Holding

The Court held that the matter should be referred to the Chief Justice for consideration of a larger bench to re‑examine the definition of "industry" and the applicability of the Bangalore Water Supply test, effectively leaving the question unsettled.

Summary

The Coir Board, a statutory body established under the Coir Industry Act, 1953, dismissed several temporary clerks and typists who claimed that their termination was governed by Chapter V‑A of the Industrial Disputes Act, 1947. The Kerala High Court held that the Board qualified as an "industry" under the Act, making the chapter applicable. On appeal, the Supreme Court examined the breadth of the definition of "industry" and the suitability of the test laid down in Bangalore Water Supply & Sewerage Board v. A. Rajappa. The Court observed that the sweeping test may not suit organisations like the Coir Board, which primarily promotes the coir sector rather than runs an industry itself. Consequently, the Court directed that the matter be placed before the Chief Justice to consider constituting a larger bench to re‑examine the definition of "industry" and the applicability of Chapter V‑A. The appeal was dismissed.

Issues considered

Whether the Coir Board qualifies as an "industry" under Section 2(j) of the Industrial Disputes Act, 1947.
Whether termination of the Board's temporary clerks and typists falls within Chapter V‑A of the Act.
Whether the test laid down in Bangalore Water Supply & Sewerage Board v. A. Rajappa should be applied to statutory bodies like the Coir Board.

Legislation cited

Industrial Disputes Act, 1947s. 2(g), s. 2(j), s. 2(s), s. Chapter V-A

Subjects

Industrial Disputes Actdefinition of industryChapter V‑ACoir Boardstatutory corporationlabour welfareBangalore Water Supply testdominant nature testtermination of service

Judgment

COIR BOARD,.ERNAKULAM; COCHIN AND ANR. A
v.
INDIRA DEVI P.S. AND ORS.

MARCH 4, 1998

[MRS. SUJATA V. MANOHAR AND D.P. WADHWA, JJ.] B

Labour L.aws :
Industrial Disputes Act, 1947-Section 2(j), (g) and (s) and Chapter
V-A-Definition of "industry"-Scope-Coir Board-Whether covered by the
definition- Termination of services of its employees-Whether attracts the C
provision of Chapter V-A of the Act-Correctness of the test laid down in
Bangalore Water Supply and Sewage Board to determine the concept of
"industry" doubted-Damaging effect of extended meaning given to the
definition of word "industry" ·in Banga!Ore Water Supply and Sewage Board,
pointed out-Hence, matter referred to larger Bench to reconsider the decision D
of Bangalore Water Supply and Sewage Board-Need to frame a proper law
to promote the welfare of labour, emphasised-Coir Industry Act, 1953,
Section I 0, Preamble & Statement of Objects and Reasons.
The Coir Board as established under the Coir Industry Act had employed
certain clerks and typists who were discharged. They claimed that their
services could only be terminated in accordance with the provisions of the E
Industrial Disputes Act. A full Bench of the Kerala High Court came to the
conclusion, inter alia, that Coir Board was an "industry" as defined under
the Industrial Disputes Act and termination of services of its employees
would attract Chapter V-A of the Act. Hence this appeal by the Coir Board.
Referring the question to larger Bench, this Court.
HELD: I. Looking to the uncertainly left low case by on the question F
of activities and organisations that can be termed as industries under the
Industrial Disputes Act and in the light of experience of the last two deceased
in applying the test laid down in the case of Bangalore Water.Supply and
Sewage B(Jm-d it is necessary that the decision in the said case is re-
examined. Instead ofleading to industrial peace and welfare of the community G
(which was the avowed purpose of artificially extending the definition of
industry), the application of the Act to organisations which were, quite
possibly, not intended to be so covered by the machinery set up under the said
Act, might have done more damage than good, not merely to the organisations
but also to employees by the curtailment of employment opportunities.
[48-G-HJ H
87
-- .
88 SUPREME COURT REPORTS [1998] 2 S.C.R.

