INDUSTRY-Definition

• Section 2(j) of the industrial disputes Act

defines-
• “industry” means any business ,trade,
undertaking, or calling of employers and
includes any calling, service, employment,
handicraft, or industrial occupation or
avocation of workmen.
• In the ordinary sense industry or business means
an undertaking where capital and labour co-
operate with each other for the purpose of
producing wealth and for making profits.
• Nothing prevents the statute from giving a wider
meaning.
• The I.D Act is intended to bring about industrial
peace and harmony.
• Hence Industry is given a wider meaning.
• The judiciary has interpreted Industry in a number
of cases.
• They can be classified as follows:
• 1st phase 1953 to 1962-wider meaning
• 2nd phase 1963 to 1978- narrow meaning
• 3rd phase BWSSB v A.Rajappa [AIR 1978 SC5 48] -
reviewed the earlier cases and widest meaning
was given
• 1978 Parliament Reacts and amends Industry not
brought in to effect so far
• 4th phase-Reservations about the correctness of
BWSSB case-Requested the CJI to constitute a
larger bench than BWSSB case to explain what is
industry- State of U.P v Jai Bir Singh [(2005) 5
SCC1]
1st phase1953 to 1962

D.N.Banerji v P.R. Mukherjee (AIR 1953 SC 58)

Q. The judiciary dealt with the question whether Municipality is an industry?

• The SC held though municipal activity could not be regarded as “business or trade” it
would fall with in the scope of the expression “undertaking” and it is an industry.
• Neither investment of capital nor profit making motive is essential to constitute an
industry as they are generally necessary in a business.
• A PUS 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 and if
these PUS are carried on by local bodies like a Municipality they do not cease to be
an industry.

Hospital Mazdoor Sabha v State of Bombay (AIR 1960 SC 610)

Q. The judiciary dealt with the question whether Hospital is an industry?

• The SC held that Hospital comes under then term “undertaking” hence Industry
• Industry includes even activities which have no commercial implications.
• Activities carried on by Govt. or charitable
organizations will also be industry.
• The SC in this case laid down a working principle:
“ an activity systematically or habitually undertaken
for the production and or distribution of goods or
for rendering of material services to the
community with the help of employees is an
undertaking”
• In this case it was also held that an undertaking to
be an Industry must be analogous to trade or
business.
• Sovereign or Regal activities are outside the scope
of Industry.
Corporation of the city of Nagpur v Its employees
AIR1960 SC 675
Q. Whether all the departments of the municipal
corporation are industry, eg. Departments dealing with
sovereign functions of the state like
1.determination of tax
2.settlement of disputes relating to fixation of tax and its
recovery as compared to other departments like
i. sanitation, sewerage fees for conveyance,
ii. street lighting or
iii. firebrigade,
which can equally be done by a private person.
• In this case the SC said that municipal functions are
analogous to “business or trade”
• Hence Corporation was held to be an industry.
• In this case there was another issue raised as to
sovereign functions.
• Departments performing sovereign functions are
excluded from the definition of Industry.
Q. If a department performs many functions, some
pertaining to industry and other non industrial
activities?
The predominant functions of the department
shall be the criteria for the purpose of deciding
whether the department is industry or not.
• The Sovereign functions shall be confined to
legislative power, administration of Law and
Judicial power.
NNUC Employees V. IT (AIR 1962 SC 1080)
Q. Whether a solicitor’s firm is an industry?
– Whether it is organised industry?
– whether there is cooperation between employer
and his employee to carry on the firms activity?
– “There is no interdependent or essential
cooperation between the firm and its employees
and the work done by the typist, or stenographer
or by menial staff is not directly concerned with
the services rendered by the solicitor to their
client. Therefore solicitor firm was held not to be
an industry.”
Decision overruled
2nd phase- Trend Between 1963 to 1978
• In this period the trend was narrowing down the meaning of
the term industry.

University of Delhi-v-Ramanath (AIR1963 SC 1873)

The SC held that University is not an industry-because:

