industrailise' the professions. After all, it is not infra dig for lawyers, doctors, engineers, architects, auditors, company secretaries or other professionals to !egard themselves as wor kers in their own sphere or employers or suppliers of specialised service to society. Even justicing is service and, ·but for the exclusion from indus try on the score of sovereign functions, might qualify for being regarded as 'industry'. The plea of 'profession' is irrelevant for the industrial law except as expression of an anathema. No legal principle supports it. Speaking generally, the editors of the book Professions People earlier mentioned state : "Jethro K. Lisberma·n (1970, p. 3) warns "Profes- sionals are dividing the world into spheres of influence and erecting large signs saying "experts at work here, do not proceed further." He shows that via such mechanisms as licensing, &elf-regulation, and political pressure the profes sions are augmenting the erosion of democracy. Profes If there is sional turf is now ratified by the rule of law. 'the case, it represents a significant development : the division of labour in society is again moving towards the legalisation of social status quo occupational roks." All this adds up ~'.} the decanonisation of the noble professions. Assuming that a professional in our egalitarian ethos, is like any other man of common clay plying a trade or business, we cannot assent to the cult of the elite in carving out islands of exception to 'industry'. H (I) A.T.R. 1976. S.C. 242 BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 259 skilled The more serious argument of exclusion urg~d to keep the pro fessions out of the coils of industrial disputes and the employees' demands backed by agitations 'red in tooth and claw' is a sublimated version of the same argument. Professional expertise and excellence, learning, bearing and with its occupational autonomy, ideology, morality, holds aloft a standard of service which centres round the individual doctor, lawyer, teacher or auditor. This reputation and quality of special service being af the essence, the co-operation of the workmen in this core activity of professional offices is absent. The clerks and stenos, the bell-boys and doormen, the sweepers and menials have no art or part in the soul of professional functions with its higber code of ethic and Intellectual proficiency, their contribution being peripheral and low-grade, with no relevance to the clients' wants and requirements. This conventional model is open to the spciologi cal criticism that it is an ideological clock conjured up by highborns, a posture of noblesse oblige which is incongruous with raw life es pecially i"n the democratic third world and post-industrial societies. To hug the past is to materialise the ghost. The paradigms of pro fessionalism are gone. In the large solicitors' firms, architects' offices, medical polyclinics and surgeries, we find a humming industry, each section doing its work with its special tlavour and culture and code, and making the end product worth its price. In a regular factory you talent is of the essence, have higbly technicians whose managers whose abiiity organizes and workmen whose co-ordin~ted input is, from one angle, secondary, from another, significant. Let us look at a surgery or walk into a realtor's tirm. What physician or surgeon will not kill 1f a'n attendant errs or clerk enters wrong or dis penses deadly dose? One such disaster somewhere m the assembly line operations and the clientele will be scared despite the doctor's function distalled skill. The lawyer is no better and without the specialised supportive tools of para-professionals like secre taries, librarians and law-knowing steno-typists or even the messengers and telephone girls. The mystique of professionalism easily melts Ill the hands of modern social scientists who have (as Watergate has shown in America and has India had its counterpart?) debunked and stripped the professional emperor naked. 'Altruism' has been expos ed, cash has overcome craft nexus and if professionalism is a mundane ideology, then "profession" and "professional" are sociological contri butions to the pile. Anyway, in the sophisticated organization of expert services, all occupations have central skills, an occupational code of ethics, a group culture, some occupational authority, and some permission to monopoly practice from the community. This incisive approach makes it difficult to 'caste-ify' or 'cla'.ss-ify' the liberal pro fessions as part and beyond the pale of 'industry' in our democracy. We mean no disrespect to the members of the professions. Even the judicial profession or administrative profession cannot escape the winds of social change. We may add that the modern world, particularly the third world, can hope for a human tomorrow only through profes sions for the people, through expertise at the service of the millions. Indian primitivism can be banished only by pro bona publico profes sions in the fie!~ of law, medicine, education, engineering and what not. But hat radicalism does not detract from the thesis that 'industry' does just cannot A B c D E F G H 260 SUPREME COURT REPORTS (1978] 3 S.C·R. A not spare professionals. Even so, the widest import may still self-exclude the little moffusil lawyer, the small rural medico or the country engi neer, even though a hired sweeper or factotum assistant may work with him. We see no rationale in the claim to carve out islets. Look. A solicitor's firm or a lawyer's firm becomes successful not merely by the talent of a single lawyer but by the co-operative operations of several specialists, juniors and seniors. Likewise the ancillary ser- B vices of competent stenographers, para-legal supportive services are equally important. The same test applies to· other professions. The. conclusion is inevitable that contribution to the success of the institu tion-every professional unit has an institutional good-will and reputa tion--<:omes not merely from the professional or specialist but all those whose excellence in their respective parts makes for the total proficiency. We have, therefore, no doubt that the claim for exclu- sion on the score of liberal professions is unwarranted from a tional or definitional angle. The flood-gates of exemption from obligations under the Act will be opened if professions flow out of its scope. C D E F G H Many callings may clamour to be regarded as liberal professions. In an age when traditions have broken down and the old world pro fessions of liberal descent have begun to resort to commercial prac tic~s (even legally, as in America, or factually, as in some other coun tries) exclusion under this new label will be infliction of injury on the statutory intent and effect. The result of this discussion is that the solicitors' case is wrongly decided and must, therefore, be over-ruled. We must hasten, how ever, to repeat that a small category, perhaps large in numbers in the muffasi!, may not squarely fall within the definition of industry. A single lawyer, a rural medical practitioner or urban doctor with a little assistant and/or menial servant may ply a profession but may not be said to run an industry. That is not because the employee does not make a contribution nor because the profession is too high t9 be classified as a trade OT industry with its commercial connotations but because there is nothing like organised labour in such employment. The image of industry or even quasi-industry is one of a plurality of workmen, not an isolated or single little assistant or attendant. The latter category is more or less like personal avocation for livelihood taking some paid or part-time from another. The whole purpose of the Industrial Disputes Act is to focus on resolution of industrial dis putes and regulation of industrial relations and not to meddle with . every little carpenter in a village or blacksmith in a town who sits with his son or assistant to work for the customers who trek m. The ordinary spectacle of a cobbler and his assistant or a cycle repairer with a helper, we come across in the pavments of cities and towns, repels the idea of industry and industrial dispute. For this reason, which applies all along the line, to small professions, petty handicrafts men, domestic servants and the like, the solicitor or doctor or rural engineer, even like the butcher, the candle-stick maker, with an assistant or without, does not fall within the definition the baker and 11 ( 'j BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, !.) 261 In regular industries, of course, even a few employees A of industry. are enough to bring them within sec. 2(s). Otherwise automated industries will slip through the net. Education We will now move on to a consideration of education as an indus If the triple tests of ·systematic activity, co-operation between try. employer and employee and production of goods and services were institute or alone to be applied, a University, a college, a research teaching institution will be an industry. But in University of Delhi(') it was held that the Industrial Tribunal was wrong in University as an industry because it would be inappropriate to describe education as an industrial activity. Gajendragadkar J., agreed in his judgment that the employer-employee test was satisfied and coopera tion between the two was also present. Undoubtedly, education is a sublime cultural service, training and personality builder. A man without education is a brute and no body can quarrel with the proposition that educati, dn, in its spectrum, is signi ficant service to the community. We have already given extracts from Australian Judge Issacs J., to substantiate the thesis that education is not merely industry but the mother of industries. A philistinic, illi terate society will be not merely uncivilised but incapable of trialisation. Nevertheless Gajendragadkar J., observed : technological regarding - Its professional stamp ? "It would, no doubt, sound somewhat strange that education should be described as industry and the teachers as workmen within meaning of the Act, but if the literal construction for which the pondents contend is accepted, that consequence must follow." Why Its respectability? is it strange to regard education as an industry ? Its cloistered virtue Its lofty character ? which cannot be spoiled by the commercial implications and raucous voices of workmen ? Two reasons are given to avoid conclusion that imparting education is an industry. The first ground relied on by the Court is based upon the preliminary conclusion teachers are not 'workmen' by definition. Perhaps, they are not, because teachers do not do manual work or technical work. We are not too sure whether it is proper to disregard, with contempt, manual work and separate it from education, nor are we too sure whether in our technological universe, education has to be excluded. However, that may be a battle to be waged on a later occasion by litigation and we do not propose to pronounce on it at present. The Court, in the teachers University of Delhi, proceeded on that assumption viz. are not workmen, which we will adopt to test argument. The reasoning of the Court is best expressed in the words of Gajendragadkar, J. : the validity of "It is common ground that teachers employed by edu cational institutions, whether the said institutions are impart ing primary, secondary, collegiate or postgraduate educa tion, are not workmen under s. 2(s), and so, it follows that the whole body of employees with whose co~operation the I) [1961] 2 S.C.R. 703. B c D E F . G H A B c D E F G H 262 SUPREME COURT REPORTS (1978] 3 S.C·R. work of imparting education is carried on by educational institutions do not fall within the purview of s. 2(s) and any disputes between them and the institutions which employed them are outside the scope of the Act. - In other words imparting education is an industry under s. 2 (j), the bulk of the employees being outside the purview of the Act, only disputes which can fall within the scope of the Act are those which arise between such institutions and their sub ordinate staff, the members of which may fall under s. 2(s). In our opinion, having regard to the fact that the work of education is primarily and exclusively carried on with assistance of the labour and co-operation of teachers, omission of the whole class of teachers, from the definition prescribed by s. 2(s) has an important bearing and signi ficance in relation to the problem which we are considering. It could not have been the policy of the Act that education should be treated as industry for the benefit of a very minor and insignificant number of persons who may be employed by the sub educational institutions to carry on the duties of ordinate staff. Reading ss_ 2(g}, (j) and together, (s) we are inclined to hold that the work of education carried on by educational institutions like the University of Delhi is not an industry within the meaning of the Act." The second argument whicn appealed to the Court to conclusion is that : "the distinctive purpose and object of education would make it very