Holding

The Court held that the persisting ambiguity and conflicting judgments on the definition of "industry" justify referring the matter to a larger Bench for re‑examination.

Summary

The Supreme Court was asked to resolve a conflict between two earlier decisions on whether the 'social forestry' department and similar welfare activities fall within the definition of "industry" under Section 2(j) of the Industrial Disputes Act, 1947. The conflict arose from differing interpretations of the expansive definition given in the 1978 Bangalore Water Supply case and the subsequent 1982 amendment to the Act, which has remained unenforced for over 23 years. The Court examined the legislative history, the fragmented judgments of the Bangalore Water case, and the practical difficulties caused by the dormant amendment. It concluded that the ambiguity persists and that the legislature’s inaction, coupled with the divergent judicial opinions, warrants a reference to a larger Bench for a definitive re‑examination of the definition of "industry". Consequently, the matter was referred to the Chief Justice of India for constituting a larger Bench. The order does not decide the substantive issue but merely directs a reference.

Issues considered

The scope of the term "industry" under Section 2(j) of the Industrial Disputes Act, 1947.
Whether the amended definition of "industry" in the Industrial Disputes (Amendment) Act, 1982, though not brought into force, can be used to interpret the original definition.
The impact of the Bangalore Water Supply & Sewerage Board v. A. Rajappa judgment and its fragmented opinions on current jurisprudence.
Whether the conflict between the judgments in Chief Conservator of Forests v. Jagannath Maruti Kondhare and State of Gujarat v. Pratamsingh Narsinh Parmar necessitates a reference to a larger Bench.

Legislation cited

Industrial Disputes Act, 1947s. 2(j)

Subjects

Industrial Disputes Actdefinition of industrystatutory interpretationlegislative amendmentreference to larger benchsovereign functionssocial welfare schemeslabour law

Judgment

A STATE OF U.P.
v.
JAi BIR SINGH

MAY 5, 2005

B [N. SANTOSH HEGDE, K.G. BALAKRISHNAN, D.M.
DHARMADHIKARI, ARUN KUMAR AND B.N. SRIKRISHNA, JJ.]

'•
Industrial Disputes Act, 1947-Section 20) {As amended by Industrial
C Disputes (Amendment) Act, 1982}-Definition of "industry"-Jnterpretation
of-Jn 1978 an expansive meaning was given to the word "industry" with
certain specified exceptions in the Bangalore Water Supply case-Keeping in
view such judicial interpretation the word "industry" was consequently
redefined by the legislature in 1982-But amended definition not brough,t into
force for the past 23 years-Held: 'There is a requirement of re-considering
D where the line should be drawn and what limitations should be reasonably
implied in interpreting the wide words used in S2(j)-Compelling reasons
more than one for making a reference on the interpretation of definition of
"industry" in S.2(j), to a larger Bench and for re-consideration by it, if
necessary, the decision rendered in the case of Bangalor,e Water Supply case.

E On the question whether 'social forestry' department of State, which
is a welfare scheme undertaken for improvement of the environment,
would be covered by the definition of "industry" under S.2(j) of the
Industrial Disputes Act, 1947, three Judges Bench of this Court in the case
of Chief Consetvator of Forests v. Jagannath Maruti Kondhare and two
F Judges Bench of this Court in the case of State of Gujarat v. Pratamsingh
Narsingh Parmar culled out differently the ratio of the seven Judges Bench
.. ~·,

decision of this Court in the case of Bangalore Water Supply & Sewarage
Board v. A. RajapPa. Based on that decision, the Court in the first case
came to the conclusion that 'Social Forestry Department' is covered by
the definition of "industry", but in the second case the Court took a
G different view. The present Bench of five Judges has been constituted on ..
a reference made due to apparent conflict between the said two judgments.

The word "industry" had been given an expansive meaning with
certain specified exceptions in the judgment of Bangalore Water Supply

H 20
,,
'4

STATE OF U.P. v.JAI BIR SINGH 21

.1' /--
& Sewarage Board. Keeping in view such judicial interpretation, the word A
"industry" was redefined but the amended definition has not been brought
into force for the past 23 years.