A Bangalore Water Supply and Sewage Board v. A. Rajjapa, (1978( 2
SCC 213; D.N. Baneriee v. P.R. Mukherjee, AIR (1953) SC 58; Corporation
of the City of Nagpur v. Employees, (19601 2 SCR 942; State of Bombay v.
Hospital Mazdoor Sabha, AIR (1960) SC 610; Workman v. Indian Standard
Institute, AIR (1976) SC 145; National Union of Commercial Employees v.
MR. Mehar Industrial Tribunal, AIR (1962) SC 1080; University of Delhi
B v. Ram Nath, (1963) 2 LLJ 335; The Secretary, Madras Gymkhana Club
Employees' Union v. The Management of the Gymkhana Club, AIR (1968)
SC 554; Cricket Club of India v. Bombay Labour Union & Anr., AIR (1969)
SC 276; The Management of Safderjung Hospital v. Ku/dip Singh Sethi, AIR
(1970) SC 1407; Physical Research Laboratory v. K.G. Sharma, (1997] 4
C SCC 257; Sub-Divisional Inspector of Post v. Theyyam Jiseph, (1996] 8 SCC
489; Bombay Telephone Canteen Employees' Association v. Union of India,
(1997] 6 SCC 723 and G.M Telecom v. Srinivas Rao, (1997] 8 SCC 767,
referred to.

2. Undoubtedly, it is of paramount importance that a proper law is
D framed to promote the welfare of labour employed in industries. It is equally
important that the welfare of labour employed in other kinds of orgainsation
is also promoted and protected. But the kind of measures which may be
required for the latter may be different, and may have to be tailored to suit
the nature of such organisations, their infrastructure and their financial
capacity as also the needs of their employees. (99-B]
E 3. The elimination of profit motive or a desire to generate income as
the purpose of industrial activity has led to a large number of philanthropic
and charitable activities being affected by the Act. This has led to cessation
of many welfare activities previously undertaken by such organisation which
has deprived the general community of considerable benefit and the employees
F of their livelihood. There are many activities which are undertaken not with
a view to secure any monetary returns (whether one refers it as livelihood,
income or profit, but for other me generous or different motives). Such
activities would not normally be levelled as industrial activities, but for the
wide interpretation given judicially to the term "industry" in tfi'Z' Act. Apart
from such activities, there may be other activities also which are u.•dertaken
G in the spirit of community service, such as charitable hospitals where free
medical services and free medicines may be provided. The definition needs
re-examination so that, while the workers in an industry have the benefit of
industrial legislation, the community as such is not deprived of philanthropic
and other vital services which contribute so much to its well-being.
H (49-C-D; 100-B]

. ---
COJR BD. ERNAKULAM, COCHIN 1•. INDIRA DEVI P.S. [SUJATA V. MANOHAR, J.] 89
4. Since the notification bringing into effect the 1982 amendment to A
Section 2G) of the Act has not been issued by the executive so far and the
difficulty in the instant case has arisen because of the judicial interpretation
given to the definition ot"industry" in the Act, the matter should be judicially
re-examined. In the present case, the function of the Coir Board is to
promote coir industry, open markets for it and provide facilities to make the B
coir industry's product more marketable. It is not set up to run any industry
itself. Looking to the predominant purpose for which it is set up it should
not be called an industry. However, if one were to apply the tests laid down
by the Banglore Water Supply and Sewage Board case it is the organisation
where there are employers and employees. The organisation does some
useful work for the benefit of others. Therefore, it will have to be called an C
industry under the Act. As it does not appear that such a sweeping test was
contemplated by the Act, nor it is possible to hold which does useful service
·and employs people can be labelled as industry, a larger Bench should lie
constituted to reconsider the decision in Bang/ore Water Supply and S.Jwage
Board. (100-D; 101-C-E)
D
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1720-21 of
1990.

From the Judgment and Order dated 7 .10.82 !Jf the Kerala High Court
in 0. P. No. 4553/82 and 4529of1982.
E
K. Sukumaran and Ms. Baby Krishnan for the Appellants.

Mrs. Prasantha Prasad and N. Sudhakaran for the Respondents.

The Judgment of the Court was delivered by
F
MRS. SUJATA V. MANOHAR, J. In these appeals from a judgment of
the Full Bench of the Kerala High Court, we have to examine whether the
appellant-Coir Board is an industry as defined in the Industrial Disputes Act,
1947. The appellant-Coir Board, Emakulam, Cochin, has been set up under the
Coir Industry Act, 1953. In the Statement of Objects and Reasons for the Act,
it is stated "(1) The Coir Industry has definite role to play in our national G
economy. It is of very great economic importance to Travancore Cochin where
it is concentrated and also, from the point of view of earning foreign exchange,
of importance to the whole country. It has, however, been passing through
acute depression since the middle of 1952 as a result of the marked decline
in exports. With a view to controlling production, improving its quality, H
90 SUPREME COURT REPORTS [1998] 2 S.C.R.