difficult to assimilate it to the position of any trade, business or calling or service within the meaning of sec. 2(j)." Why so? The answer is given by the learned judge himself : "Education seeks to build up the personality of the pupil by assisting his physical, intellectual, moral and emotional development. To speak of this educational process in terms of industry sounds so completely incongruous that one is not surprised that the Act has deliberately so defined workmen under s. 2(s) as to exclude teachers from its scope. Under the sense of values recognised both by the traditional and social conservative as well as the modern and progressive outlook, teaching and teachers are, no doubt, assigned a high place ol: honour and it is obviously necessary and desirable that teaching and teachers should receive the respect that is due to them, A proper sense of values would naturally hold teaching and teachers in high esteem, though power or wealth may not be associated with them. It cannot be denied that the concept of social justice is wide enough to include teaching and teachers, and the requirement that teachers should receive proper emoluments and other amenities which is essentially based on social justice cannot be disput ed; but the effect of excluding teachers from s. 2(s) is only this that the remedy available for the betterment of their financial prospects does not fall under the Act. It is well known that Education Departments of the State Govern ments as well as the Union Government, and the University (' - - - .. - llANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 263 this problem and Grants Co=ission carefully consider assist the teachers by reqmring the payment to them of proper scales of pay and by insisting on the fixation of other reasonable terms and conditions of service in regard to teach ers engaged in primary and secondary education and colle giate education which fall under their respective jurisdic tions. The position nevertheless is clear that any problems connected with teachers and their salaries are outside purview of the Act, and since the teachers form the sole class of employees with whose co-operation education - is imparted by educational institutions, their exclusion from the purview of the Act necessarily corroborates the conclu sion that education itself is not without its scope." Another reason has also been adduced to reinforce sion: this condu "'lt is well known that the University of Delhi and most other educational institutions are not formed or conducted for making profit; no doubt, the absence of profit motive would not take the work of any institution ontside s. 2 (j) if the requirements of the said definition are otherwise satisfied. We have referred to the absence of profit motive only to emphasise the fact that the work undertaken by such educational institutions differs from the normal concept of Indeed, from a rational point of view, it trade or business. would be regarded as inappropriate to describe education even as a profession. Education in its true aspect is more a mission and a vocation rather than a profession ·or trade or business, however wide may be the denotation of the latter words under the Act. That is why we think it would be unreasonable to hold that educational institutions are employers within the meaning of s. 2(g), or that the work of teaching carried on by them is an industry under s. 2(j), because essentially, the creation of a well-educated healthy - young generation imbued with a rational progressive out look on life which is the sole aim of education, cannot at all be compared or assimilated with what may be described as an industrial process." A B c D F The Court was confronted by the Corporation of Nagpur where it had been expressly held that the education department of the Cor poration was service rendered by the department and so the sub ordinate menial employees of the department eame under the definition of employees and would be entitled to the benefits of the Act. This was explained away by the suggestion that "the question as to whether educational work carried on by educational institutions like the Uni versity of Delhi which have been formed primarily and solely for the- . H purpose of imparting education amounts to an industry within meaning of s. 2 (j), was not argued before the Court and was not really raised in that form." G A B c 264 SUPREME COURT REPORTS [1978) 3 $.C.R. We dissent, with utmost deference, from these propositions and are inclined to hold, as the Corporation of Nagpur held, that educa tion is industry, and as Isaacs J., held, in the Australian case (supra), that education is pre-eminently service. The actual decision in University of Delhi was supported by another ground, namely, that the predominant activity of the university was teaching and since teachers did not come within the purview of the Act, only the incidental activity of the subordinate staff could fall within its scope hut that could not alter the predominant character of the insti tution. We may deal with these contentions in a brief way, since the subs tantial grounds on which we reject the reasoning have-already b~en set out elaborately. The premises relied on is that the bulk of employees in the university is the teaching community. Teachers are not workmen and cannot raise disputes under the Act. The subordinate smff being only a minor category of insignificant numbers, the institu tion must be excluded, going by the predominant character test. It is It is altogether one thing to say that an institution is not an industry. 11Dother thinking to say that a large number of its employees are not 'workmen' and cannot therefore avail of the benefits of the Act so the institution ceases to be an industry. The test is not the predo minant number of employees entitled to enjoy the benefits of the Act. The true test is the predominant nature of the activity. In the case of the university or an educational institution, the nature of the activity is, ex hypothesi, education which is a service to the co=unity. Ergo, the university is an industry. The error has crept in, if we may so say with great respect, in mixing up the numerical strength of the personnel with the nature of the activity. · Secondly there are a number of other activities of the University Administration, demonstrably industrial which are severable although ancillary to the main cultural enterprise. For instance, a university may have a large printing press as a ·separate but considerable establish It may have a large fleet of transport buses with an army of ment. It may have a tremendous administrative strength of running staff. officers and clerical cadres. It may have karamoharis of various hues. As the Corporation of Nagpur ha·s effectively ruled, these operations, viewed in severalty or collectively, may be treated as industry. It would be strauge, indeed, if a university has 50 transport buses, hiring drivers, conductors, cleaners and workshop technicians. How are they to be denied the benefits of the Act, especially when their work is separable from academic teachin,11;, merely because the buses are owned by the same corporate personality ? We find, with all defence, little force in this process of nullification of the industrial character of the University's multi-form operations. D E F G H The next argument which hits appealed to the Court in that case is that education develops the personality of the pnpil and this process if described as industry, sounds grotesque. We are unable to apore2 It is ciate the force of this reasoning, if we may respectfully say so. .,,.. , .... • .. ---...-- _1 ·; ' -· i .. , BANGALORE SEWERAGE BOARD v. RAJAPPA, (Krisluuz Iyer,],) 265 true that our social values assign a high place of honour to education, out how aoes it 1011ow trom uus tnat eaucatton is not a service ·1 'lhe sequitur 1s not easily dtscermble. lhc pejorative assumption seems to oe that 'lllaumy is SO!Ilemmg vulgar, !Illenor, disparaging and snou1d not be alloweu to sully t!1e sancuhed subject of education. Ill our view, maustry is a nob1e term and embraces even the most sublime acuvity. At any rate, in legal terminology located 1Il the statutory dctimuon it is not money-maKmg, it is not lucre-loving, it is not com merciahsmg, it is not proht hunger. On the othc.r hand, a team ot painters who proaucc works of art and sell them or an orchestra group which travels and pertorms and makes money may be au trnJustry 1f they employ suppo.rtive sta1f ot artistes or others. 1herc light ot is no uegradmg touch about 'industry', especially m the Mahatma Ganuhi's dictum that colonial system of education, which divorced book manual work anu practical responsible for the calamities in that field. For that very reason, Gandhiji and Dr. Zak:ir Hussain propagated basic education which used work as moaus operandi for teaching. We have hardly any hesllal!on m regaromg eoucation as an industry. training, has been is Worship'. learning lndeed 'Work A B c D The final ground accepted by the Court is that education is a mis sion and vocauon, rather than a profession or trade or business. The most that one can say is that this is an assertion which does not prove Indeed, all hie is a mission and a man without a miss10n is itself. spiritually still-born. The high mission u( life is the ma11ifesta:1un of tne divinity already in n1an~ To christen education as a ml.,sion, even if true, is not to negate its being an industry. We have to JUok E at educational activity from the angle of the Act, and so V1ewed the therefore, an ingredients of education are fulfilled. Education industry and nothing can stand in the way of that conclusion. is, It may well be said by realists in the cultural field that educational managements depend so much on governmental support and some of F them charge such high fees that trade and managers merchants. Whether this will apply to universities or lJIJ't, schools and colleges have been accused, at least in the private sector, of being tarnished with trade motives. schools have become Let us trade romantics for realities and see. With evening classes, correspondence courses, admissions unlimited, fees and government G grants escalating, and certificates and degrees for prices, education Jegal, medical, technological, school level or collegiate-education-is ri.sklcss trade for cultural 'entrepreneurs .and hapless posts of campus lmagmary assumpt10ns are experiments with (mdustnal) unrest. untruth . . our conclusion is that the University ?f .Delhi case was wrongly H decided and that education can be and is, m its mslltut10nal form an industry. 18-211SCI/78 ' A B c D E F G H 266 SUPREME COURT REPORTS [1~78J 3 S.C·R. Are Charitable Institutions Industries ? Can charity be 'industry' ? This paradox can be unlocked only by examining the nature of the activity of the charity, for the.re are charities and charities. The grammar of labour law in a pluralist society tells us that the worker is concerned with wages and conditions of service, the employer with output and economies and the community with peace, production and stream of supply. This complex of work, wealth and happiness, firmly grasped, ·will dissolve the dilemma of the law bearing on charitable enterprises. Charity is free; industry is business. Then how ? A lay look may scare; a legal look will see; ii social look will see through a hiatus sophisticated society with organizational diversity and motivational dexterity. inevitable in a If we mull ove.r the major decisions, we get a hang of the ba5ic &trncture of 'industry' in its legal anatomy. Bedrocked on the ground norms, we must analyse the elements of charitable economic euter prises, established and mainWned for satisfying hmnan wants. Easily, three brpad categories emerge more may exist. The charitable element enlivens the operations at different levels in these patterns and the legal consequences are di'ffereut, viewed from the angle of 'industry'. For income-tax purposes, Trusts Act or company law or registration law or penal code requirements the examination will be different. We are concerned with a benignant disposition towards workmen and a tricho tomy of charitable enterprises run for producing and/or supplying goods and service•, organised systematically and employing workmen, is scientific. The first is one where the enterprise, like any other, yields profits but they are siphoned off for altruistic objects. The second is one where the instit!Jtion makes no profit but hires the services of employees as in other like businesses but the goods and services, which are the output, are made available, at low or no cost, to the indigent needy who are priced out of the market. The third is where the establishment is oriented on a humane mission fulfilled by man who work, not be cause they are paid wages, b\lt because they share the passion for the cause and derive job satisfaction from their contribution. The first two are industries, the third not. What is the test of identity whereby these institutions with eleemosynary inspiration fall or do not fall under the definition of industry ? All industries