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
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
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
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
, 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
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
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:
- There must be a systematic activity which has to be done. (The profit
motive is not relevant)
- There must be a co-operation between the employers and employees.(
Investment of capital is not necessary )
- The production or supply of the goods or rendering services to the
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.
- Single Person's Firm (Doctor, Lawyers, etc.)
- Sovereign Functions
- Charitable Institutions
- 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
- 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
- Section 2 (j) of Industrial Disputes Act, 1947
- D.N Benerjee vs. P.R.Mukharjee (1953 AIR 58, 1953 SCR 302)
- City of Corporation of Nagpur vs. City of Corporation of Nagpur its
employees (1960 AIR 675, 1960 SCR (2) 942)
- University of Delhi vs. K. Ramanth (1963 AIR 1873, 1964 SCR (2) 703)
- State of Bombay vs. Hospital Mazdoor Sabha (1960 AIR 610, 1960 SCR (2)
- 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)
- National Union of commercial employer's vs. M.R Mehar, (1962 AIR 1080,
1962 SCR Supl. (3) 157)
- Shri Adi Visheshwara of Kashi Vishwanath Temple vs. State of Uttar
Pradesh 1997(2) SCR 1086
- Bangalore Water Supply vs. A. Rajappa &others 1978 AIR 548, 1978 SCR (3)
- Section 33(2) of Industrial Disputes Act, 1947
- 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.
Authentication No: MR307863371250-19-0323