The question which arose for consideration in the present matter is
as to whether the amended definition, which is now a part of the statute,
although not enforced, is a relevant piece of subsequent legislation which B
can be taken aid of to amplify or restrict the ambit of the definition of
"industry" in S. 2(j) of the.Industrial Disputes Act, 1947 as it stands in its
original form.

Referring the matter to a larger Bench, the Court
c
HELD: 1.1. The word "industry" seems to have been redefined under
the Amendment Act keeping in view the judicial interpretation of the word
"industry" in the case of Bangalore Water Supply. The Judges delivered
different opinions in the case of Bangalore Water Supply at different points
of time and .in some cases without going through or having an opportunity
D
of going through the opinions of other Judges. ·They have themselves
recorded that the definition clause in the Industrial Disputes Act is so wide
_.. and vague that it is not susceptible to a very definite and precise meaning.
In the opinions of all of them it is suggested that to avoid reference of the
vexed question of interpretation, to larger Benches of the Supreme Court
it would be better that the legislature intervenes and clarifies the legal E
position by simply amending the definition of ~industry". The legislature
did respond by amending the definition of "industry" but unfortunately
23 years were not enough for the legislature to provide Alternative
Disputes Resolution Forums to the employees of specified categories of
industries excluded from the amended definition. The legal position thus
continues to be unclear and to a large extent uncovered by the decision of
F
Bangalore Water Supply case as well. [46-B; 34-B, C, DJ
-., ,..
1.2. The legislature has intervened and amended the definition of
"industry" in 1982 but for more than 23 years the amended provision not
having been brought into force, the Ul\amended definition with the same G
vagueness and lack of precision continues to confuse the courts and the
/ parties. The inaction of the legislative and executive branches has made
it necessary for the judiciary to reconsider the subject over and over again
in the light of the experience of the working of the provisions on the basis
of the interpretation in the judgment of Bangalore Water Supply case
' -""" rendered as far back as in the year 1978. (37-A, BJ H
22 SUPREME COURT REPORTS [2005] SUPP. I S.C.R.

A 1.3. The decision of Bangalore Water Supply is also not a unanimous
decision. Of the five Judges who constituted majority, three have given a
common opinion but two others have given separate opinions projecting
a view partly different from the views expressed in the opinion or the other
three Judges. Beg CJ, having retired had no opportunity to see the opinions
B delivered by the other Judges subsequent to his retirement. Krishna Iyer,
J., and the two Judges who spoke through him did not have the benefit or
the dissenting opinion of the other two Judges -and the separate, partly
dissenting opinion of Chandrachud, J. as those opinions were prepared
and delivered subsequently. (38-G, ff; 39-A]

C 1.4. In such a situation, it is difficult to ascertain whether the opinion
of Krishna Iyer, J. given on his own behalf and on behalf of Bhagwati
and Desai, JJ. ·can be held to be an authoritative precedent which would
require no re-consideration even though the Judges themselves expressed
the view that the exercise of interpretation done by each one of them was
tentative and was only a temporary exercise till the legislature stepped
D in. The legislature subsequently amended the definition of the word
"industry" but due to the lack of will both on the part of the Legislature
and the Executive, the amended definition, for a long period of 13 years,
has remained dormant. (39-A, B, CJ

1.5. There are compelling reasons more than one for making a
E reference on the interpretation of definition of "industry" in S.l(j) of the
Act, to a larger Bench and for re-consideration by it, if necessary, the
decision rendered in the case of Bangalore Water Supply and Sewerage
Board. (41-H; 41-A]

F Bangalore Water Supply and Sewerage Board v. A. Rajappa, (1978] 2
SCC 113; Chief Conservator ofForests v. Jagannath Maruti Kondhare, (1996)
1SCC193; State of Gujarat v: Pratamsingh Narsinh Parmar, (2001] 9 SCC '
713; Aeltemesh Rein v. Union of India, (1988] 4 SCC 54; State of Bombay v.
Hospital Mazdoor Sabha, AIR (1960) SC 866; Coir Board v. Indira Devi,
(1998) 3 SCC 259; Coir Board v. Indira Devi, (2000) 1 SCC 124; Central
G Board ofDawoodi Bohra Community v. State of Maharashtra, (2005] 2 SCC
673; Yogender Nath Naskar v. CIT, (1969) 3 SCR 742; Kajri Lal Agarwal v.
UOJ, AIR (1966) SC 1538-41; State of Bihar v. SK Roy, AIR (1966) SC
(1995); Thiru Manickam and Co. v. State ofTamilnadu, AIR (1977) SC 518
and A.K. Roy v. Union of India, (1982] 1 SCC 271, referred to.