are organised, systematic activity. Charitable ad ventures which do not possess this feature, of course, are not industries. Sporadic or fugitive strokes of charity do not become industries. All three philanthropic entities, we have itemised, fall for consideration only if they involve co-operation between employers and employees to prodnce and/or supply goods and/or services. We assume, all three do. The crucial difference is over the presence of charity in the quasi business nature of the activity. Shri Tarkunde, based on Safdarjung, submits that, ex hypothesi, charity frustrates commerciality and thereby deprives it of the character of industry. BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 267 It is common ground that the first category of charities is dii- A If a business is run for production and or qualified for exemption. supply of goods and services with an eye on profit, it is plainly an industry. The fact that the whole or substantial part of the profits so earned is diverted for purely charitable purposes does not affect the nature of the economic activity which involves the co-operation of employer and employee and results in the production of gqo'ds and B services. The workers are not concerned about the destination of the profits. They work and receive wages. They are treated like any other workman in any like industry. All the features of an industry, as spelt out from the definition by the decisions of this Court, are fully In short, they are industries. present in those charitable businesses. The application of the income for philanthropic purposes, instead of filling private coffers, makes no difference either to the employees or c to the character of the activities. Good Samaritans can be clever industrialists. products The second species of charity is really an allotropic modification of the first. If a kind-hearted businessman or high-minded industrialist or service-minded operator hires employees like his non-philanthropic D counter-parts and, in co-operation with them, produces and supplies goods or services to the lowly and the Jost, the needy and the ailing without charging them any price or receiving a negligible return, people regard him as of charitable disposition and his enterprise as a charity. But then, so far as the workmen are concerned, it boots little whether he makes a'vailable poor. They c.o·ntribute labour in return for wages and conditions of ·service. E For them the charitable employer is exactly like a commercial-minded employer. Both exact hard work, both pay similar wages, both treat them as human machine cogs and nothing more. The material diffe- rence between the commercial and the compassionate employers is not with reference to the workmen but with reference to the recipients or goods and services. Charity operates not vis-a-vis the workmen in which case they will be paying a liberal wage and generous extras with F no prospect of strike. The beneficiaries of the employer's charity are Industrial law doe5 not take note of such the indigent consumers. extraneous factors but regulates industrial relations between employers and employers, employers and workmen and workmen and workmen. From the point of view of the workmen there is no charity. For him charity must begin at home. From these strands of thought flows the conclusion that the 'second group may legitimately and legally be des- cribed as industry. The fallacy in the contrary contention lies in shift- ing the focus from the worker and the industrial activity to the disposal of the end product. This law has nothing to do with that. The income- tax may have, social opinion may have. G Some of the appellants may fall under the second category jusl described. While we are not investigating into the merits of appeals, we may as well indicate, in a general way, that the Gandhi H .. ~ 1 .... ~ J---.,- ,.\ Iii -- . 268. SUPREME COURT REPORTS [1978] 3 s.c.R. A B c to needy Ashram, which employs workers like spinners and weavers and sup plies cloth or other handicraft at concessional rates consumt; rs, may not qualify for exemption. Even ·so, particular inci dents may have to he closely probed before pronouncing with precision upon the nature of the activity. Jf cotton or yarn is given free to workers, if charkhas are made available free for families, if fair price fa paid for the net product and substantial charity thus benefits the similar undertakings and commercial adventures do. To qualify for closely into the character of the enterprise. If employees are hired and their services are J"ewarded by wages-whether on cottage industry or factory basis-the enterprises become industries. even if some kind of concession is shown and even if the motive and project mav be to encourage and help poor families and find them employment. A com passionate industrialist is nevertheless an industrialist. However, if iaw material is made available free and the finished product is fullv paid for-rather exceptional to imagine-the conclusion may be hesite.nt but for the fact that the integrated administrative, purchase, mark«~!ng. advertising and other functions are like in trade and busi ness. This makes them industries. Noble obiectives. oiou·s purposes, shidtu::i1 fo11nclations and develoomental r,roieots are no reason not to imnlic~te these institutions as industries. We now move on to economic activitie" and occupation's of an altruistic character fallinrr under the third category. E F G H The heart of trade or business or analogous activity is organisa tion with an eye on competitive efficiency, by hinng employees, systematising processes, producing goods and services needed by the community and obtaining money's worth of work from employees. ff such be the nature of operations and employer-employee relations which make an enterprise an industry, the motivation of the emp loyer in the final disposal of products or profits is immaterial. Indeed the activity is patterned on a commercial basis, judged by what other similar undertakings and commercial adventures do. To qualify for exemptio!) from the definition of 'industry' in a case where there are e'mploycrs and employees and systematic activities a1id production of )',Oods and services, we need a totally different orientation, crganisa tion and m.ethod which will stamp on the enterprise the imprint of cbinmerciality. Special emphasis, in such cases, must be placed on the central fact of employer-employee relations. If a philanthropic devotion is the basis for the charitable foundation or establishment, the institution is headed by one who whole-heartedly dedicates him self for the mission and pursues it with passion, attracts 0thers into the institution, not for wages but for sharing in the cause and Not that the fulfilment, then the undertaking is not 'industrial'. orc>cncc of charitable impulse extricates the institution from definition in Sec. 2 (j) but that there is no eminomic relationship such as is found in trade or business between the head who employs and the other.s who emotively flock to render In one sense, there are no employers and emplovees but crusaders all. In another sense, there is no wag~ basis for the employment but voluntary par- service. • -.- BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 269 to propitiate further, sl; are in ticipation in the production, inspired by lofty ideals and unmindful of remuneration, service conditions and the like. Supposing there is an Ashram or Order with a guru or other head. Let us further assume that there is a band of disciples, devotees or priestly sub ordinates in the Order, gathered together for prayers, ascetic prac tices, bhajans, meditation and worship. Supposing, outsiders are also invited daily or occasionally, spiritual proceedings. And, let us assume that all the mmetes of the Ashram and members of the Order, invitees, guests and other out side participant3 arc fed, accommodated and looked after by In such a case, as often happens, the cooking and institution. cleaning, the bed-making and service, may often be done, at least substantially by the Ashramites themselves. They may spiritual ecstasy even as material goods and services ar<: made and served. They may affectionately look after the guests, and, all this they may do, not for wages but for the chance It may well be Master, work selflessly and acquire spiritual grace. that they may have surrendered their lucrative employment to come It may also be that they take some small into the holy institution. pocket money from the donations or takings of the institution. Nay more, there may be a few scavengers and servants, a oart-time auqi If the substantial number of tor or accoun1ant employed on wages. participants in making available goods and services, if t1e substan tive nature cf the work, as distinguished from trivial iten:», is render ed by voluntary wagcless sishyas. it is impossible to designate institution ~s an industry, notwithstanding a marginal fev/ \Vho arc employed on a regular basis for hire. The reason is that in tl1c crucial, substantial and substantive aspects of institut10nol life the nature of the relations between the oarticipants is non-iridustrial. Perhars, when Mahatma Gandhi lived in Sabarmati, Aurobindo had his hallowed silence in Pondicherry, the inmates belonged to this chastened brand. Even now, in many foundations, centres, monas taries, holy orders and Ashrams in the East and in the West. spiritual fascination pulls men and women into the precincts and they work tirelessly for the Maharishi or Yooi or Swamiji and arc not wage earners in any sense of the term. Such people are not workmen and such institutions are not industries despite some menh• ls and some professionals in a vast complex being hired. We muse look at the prndominant character of the institution and the natu··e oi the re lations resulting in the production of goods and Stray wage-earning employees do not shape the soul of an ir·stitution into a!l industry. sen·ices. It now remains to make a brief survey of the precrdems on the point. One case which is germane to the issue is Bo,nbay Pinjra pole(I). A Bench of this Court considered the earlier case-law. in cluding the decisions of the High Courts bearing on hurrane activities for the benefit of sick animals. Let there be no doubt that kindness to our dumb brethren, especially invalids. sorings from the highest In the land of the Buddha and Gandhi motives of fellow feeling. no enc dare argue to the contrary. So let there be no mistaking (I) [19721 l S.C.R. 202 B c D E F G H 270 SUPREME COURT REPORTS [ 197 8) 3 s.c.!l. A B c D E F G H our compassionate attitude to suffering creatures. It is laudable and instituticns dedicated to amelioration of conditious of animals deserve eucouragement from the State and affluent philanthropists. But these considerations have no bearing on the crucial factors which invoke the application of the definition in the Act as already set out elabor "The manner in which the activity in question is orga ately by us. nised or mranged, the condition of the cooperation between the emp loyer and the employee necessary for its success and its object to render 1naterial service to the community" is a pivotal factor in the activity-oriented test of an 'industry'. The compassionate motive and the charitable inspiration are noble but extraneous. Indeed, medi cal relief for human beings made available free by regular hospitals, run by government or philanthropists, employing doctors ~nd snp portive staff and business-like terms, may not qualify for exemption from industry. Service to animals cannot be on a hi~her footin.g than serYice to humans. Nor is it possible to contend that love of animals is religioos or spiritual any more than love of human-beings is. A pinjrapole is no church, mosque or temple. Therefore, with out going into the dairying aspects, income and expenditure and other features of Bombay Pinjrapole, one may hold that the institution is an industry. After all, the emplovees are en~aged on ordinary eco nomic terms and with conditions of service as fn other business insti tutions and the activities nlso have organisational comparability to other profit-making dairies or Pinjrapoles. What is different is the charit.ible obiect. What is. common is the nature of the employer employces relations. The conclusion, notwithstanding the humani tarian overtones. is that such organisations are also industries. Of course. in Bombay Pinjrapole the same oonclusion was reached but on different and, to some extent faultv reasonin)?. For, the assump tion iq the judgment of Mitter J., is that if the income were mostly from donations and the treatment of animals were free, perhaps such charity, be it a hospital for humans or animals, may not be an industry. We agree with the holding, not because Pinirapoles have commercial motives but because, despite comnassionate objectives, this view, thev share business-like orientation and operation. section 2(j) applies. In We may proceed to consider the applicabilitv of Sec. 2-(j) to insti tutiom, wl1ose obiectives and activities cover the research field in a significant way. This has been the bone of contention in a few cases in the past and in one of the aooeais argued at considerable length and with considerable force bv Shri Tarkunde who has presen ted a panoramic view of the entire subject in his detailed submiss:o~s. An earlier decision of this Court. The A hmedabad Textile Industries Research Association(')case has taken the view that even research institutes are roped in by the definition bnt later judicial thinking at the High Court and Sunreme Court levels has leaned more in favonr of exemotion where profit-motive has been absent. The Kurji Holy Family Hospital( 2 ) was held not to be an industry because it was a (I) [1961) 2 S.C.R. 480. [19711 I S.C'.R. 177. (2) f BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 271 non-profit-making body and its work was in the nature of training, A research aud treatmem. Likewise m 1Jhanra1gir1i liospztal v. WorK men('), a bench ot this Court held that the charitable trust which ran a hospital and served research purposes and training ol nurses was not an industry. 