A weeding out the undesirable elements in the export trade and developing the
internal market so as to reduce the industry's dependence on exports, it is .( ~
considered necessary to establish a Statutory Board on the lines of Boards
set up for other plantation industries.

(2)In order to finance the development of this industry it is proposed
B that a duty up to Rs. I per cwt. should be levied on coir fibre, coir yarn as
well as 'coir mats and matting exported .......... " The Preamble to the Act states •
that it is an Act to provide for the establishment of a Board for the development ~
of the coir industry and for that purpose to levy a customs duty on coir fibre,
coir yam and coir products exported from India and for matters connected
C therewith. Section 10 of the Coir Industry Act, 1953 lays down the functions
of the Board :-

Section JO :

"Functions of the Board :- ( l) It shall be the duty of the Board to
D promote by such measures as it thinks fit the development under the
control of the Central Government of the coir industry.

(2) Without prejudice to the generality of the provisions of sub-sec.
(I), the measures referred to therein may relate to -

(a) promoting exports of coir yarn and coir products and carrying on
E propaganda for that purpose;

(b) regulating unde~ the supervision of the Central Government the
production of husks, coir yam and coir products by registering coir
spindles and looms for manufacturing coir products as also
manufactures of coir, coir yam and coir products and taking such
F other appropriate steps as may be prescribed;

(c) undertaking, assisting or encouraging scientific, technological and
economic research and maintaining and assisting in the maintenance
of one or more research institutes;
G (d) collecting statistics from manufacturers of and dealers in, coir
products and from such other persons as may be prescribed, on any
matter relating to the. coir industry; the publication of statistics so
collected or portions thereof or extracts therefrom;
(e) fixing grade standards and arranging when necessary for inspection
H of coir fibre, coir yam and coir products;
COIR BD. ERNAKULAM, COCHIN''- INDIRA DEVI P.S. [SUJATA V. MANOHAR, J.] 91
(f) improving the marketing of coconut husk, coir fibre, coir yam and A
coir products in India and elsewhere and preventing unfair competition;

(ff) setting up or assisting in the setting up of factories for the
production of coir products with the aid of power;

(g) promoting co-operative organisation among producers of husks, B
coir fibre and coir yam and manufacturers of coir products; .
... (h) ensuring remunerative returns to producers of husks, coir fibre
and coir yam and manufacturers of coir products;

(i) licensing ofresting places and warehouses and otherwise regulating C
the stocking and sale of coir fibre, coir yam and coir products both
for the internal market and for exports;

(j) advising on all matters relating to the development of the coir
industry;

(k) such other matters as may be prescribed. D

(I) The Board shall perform its functions under this section in
accordance with and subject to such rules as may be made by the
Central Government."

For the purpose of improving the marketing of coir products and for promoting E
exports the coir Board, inter alia, maintains show rooms and sales depots.
The function of the show rooms is to exhibit quality samples of coir and coir
products, and make intends for products and, receive consignments from
manufacturers and/or merchants of coir products. The products are sold
through the show rooms for which the Coir Board charges a commission. The F
consignors of such products have to be regist~ed with the Coir Board and
these are private co-operatives of coir manufacturers. The marketing personnel
in each of the show rooms or sales depots helps in promoting their sale.

The Coir Board had employed certain temporary. clerks and typists who
were discharged. They claim that their services could only be terminated in G
accordance with the provisions of the Industrial Disputes Act, 1947.

A Full Bench of the Kerala High Court considered the question of
application of the Industrial Disputes Act to the appellant-Coir Board along
with a similar question raised in respect of a large number of Government
Departments, Government companies, other statutory corporations and local H
I

..,J
92 SUPREME COURT REPORTS (1998] 2 S.C.R.

A bodies, in the impugned judgment. After extensively dealing with the various
decisions of this Court on what is an 'industry' and who is a 'workman' under
the Industrial Disputes Act, the High Court has come to the conclusion, inter
alia, that Coir Board is an 'industry' as defined in the Industrial Disputes Act.
Hence chapter V-A of the Industrial Disputes Act would be applicable in
B respect of termination of the services of its temporary clerks and typists.