H K. Brandy v. England Revenue Commissioner, (1921) 2 Kings Bench
STATE OF U. P. v. JAi BIR SINGH 23

-~
~ 403 and Regina v. Secretary ofState for the Home Department (1995) 2 WLR A
2, referred to.

Statutory Interpretation, by FAB Bennion 3rd Edn., referred to.

2.1. The statute under consideration cannot be looked at only as a
worker-oriented statute. Law and particularly industrial law needs to be B
so.interpreted as to ensure that neither the employers nor the employees
are in a position to dominate the other. Both should be able to cooperate
.A for their mutual benefit in the growth of industry and thereby serve public
good. (42-DI
,.
2.2. A worker oriented approach in construing the definition of c
industry, unmindful of the interest of the employer or the owner of the
industry and the public, who are ultimate beneficiaries, would be a one
sided approach and not in accordance with the provisions of the Act.
(44-H; 45-A)

3.1. The Judges in the Bangalore Water Supply and Sewerge Board D
case seem to have confined only such sovereign functions outside the
purview of 'industry', which can be termed strictly as constitutional
<'
functions of the three wings of the State i.e. executive, legislature and
judiciary. (45-BJ
E
3.2. Had there. been no such expansive definition of 'industry' given
in Bangalore Water Supply case, it would have been ·open to the Parliament
to bring in either a more expansive or a more restrictive definition of
industry by confining it or not confining it to industrial activities other
than sovereign functions .and public welfare activities of the State and its
departments. Similarly, employment generated in carrying on of liberal F
professions could be clearly included (Ir excluded depending on social
..... conditions and demands of social justice. Comprehensive change in law
and/or enactment of new law had not been possible because of the
interpretation given to the definition of 'industry' in Bangalore Water
Supply case. The judicial interpretation seems to have been one of the
G
inhibiting factors in the enforcement of the amended definition of the Act
for the last 23 years. (46-B, C, DI

4.1. In the Bangalore Water Supply case, not all the Judges in
interpreting the definition clause invoked the doctrine of noscitur-a-sociis.
~ Keeping in view the other provisions of the Act and words used in the H
24 SUPREME COURT REPORTS [2005] SUPP. I S.C.R.

A definition clause, although 'profit motive' is irrelevant, in order to
-encompass the activity within the word 'industry', the activity must be
'analogous to trade or business in a commercial sense'. Further mere
enumeration of 'public utility services' in Section 2(n) read with the First
Schedule should not be held decisive. Unless the public utility service
answers the test of it being an 'industry' as defined in clauseU) of Section
B 2, the enumeration of such public utility service in the First Schedule to
the Act would not make it an 'industry'. (46-E, F]

.4.2 .. In construing the definition clause and determining. its ambit,
one cannot lose sight of the fact that in activities like hospitals and
C education, concepts like right of the workers to go on 'strike' or the
employer's right to 'close down' and 'lay ofr are not contemplated because
they are services in which the motto is 'service to the community'. If the
patients tfr students are to be left to the mercy of the employer and
employees exercising their rights at will, th~ very purpose of the service
activity would be frustrated. [47-E, F)
D · Management of SafdarjungHospital, New Delhi v. Ku/dip Singh Sethi,
[1971) 1 SCR 177, relied on.

· Secretary, Madras Gymkhana Club Employees' Union v. Management
."'. . • t .'• . ' .
of the Gymkhana Club, [1968] 1 SCR 742, referred to.