'fhe High Courts of Madras and Keraia have also heid that research mst1tmes such as the Pasteur Institute, C.S.I.R. and the Central l'lantauon Crops Research Institute are not indus',ries. The basic decis10ri which has gone against the Ahmeda- bud Te;i.llle case is the Safdarjung case. We may brietly examine the rival view-points, although in substance we have already stated the correct principle. The view that commends itself to ns is plainly in reversal of the ratio of Safdarjung which has been wrongly decided, if we may say so with great respect. B Research Does research involve colla1¥Jration between employer cn; ployee ? It does. The employer is the institution, the employees are the scientists, para-scientists and other personnel. ls scientific resea1ch lts d1sooveries arc valuable contribu service 'I Unooubtedly it is. tions to the wealth ot the nation. Such discoveries may be sold for a heavy price in the industrial or other markets. Technology has to be paid for and technological inventions and innovations may be patented and sold. In our scientific and technological age nothing nas more cash value, as intangible goods and mvaluable services, than discoveries. For instance, the discoveries of Thomas Alva Edison made him fabulously rich. It has been said that his brain had the lughest cash value m history tor he maae the world vibrate w1t11 tile mrraculous discovery ot recorded. sound. Unlike most m ventors, he did not have lo wait to get his reward in heaven; he recceived it munificently on this gratmed and gratclul cartn, tnanks to conversion ot his inventions lllto money a ptcuty. Kesearcn bene- fits industry. Even thougll a research rnstitutc may be a separate entity- disconnected from tne many industries whicll wnued tne insti · tute itself, 1t can be regarded as an orgamsation, propelled by systematic activity, moaelled on co-operat10n between employer unu employee and calculated to throw up discoveries and inventiOl)S and usetul solutions which benefit indivioual industries and the nation in research terms of goods and services and wealth. institutes, albeit run without profit·motive, are industries. It follows C D E F True Shri Tarkunde is right if Safdarjung is rightly decided. The concluding portions of that decision proceed on the ~doting that re search and training have an exclusionary effect. That reasoning, as we have already expounded, hardly has our approval. Clubs : Are clubs industries ? The wide words used in Sec. 2 (f) if applied without rational limitations, may cover every bilateral activity even spiritual, religious, domestic, conjugal, pleasurable or the subjcct political. But functional circumscriptions spring from ip.atter aud other cognate considerations already set out early in this Industrial law, any Jaw, may insanely run amok if limitless judgment. G H (1) A.i.R. i97S S.0. 2232. 272 SUPREME COURT'REPORTS [1978) 3 s.c.R. A B c D E F G H . - . If it does, lexical liberali;y. were to intlatc expressions into bursting point or prohterate odu Jud•cial arrows which at random sent, hits, many an trrelevant mark the leg1slat1ve archer never meant. To read down words to y1elu rele ;&nt sense is a pragmatic art if care is taken to ' . eschew sub3ect1ve i;roiecl!ons masked as judicial processes. The true test as we ap; irche,1d from the ccononuc history and functional phtlosophy or the Act is based on the pathology ot industrial friction ~nd explosio'1 impedrng community production and consumption and tmpenllmg po ,cc and wcllarc. This social pathology arises from the exploilat1vc p<,tenttal latent Ill organized employer-emp\oyee relations. So, where th0 dichotomy of employer and workmen in the process of matenal prod·1ct•on is present, the service of economic fnction and need for conft, ct resolut10n show up. The Act is meant to obviate such confr.oncLtion and 'industry' cannot functionally and defunctional ly exceed this object. The question is whether in a club situation-or of a co-oper; itivc or even a monastery situation, for that matter--a dispute potential .of the nature suggested exists. it · is an Jndustry, smce the basic elements are satisfied. If productive co is necessary, contlict operation be; ween employer and employee between them is on the cards, be it a social club, mutual benefit society, pinjarapole, public service or professional ol!ice. Tested on this touchstone, nost clubs will fail to qualify for exemption. For clubs gentlemen's dub;, proprietary clubs, service clµbs, investment clubs, sports clubs, art clubs, military clubs or other brands of recreational associations-- when x-rayed from the industrial angle, project a picture on the screeH tyi; ical of employers hiring employees for wages for ren dering services and/or supplying goods on a systematic basis at specill ed honrs. There is a co-operation, the club management providing the capital, the rc1w material, the appliances and auxilliaries and the cooks, waiters, bell boys, p:ckers, bar maids or other servants making available enj"yable cats, pleasures and other permissible services for price paid by way of subscriptions or bills charged. The club life, the warm comp<-ny, the enrichment of the spirits and freshening of the mind are theie. But these blessings do not contradict the co-existence of an 'industry' in the technical sense. Even tea-tasters, hired for high wages, or commercial art troupes or games teams remunerated fantastically, enjoy company, taste, travel and games; but, elementally, they are workmen with employers above and together constitute not merely entertainment groups but industries under the Act. The protean hues of human orgamzation project delightfully different designs de pending upon the legal prism and the filtering process used. No one can deny the cultural value of club life; neither can anyone blink at the legal result pf the organization. ' The only ground to ~xtricatc clubs from the coils of industrial law (except specific statutory provision) is absence of employer employec co-operatio.n on the familiar luring-firing pattern. Before· we explain tlis possible excmpllon and it applies Ip :i1~11y clubs at the poorer levels of society we must meet another subm1ss1on made by counsel. Clubs are exclusive; they cater to needs and pleasures of members, not of the community as ~uch and this fatter feature salvages them from the clutches of industnal regulation. We do not agree. • ) •• I ' / ,, BANGALORE SEWERAGE BOARD v. RAJ APP A (Krishna lyer, I.) 2 7 3 Clubs are iopen to the public for membership subject to their own bye-laws and rules. But any member of the community complying with those conditions and waiting for his turn has reasonable chance .of membership. Even the world's summit club-the United Nations has cosmic membership subject to vetoes, qualifications, voting and what not. What we mean is that a club is not a limited partnership but form ed from the community. M,oreover, even the most exclusive clubs of imperial vintage and class snobbery admit members' guests who are not specific souls but come from the undefused community or part of a community. Clubs, speaking generally are social institutions enli vening community life and are the fresh breath of relaxation in a faded society. They serve a sectipn and answer the doubtful test of servin,g the community. They are industry. A B We have adverted to a possible category of clubs and associa ticns which may swim out of the industrial pool-we mean serving clubs, societies or groups or associations. Less fashionable but more numerous in a poor, populous, culturally hungry country with democratic urges and youthful vigour is this species. Lest there should be a rush by the clubs we have considered and dismissed to get into this proletarian brood if we may so describe them to identify, D not at all to be pejorative,-we must elucidate. c It is a common phenomenon in parts of our country workers, harijans, student youth at the lower rung of the socio-eco nomic ladder, weaker sections like women and low-income groups qucnoh their cultural thirst by forming gregarious organisations main ly for recreation. A few books and magazines, a manuscript house magazine contributed by and circulated among members, a football or volley ball game in the evenings-not golf, billiards or other expen sive games-a music or drama group, an annual day, a competition and pretty little prizes and family get together and even organising occasional meetings inviting V.I.Ps.-these tiny yet luscent . cultural balls dot our proletarian cheerlessness. And these hopeful organisms, if fostered, give a mass spread for our national awakening for those for whom no developmental bells yet toll. Even these people's organs cannot be non-industries unless one . strict condition i~ fulfilled. They should be-and usually are-self serving. They are poor men's clubs without the wherewithal of a adjudication. Gyamkhana or C.C.l. which reacted this court Indeed, they rarely reach a court being easily priced out of our ex l)ensive judicial market. These self-service clubs do not have hired \Jn""""Jees to cook or serve, to pick or chase balls, to tie up nets or arrange the "ards table, the billiards table, the bar and the oath or do those elabc.rate business management chores of the well-run city or conntry clubs. The members come and arrange things f•'r them selves. The secrebry, an elected member, keeps the key. Those terested in particul>.r pursuits organise those terms themselves. Even the small accounts: "r clerical items are maintained by one member or other. On special wenings all contribute efforts to make a good 19-211 SCI/78 E F G H "'-., 274 SUPREME COURT REPORTS __ [1978] 3 s.c.R. show, excursion, ioY picnic or anniversary celebratiOn. The dynamic aspect is self-service. In such an institution, a part-time sweeper or scavenger or multi-purpose attendant ma;· sometimes exit He may be ao employee. This marginal element does· not transform a little association into an industry. We have projected an imprecise profile aud there may. be minor variations. The central thrust of' our pro position is that if a club or other like collectivity has a basic and dominant self-service mechanism, a modicum of employees at the periphery will not metamorphose it into a conventional club· whose verve.and virtue are.taken care of by paid staff, and the members' . role is to enjoy. The small man's Nehru Club (Gandhi Granthasala, ·Anna Manram, Netaji Youth Centre, Brother Music Club, Muslim Spcrts Club and like organs often named after natural or provincial' heroes and manned by members themselves as contrasted with the · upper bracket's Gyamkhana Club, Cosmopolitan Club, Cricket Club of India, National Sports Club of India whose badge is pleasure paid for and provided through skilled or semi-skilled catering staff. We do not deal with hundred per cent social service clubs which meet once . in a way, hire a whole evening in some hotel, have no regular staff and devote their energies and resources also to social service projects. TI1ere are many brands and we need not deal with every one. Only if they answer the test laid down affirmatively they qualify. Tte leading cases on the point are Gyamkhana and C.C.l. We mu't deal with them before we_ conclude on this topic. The Madras Gymkhana Club, a blue-blooded, members' club has the socialite cream of the city on its rolls. It offers choice faci lities for golf, tenni~ and billiards, arranges dances, dinners aml refreshments; entertainS and ·accommodates guests and conducts tournaments for members and· non-members. These are all activities rictJy charged with pleasurable. service. For fulfilment of these object> the club employs officers, caterers, and others on reasonable salaries. Does this club become an industry ? The label matters little; tl1e sub stanc~ is the thing. A night club for priced 'nocturnal sex is a lasci vious 'industry'. But a literary club, meeting weekly to read or discuss poetry, hiring a venue and running solely by the self-help of the participants, is not. Hidayatullah C.J ., the club was not an 'industry'. Reason? 