'Industry' is defined in section 2(j) of the Industrial Disputes Act, 1947
as "any business, trade, undertaking, manufacture or calling of employers and
includes any calling service, employment handicraft or industrial occupation
or avocation of workmen". The term 'employer' is defined in Section 2(g) to
C mean "(i) in relation to an industry carried on by or under the authority of
any department of the Central Government or a State Government, the authority
prescribed in this behalf, or where no authority is prescribed, the head of the
department; (ii) in relation to an industry carried on by or on behalf of a local
authority, the chief executive officer of that authority." The term 'workman'
in Section 2(s) is defined to mean "any person (including an apprentice)
D employed in any industJy 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; 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
E a consequence of, that dispute, or whose dismissal, discharge or retrenchment
has led to that dispute, but does not include any such person ...... "

Tlius, while employer is defined in the context of an industry' and the
workman is also defined as a person employed in any industry, the term
'industry' itself has been defined to mean business, trade, manufacture,
F undertaking or calling. While the terms 'business, trade, manufacture or
calling' are fairly clear, the term 'undertaking' which accompanies these four
words has given scope for judicial expansion of the meaning' of the word
'industry'. The words 'service, employment and avocation of workmen' also
being somewhat imprecise, like the word 'undertaking', have led to varying
G definitions of 'industry' being given from time to time by judicial
pronouncements when the courts were called upon to decide whether any
particular organisation could be considered as an industry or not.

In one of the early cases before this court, D.N Banerji v. P.R. Mukherjee,
AIR (1953) SC 58, a Bench of five judges considered the question whether
H a municipal corporation could be considered as an industry and the dispute
COJR BD. ERNAKULAM, COCHIN 1•. INDIRA DEVI P.S. [SUJATA V. MANOHAR, J.] 93
of its employees with it could be considered as an industrial dispute. The A
Court observed (para 13) that the words 'industrial dispute' convey the idea
of a dispute that would affect large groups of workmen and employers renged
on opposite sides, on some general questions on which each group is bound
together by a community of interests-such as wages, bonus, allowances,
working hours and so on. In branches of work of a municipality analogous
to carrying on of a trade or business, the dispute can be considered as an B
industrial dispute. A similar view was taken in the case of The Corporation
of the City of Nagpur v. Its Employees, [ 1960] 2 SCR 942. In The State of
Bombay & Ors. v. The Hospital Mazdoor Sabha & Ors., AIR (1960) SC 610
the word 'undertaking' in the definition of an industry was held to connote
an activity systematically and habitually undertaken for production or C
distribution of goods or for rendering material services to the community at
large or a part of such community with the help of employees. Profit motive
was considered as not relevant. This view of an industry covered organisations
- which would not have nonnally been considered as industries. But this Court
observed that the conventional meaning of trade and business had lost some
its validity for the Industrial Disputes Act which was a welfare measure for D
~.
the benefit of workers.

Thus, by eliminating the purpose of an industrial activity as earning of
profits or income or returns, the Court brought into the sweep of an industry,
activities such as charities, Government hospitals giving free medicines and E
medical care or other philanthropic activities. Even activities such as education,
recreation, research and the like that benefit the community as a whole came
under the label of 'industry'. In fact, by considering the tenn 'undertaking'
in this fashion, all kinds of organised activities which would ordinarily not
have been considered as industries at all and which would not have been
otherwise considered as industries even under the Industrial Disputes Act F
were now 'industries' under the Industrial Disputes Act. Because if we look
at the languag·e of the definition· of 'industry' in the Industrial Disputes Act
and interpret the word 'undertaking' appearing along with the words 'trade,
business and manufacture· or calling' by applying the principle of noscitur a
sociis, 'undertaking' would coyer activities similar to trade, business, G
manufacture of goods or calling and not other kinds of activity.

However, the same non-conventional interpretation was reiterated in the
case of The Workmen of Indian Standards Institution v. The Management of
Indian Standards Institution, AIR (1976) SC 145 by saying that the widest
possible connotation should be given to the word 'industry' since Industrial H
\

94 SUPREME COURT REPORTS [1998] 2 S.C.R.

A Disputes Act was a welfare legislation for the welfare of workers.· Therefore,
Indian Standards Institution was held to be an industry.