E 5. This Court must reconsider where the line should be drawn and
what limitations can and should be reasoriabiy implied in interpreting the
\vide words used in Section 2(j). Pressing demands of the competing sectors
or'employers and employees and the helplessness of legislature and
executive in bringing into force the Amendment Act compel making of
F this reference. (48-C, E)

Harinagar Cane Farm v. State of Bihar, AIR (1964) SC 903 and State
of Bombay v. Hospital Mazdoo-r Sabha and Ors., AIR 1960(2) SCR 866,
relied on.
• I

G
CIVIL APPELLATE
.
'~' '
JURISDICTION:
. .
Civil Appeal No. 897 of2002.
'

From the Judgment and Order dated 30.1.200 l of the Allahabad High
Court in Civil Misc. Writ Petition No. 3282 of:2001.

WITH
j I,

H C.A. No. 2506 of 2002, SLP (C) No. 20982 of 2002, C.A. No. 8597
STA TE OF U.P. v. JAi BIR SINGH [DI-IARMADI-IIKARI, J.] 25

of2001, C.A. No. 6114 of2001, C.A. No. 6471 of2002, SLP (C) No. 14127 A
of2004, C.A. No. 1279 of2001, C.A. No. 1278 of2001, C.A. No. 2409 of
2002, SLP (C)·Nos. 11291 and 14085 of2004, C.A. No. 1276 of2001, C.A.
No. 7994 of2004, C.A. No. 6108 of2002, C.A. No. 5101 of2002, C.A. No.
4569 of 2002, C.A. No. 812 of 2005, C.A. Nos. 355-358 of 2004 and SLP
(C) No. 4139 of 2005.
B
Ms. Harvinder Kaur, A.A.G. of Punjab, Rakesh Dwivedi, Mrs. Shobha
Dikshit, Indira Jaisingh, T.R. Andhyarujina, S.K. Dholkia, A.K. Sriwastava
and Colin Gonsalvase, Kamlendra Mishra, Rajeev Kumar Dubey, Javed M.
Rao, Ms. Rashmi Singh, Niranjana Singh, Vimla Sinha, Abhishek Chaudhary,
Gaurav Bhatia, Avanish Tripathi, Pradip Misra, Pramod Dayal, Gaurav C
Librahan, Bharat Sangal, Ms. Sangeeta Panicker, R.R. Kumar, S. Chatterjee,
S.B. Upadhyay, Shiv Mangal Sharma, Pawan Upadhyay, Manjeet Singh, T.V.
George, Harikesh Singh, Ms. Kavita \\fadia, Bhargava V. Desai, Sanjeev
Kumar Singh, Pradeep Kumar' Malik, Ms.Sheenam Parwanda, Jai Chandra,
Arun Kumar Sinha, S.V. Dehspande, S.S. Shinde, Mukesh K. Giri,
Ms.Hemantika Wahi, Ms. Sadhana Sandhu, Sanjay R.Hegde, Ravi Prakash D
Mehrotra, Garvesh Kabra, Mrs. Deepti R. Mehrotra, M.K. Garg, Ms. Aparna
Bhat, Vipin M. Benjamin, P.Ramesh Kumar, Dinesh Verma, Umesh Narang,
A.P. Mohanty, Dharam Bir Raj Vohra, Ms. Madhu Sikri, Subhash Sharma,
Yash Pal Dhingra,, Mrs. K. Sarada Devi, E.C. Vidya Sagar, Ashok Kr.
Upadhyam, S. Wasim A.Qadri, Mohd. Saud, Mrs. K.S. Mehlwal, K.L. Janjani, E
·Vidya Dhar Gaur, S.U.K. Sagar, D. Mahesh Babu and S.N. Bhat with them
for the appearing parties.