'An industry is thus said to involve cooperation between employer and employees for the .object of satisfying material human needs but not for oneself nor for plea sure nor necessarily for profit.' in Gymkhana ruled "It is not of any consequence that there is no profit motive because that is considered immaterial. It is · true that the affairs of the club are organised in the way · business is orgainsed, and that there is production of materi al and other services and in a limited way production of material goods mainly in the catering department But these circumstances are not truly representative in the case of them- the club because the services are to the members . selves for · their own pleasure and amusement and · the A B c D E F G H • BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 2 7 5 In other words, material goods are for their consumption. the club exists for its members. No doubt occasionally strhngers also benefit from its only do so on invitation of members. No one outside these services list of members has as of right. Nor can these privileges be bought. In fact they are available only to members or through members. the advantage of services, but If today the club were to stop entry of outsiders, no essential change in its character viS:-a-vis the members would take place. In other words, the circumstances that guests are admitted is irrelevant to dete1mine if the club an industry. Even with the admission of guests being open the club remains the same, that is to. say, a mem ber's self-serving institution. No doubt the material needs or wants of a section of the community is catered for but that is not enough. This must be done m: part of trade or trade or busi business or as undertaking analogous ness. This element is completely missing in a members' club". Why is the club not an industry'! It involves c:ooperati011 of employer and employees, organised like in a trade and calculated to supply plea surable utilities to members and others. The learned Judge agrees that 'the material needs or wants of a section of the community is catered for but that is not enough. This must be done as part of trade or business or as an undertaking analogous to trade or business. This element is completely missing in a members' club. 'This element' ? What element makes it analogous trade ? Profit motive? No, says the learned judge. Because it is a self serving institution? Yes? Not at all. For, if .it is self-service then why the expensive establishment and staff wih high salary bills ? It is plain as day-light that the club members do nothing to produce the goods or services. They are rendered by employees who work for wages. The members merely enjoy club life, the geniality of company and ex hilarating camaraderie, to the accompaniment of dinners. dance, games and thrills. The 'reason' one may discover is that it is a mem bers' club in the sense that 'the club belongs to members for the time being on its list o! members and that is what matters. Those mem bers can deal with the club as they like. Therefore, the club . identified with its members at a given point of time. Thus it can not be said that the club has an existence apart from the members'. We are intrigued by this reason. The ingredients nec~ssary for an industry are present here and yet it is declared a non-mdustry be cause the club belongs to members only. A company belongs to the shareholders only; a co-operative belongs to the share mei; nbers only; a firm of experts belongs to the partn~rs only. And yet, if. they em ploy workmen with whose co-op~rat10n goods and made available to a section of the community and the operatic; ms. are ornanised in the manner typical of business method and "!rgan.1sat10n, the conclusion is irresistible that an 'industry' emerges. L1kew1se, the serv1c~s -, A B c D E F G H A B c D E F G 276 SUPREME COURT REPORTS (1978] 3 S.C.R. members of a club may own the institution and become the em ployers for th~t reason. It is transcendental logic to jettison the in fercnoo of an 'industry' frC?m such a factual situation on the ingenious plea that a club 'belongs to members for the time being and that is what matters'. We are inclined to think that that just does ndt matter. TI1e Gymkhana case, we respectfully hold, is wrongly decided. tickets Indeed, Is the fact that The Cricket Club of India(') stands in a worse position. It is a huge undertaking with activities wide-ranging, with big budgets, army of staJI and profit-making adventures. the members' share in the gains of these advantures by getting money's worth by cheaper accommodation, free or low priced for entertain speaking ment and concessional refreshments; and yet Bhargava J, Is for the Court held this mammoth industry a non-Industry. Why? che promotion of sports and games by itself a legal reason for ex cluding the organisation from the category of industries if all necessary ingredients are present ? residential facility is exclusive for members an exemptive factor ? Do not the members share in the profits through the invisible process of lower charges ? When all these services are rendered by hired employees, how can the nature of the activity be described as self-service, with out taking liberty with reality? A number of utilities which have money's worth, are derived by the members. An indefinite section of the community entering as the guests of the members also share The testimony of the activities can leave none in in these services. is a vibrant collective undertaking doubt that this colossal 'clnb' which offers goods and services to a section of the community payment and there is co-operation between employer and employees in this project. The plea of non-industry is un-presentable and ex clusion is possible only by straining law to snapping point to salva&e a certain class of socialite establishments. Presbyter is only priest writ large. Club is industry manu brevi. Co-operatives. Co-operative societies ordinarily cannot, we feel, fall outside Sec. 2 (j) · After all, the society, a legal person, is ~e. employer. The members and/ or others are employees and the act1V1ty partakes of the nature of trade. Merely because Co-operative enterprises deserve State en couragement the defination cannot be distorted. Even if the society is worked by the members only, the entity (save where they are f~w and self-serving) is an industry because the member-workers are paid wages and there can be disputes about rates and different scales of wages among the categories i.e. workers and workers or between workers and employer. These societies-<:_re~it societies, marketing co-operatives, producers' or consumers' soc1e!Jes or apex soc1et1es are industries. Do credit unions, organised on a copperative basis, scale the defi?i tional walls of industry ? They do. The judgment of the Austral~an High Court in The Queen v. Marshall Ex Parle Federated Clerks Union (l) [1969] l S.C.R. 600. I • BANGALORE.SEWERAGE BOARD v .. RAJAPPA (Krishna Iyer,!.) 277 A of Australia(') helps reach this conclusion. There a credit union which was a co-operative association which pooled the savings of small people and made loans to its members at low interest was considered fr~m ~e point of view of industry. Admittedly, th~y were credit umons mcorporated as co-operative societies and the thinking of Mason J., was that such institutions were industrial in character. The indus- trial mechanism of society according to Starke J, inc; uded "all those bodies. 'of men associated, in various degrees of ·competition a'nd co operation, to win their living by providing the community with some service w~ich it requires' ". Mason J., went a step further to hold that even 1f such credit unions were an adjunct of industry, they could be regarded as industry. It is enough, therefore, if the activities carried on by credit unions can accurately be described as incidental to industry or to the organized C production, transportation or distribution of commodities or other forms of material wealth. To our minds the evidence admits of no doubt that the activities of credit unions are incidental in this sense. ~ This was sufficient, in his view, to conclude that credit unions constituted au industry under an Act which has resemblance to our own. In our vi1~w, therefore, societies are industries. D' .. • The Safdarjung Hospital Case. A sharp bend in the courne of the Law came when Safdarjung was decided. The present reference has come from that land mark case, and, necessarily, it claims our close attention. Even so, no lengthy discussion is called for, because the connotation of 'industry' has al ready bee'n given by us at sufficient length to demarcate out deviation from the decision in Safdarjung. E Hidayatullah C. J., considered the facts of the appeals clubbed toge/her there and held that all the three institutions in the bunch of appeals were not industries. Abbreviated reasons were given for the holding in regard to each institution, which we may extract for precise understanding : "It is obvious that Safdarjung Hospital is not embarked on an economic activity which can be said to be analogous to trade or business. There is no evidence that it is more than a place where persons can get treated. This is a part of the functions of Government a'nd the Hospital is run as a Department of Government. !o be an industry. It cannot, therefore, hoe The Tuberculosis Hospital is not an independent insti It is a part of the Tuberculosis Association of India. tution. The hospital is wholly charitable and is a research institute. The dominant purpose of the Hospital is research and train ing, but as reseiirch and training cannot be given without beds in a hospital, the Jaospital is run. Treatinent is thus a In these circumstances the part of research and training. Tuberculosis Hospital cannot be described as industry. (I) [1975] 132 O.L.R. 595. G K , / ' A B c D E F G H 278 SUPREME COURT REPORTS [1978] 3 S.C·R. The objects of the Kurji Holy Family Hospital are It carries on work of training research Its income is mostly from donations and It is, there i'n entirely charitable. and treatment. distribution of surplus as profit is prohibited. fore, clear that it is not an industry as laid down Act." · Even a cursory glance makes it plain that the learned Judge took the view that a place of treatment of patients, run as a department of government, was not an industry because it was a part of the functions of the government. We cannot possibly agree that running a hospital, which is a welfare activity and not a sovereign function, cannot be an industry. Likewise, dealing with the Tuberculoois Hospital case, the learned Judge held that the hospital was wholly charitable and also was a research institute. Primarily, it was an institution for research and training. Therefore, the Court concluded, the institution conld not be described as industry. Non sequitur. Hospital facility, re search products and training services are surely services and hence In indnstry. the third case the same factors plus the prohibition of profit are relied on by the Court. . We find it difficult to hold that absence of profit, or functions o!f tra:iriing and research, take the institution out of the scope of industry. It is difficult to agree that a hospital is not an industry. Although the facts of the three appeals considered in Safdarjung related only to hospitals with research and training component, the bench went extensively into a survey of the earlier precedents and crystallisation of criteria for designating industries. After stating that trade and business have a wide connotation, Hidayatullah, C. J., took the view that professions must be excluded from the ambit of industry; "A profession ordinarily is an occupation requiring intellectual skill, often coupled with manual skill. Thus a teacher uses purely intellec they are not tual skill, while a paint.er ~ both. engaged in an occupation in which employers and employees co operate in the production or sale of commodities or arrangement for their production or sale or distribution and their services cannot be described as material service". In any event, We are unable to agree with this rationale. It is difficult to under stand why a school or a painting institute or a studio which uses the services of employees and renders the service to the community cannot be regarded as an industr;. What is more baffling is the subsequent strillg of reasons presented by the learned Judge : "What is meant by 'material services' needs some expla nation too. Material services are not services which depend wholly or largely upon the contribution of professional know ledge, skill or dexterity for the production of a result. Such services being given individually and by individuals are ser vices no doubt but not material services. Even an establish ment where many such operate cannot be said to convert their professional services into material services. Material . services involve an activity carried on through co-operation · .BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna Iyer, J.) 279 between employers and employees to provide the community with the