“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;”
Section 2(j) of the Industrial Disputes Act (1947) which defines, “industry” contains words of wide import, as wide as the Legislature could have possibly made them. The Parliament must step in and legislate in ‘a manner which will leave no doubt as to its intention. That alone can afford a satisfactory solution to the question which has agitated and perplexed the judiciary at all levels.
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, Industrial Disputes Act, 1947 (for short, the Act).
An industry is a continuity, is an organized activity, is a purposeful pursuit-not any isolated adventure or casual, fleeting engagement motivelessly undertaken. Such is the common feature of a trade, business, calling, manufacture- mechanical or handicraft based-service, employment, industrial occupation or avocation. For those who know English and are not given to the luxury of splitting semantic hairs, this conclusion argues itself. The expression ‘Undertaking’ cannot be torn off the words whose company it keeps. If birds of a feather flock together and noscitur a sociis is a commonsense guide to construction, ‘undertaking’ must be read down to conform to the restrictive characteristic shared by the society of words before and after. Nobody will torture ‘undertaking in Section 2(j) to mean meditation or musheira which are spiritual and aesthetic undertakings.
To sum up, the personality of the whole statute, be it remembered, has a welfare basis, it being a beneficial legislation which protects Labour, promotes their contentment and regulates situations of crisis and tension where production may be imperiled by untenable strikes and blackmail lock-outs. The mechanism of the Act is geared to conferment of regulated benefits to workmen and resolution, according to a sympathetic rule of law, of the conflicts, actual or potential, between managements and workmen. Its goal is amelioration 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 the welfare of the weaker lot. Empathy with the statute is necessary to understand not merely its spirit but also its sense. One of the vital concepts on which the whole statute is built, is ‘industry’ and when we approach the definition in Section 2 (j), we must be informed by these values.
- (a) Are establishments, run without profit motive. Industries?
(b) Are charitable institutions industries?
(c) Do undertakings governed by a no-profit- no-loss rule. Statutorily or otherwise fastened, fall within the definition 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, fit into the definitional circle?
(e) To go to the core of the matter, is it an inalienable ingredient of ‘industry’ that it should be plied with a commercial object?
- (a) Should co-operation between employer and employee be direct in so far as it relates to the basic service 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?
- (a)Is the inclusive part of the definition in Sec. 2(j) relevant to the determination of an industry ? If so, what impact does it make on the categories?
(b) Do domestic service drudges who slave without respite-become ‘industries’ by this extended sense?
- Are governmental functions, stricto sensu, industrial and if not, what is the extent of the immunity of instrumentalities of government ?
- What rational criterion exists for a cut-back on the dynamic potential 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 relations become more complex and sophisticated and workmen become more right-conscious?
- 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 into an employer-employee complex ?
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 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 conciliation 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. Without such an approach, the numerous problems that now arise for solution in the shape of industrial disputes cannot be tackled satisfactorily and this is why every civilised government has thought of the machinery of conciliation officers, Boards and Tribunals for the effective settlement of dispute.” (emphasis added)
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) 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-government 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 and workmen is an industrial dispute, and the proviso to section 10 lays down that where such a dispute arises and a notice under section 22 has been given, the appropriate Government 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 state, and which functions under the limitations imposed by the statute, does it cease to be an industry for this reason ? The only ground on which one could say that what would amount to the 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 like a Municipality is that in the letter there is nothing 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 industry ? ,(emphasis added)
Hence, absence of capital does not negative ‘industry. For instance, there is a necessary element of distinction between the supply of power and light to the inhabitants of a Municipality and the running of charitable hospitals and dispensaries for the aid of the poor. In ordinary parlance, the former might be regarded as an industry but not the latter. The contention that charitable undertakings are not industries is, by this token, untenable.
Profit-making motive is not a sine quo non of ‘industry’ functionally
It that argument were sufficient, then a philanthropist who acquired a clothing factory and employed the same employees 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 the bare cost of production. If the contention of the respondent is correct, a private company carrying on a ferry would be engaged in an industrial occupation. If a municipal corporation carried it on, it would not be industrial. This view cannot be accepted”. (emphasis added) The negation of profit motive, as a telling test against ‘industry is clear from this quote.
Charitable activities may also be industries.
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 the Organisation of the venture, including the relations between the two limbs viz. labour and management. If the mutual relations, the method of employment and the process of co-operation in the carrying out of the work bear close resemblance to the organization method remuneration, relationship of employer and employee and the like then it is industry otherwise not. This is the kernel of the decision. An activity oriented,but motive based, analysis.
The long title of the make provision for the promotion of industries and peaceful 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 important step in achieving social justice. The Act seeks to 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.
In any case it is 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 exclusion; 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`.
The tax department of the local body is ‘industry’. The reason is this.