The Judgment of the Court was delivered by

DHARMADHIKARI, J. This present Appeal along with other F
connected cases has been .listed before this Constitution Bench of five judges
on a reference made by a Bench of three Honourable judges of this Court
·finding an apparent conflict between the decisions of two Benches of this
.court in the cases of <;hie/ Conservator of Forests v. Jagannath Maruti
Kondhare, [1996] 2 SCC 293 of three judges and State of Gujarat v.
Pratamsingh Narsinh Parmar, [2001] 9 SCC 713 of two judges. G
On the questiqn of whether 'social forestry' department of State, which
is a welfare scheme undertaken for improvement of the environment, would.
be covered by the definition of "Industry" under S. 2U) of the Industrial
Disputes Act, 1947, the aforesaid Benches (supra) of this Court c:ulled out
differently the ratio of the seven judges' Bench decision of this Court in the H
26 SUPREME COURT REPORTS [2005) SUPP. I S.C.R.

- A case of Bangalore Water Supply and Sewerage Board v. A. Rajappa, [1978)
2 SCC 213 (shortly hereinafter referred to as the Bangalore Water case). The
Bench of three judges in the case of Chief Conservator of Forests v. Jagannath
Maruti Kondhare, (supra) based on the decision of Bangalore Water case
came to the conclusion that 'Social Forestry Department' is covered by the
B definition of 'industry' whereas the two judges Bench decision in State of
Gujarat v. Pratamsingh Narsinh Parmar, (supra) took a different view.

As the cleavage of opinion between the two Benches of this Court
seems to have been on the basis of seven judges' Bench decision of this
Court in the case of Bangalore Water, the present case along with the other
C connected cases, in which correctness of the decision in the case of Bangalore
Water is doubted, has been placed before this Bench.

Various decisions rendered by this Court prior to and after the decision
in Bangalore Water, (supra) on interpretation of the definition of the word
'industry' under the Industrial Disputes Act, 1947 have been cited before us.
D lt has been strenuously urged on behalf of the employers that the expansive
meaning given to the word 'industry' with certain specified exceptions carved
out in the judgment of Bangalore Water, (supra) is not warranted by the
language used in the definition clause. It is urged that the Government and
its Departments while exercising its 'sovereign functions' have been excluded
from the definition of 'industry'. On the question of 'what is sovereign
E function', there is no unanimity in the different opinions expressed by the
judges in the Bangalore Water case. It is submitted that in a constitutional
democracy where sovereignty vests in the people, all welfare activities
undertaken by the State in discharge of its obligation under the Directive
Principles of State Policy contained in Part IV of the Constitution are
F 'sovereign functions'. To restrict the meaning of 'sovereign functions' to
only specified categories of so called 'inalienable functions' like Law and
Order, Legislation, Judiciary, Administration and the like is uncalled for. It
is submitted that the definition of 'industry' given in the Act is, no doubt,
wide but not so wide· as to hold it to include in it all kinds of 'systematic
organized activities' undertaken by the State and even individuals engaged in
G professions and philanthropic activities.

On behalf of the employers, it is also pointed out that there is no
unanimity in the opinions expressed by the judges in the Bangalore Water
case on the ambit of the definition of 'industry' given in the Act. Pursuant
H to the observations madt: by the judges in their different opinions in the
STATE OF U.P. v. JAi BIR SINGH [DHARMADHIKARI, J.] 27

judgment of Bangalore Water, (supra), the legislature responded and amended A
the Act by Industrial Disputes (Amendment) Act 1982. In the amended
definition, certain specified types of activities have been taken out of the
purview of the word 'industry'. The Act stands amended but the amended
provision redefining the word 'industry' has not been brought into force
because notification to bring those provisions into effect has not been issued B
· in accordance with sub-section (2) of Section I of the Amendment Act. The
amended definition thus remains on the statute unenforced for a period now
of more than 23 years.

On behalf of the employers, it is pointed out that all other provisions
of the Amendment Act of 1982, which introduced amendments in various C
other provisions of the Industrial Disputes Act have been brought into force
by issuance of a Notification, but the Amendment Act to the extent of its
substituted definition of 'industry' with specified categories of industries
taken out of its purview, has not been brought into force. Such a piecemeal
implementation to the Amendment Act, it is submitted, is not contemplated
by sub-section (2) of Section I of the Amendment Act. The submission made D
is that if in response to the opinions expressed by the seven judges in Bangalore
Water, case (supra), the legislature intervened and provided a new definition
of the word 'industry' with exclusion of certain public utility services and
welfare activities, the unamended definition should be construed and
understood with the aid of the amended definition, which although not brought E
into force is nonetheless part of the statute.