use of something such as electric power, water, In transportation, mail delivery, telephones and the like. providing these services there may be employmen~ of trained men and even professional men, but the emphasis is not on what these men do but upon the productivity of a service ·organised as an industry and commercially valuable. Thus the servioes of professional men involving benefit to indivi duals according to their needs, such as doctors, teachers, lawyers, solicitors etc. are easily distinguishable from an acti vity such as transport service. The latter is of a commercial character in which something is brought into existence quite It is the apljl't from the benefit to particular individuals. production of this something which is described as the pro duction of material services." With the greatest respect to the learned Chief Justice, the argu ments strung together in this paragraph are too numerous and subtle It is transcendental to define material services as for us to imbibe. ·excluding prefessional senices. We have explained this position at some length elsewhere in this judgment and do not feel the need to repeat. Nor are we convinced that Gymkhana and Cricket Club of India are correctly decided. The learned Judge placed accent on the non-profit making members club as being outside the pale of trade or industry. We demur to this proposition. ~-- It reasoning this expression mean ? If it mea'ns profit-making, the Another intriguing reasoning in the judgment is that the Court has stated "it is not necessary that there must be a profit motive but the enterprises must be analogous to trade or business in a commercial sense''. However, somewhat con~rary to this reasoning we find, in the <:oncluding part of the judgment, emphasis on the non-profit making aspect of the institutions. Equally puzzling is the reference to "com mercial sense" what precisely does interesting to note that the word "commercial" has more than one semantic shade. If it merely means a commercial pattern of organisa contradictory. tion, of hiring and firing employees, of indicating the nature of employer-employee -relation as in trade or commercial house, the activity-oriented approach is the correct one. On that footing, the conclusions reached in that case do not follow. As a matter of fact, Hidayatullah, C.J., had in Gymkhana turned down the test of com- merciality : "Trade is only one aspect of industrial activity ......... . ...... This requires co-operation in some form between employers and workmen and the result is directly the product of this association but not necessarily ·commercial". reasoning in Hospital Mazdoor Sabha he observes : "If a hospital, nursing home or a dispensary is run as a business, in a commercial way, there may be found elements of an suggests either profit motive, which has been expressly negatived in the very case, or commercial-type of activity, regardless of profit, which affirms the test which we have accepted, namely, that there must be employer-employee relations more or. less on the pattern . of Indeed, while dealing with there". This industry A B c D E F G H A B c D E F G H 280 SUPREME COURT REPORTS [1978] 3 S.C.lt. trade or business. All that we can say is that there are different strands of reasoning in the judgment which are somewhat difficult to reconcile. Of course, when the learned judge states that the use of the first schedule to the Act depends on the conditioh precedent of the existence of an industry, we agree. But, that by itself doe.§ not mean that a hospital cannot be regarded as an industry, profit -or no profit, research or no research. We have adduced enough reasons in the various portions of this judgment to regard hospitals, research institutions and training centres as valuable material services to the community, qualifying for coming within sec. 2(j). We must plainly state that vis-a-vis hospitals, Safdarjung was wrong and Hosp; tal Maz door Sabha was right. Because of the problems of reconciliation of apperently contra dictory stands of reasoning in Safdarjung we find subsequent cases of this Court striking different notes. In fact, one of us (Bhagwati J.} in Indian Standards Institution (') referred, even at the opening, to !h(l baffling, perplexing question which judicial ventures had not solved. We fully endorse the observations of the Court in l.S.I. : "So infinitely varied a'nd many-sided is human activity and with the incredible growth and progress in all branches of knowledge and ewr widening areas of experience at all in so levels, it is becoming so diversified and expanding rigid and many directions hitherto u'nthought of, that no doctrinaire approach can be adopted in considering question. Such an approach would fail to measure up to the needs of the growing welfare state which is constantly engaged in undertaking new and varied activities as part of its social welfare policy. The concept of industry, which is intended to be a convenient and' effective tool in the hands of industrial peace industrial adjudication for bringing about and harmony, would lose its capacity for adjustment and It would be petrified and robbed of its dynamic change. content. The Court should, therefore, so far as possible avoid formulating or adopting generalisations and hesitate rigid mould to cast the concept of industry in a narrow which would not pennit of expansion as and when n~essity arises. O'nly some working principles may be evolved which would furnish guidance in determining what are the attri butes or characteristics which would ordinarily indicate that an undertaking is analogous to trade or business". Our endeavour in this decision is to provide such working princi ples. This Court, within a few years of the enactment of the salutary statute, explained the benign sweep of 'industry' in Banerji which serv~d as beacon in later years-Ahmedabad Textile Research acted on it, HospUal Mazdoor Sabha and Nagpur Corporation marched in its shoon. The law shed steady light on industrial inter-relations and the country's trjbunals and courts settled down to evolve a progressive -lab.our juris~ prudence, burying the bad memories-of laissez faire and bitter struggles (I) [19761 2 S.O.R. 138. :SANGALORE SEWERAGE BOARD v. RAJ APP A (Krishna Iyer, !.) 2 81 tendencies in this field and nourishing new sprouts of legality fertilised by the Indeed, every great judgment is not merely seminal ratio in Banerji( an adjudication of an existing Us but an appeal addressed by the pre sent to the emerging futuPo. And here the future responded, harmoni sing with the humanscape hopefully projected by Part IV of the Consti tution. But the drama of a nation's life, especially when ·it confronts die-hard forces, develops situations of imbroglio and back-track. And Law quibbles where Life wobbles. Judges only read signs and translate symbols in the national sky. So ensued an era of islands of exception dredged up by judicial process. Great clubs were privileged out, liberal professions swam to safety, educa tional institutions, vast and small, were helped out, divers charities, disinclined to be charitable to their own weaker workmen, made pious pleas and philanthropic appeals to be extricated. A procession of deci sions--Sol1citors' case, University of Delhi, Gymkhana Club, Cricket Club of India (supra) Chartered Accountants(') climaxed by Safdar jung, carved out sanctuaries. The six-member bench-the largest which sat on this court conceptually to reconstruct 'industry', affirmed and reversed, held profit motive irrelevant but upheld charitable service as exemptive, and in its lights and shadows, jndicial thinking became ambivalent and industrial jurisprudence landed itself in a legal quag in principle mire. Pinjrapoles sought salvation and (Bombay Panjrapole), Chambers of Commerce fought and failed, hospitals battled to victory (Dhanrajgirji Hospital), standilras institute made a vain bid to extricate (LS.I. Case), research institbtes, at the High Court level, waged and won non-industry status in Madras and Kerala. The murky legal sky paral)'8ed tribunals and conrts and administration and then came, in consequence, this reference to a larger bench of seven judges. succeeded It behoves us, therefore, hopefully Banerji, amplified by CorporaJion of Nagpur, in effect met with its waterloo in Safdarjung. But in this latter case two voices could be heard and subsequent rulings zigzaged and conflicted precisely because of this built~in ambivalance. abolish blurred edges, illumine penumbra! areas and over-rule what we regard as wrong. Hesitancy, half-tones and hunting with the hounds and running with the hare can claim heavy penalty in the shape of industrial confusio·n, adjudicatory quandary and administrative per plexity at a time when the nation is striving to promote employment through diverse strategi~s which need for their smooth fulfilment, less stress and distress, more mutual understanding and trust based on a dynamic rule of law which speaks clearly, firmly and humanely. If the salt of Jaw lose its savour of progressive certainty wherewith s~all it ~ salted? So we proceed to formulate the principles, deducible from our discussion, which are decisive, positively and negatively, of the identity of 'industry' under the Act. We speak, not exhaustively, but to the extent covered by th~ debate at the bar and, to that extent, authoritatively, until over-ruled by a larger bench or superseded by the legislative branch: (!) [1963! I L.L.J. 567 ~Cukutta). A B c D E F G H 282 SUPREME COURT REPORTS [1978) 3 S.C.IL A B I. 'Industry', as defined in Sec. 2U) and explained in Banerji, has a wide import. (a) Where (i) systematic activity, (ii) organized by co-operation (the direct and substantial element between employer and employee, is chimerical) (iii) for the production and/or distribution of goods and services calculated to satisfy human wants and wishes (not spiri tual or religious but inclusive of material things or services geared to celestial bliss e.g. making, on a large 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 (c) The .true focus is functional a'nd the decisive test is the nature of the activity with special emphasis on the employer-employee rela tions. (d) If the organisation is a trade or busine5s it does not cease to be one because of philanthropy animating the undertaking. D II. Although sec. 2 (j) uses words of the widest amplitude in its two limbs, their meaning cannot be magnified to overreach itself. (a) 'Undertaking' must suffer a contextual and associational shrinkage as explained in Banerji and in this jndgment, so also, service, calling and the like. This yields the inferehce that all organizr.xl acti vity possessing the triple elements in I (supra), although not trade or business, may still be 'industry' (provided the nature of the activity, viz. the employer-employee basis, bears resemblance to what we find in trade or business. This takes into the fold of 'industry' under takings, callings and services adventure 'analogous 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 It does not matter, if on employer and employee may be dissimilar. the employment terms there is analogy. III. Application of these guidelines should not slot> short of their logical reach by invocation of creeds, cults or inner sense of incongruity or other sense of motivation for or resultant of the economic operations. The ideology of the Act being industrial peace, regulation and resolu tion of industrial disputes between employer and workmen, the range of this statutory ideology must inform the reach of the statutory defini tion. Nothing Jess, nothing more. (a) The consequences are (i) professions, (ii) Clubs (iii) educa tional institutions (iiia) co-operatives, (iv) research (v) charitable projects and (vi) other kindred adventures, if they fulfil the triple tests listed in I (supra), cannot be exempted from the scope of sec. 2(j). institutes (b) A restricted category of professions, clubs, co-operatives and even Gurukulas and little research labs, may qualify for exemption if E F G H I• • BANGALORE SEWERAGE BOARD v. RAJAPPA (Krishna J'yer, !.) 2 8 3 in simple ventures substantially and going by the dominant nature cri- terion substantatively, in single simple ventures, no employees are entertained but in minimal matters, margi'nal employees are hired with- out destroying the non-employee character of the unit. A ( c) If in a pious or altruistic mission many employ selves, free or for small honoraria, or likely return mainly by sharing in the purpose or cause, such as lawyers volunteering to rw1 a free legal services clinic or doctors serving in their spare hours in a free medical centre or ashramites working at the bidding of the holiness, divinity or like central personality and the rervices are supplied free or at nomi- nal cost and those who serve are not engaged for remuneration or on the basis of master and servant, relatio'nship, 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 gene rosity, compassion, developmental passion or project. IV 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 or some departments are not prodnctive of goods and se1"1ices if isolated, even then, the predominant '.nature of the services and the integrated nature of the departments as explained in the Corporation of Nagpur, will be true test. The whole undertaking will be 'industry' although those who are not 'workmen' by definition may not benefit by the status. (b) Notwithstandi!