“The scheme of the Corporation Act is that taxes and fees are collected in order to enable the municipality to discharge its statutory functions. If the functions so discharged are wholly or predominantly covered by definition of “industry”, 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 performing 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.
“It is the character of the activity which decides the question as to whether the activity in question attracts the provision of Sec. 2(j); who conducts the activity and whether it is conducted for profit or not do not make a material difference.” 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 without charging any fees from the patients treated in it, it would nevertheless be an undertaking under s. 2(j). Thus the character of the activity involved in running a hospital brings the institution of the hospital within s. 2(j)”
The service of a solicitor was regarded as individual 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 with the advice or services. In this way learned professions were excluded.”
This proves that 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 establish a partnership as such in the production of material goods or material services. Each person doing his appointed task in an Organisation will be a part of industry whether he attends to a loom or merely polishes door handles. The fact of employment 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 absence of such partnership but because viewed from the angle of the employer’s occupation, they do not satisfy the test.”
The lawyer is no better and just cannot function without the specialised supportive tools of paraprofessionals like secretaries, librarians, and law-knowing steno-typists or even the messengers and telephone girls. 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 services of competent stenographers, paralegal supportive services are equally important. The same test applies to other professions.
The result of this discussion is that the solicitors’ case is wrongly decided and must, therefore, be’ over-ruled.
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 to be classified as a trade or industry with its commercial connotations but because there is nothing like organized labour in such employment.
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 in.
“The basic question, strange as it may seem, is whether the occupation of employees engaged in education, itself universally recognized as the key industry to all skilled occupations, is ‘industrial’ within the meaning of the Constitution”.
“The theory was that society is industrially organized for the, production and distribution of wealth in the sense of tangible, ponderable, corpuscular wealth, and therefore an “industrial dispute” cannot possibly occur except where there is furnished to the public- the consumers by the combined efforts of employers and employed, wealth of that nature. Consequently, say the employers, “education” not being “wealth” in that sense, there never can be an “industrial dispute” between employers and employed engaged in the avocation of education, regardless of the wealth derived by the employers from the joint co-operation.
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 services, national service as the service of organized industry must always be.
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 material 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, because it is the production of wealth. But if Australian 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 community, that training is said not to be wealth and the work done by teachers employed is said not to be industrial.”
So long as services are part ‘of ‘the wealth of a nation-and it is obscurantist to object to it-educational services are Wealth, are ‘industrial’.
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 industrialisation.
Two reason conclusion that imparting education is an industry. The first ground relied on by the Court is based upon the preliminary conclusion that teachers are not ‘workmen’ by definition. Perhaps, they are not are given to avoid the 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 University of Delhi, proceeded on that assumption viz. that teachers are not workmen, which we will adopt to test the validity of the argument.’
“It is common ground that teachers employed by educational institutions, whether the said institutions are imparting primary, secondary, collegiate or postgraduate education, are not workmen under s. 2(s), and so, it follows that the whole body of employees with whose co- operation the 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, if imparting education is an industry under S. 2(j), the bulk of the employees being outside the purview of the Act, the only disputes which can fall within the scope of the Act are those which arise between such institutions and their subordinate 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 the assistance of the labour and co- operation of teachers, the omission of the whole class of teachers, from the definition prescribed by s. 2(s) has an important bearing and significance 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 educational institutions to carry on the duties of the subordinate staff. Reading ss, 2(g), (j) and (s) together, 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 which appealed to the Court to reach its 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.
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 disputed; 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 Governments as well as the Union Government, and the University 263
Grants Commission carefully consider this problem and assist the teachers by requiring 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 teachers engaged in primary and secondary education and collegiate education which fall under their respective jurisdictions. The position nevertheless is clear that any problems connected with teachers and their salaries are outside the purview of the Act, and since the teachers form the sole class employees with whose co-operation education is imparted by educational institutions, their exclusion from the purview of the Act necessarily corroborates the conclusion that education itself is not without its scope.”
Hence, education is industry.
The premises relied on is that the bulk. of the employees in the university is the teaching community. Teachers are not workmen and cannot raise disputes under the Act. The subordinate staff being only a minor category of insignificant numbers, the institution must be excluded, going by the predominant character test. It is one thing to say that an institution is not an industry. It is altogether, another 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 predominant 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 hypothesis education which is a service to the community. 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.
Research: it is. Its discoveries are valuable contributions to the wealth of the nation. Such discoveries may be sold for a heavy price in the industrial or other markets. Technology has to be plate for and technological inventions and innovations may be patented and sold. In our scientific and technological age nothing has more cash value, as intangible goods and invaluable services, than discoveries. For instance, the discoveries of Thomas Alva Edison made him fabulously rich. It has been said that his brain had the highest cash value in history for he made the world vibrate with the miraculous discovery of recorded, sound.