. At the same, there has been ano~er set of cases of this court and a
number of High Courts where a sJightly more restricted and conventional
meaning has been given to. th!l term 'industry' as defined in the Industrial
B Disputes Act. For example, in National Union of Commercial Empfoyees &
Anr. v. MR. Meher, Industrial Tribunal, Bombay& Ors., AIR (1962) SC 1080
the case of State of Bombay v. Hospital Mazdoor Sabha (supra) was
distinguished and it was held that a liberalprofession such as that <if·an
attorney was not an industry because the attorney does not carry on his
C profession with the active co-operation of his employees. He brings to bear
his intellectual equipment on the work he does. Similarly in the case of
University of Delhi and Anr. v. Ram Nath and Ors., (1963) 2 L.L.J. 335 this
court had held an educational institution was not an industry.

In the case of The Secretary, Madras Gymkhana Club Employees'
D Union v. The Management of the Gymkhana Club, AIR (1968) SC 554 this
Court held that every activity which involves the relationship of an employer
and employee .is not necessarily an industry. After examining the vast range
of human activities, this Court held that in on industry co-operation between
employers and employees was with a view to production and distribution of
E material goods or material services. A club was not an industry since its
services were to. the members themselves for their. own pleasure and
amusement and material goods were for their own consumption. It was a self-
serving organisation.and was not an industry. Following the same judgment,
in the Cricket Club of India v. Bombay Union and Anr., AIR (1969) SC 276,
·the Cricket Club of India was held not to be an industry.
F
In the next year, in the case of The Management of Safdar Jung
Hospital, New Delhi v. Ku/dip Singh Sethi, AIR (1970) SC 1407 a Bench of
six judges of this Court unanimously followed the ratio of the Madras
Gymakhana Club's case (supra) and held that the Safdar Jung Hospital was
not an industry. In the case of Safdar Jung Hospital (supra), a Bench of six
G judges unanimously held that an industry as defined in Section 2(j) exists
only when there is a relationship of employers and employees, the former
engaged in business, trade, undertaking, manufacture or calling of employers
and the latter engaged in any calling service, employment, handicraft or
industrial occupation or avocation. There must, therefore, be an enterprise in
H which the employers follow their avocation as detailed in the defmition and
COIR BO, ERNAKULAM, COCHIN'" INDIRA DEVI P.S. [SUJATA V. MANOHAR, J.) 95
employ workmen who follow one of the avocations detailed for workmen. But A
every case of employment is not necessarily productive of an industry. Domestic
employm·ent, administrative services of public officials, service in aid of
occupations of professional men also disclose relationship of employers and
employees but they cannot be regarded as in the course of industry. It must
bear the definite character of trade or business or manufacture or calling or
must be capable of being described as an undertaking resulting in material B
goods or material services. If a hospital, nursing home or dispensary is run
as a business in a commercial way there may be found elements of an industry
there. Hospitals run by Government and even by private associations not on
commercial lines but on charitable lines, or as part of the functions of ·
Government Department of Health cannot be included in the· definition of C
industry. The first and second parts of the definition are not to be read in
isolation as if they were different industries but only as aspects of the
occupation of employers and employees in an industry. They are two
counterparts in one industry.

The. same position had been earlier reiterated by a three judge Bench D
of this Court in the case of Madras Gymakhana Club (supra) where also this
Court had interpreted the definition of industry as being in two parts. In its
first part, it means any business, trade, undertaking, manufacture or calling
of employers, This part of the definition determines an industry by reference
to occupation of employers in respect of certain activities. These activities are E
specified by five words and they determine what an industry is and what the
cognate expression "industrial" is intended to convey. The second part views
the matter from tlie angle of employees and is designed to include something
more in what the term primarily denotes. By the second part of the definition,
any calling, service, employment, handicraft or industrial occupation or
avocation of workmen is included in the concept of an indwstry. This part F
gives the extended connotation. This Court also said that the word
'undertaking' must be defined as any business or any work or project which
one engages in or attempts as an enterprise analogous to business or trade.
It did not accept as correct the extension of the definition as laid down in The
Corporation of the City of Nagpur v. Its employees (supra). G
However, this view which was reaffirmed in Safdar Jung Hospital's case
(supra), by a decision of six judges of this court, as well as the University
of Delhi's case (supra) were overruled in 1978 by a decision of a Bench of
seven judges of this court in the case of Bangalore Water Supply & Sewerege.
Board etc. v. A. Rajappa & Ors. etc., [1978] 2 SCC 213 by a majority of five H
96 SUPREME COURT REPORTS [1998] 2 S.C.R.

