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A Critical Analysis Of Bangalore Water Supply v/s A Rajappa: Meaning And Definition Of Industry Under Industrial Disputes Act 1947

The law relating to labor and employment is also known as Industrial law in India. The history of labor legislation in India is come from the British rule. Most of the acts are established by the Britisher's only, like Trade Disputes Act,1929, Trade Union Act ,1926, etc. Later Industrial Disputes Act,1947 has been enacted which has a proper adjudicating authority or resolution system has been established through this act.

The objective of this act is to solve the disagreements between the employers and employees, employees and employees, capitalists and employees. Before get into the case we need to know what amounts to Industry.

Meaning of Industry:

As we all know Industries plays a vital role in a country for manufacturing or producing or providing service to people. So what does exactly Industry means? We do have a lot of meanings about the word 'Industry'. We can say the word 'Industry' means that there is a group of manufactures or business that can produce a particular kind of goods and services, for example we can take textile industry as an example in Textile Industry the workers will produce the cloth with various designs that people like and they sell it.

Definition of Industry:

We have gone through the meaning of the word 'Industry'. Now we will go to the definition of the word 'Industry'. It can be defined as where there is an economic activity concerned with the processing of raw materials and manufacturing of goods or providing services. In the definition we can see that there is a process of converting raw materials into the product.

Judicial Interpretation of Industry:

The word 'Industry' which was defined under the section 2(j) of Industrial Disputes Act, 1947, it states that " any business, trade, undertaking, manufacture, or calling of employers and includes any calling, service, employment, handicraft or industrial occupation or avocation of workmen ". An industry would exist when there is a co-operation between the employers and the workmen or employers, if not there would be arising of an Industrial dispute between them.

We can break the judicial interpretation into two parts:
  • Position prior to 1978
  • Position from 1978

Position prior to 1978:

Before 1978, there are a lot of cases regarding that a particular organization is an industry or not. Here the organization can be Municipal Corporation, Educational Institutions, Hospital, Club, Religious Institutions, etc..... Let's us discuss each one of the Organization is an industry or not, through the cases.

Whether Municipal Corporation is an industry or not?

In the case D.N Benerjee vs. P.R Mukharjee, the head clerks and the sanity inspectors have been terminated from their jobs. As it is a industrial dispute they approach to the industrial tribunal, it gave in the favor of head clerk and the sanitary inspectors. The management challenged that the municipal corporation is not an industry, so the industrial tribunal lacks the jurisdiction. This case goes to the Supreme Court. Supreme Court gave the judgement as the municipal corporation is an industry.

In another case of City of Corporation of Nagpur vs. City of Corporation of Nagpur its employees, there is an industrial dispute between the employer and employee regarding the wages. As it is an Industrial Dispute, it refers to the Industrial Tribunal, the management has challenged that the Corporation is not an Industry. The cases gone to the Supreme Court of India, Supreme Court states that the Corporation is an Industry.

Is educational Institution is treated as an Industry??

In the case of University of Delhi vs. K. Ramanth, the university provides the bus facility to the girl students due to the losses to the university; the management terminates the drivers from their job. As the workmen approaches to the court, the management argument is that the university is not an Industry. The Supreme Court stated that the teachers are not workmen, the University is an Industry but the purpose of the university is to provide education only.

Is Hospital an Industry?

In the case of State of Bombay vs. Hospital Mazdoor Sabha, two employees were terminated from the service. The management argued that the management is a government hospital so it is not an Industry so the Industrial Disputes Act, 1947 won't be applicable. The Supreme Court stated that the Government Hospital is an Industry.

In the case of Management of SAFCLARJUNG Hospital vs K.S Sethi, the Supreme Court concluded that the government hospital is the sovereign function of the government so the government hospital is not an industry.

Solicitors firm is an Industry?

In the case of National Union of commercial employer's vs. M.R Mehar, the lawyers terminated the clerks, stenographers, and other employees. This case came up to the Supreme Court, Supreme Court conducted test that there must be a Association of Labor and capital then only the firm will be determined as an Industry. So the Supreme Court held that the Lawyers firm is not an Industry.

Is Religious Institutions Comes under Industry?

In the case of Shri Adi Visheshwara of Kashi Vishwanath Temple vs. State of Uttar Pradesh, the question before the court is that the religious institution comes under the Industrial Disputes Act, 1947. The High court of Allahabad concluded that the temples could not be considered as an industry.

The Court has observed that the temple's purpose was religious, and any economic activity was incidental to that purpose. The court also observed that the temple was not involved in any other commercial activity for profit making and doesn't function like a Business Enterprise.

Is a charitable Institution is an Industry?

In the case, Bombay Pingapore vs. Bombay Pingapore's Employees, the Bombay Pingapore is an charitable institution which protecting and promoting the disabled and deformed cattle. It has been developed as Dairy Farm and started the production of milk. The small quantity of milk was consumed and the large quantity of milk was being sold so the court stated that the charitable institution has lost its character as a charitable institution. So the court concluded that the Bombay Pingapore is an institution.

Position from 1978:

From the year 1978, the scope of the word 'Industry ' has become wider and enlarged. The case Bangalore Water Supply vs. A Rajappa and others has bought a change in the definition of the Industry. The Judgement of this case has bought a change from the preceding cases.