On behalf of the employees, learned counsel vehemently urged that the
decision in the case of Bangalore Water, (supra) being in the field as binding
precedent for more than 23 years and having been worked to the complete
satisfaction of all in the industrial field, on the principle of stare decisis, this F
Court should refrain from making a reference to a larger Bench for its
reconsideration. It is strenuously urged that upsetting the law settled by
Bangalore Water is neither expedient nor desirable.

It is pointed out that earlier an attempt was made to seek enforcement
of the amended Act through this Court [see: Aeltemesh Rein v. Union of G
India, [1988] 4 sec 54]. The Union came forward with an explanation that
for employees of the categories of industries excluded under the amended
definition, no alternative machinery for redressal of their service disputes,
- · has been provided by law and therefore, the amended definition was not
brought into force.
H
28 SUPREME COURT REPORTS [2005] SUPP. l S.C.R.

A We have heard the learned counsel appearing on behalf of the employers
and on the other side on behalf of the employees at great length. With their
assistance, we have surveyed critically all the decisions rendered so far by
this Court on the interpretation of the definition of 'industry' contained in
Section 20) of the Act. We begin with a close examination of the decision
B in the case of Bangalore Water for considering whether a reference to a
larger Bench for reconsideration of that decision is required.

Justice Krishna Iyer who delivered the main opinion on his own behalf
and on behalf of Bhagwati and Desai 11 in his inimitable style has construed
the various expressions used in the definition of 'industry'. After .critically
C examining the previous decisions, he has recorded his conclusions thus:

"So we proceed to formulate the principles, deducible from our
discussion, which are decisive, positively a,nd negatively, of the identity
of 'industry' under the Act. We speak, not exhaustively, but to the ..
extent, covered by the debate at the bar and, to that extent,
D authoritatively, until overruled by a la,rger Bench or superseded by
the legislative branch.

140. 'Industry', as defined in Section 20) and explained in Banerji,
(supra), has a wide import.

(a) Where (i) systematic activity, (ii), organized by co-operatio'n
E 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 i.e. making, on a large scale or prasad or food), prima
F facie, there is an 'industry' in that enterprise.

(b) Absence of profit motive or gainful ~bjective 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 employer-employee relations.
G . '

(d) lfthe organization is a t~ade or business it does not cease to be.
one because of philanthropy animating the undertaking.

II

H 141. Although Section 2(j) uses words of the widest amplitude in its
/
,
STATE OF U.P. v. JAi BIR SINGH [DHARMADHIKARI, J.] 29

two limbs, their meaning cannot be magnified to over reach itself. A
(a) 'Undertaking' must suffer a contextual and associational shrinkage
as explained in Banerji (supra) a!1d in this judgment; so also, service,
calling and the like. This yields the inference that all organized activity
possessing the triple ~lements in I (supra), although not trade or
business, may still be 'industry' provided the nature of the activity, B
viz..the employef-employee basis, bears resemblance to what we find
in trade or business. This takes into the fold of 'industry' undertakings,
callings and services, iidventures 'analogoos 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 C
and employee may be .dissimilar. It does not matter, if on the
employment terms there is analogy.

III

142. Application of these guidelines should not stop short of their D
logical reach by invocation of creeds, cults or inner sense of
, incongruity or outer sense of motivation for or resultant of the
economic operations. The ideology of the Act being industrial peace,
regulation and resolution of industrial disputes between employer and
workman, the range of this statutory ideology must inform the reach
or the statutory definition. Nothing less, nothing more. E
(a) The consequences are (i) professions, (ii) clubs, (iii) educational
institutions, (iv) co-operative, (v) research institutes (vi) charitable
projects and (vii) other kindred adventure, if they fulfil the triple tests
listed in I (supra), cannot be exempted from the scope of Section 20).
F
(b) A restricted category of professions, clubs, co~operative and even
· gurukulas and title research labs, may qualify for exemption if, in
imple ventures, substantially and, going by the dominant nature
criterion, substantively, no employees are 'entertained but in minimal
matters, marginal employees are hired without destroying the non-
employee character of the unit. G
(c) If, in a pious or altruistic mission many employ themselves, free
or for small honoraria or like return, mainly drawn 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 o{,-the holiness, divinity H
or like central personality, and the services are supplied free or at
30 SUPREME COURT REPORTS (2005] SUPP. I S.C.R.