A with two dissenting.

The definition of industry under the Industrial Disputes Act was held
to cover all professions, clubs, educational institutions, co-operatives, research
institution charitable projects and anything else which could not looked upon
as organised activity where there was a relationship of employer and employee
B and goods were produced or service was rendered. Even in the case of local
bodies and administrative organisations the court evoled a 'predominant
activity' test so that whenever the predominant activity could be covered by
the wide scope of the definition as propounded by the court, the local body
or the organisation would be considered as an industry. Even in those cases
C where the predominant activity could not be so classified, the court included
in the definition all those activities of that organisation which could be so
included as industry, depaiting from its own earlier test that one had to go
by the predominant nature of the activity. In fact, Chandrachud, J. (as. he then
was) observed that even a defence establishment or a mint or a security press
could, in a given case, be considered as an industry. Very restricted exemptions
D were given from the all embracing scope of the definition so propounded. For
example, pious or religious missions were considered exempt even if a few
servants were hired to help the devotees. Where normally no employees were
hired but the employment was marginal the organisation would not qualify as
an industry. Sovereign functions of the State as tarditically understood would
E also not be classified as industry though Government department which
could be served and labelled as industry would not escape the Industrial
Disputes Act.

The majority laid down the 'dominant nature' test for deciding whether
the establishment is an industry or not (see paragraph 143, Krishna Iyer, J.):

F "Para 143: The dominant nature test:

(a) Where a complex of activities, some of which qualify for
exemption, others not, involves employees of the total undertaking,
some of whom are not 'workmen' as in the University of Delhi case
(supra) or some departments are not productive of goods and services
G if isolated, even then, the predominant nature of the services and the
integrated nature of the departments as explained in the Corporation
of Nagpur (supra), will be the true test. The whole undertaking will
be 'industry' although those who are not 'workmen' by definition may
not benefit by the status.
H (b) Notwithstanding the previous clauses, sovereign functions,
~
I
COIR BD, ERNAKULAM, COCHIN r INDIRA DEVI P.S. [SUJATA V. MANOHAR, J.] 97
strictly unders.tood, alone qualify for exemption not the welfare A
activities or economic adventures undertaken by the 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 Section 2 U). B
(d) Constitutional and competently enacted legislative provisions
may well remove from the scope of the Act categories which otherwise
may be covered thereby"

Two judges dissented from this view. They said that bearing in mind the C
collocation of terms in which a definition is couched and applying the doctrine
of noscitur a sociis as pointed out in the Hospital Mazdoor Sabha 's case
(supra), when two or more words are coupled together they have to be
understood as being used in their cognate sense taking their colour from each
other. Meaning of a doubtful word may be ascertained by reference to the
meaning of the words associated with it. Therefore, despite the width of the D
I( definition of 'industry' in Section 2(j) it could not have been the intention of
the legislature that hospitals run on charitable basis or as part of the functions
of the Government or local bodies like municipalities and education and
research institutions whether run by private entities or by Government and
liberal and learned professions like doctors, lawyers etc. the pursuit of which E
is dependent upon the individual's own education, intellectual attainments
and special expertise, should fall within the pale of the definition. They were
·of the view that the definition is limited to those activities systematically or
habitually undertaken on commercial lines by private entrepreneurs with the
co-opreation of employees for the production or distribution of goods or for
rendering material service to the community at large or a part of such F
community. They observed that this Court had also in previous decisions felt
the necessity of excluding some callings, services and undertakings from the
purview of the definition .. Even the majority was of the view that legislative
exercise was necessary to settle the position.

G
The subsequent decisions of this Court have left some uncertainty on
the question of activities and organisations that can be labelled as industries
under the Industrial Disputes Act. To take only a few recent cases, in the case
of Physical Research Laboratory v. K.G. Sharma, [1997] 4 SCC 257 this
Court, after discussing the definition of industry as propounded in the
Bangalore Water Supply Case (supra). and other cases ultimately came to the H
98 SUPREME COURT REPORTS [1998] 2 S.C.R.