_lg the previous clauses, functions, strictly understood, alone qualify for exemption, not the welfare acti- vities or economic adventures undertaken by government or statutory bodies. sovereign B c D E I ., ( c) Even in departments discharging soV'~reign functions, if there ar·~ units which are industries and they are substantially severable, then they can be considered to come within sec. 2(j). F (d) Constitutional and competently enacted legislative provisions may well remove from the scope of the Act categories which otherwise may be covered thereby. We over-rule Safdarjung, Solicitors' case, Gymkhana, Delhi Uni- versity, Dhanrajgirji Hospital and other rulings whose ratio runs cow1- ter to the pri'nciples enunciated above, and Hospital Mazdoor Sabha is hereby rehabilitated. , 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 re structure the rather clumsy, vapourous and tall-and-dwarf definition or tidy. up the scheme although Judicial thesis and anti--thesis, disclosed in the two decades long decisions, should have produced· a legislative G H A B c D E F 284 SUPREME COURT REPORTS [1978) 3 &C.R. in a synthesis becoming of a welfare State and Socialistic Society, world settmg where I.L.O. norms are adva'ncing and India needs up dating. We feel confident, in another sense, since counsel stated at the bar that a bill on the subject is in the offing. The rule of Jaw, we are sure, will run with the rule of Life-Indian Life-at the thres hold of the decade of new development in which Labour a"nd Manage ment, guided by the State, will constructively partner the better pro duction and fair diffusion of national wealth. We have stated that, save the Bangalore Water Supply. and Sewerage Board· appeal, we are not disposing of the others on the merits. We dismiss that appeal with costs and direct that all the others be posted before a smaller bench for disposal on the merits in accordance with the principles of Law herein laid down. ORDER 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 dwelt. CHANDRACHUD, C. J.-By a short order dated February 21, 1978, which I pronounced on behalf of myself and my learned Brethre'n Jaswant Singh and Tulzapurkar, I had expressed our agreement with the view taken by Brother Krishna Iyer on behalf of himself and three other learned Brethren that the Bangalore Water Supply & Sewerage I had stated that the area of concurrence Board's appeal be dismissed. or divergence with the rest of the judgment will, if necessary, be indi cated later. I have now the added advantage of knowing the divergent view expressed by Jaswant Singh and Tulzapurkar, JJ. on certain aspects of the matter. Almost every possible nuance of the question as to what is comprehended within "Industry" and what ought to be exclu ded from the sweep of that expression has received co'nsideration in the two judgments. Having given a further thought to the frustrating question as to what falls within and without the statutory concept of 'industry' I am unable to accept, respectfully, the basis on which Jaswant Singh and Tulzapurkar, JJ. have expressed their dissent. G Section 2(j) of the Industrial Disputes Act, 1947, defines 'i'ndustry' to mean- "any business, trade, undertaking, manufacture or calling of employen and includes any calling, service, employment, handicraft, or industrial occupation or avocation of work me'n". H These are words of wide import, as wide as the legislature could have possibly made them. The first question which h~s engaged the atte~­ tion of every court which is called upon to consider whether a partt- T \ ' .BANGALORE SEWERAGE .BOARD v. RAJAPPA (Chandraclwd, C.J.) 285 cular activity is 'industry' is whether, the definition shou'.d be permitted to have its full sway embracing within its wide sweep every activity which squarely falls within its Mms or whether, some limitation ought not be read into the definition so as to restrict its scope as reasonably as one may, without doing violence to the supposed intention of the legislature. An attractive argument based on a well-known principle of statutory interpretation is often advanced in support of the latter view. That principle is known as 'noscitur a sociis' by which moont that associated words take' their meaning from one another. susceptible of That is to say, when two or more words which are .analogous meaning are coup:ed toge_ther, they take their colour from each other so that the width of the more general words may square with that of words of lesser gen·~rality. An argument based on this principle was rejected by Gajendragadkar, J., while speaking on behalf of the Court, in State of Bombay & Others v. The Hospital Mazdoor Sabha & Others('). A group of five hospitals called the J. J. Hospital, Bombay, which is run a'nd managed by the State Government in order to provide medical relief and to promote the health of the people was beld in that case to be an industry. A B c The Court expressed its opinion in a characteristically clear tone D by saying that if the object and s.cope of the Industrial Disputes Act are ·considered, there would be no difficulty in holding that the relevant words of wide import have been delirerately used by the legislature in defining 'industry' in section 2 (j) of the Act. The object of the Act, the Court said, was to make. provision for the investigation and ·settlement of indsutrial disputes, and the extent and scope of itJs pro visions would be realised if one were to bear in mind the definition of E 'industrial dispute' given bys. 2(k), of 'wages' bys. 2(rr), 'workman' bys. 2(s), a'nd of 'employer' bys. 2(g). The Court also thought that in deciding whether the State was running an industry, the definition of 'public utility service' prescribed by section 2(n) was very signifi ·cant and one had merely to glance at the six categories of public utility services mentioned therein to f'ealise that i'n running the hospitals the State was running an industry. ·which . decides the question as to whether the activity in question attracts the provision of section 2 (j) ; who conductG the activity", said the Court. "and whether it is conducted for profit or not do not make a material difference". "It is the character of the activity F But having thus expressed its opinion in a language which left no doubt as to its meaning, the Court went on to observe section 2 (j) used words of a very wide denotation, "It is clear" that a line would have to be drawn in a fair and just manner so as to exclude some· callings, services or undertakings from the scope of the definition. This was considered 'necessary because i'f all the words ~used in the definition were given their widest meaning, all services and all callings would come within the purview of the definition including services rendered by a person in a purely perso'nal or domestic capacity H or in a casual manner. The Court theu undertook for examination that though G (1) [1960] 2 S.C.R. 866. A B c D E F G H 286 SUPREME COURT REPORTS [1978] 3 S.C.R. what it euphemistically called "a somewhat difficult" problem to decide and it proceeded to draw a line in order to ascertain what limitations could and should be reasonably imp:iect in interpreting the wide words used in section 2(j). I consider, with great respect, that the problem is far too policy-oriented to be satisfactorily settled by judicial deci sions. The Parliament must step in and legislate in a manner which will leave no doubt as to its intention. That alo'ne can afford a satis factory solution to the question which has agitated and perplexed the judiciary at all levels. In the Hospital Mazdoor Sabha (supra) the Court rejected, on concession, two possible limitation on the meaning of 'industry' as defined in section 2(j) of the Act : firstly, that no activity can be an industr.):'. unless accompanied by a profit motive and secondly, !nvestrnent of capital is indispensible for treating an activity as an mdustry. The Court also rejected, on examination, the limitation that a quid pro quo for services rendered is necessary for bringing an acti vity within the terms of section 2(j). If the absence of profit motive was immaterial, the activity, according to the Court, could not be excluded from section 2(j) merely because the person responsible for the conduct of the activity accep~ed no return and was actuated by philanthropic or charitab:e motives. The Court ultimately drew a line at the point where the regal or sovereign activity of the Government is undertaken and held that such activities of the Government as have been pithily described by Lord Watson as "the primary and inalien able functio'ns of a constitutional Government", could be stated· nega- tively as falling outside the scope of section 2(j). The judgment concludes with the summing-up that, as a working principle, an activity systematically or habitually undertaken for the production or dil'Stri- bution of goods or for the rendering of material services to the com munity at large or a part of such community with the help of employees is an undertaking within the meaning of section 2 (j); that such an activity generally involves the co-operation of the employer and the employees; that the activity must not be casual nor must it be for oneself nor for pleasure, but it must be organised or arranged in a manner in which trade or business is generally organised; and thus~ the manner in which an activity is organised or arranged and the form and the effectiveness of the cooperation between the employer and employee for producing a desired result and for rendering of material services t,o the community become distinctive of activities falling within the terms of section 2 (j). Seeds of many a later judgment were sown by these limitations which were carved out by the Court in order to reduce the width of a definition which was earlier described as having been deli- berately couched by the legislature in words of the widest amplitude. These exceptions which the Court engrafted upon the definition of 'industry' in section 2(j) in order to give to the definition the merit of reasonableness, became in course of time as many categories of activities exempted from the operation of the definition clause. To an .extent, it seems to me clear that though the decision in Hospital Mazdoor Sabha (supra) that a Government run hospital was an indus try proceeded upon the rejection of the test of 'noscitur a sociis', it is r ' I • , ' y BANGALORE SEWERAGE BOARD v. RAJAPPA (Chandrac/1ud, C.J.) 287 this very principle which constitutes the rationale of the exceptions It was said that the principle of 'noscitur carved out by the Court. a sociis'" is applicable in cases of doubt and since the language of the definition admitted of no doubt, the principle had no application. But if the language was clear, the definition had to be given the meaning which the words convey and there can be no scope for seeking excep tions. The contradiction. with great respect, is that the Court rejected the test of 'association of words' while deciding whether the Govern ment-run hospital is an industry but accepted that very test while indi cating which categories of activities would fall outside the definition. The question then is : If there is no doubt either as to the meaning of the words used by the legislature in scctio'n 2 (j) or on the question that these are words of amplitude, what justification can one seek for diluting the concept of industry as envisaged by the legislature ? On a _careful consideration of the question I am of the opinion that Hospital Mazdoor Sabha was correctly decided in w far as it held that the J. J. groujl o'. hospitals was an industry but, respectfully, the same. cannot be said m regard to the view of the Court that certain activities ought to be treated as fa:Jing outside the definition clause. A B c D E . Oi;e of the exceptions carved out by the Court is favour of achv1t1es undertaken by the Government in the exercis" of its inalien able functions under the Constitution, call it regal, sovereign or by any I ~e.e. no justification fo'. ·~xccptiug these categories of othe~ nam_e. If it be true jlUbhc ul!hty act1V1t1es from the defiml!on of 'industry'. tnat one must have regard to the nature of the activity and not to who engages in it, it seems to m, beside the point to enquire whether if so, whether the activity is undertaken by the State, aind further, it is undertaken in fulfilment of the State's constitutional obligations or in discharge of its constitutional functions. In fact, to conced.