• Main scheme of an educational institution is imparting
education
• Teaching is not within the purview of industry as there is no
commercial motive
• The subordinate staff play a minor or insignificant role in the
process of imparting education
• Permitting the insignificant role of the subordinate staff to
lend the colour of industry is unreasonable.
Cricket Club of India-v-Bombay Labour union
(AIR 1969 SC 276)
The SC held that Cricket Club is not an Industry.
• The Clubs activity is basically promotion of the
game of Cricket.
• It is a self serving institution.
• It is not carrying any trade or business.
• In the course of promoting the game it has
incidentally earned some profits.
• It is not set up for earning profits.
• In the Management of Sardarjung Hospital v.
Kuldipsingh Sethi (AIR 1970 SC 1407), the SC held
that Hospital is not an industry.
• They overruled the earlier Hospital mazdoor
sabha case
• Hospitals run by the Government or Charitable
institutions are not run on commercial lines.
• If an hospital or Nursing home is run on
commercial basis then it may be an industry.
• The hospitals in question are not industry as they
are not run on terms analogous to trade or
business.
3rd phase
Bangalore Water supply Sewerage Board v.
A.Rajappa (AIR 1978 SC 548)
• This was a seven judge bench constituted to
review all the earlier cases and explain what is
the meaning of Industry.
• This case revived the pre 1962 cases and over
ruled the post 1962 cases.
• The law developed in this case is an
amalgamation of Hospital Mazdoor sabha case
and Nagpur city Corporation case, with minor
elaborations.
• The BWSSB case developed a working principle to
determine whether an activity is an industry or
not:
1. Systematic activity
2. organized by Co-operation between employer and
employee
3. For the production and or distribution of goods or
services;
• Such an activity is an industry
• Absence of profit motive is irrelevant.
• If the organization is trade or business it does not
cease to be one because of philanthropy
animating the undertaking.
• A restricted Category of professions, Clubs, co
operatives and little research labs may qualify
for exemption.
Parliamentary reaction-1982
• Amendment to section 2(j)- industry
• Amendment borrowed the definition as given in
the BWSSB case- Clarified the situation further by
stating that employer – employee relation
includes employees employed through
contractor.
• The definition excludes certain categories of
employment from the definition.
• Coir board-v- Indiradevi (2000)1 SCC 224
• State of U.Pv.Jai Bir Singh (2005)5SCC1 a
constitutional bench decision.
• Now it has been referred to 9 judge bench
Definition of Workman-Section 2(s)
• Workman means any person (including an apprentice)
employed in any industry to do any manual, unskilled,
skilled, Technical, Operational, clerical or supervisory
work for hire or reward, whether the terms of
employment be express or implied
• It includes any such person who has been discharged ,
dismissed or retrenched whose discharge ,dismissal,
retrenchment has led to the ID
• It excludes persons subject to defense forces, police
force and prison service
• It excludes persons who are mainly employed in
managerial or Administrative capacity
• It excludes supervisory staff whose salary is more than
Rs.10,000=00 per month
• The definition does not differentiate between
permanent, temporary etc workers
• Conflicting judicial decisions as to the
interpretation of the definition
• Burmah shell storage Distribution Co; of India ltd-
v-Management staff association(1970)2LLj590
• May and Baker(I) ltd-v-Workmen(1961)2LLJ94
• Sundarambal-v- Govt of Goa(1989)1LLJ61
• The above three decisions gave literal
interpretation as per the words used in the
definition.
S.K.Verma v.MaheshChandra(1983)Lab.I.C1483
The SC gave a beneficial interpretation to the
definition by holding that if an employee
employed in an Industry is not expressly
excluded from the definition of workman then
he is included in the definition.
H.R.AdyanthayaV.Sandoz(India)ltd(1995)1LLJ30
3
The SC- Constitutional bench decision held
that earlier trend of decisions are correct and
over ruled S.K.Verma case
Muir Mills NTC ltd-v-Swayam prakash
Srivastava (2007)1 SCC 491
• The SC held that Professional regulated by any
professional body is not a workman though
employed
• In the above case the respondent was
appointed as a legal assistant in the appellant
co; and he use to do the jobs like prepare
replies to the claims made against the
appellant co; preparing affidavits, doing the
job of an enquiry officer etc;
• The SC also reasoned that the respondent has
not been performing stereotype job. His job
had creativity. He not only used to render
legal opinions on a subject but also used to
draft pleadings on behalf of the appellant as
also represent it before various courts/
authorities. He would also discharge quasi
judicial functions.
Distinction between workman and
independent contractor
• Workman does the work by himself where as
an independent contractor gets the work
done by others.
• Workman is subject to supervision and control
of the employer where as independent
contractor is not.
• Workman is hired by the employer and can be
terminated. In case of contractor there is a
contract.
Hussainbai v. Alath Factory union (AIR1978 SC 1410)
• The workers employed under a contractor
• The work was done for the principal employer
• The work was carried at the principal employers
premises
• The raw materials were supplied by the principal
employer
• The workers raised a dispute that they are the workmen
of the principal employer
• The I.T adjudicated that the workmen are the
employees of the principal employer
• The S.C up holds the decision of the tribunal and held
that the contractor is a sham
Industrial Dispute (Sec.2k)
• Industrial dispute means any dispute or difference
between employers and employers, or between
employers and workmen or between workmen
and workmen, which is connected with
employment or non-employment or the terms of
employment or with the conditions of labour of
any person.
• The dispute has to be between plurality of
workman and employer
• Individual workman cannot raise an industrial
dispute
• A trade union or a number of workmen must rise
the dispute.
Newspapers Ltd. V. Industrial Tribunal (1960 (2) LLJ
SC 37)

“The SC held that for extending support or to

espouse the cause of individual workman, TU
need not be a registered TU.”

Workmen of Dharampal Premchand v.

D.P.Chand(1965(1) LLJ 668)

“The representation by TU u/s. 36 of ID Act can be

allowed by an outside TU also if the concerned
industry does not have a TU of its own.”
Q. What number of workmen are required to
rise an industrial dispute?
• The SC has said that substantial number of
workmen will have to rise the dispute
• The SC has said that substantial number is not
majority
• It must however be such number as to lead an
inference that the dispute is one which affects
the workmen as a class.
Any person used in the definition
Workmen of Dimakuchi Tea estate v. Dimakuchi
Tea estate (1958 1 LLJ 500 SC)
• The Court held that the word any person in the
definition means a person in whose employment
or non employment or terms of employment or
conditions of labour the workmen as a class have
a direct and substantial interest.

• Whether such direct and substantial interest

has been established in a particular case will
depend on its facts and circumstances
Standard Vacuum refining co; of India ltd v. the
workmen (1960 2 LLJ 233 SC)
• this case labour was employed for cleaning
and maintenance through contractor
• The regular employees raised a dispute for
regularising the contract labour
• The regular workmen have direct and
substantial interest in the contract workers
• The regular workers have class interest also.
Individual dispute deemed as industrial
dispute(2-A)

Where any employer discharges, dismisses,

retrenches or otherwise terminates the
services of an individual workman, any
dispute or difference between that workman
and his employer…….shall be deemed to be an
industrial dispute notwithstanding that no
other workman nor any union of workmen is a
party to the dispute.