A conclusion that a Physical Research Laboratory was not an industry. This
Court emphasised that the principles which were formulated in the Bangalore
Water Supply. Case (supra) were formulated because this Court found the
definition of the word 'industry' vague. Therefore, while applying the
'traditional' test approved by this Court in the Bangalore Water Supply's,
Case (supra) to determine what can be regarded as sovereign functions, the
B change in the concept of sovereign functions, the change in the concept of
sovereign functions of a constitutional Government which involved varied
functions had. to be kept in mind. The activity of a Physical Research
Laboratory would not be covered by the definition of an industry under
Industrial D·isputes Act.
/
c In a earlier judgment in the case of Sub-Divisional Inspector of Post,
Vaikam & Ors. v. Theyyam Joseph & Ors., (1996] 8 SCC 489, the establishment
of the Sub-Divsional Inspector of Post was held not to be an industry but
as an exercise of a sovereign function. In the case of Bombay Telephone
Canteen Employees' Association, Prabhadevi Telephone Exchange v. Union
D of India & Anr., [1997] 6 sec 723, this court, after examining the case law,
held that workman employed in the departmental canteen of Telephone Nigam·.
Limited and admittedly holding civil posts were not workmen within the
meaning of the Industrial Disputes Act. However, a Bench of three judges of
this court in Civil Appeal No. 7845 of I997, General Manager, Te/com v. S.
E Srinivasa Rao & Ors., decided on 18.11.1997 held that the cases of Sub-
Divisional Inspector ·Of Post (supra) and Bombay Telephone Centeen
Employees' Association, Prabhadevi Telephone Exchange; (supra) were not
correctly decided in view.of the ratio laid down by a Bench of seven judges
of this Court in the case of Bangalore Water Supply and Sewerage Board
(supra).
F
Looking to the uncertainty prevailing in this area and in the light of the
experience of the last two decades in applying the test laid down in the case
of Bangalore Water Supply and Sewerage Board, (supra) it is necessary that
the decision in Bangalore Water Supply and Sewerage Boards case (supra)
G is re-examined. The experience of the last two decades does not appear to be
entirely happy. Instead of leading to industrial peace and welfare of the
community (which was the avowed purpose of artificially extending the
definition of industry), the application of the Industrial Disputes Act to
organisations which were, quite possibly not intended to be so covered by
the machinery set up under the Industrial Disputes Act, might have done
H more damage than good, not merely to the organisations but also to employees
COIR BD, ERNAKULAM, COCHIN 1•. INDIRA DEVI P.S. [SUJATA V. MANOHAR, J.J. 99
by the curtailment of employment opportunities. A

Undoubtedly, it is of paramount importance that a proper law is framed
to promote the welfare of labour employed in industries. It is equally important
that the welfare of labour employed in other kinds of organisations is also
promoted and protected. But the kind of measures which may be required for B
the latter may be different and may have to be tailored to suit the mature of
such organisations, their infrastructure and their financial capacity as also the
needs of their employees.

The elimination of profit motive or a desire to generate income as the
purpose of industrial activity has led to a large number of philanthropic and C
charitable activities being affected by the Industrial Disputes Act. In a number
of cases where the organisation is run by voluntary social workers,· they are
unable to cope with the requirements of Industrial Disputes Act. This has led
to a cessation of many welfare activities previously undertaken by such
organisations which has deprived the general community of considerable
benefit and the employees· of their livelihood. There are many activities which D
are undertaken not with a view to secure any monetary return-whether one
labels it as livelihood, income ·or profit, but for other more generous or
different motives. Such activities.would not normally be labelled as industrial
activities, but for the wide interpretation given judicially to the term 'industry'
in the Industrial Disputes Act. For example, a number of voluntary organisations E
used to run workshops in order that the poor and more particularly poor or
destitute woman may earn some income. Voluntary welfare organisations
organised activities like preparation of spices, inasalas, pickles or they would
secure small orders from industries for poor woman. A small number of
persons were employed to assist in the activities. The income earned by these
< activities was distributed to the woman who were given such work. Other F
voluntary organisations orgainsed tailoring or embroidery classes or similar
activities for poor woman and provided an outlet for the sale of the work
produced by them. These persons would otherwise have found it impossible
to secure a market for their products. Such organisations are not organised
like industries and they do not have the means or manpower to run them as G
industries. A large number of such voluntary welfare schemes have had to
be abandoned because of the wide interpretation given to the term industry.