~ the benefit of an exception to the State's activities which are in the nature of sovereign functions is really to have regard not so much to the nature of the activity as to the consideration who engag1~s in that acti vity; for, sovereign functions can only be discharged by the State an.cl not If the State's inalienable functions are excepted by a private person. from the sweep of the definition conta~ned in section 2. (jJ, one shall liave 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 P'spect, it should make no difference whether, on the one hand, an activity is undertaken by a corporate body in the dis charge of its statutory functions or, on the other, by the State itself If the water supply and in the exercise of its inalienable functions. 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 of activities are, or can only be, undertaken by the State does not furnish a'ny answer to the question whether these activities are industries. When undertaken by a private individual they H are industries. Therefore, when undertaken by the State, they are industries. The nature of the activity is the determining factor and Items 8, 11, that does not change according to who undertakes it. F G A B c D E F G H 288 SUPREME COURT REPORTS [1978) 3 S.C.R. 12, 17 and 18 _of the First Schedule read with section 2(n)(vi) of the_ Industm\ Disputes Act render support to this view. These pro v1s1ons w~1ch were described in Hospiwl Mazdoor Sabha 'very s1gmficant at least show that, conceivably a Defence Establishment, a. Mint or a Security Press can be an indu~try even though these acti v1t1es 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 11ote or strikes a coin. And yet, considering the nature of the activity, It is engaged in au industry when it does so. irrelevant That leads to the consideration whether charitable enterprises can at all be industries. Viewing the problem from the angle from which one must, according to me, view the State's inalienable functions, it seems to me to follow logically that a systematic activity which organised or aq!lnged in a manner in which trade or business. is generally organised or arranged would be an industry despite the fact It is the nature of the acti that it proceeds from charitable motives. vity 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 'in dustry'. The very same principle must yield the result that just as the consideration as to who conducts an activity determining whether the activity is an industry, so is the fact that the activity is charitable in ffature or is undertaken with a charitable motive. The status or capacity, corporate or constitutional, of the employer would have, if at all, closer nexus, than his motive, with the quest10n whether the activity is an industry. And yet that circumstance, accord ing to me, cannot affect the decision of the question. The motive which propels an activity is yet .another step removed and, ex hypo thesi, ·can have no relevance on the question as to what is the nature It is never true to say that the nature of an activity of the activity. is charitable. The subjective motive force of an activity can be charity but for the purpose of deciding whether an activity is an in the activity, ob dustry, one has to look at the process involved in jectively. The argument that he who does charity is not doing trade or business misses the point because the true test is whether the acti vity, considered objectively, is organised or arranged in a manner in If so, the which trade or business is normally organised or arranged. activity would be an industry no matter whether the employer 1s actuated by charitable motives in undertaking it. The jural founda tion 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, I suppose, has been rejected consis tently 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 motive and capital investment is irrelevant for determining whether an acti vity is an industry. Therefore, activities which are dominated by charitable motives, either in the sense that they involve the rendering of free or near-free services or in the sense that the profits which they vield are diverted to charitable purposes, are not beyond t11e pale of It is as much beside the point to in- the definition in section 2(j). . I • r ' J I r... • BANGALORE SEWERAGE BOARD v. RAJAPPA (Chandrachud, C.JJ 289 quire who is the employer as it is to inquire why is the activity under- taken and what the employer does with his profits, if any. A_ In Hospital Mazdoor C' Judged by these tests, I find myself unable to accept the broad formulation that a Solicitor's establishment cannot be an industry. A Solicitor, undoubtedly, does not carry on trade or business when he acts for his client or advises him or pleads for him, if and when pleading is permissible to him. He pursues a profession which is B. variously and justifiably described as learned, liberal or noble. But, with great respect, I find it difficult to infer from the language of the definition in section 2(j), as was done by this Court in The National Union of Commercial Employees and Another v. M. R. Meher, In dustrial Tribunal, Bombay and Others, (1) that the legislature could not have intended to bring a liberal profession like that of an attorney within the ambit of the definition of industry. Sabha (supra) the Court while evolving a working principle stated that an industrial activity generally involves, inter alia, the coopera- tion of the employer and the e1nployee. 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. D· 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 concrete cases dependant upo11 a factual assessment so highJy subjective as to lead to confusion and uncertainty in the understanding of the true legal position. Granting that the language of the definition is so wide that some limitation ought to be read into it, one must stop at a point beyond which the E: definition will skid into a domain too rarefied to be realistic. Whether the cooperation between the employer and the employee is the proxi- mate cause of the ultimate product and bears direct nexus with it is a test which is almost impossible of application with any degree of assurance or certitude. It will be as much true to say that the Soli citor's Assistant, Managing Clerk, Librarian and the Typist do not directly contribute to the intellectual end product which is a creation F of his personal professional skill as that, without their active assis tance and cooperation it will bl' impossible for him to function effecti- vely. The unhapply state of affairs in which the law is marooned will continue to baffle 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 em ployer and the employee, until such time as the. legislature decides to G: manifest its intention by the use of clear and indubious language. ·Beside the fact that this Court has so held in National Union of Com ·mercial Employees, (supra) the legislature will find a plausible case for e~empting the learned and liberal professions of Lawyers, Solici- tors, Doctors, Engineers, Chartered Accountants and the like from the operation of industrial lawll. · But until that happens, I consider that in the present state of the law it is difficult by judicial interpreta- H: tion ·to create exemptions in favour of any particular 'class. ' (1) [1962] Supp, 3 s.C.R. 157. / ' A !B D 290 SUPREME COURT REPORTS [1978] 3 S.C.R. The case of the clubs, on the present definition is weaker still· and not only ~o .1 consider !ha~ the definition squa; ely covers them'. .except to the limited extent mdicatcd by Brother Krishna Iyer in his Judgment, but I see no justification for amending the law so as exclude them from the operation of the industrial laws. The fact that t~e running of clubs is not a ca~ling of the club or its managing co~1ttee_, that the club has no eXIstence apart from its members, that 1t exists for its members though occasionally strangers also take the benefit of its services and that even with the admission of guests ~e club remains a members' self-se~ving institution, seems to me, with respect, not to touch the core ¢ the problem. And the argu ment that the activity of the clubs cannot be described as trade or business or manufactUJ:e overlooks, with respect, that the true test can only be whether the activity is organised or arranged in a manner in which a trade or business is normally organised or arranged. I have already said enough on that question. On the remaining aspects of the case I have nothing useful to add to the penetrating analysis of the problem made by Brother Krishna Iyer in his judgment. JAsWANT SINGH, J. It may be. recalled that in the order dated February 21, 1978 pronounced by oui: learned brother, Chandracbpd, J. (as he then was) on behalf of himself, brother Tulzapurkar and myself, expressing our respectful agreement with the view expressed by our learned brother Krishna Iyer that the Bangalore Water' Supply & Sewerage Board appeal be dismissed, it was stated that we would indicate the area of concurrence and divergence, if any, later on. Accordingly, we proceed to do that now. F The definition of the term "industry" as contained in Section 2 (j) of the Industrial Disputes Act which is in two parts being vague and too wide as pointed out by Beg, C.J. and Krishna Iyer, J., we have struggled to find out its true scope and ambit in the light of plethora of decisions of this Court which have been laying down fresh tests from time to time making our task an uphill one. However, bearing in mind the collocation of the terms in which the definition is couched and applying the doctrine of noscitur a sociis (which, as pointed out by this Court in State of Bombay & Ors. v. The Hospital Mazdoor Sabha & Ors.(') means that, when two or more words which are sus cephole of analogous meaning are coupled together they are under stood 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 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 Legis lature that categories 2 and 3 of the charities alluded to by our lerurn~d brother Krishna Iyer in his judgment, hospital run on charit- :H able basis or as a part of the functions of the Government or local bodies like muniCipalities 11nd educational and research institutions ·G (ll [1960) 2 S.0.R. 866. \ '' { ,. I .. " • ) \ " ' BANGALORE SEWERAGE BOARD v. RAJAPPA (laswant Singh, !.) 2 91 whether run by private entities or by Government and liberal and learned professions like that of doctors, lawyers and teachers, the pursuit of which is dependent upon an individual's own education, int"1lectual attainments and special expertise E.hould fall within the pale of the definition. We are inclined to think that the definition is limited to th.ose activities systematically or habitually undertaken on commercial lines by private entrepreneurs with the cooperation of employees for the production or distribution of goods, or for the render ing of material services to the community at large or a part of such community. It is needless to emphasise that 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 pro fessional and his employees. It may be pertinent to mention in this connection that the need for excluding some callings, services and undertakings from the pur view 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". This is evident from the observations made by this Court in State of Bombay & Ors. v. The Hospital Mazdoor Sabha & Ors. (supra), Secretary, Madras Gymkhana Club Employees Uinon v. Management of the Gymkhana Club(1) and Management of Safdar jung Hospital, New Delhi v. Ku/dip Singh Sethi('). Speaking for the Bench in State of Bombay & Ors. v. The Hospital Mazdoor Sabha & Ors. (supra), Gajendragadkar, J. (as he then was) observed in this connection thus : "It is clear, however, that though s. 2(j) uses words of very wide denotation, a line would have to be drawn in a fair and just manner so as to exclude some callings, ser If all the words used are given their vices or undertakings. widest meaning, all services and all callings would come within the purview of the definition; even service rendered by a servant purely in a personal or domestic matter or even in a casual way would fall within the definition. It is not and cannot be suggested that in its wide sweep the word "service" is intended to include service however rendered in whatsoever capacity and for whatsoever reason. We must, therefore, consider where the line should be drawn and what limitations can and should be reasonably implied in interpreting the wide words used in s. 2(j); and that no doubt is a somewhat difficult problem to dedde." (1)1 [1968] I S.C.R. 742. [1971[ 1 S.C.R. 177. (2) A B c D E F G H 292 SUPREME ~URT REPORTS \ [I 978] 3 s.c.R. A In view of the difficulty experienced by all of us in defining the true denotation of the term "industry" and divergence of opinion in regard thereto-as has been the case with this bench also--we think, it· is high time that the Legislature steps in with a comprehensive bill to clear np the fog and remove the doubts and set at rest once for all the controversy which crops up from time to time in relation to the meaning of the aforesaid term rendering it necessary for larger B benches of this Court to be constituted which are driven to the neces sity of evolving a working formula to cover particular cases. SJ~ .. Appeal dismi$sed. ' l- \ 1· ) . • ~ .• .f I • I • • 211 SCI/78-2500--GIPF.