Facts of the Case:
In this case, A. Rajappa is an employee in the Bangalore water Supply. An Industrial Dispute has arisen between the Bangalore Water Supply and the employers. Each and every employee was fined by the Bangalore water supply for the misconduct, the fine was very high and it was not reasonable.

The employees has approached the labor court under the section 33(c) of Industrial Disputes Act, 1978, stating that the breach of the Natural Justice Principles. The Bangalore water supply's argument is that the Bangalore water supply is not an industry, so it is not a Industrial Dispute so the Labor Court lacks the jurisdiction.

Under the Article 226 of Indian Constitution, the employers have filed 2 writ petitions in the High Court of Karnataka. The High Court concluded that the Bangalore water supply is an Industry under section 2(j) the Industrial Disputes Act, 1978.

Later, the Bangalore Water Supply has gone to the Supreme Court, under the Article 126 of Indian Constitution.

This is the question laid before the Supreme Court.
  • Whether the Bangalore Water Supply is an Industry or not?

The Apex Court of India has stated that ' to say any particular organization is an Industry ' for that there has to be a test conducted. The test was named as a ' Triple Test '. Triple test is the test which shows whether a particular organization is an Industry or not.

For the triple test there must be satisfying the conditions:
  1. There must be a systematic activity which has to be done. (The profit motive is not relevant)
  2. There must be a co-operation between the employers and employees.( Investment of capital is not necessary )
  3. The production or supply of the goods or rendering services to the public.

With this test, the Supreme Court stated that the Bangalore water supply is an Industry. Therefore the Labor court has the jurisdiction to take the case and give the award (judgement).

There are some exceptions to the Triple test, which gives that a particular organization is not an Industry.

  1. Single Person's Firm (Doctor, Lawyers, etc.)
  2. Sovereign Functions
  3. Charitable Institutions
  4. Religious Institutions

The single professions firm doesn't treated as a Industry because the lawyers are not treated a workmen and their purpose is to provide the service to the public. Where ever the sovereign functions are there, then the particular organization will not be treated as an Industry. Because the sovereign functions need to be performed by the government like postman, etc...

With this definition the Supreme Court is not satisfied, so the Supreme Court asked the parliament to come with a amendment in relation to the term Industry under Industrial Disputes Act, 1978.

The parliament has come with amendment; the new amendment's definition continues the triple test. If any establishment of an organization satisfies with the above three conditions then it is treated as an Industry unless it's an:
  • Agricultural operations
  • Hospitals
  • Education and Research Institutions
  • Charitable Institutions
  • Sovereign Functions
  • Single Profession Firms
  • Any clubs with less than 10 members.
The Apex Court had given the term "industry" under the Act a broad definition, and since then, the ruling has been enacted as national law. Due to a revision in the definition of "industry" made by Parliament in 1982, the expansive meaning provided by the Bangalore Water Supply case was constrained. Except Single Professional Firms, Charitable Institutions, Religious Institutions, Any clubs with less than 10 members and Sovereign Functions other than these every organization will be treated as an Industry.

In order to make it easier for them to be controlled by the same rules and regulations and to make things clearer for the general public so that they may more readily access the law, we feel that the court's decision to mandate that some industries be covered by the act was totally reasonable. In our opinion, the lawmakers spent more effort on this amendment than was actually necessary.

It took the Parliament four years to change this definition, despite the fact that we think it should have been done sooner. Therefore, the politicians should have been more proactive in putting a stop to the commotion about how to define "Industry".

End Notes:
  1. Section 2 (j) of Industrial Disputes Act, 1947
  2. D.N Benerjee vs. P.R.Mukharjee (1953 AIR 58, 1953 SCR 302)
  3. City of Corporation of Nagpur vs. City of Corporation of Nagpur its employees (1960 AIR 675, 1960 SCR (2) 942)
  4. University of Delhi vs. K. Ramanth (1963 AIR 1873, 1964 SCR (2) 703)
  5. State of Bombay vs. Hospital Mazdoor Sabha (1960 AIR 610, 1960 SCR (2) 866)
  6. Management of SAFCLARJUNG Hospital vs K.S Sethi (AIR 1970 SC 1407, 1970 (20) FLR 399, (1970) IILLJ 266 SC, (1970) 1 SCC 735, 1971 1 SCR 177)
  7. National Union of commercial employer's vs. M.R Mehar, (1962 AIR 1080, 1962 SCR Supl. (3) 157)
  8. Shri Adi Visheshwara of Kashi Vishwanath Temple vs. State of Uttar Pradesh 1997(2) SCR 1086
  9. Bangalore Water Supply vs. A. Rajappa &others 1978 AIR 548, 1978 SCR (3) 207
  10. Section 33(2) of Industrial Disputes Act, 1947
  11. 126, 226 Articles of Indian Constitution.

Award Winning Article Is Written By: Mr.Kuncha Anudeep Durga Prasad - Student BBA LLB(Hons), Gitam, School of Law, Visakhapatnam.
Awarded certificate of Excellence
Authentication No: MR307863371250-19-0323

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