Apart from such activities, there may be other activities also which are
undertaken in the spirit of community service, such as charitable hospitals
where free medical services and free medicines may be provided. Such activities H
JOO SUPREME COURT REPORTS [1998] 2 S.C.R.

A may be sustained by free services, given by professional men and women and
by donations. Sometimes such activities may be sustained by using the
profits in the paid section of that activity for providing free services in the
free section. Doctors who work in these hospitals may work for no returns
or sometimes for very nominal fees. Fortunately, philanthropic instinct is far
B from extinct. Can such philanthropic organisations be called industries? The
definition needs re-examination so that, while the workers in an industry have
the benefit of industrial legislation, the community as such is not deprived
of philanthropic and other vital services which contribute so much to its well-
being. Educational services and the work done by teachers in educational
institutions, research organisations, professional activities, or recreational
C activities amateur sports, promotion of arts-fine arts and performing arts,
promoting crafts and special skills, all these and many other similar activities
also require to be considered in this context.

In fact, in 1982 , the Legislature itself decided to amend the definition
of 'industry' under the Industrial Disputes Act, 1947 by enacting the
D Amending Act 46 of 1982. In the statement of Objects and Reasons for the
Amending Act 46 of 1982, Clause 2 expressly refers to the decision of this
Court in Bangalore Water Supply and Sewerage Board (supra) and the wide
interpretation given to the definition of the term industry in the Industrial
Disputes Act. The Statement of Objects and Reasons states, inter alia, as
E follows:-

"The Supreme Court in its decision in the Bangalore Water Supply
and Sewerage Boardv. Rajappa, (1978) 2 SCC 213; (1978) SCC (L&S)
215; AIR (1978) SC 548 had, while interpreting the definition of
"industry" as contained in the Act, observed that Government might
F restructure this definition by suitable legislative measures. It is
accordingly proposed to redefine the term "industry". While doing so,
it is proposed to exclude from the scope of this expression, certain
institutions like hospitals and dispensaries, educational, scientific,
research or training institutes, institutions engaged in charitable, social
and philanthropic services, etc., in view of the need to maintain in
G such institutions and atmosphere different from that in industrial
undertakings and to meet the special needs of such organisations. It
is also proposed to exclude sovereign functions of Government
including activities relating to atomic energy, space and defence
research from the purview of the term "industry". However, keeping
H in view the special characteristics of these activities and the fact that
COIR BD. ERNAKULAM, COCHIN 1•. INDIRA DEVI P.S. [SUJATA V. MANOHAR, J.] JO]
their woman also need protection, it is proposed to have a separate A
law for the settlement of individual grievances as well as collective
disputes in respect of the workman of these institutions. All these
term "industry" had been made more specific while making the
coverage wider."

Unfortunately, despite the legislative mandate the definition has not been B
notified by the Executive as having come into force.

Since the difficulty has arisen because for the judicial interpretation
given to the definition of "industry" in the Industrial Disputes act, there is
no reason why the matter should not be judicially re-examined. In the present
case, the function of the Coir Board is to promote coir industry, open markets C
for it and provide facilities to make the coir industry's products more marketable.
It is not set up to run any industry itself. Looking to the predominant purpose
for which it is set up we would not call it an industry. However, if one were
to apply the tests laid down by Bangalore Water Supply and Sewerage
Board's case (supra), it is an organisation where there are employers and D
employees. The organisation does some useful work for the benefit of others.
Therefore, it will have to be called an industry under the Industrial Disputes
Act.

We do not think that such a sweeping test was contemplated by the
Industrial Disputes Act, nor do we think that every organisation which does E
useful service and employs people can be labelled as industry. We, therefore,
direct that the matter be pla~ed before the Hon 'ble the chief justice of India
to consider whether a larger Bench should be constituted to re-consider the
decision of this Court in Bangalore Water Supply and Sewerage Board's
(supra).
F
R.K.S. Appeal dismissed.