Co-operative societies ordinarily cannot, we feel, fall outside Sec. 2 (j) After all, the society, a legal person, is the employer. The members and/or others are employees and the activity partakes of the nature of trade. Merely because Co-operative enterprises deserve State encouragement the definition cannot be distorted. Even if the society is worked by the members only, the entity (save where they are few 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 edit societies, marketing Co-operatives, , producers’ or consumers’ societies or apex societies-are industries.
The Tuberculosis Hospital is not an independent institution. It is a part of the Tuberculosis Association of India. The hospital is wholly charitable and is a research institute. The dominant purpose of the Hospital is research and training, but as research and training cannot be given without beds in a hospital, the hospital is, run. Treatment is thus a part of research and training. In these circumstances the Tuberculosis Hospital cannot be described as industry.
- ‘Industry’, as defined in Sec, 2 (j) and explained in Banerji, has a wide import.
(a) Where (i) systematic activity, (ii) organized by co- operation between employer and employee, (the direct and substantial element is chimerical) (iii) for the production and/or distribution of goods and services calculated to satisfy human wants and wishes (not spiritual 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) The true focus is functional and the decisive test is the nature of the activity with special emphasis on the employer-employee relations.
(d) If the Organisation is a trade or business, it does not cease to, be one because of philanthropy animating the undertaking.
- 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 This yields the inference that all organized activity possessing the triple elements in I (supra), although not trade or business, may still be ‘industry’ (provided the nature of the activity, viz. the employer-employee basis, bears resemblance to what we find in trade or business. This takes into the- fold of ‘industry’ undertakings, callings and services 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 employer and employee may be dissimilar. It does not matter, if off the employment terms there is analogy.
III. The ideology of the Act being industrial peace, regulation and resolution of industrial disputes between employer and workmen, the range of this statutory ideology must inform the reach of the statutory definition. Nothing less, nothing more. (a) The consequences are (i) professions, (ii) Clubs (iii) educational institutions (iiia) co-operatives, (iv) research institutes (v) charitable projects and (vi) other kindred adventures, if they fulfill the triple tests listed in I (supra), cannot be exempted from the scope of sec. 2 (j). (b) A restricted category of professions, clubs, co- operatives and even Gurukulas and little research labs, may qualify for exemption if in simple ventures substantially and going by the dominant nature criterion substantatively, in single simple ventures, no employees are entertained but in minimal matters, marginal employees are hired without destroying the non- employee character of the unit.
(c) If in a pious or altruistic mission many employ them- selves, free or for small honoraria, or likely return mainly by sharing in the purpose or cause, such as lawyers volunteering to run a free legal services clinic or doctors serving in their spare hours in a free medical centre or ashramites working at the bidding of the holiness, divinity or like central personality and the services are supplied free or at nominal cost and those who serve are not engaged for remuneration or on the basis of master and servant, relationship, then, the institution is not an industry even if stray servants, manual or technical, are hired.
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 productive of goods and services 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) Notwithstanding the previous clauses, sovereign functions, strictly understood, alone qualify for exemption, not the welfare activities or economic adventures undertaken by government or statutory bodies.
(c) Even in departments discharging sovereign functions, if there are units which are industries and they are substantially severable, then they can be considered to come within sec. 2(j).
(d)Safdarjung, Solicitors’ case, Gymkhana, Delhi University, Dhanrajgirji Hospital and other rulings whose ratio runs counter to the principles enunciated above are overruled, 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 restructure the rather clumsy, vaporous and tall-aud-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 synthesis becoming of a welfare State and Socialistic Society, in a world setting where I.L.O. norms are advancing and India needs updating. 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 law, we are sure, will run with the rule of Life-Indian Life-at the threshold of the decade of new development in which Labour and Management, guided by the State, will constructively partner the better production and fair diffusion of national wealth.
Question & Answer
- Whom to approach for any industrial dispute?
The parties to an industrial dispute cannot directly approach the Tribunal or the labour court to get their dispute settled. As per Sec 10 of I.D Act, an industrial dispute inorder to be adjudicated by a tribunal or labour court has to be referred to it by the appropriate Government as either the Central Government or the State Government exercise control over such industries.
- Is the order disposing of the reference for non-appearance of parties an award?
No. Such order is a no dispute award and is not a award within the meaning of Sec 2(b) as there is no determination of any dispute.
- What is an ex parte award?
It means an award that is determined in the absence of the either of the parties to the dispute.
- Can ex-parte award recalled?
The ex-parte award can be recalled by the labour court/ Tribunal, if the aggrieved party by any application, can show sufficient cause for his non-appearance.
- What is the jurisdiction and powers of the labour court?
- The propriety or legality of any order passed by an employer under the Standing Orders.
- The application and interpretation of Standing Orders.
- Discharge or dismissal of workmen, including reinstatement of, or grant of or relief to, workmen wrongfully dismissed.
- Withdrawal of any customary concession or privilege.
- Illegality or otherwise of a strike or lockout.
- All matters other than specified in the Third Schedule.