A 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. Such eleemosynary or like undertaking alone are exempt - not
other generosity, compassion, developmental passion or project.

B IV

143. The dominant nature test:

(a) Where a complex of activities, some .of which qualify for
exemption, others not, involves employees on the total undertaking,
c some of whom are not 'workmen' as in the University of Delhi case
(supra) 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 (supra), will be the true test. The whole undertaking will
be 'industry' although those who are not 'workmen' by definition
D 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.

E (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 2G).

(d) Constitutional and competently enacted legislative provisions may
well remove from the scope of the Act categories which otherwise
F may be covered thereby.

v
144. We overrule Safdarjzmg, (supra), Solicitors', case (supra),
Gymkhana, (supra), Delhi University, (supra), Dhanrajgirji Hospital,
G (supra) and other ruling whose ratio runs counter to the principles
enunciated above, and Hospital Mazdoor Sabha, (supra) is hereby
rehabilitated."

[Underlining for emphasis]

H What is to be noted is that the opinion of Krishna Iyer J on his own
STATE OF U.P. v. JAi BIR SINGH [DHARMADHIKARI, J.] 31

behalf and on behalf of Bhagwati and Desai JJ was only generally agreed to A
by Beg CJ who delivered a separate opinion with his own approach on
interpretation of the definition of the word 'industry'. He agreed with the
conclusion that Bangalore Water Supply and Sewerage Board is an 'industry'
and its appeal should be dismissed but he made it clear that since the judgment
was being delivered on his last working day which was a day before the day B
he was to retire, he did not have enough time to go into a discussion of the
various judgments cited, particularly on the nature of sovereign functions of
the State and whether the activities in discharge of those functions would be
covered in the definition of 'industry'. What he stated reads thus:

"165. I have contended myself with a very brief and hurried outline C
of my line of thinking partly because I am in agreement with the
conclusions of my learned brother Krishna Iyer and I also endorse his
reasoning almost wholly, but even more because the opinion l have
dictated just now must be given today if I have to deliver it at all.
From tomorrow I cease to have any authority as a Judge to deliver
it. Therefore, I have really no time to discuss the large number of D
cases cited before us, including those an what are known as
"sovereign" functions'.

Beg CJ clearly seems to have dissented from the opinion of his other
three brethren on excluding only certain State - run industries from the purview
of the Act. According to him, that is a matter purely of legislation and not E
of interpretation. See his observations contained in paragraph 163:

"163. I would also like to make a few observations about the so-
called "sovereign" functions which have been placed outside the
field of industry. I do not feel happy about the use of the term
"sovereign" here. I think that the term 'sovereign' should be reserved, F
technically and more correctly, for the sphere of ultimate decisions.
Sovereignty operates on a sovereign plane of its own as I suggested
in Keshavananda Bharat/ 's case supported by a quotation from Earnest
Barker's Social and Political Theory. Again, the term "Regal", from
which the term ''sovereign'' functions appears to be derived, seems G
to be a misfit in a Republic where the citizen shares the political
sovereignty in which he has even a legal share, however small,
inasmuch as he exercises the right to vote. What is meant by the use
of the term "sovereign", in relation to the activities of the State, is
more accurately brought out by using the term "governmental"
functions although there are difficulties here also inasmuch as the H
·"J
32 SUPREME COURT REPORTS [2005) SUPP. l S.C.R.

A Government has entered largely new fields of industry. Therefore,
only those services which are governed by separate rules and
constitutional provisions, such as Articles 310 and 311 should, strictly
speaking, be excluded from the sphere of industry by necessary
implication. ''

B [Emphasis supplied]

Since Beg CJ was to retire on 22.2.1978, the Bench delivered the
judgment on 21.2.1978 with its conclusion that the appeal should be dismissed.
The above conclusion was unanimous but the three Hon. Judges namely
Chandrachud Jon behalf of himself and Jaswant Singh J. speaking for himself
C and Tulzapurkar JJ., on the day the judgment was delivered i.e. as on
21.2.1978, had not prepared their separate opinions. They only declared that
they would deliver their separate opinions later. This is clear from paragraph
170 of the judgment which reads thus:

"We are in respectful agreement with the view expressed by Krishna
D Iyer, J. In his critical judgment that the Bangalore Water Supply and
Sewerage Board appeal should be dismissed. We will give our reasons
later indicating the area of concurrence and divergence, if any, on
the various points in controversy on which our learned Brother has
1
dwel('.
E
On the retirement of Beg CJ, Chandrachud J., took over as the CJ and
he delivered his separate opinion on 7.4.1978 whkh was obviously neither
seen by Beg CJ nor dealt with by the other three judges:' Krishna Iyer,
Bhagwati and Desai JJ. As can be seen from the contents of the separate
opinion subsequently delivered by Chandrachud CJ, (as he then was), he did
F not fully agree with the opinion of Krishna Iyer J. that the definition of
'industry' although of wide amplitude can be restricted to take out of its
purview certain sovereign functions of the State limited to its 'inalienable
functions' and other activities which are essentially for self and spiritual
attainments. Chandrac~ud J. seems to have projected a view that all kind's of
G organized activities giving rise to employer and employee relationship are
covered by the wide definition of 'industry' and its scope cannot be restricted
by identifxin& and including certain types of industries and leaving some
other types impliedly outside its purview.

A separate opinion was delivered much later by Jaswant Singh J. for
H himself and Tulzapurkar J., after they had gone through the separate opinion
STATE OFU.P. v. JAi BIR SINGH [DHARMADHIKARI, J.] 33

given by Chandrachud CJ (as he then was). The opinion of Jaswant Singh for A
himself and Tulzapurkar J. is clearly a dissenting opinion in which it is said
that they are not agreeable with categories 2 and 3 of the Charities excluded
by Brother Krishna Iyer J.

In the dissenting opinion of the two judges, the definition covers only
such activities 'systematically and habitually carried on commercial lines for B
production of goods or for rendering material services to the community. '
The dissenting opinion is on the lines of the opinion of Gajendragadkar J. in
the case of State of Bombay v. Hospital Mazdoor Sabha, AIR(1960) SC 866
where it was observed that although the definition in the Act is very wide,
'a line has to be drawn in a fair and just manner' to exclude some callings C
of services or undertakings which do not fit in with the provisions of the Act.
l
-~
We may quote from the dissenting opinion of Jaswant Singh J. (for -himself
arid for Tulzapurkar J,):

"However, bearing in mind the collocation of the terms in which the
definition is couched and applying the doctrine of noscitur-a-sociis D
(which as pointed out by this Court in State of Bombay v. The Hospital
Mazdoor Sabha, means that, when two or more words which are
susceptible of analogous meaning are coupled together they are
understood to be used in their cognate sense. They take as it were
their colour from each other, that is, the more general is restricted to
a sense analogous to a less general. Expressed differently, it means E
that the meaning of a doubtful word may be ascertained by reference
to the meaning of words associated with it), we are of the view that
despite the width of the definition it could not be the intention of the
Legislature that categories 2 and 3 of the charities alluded to by our
·f learned brother Krishna Iyer in his judgment, hospitals run on F
charitable basis or as a part of the functions of the Government or
local bodies like municipalities and educational and research
institutions whether -run by private entities or by Government and
liberal and learned professions like that of doctors, lawyers and
teachers? the pursuit of which 1s dependent upon an individual's own
education, intellectual attainments and special expertise should fall G
within the pale of the definition. We are inclined to think that the
definition is limited to those activities systematically 'or habitually
undertaken on commercial lines by private enterpreneurs with the
cooperation of employe,es for the production or distribution of goods
or for the rendering 'of material services to the community_ at large or H

I
(
34 SUPREME COURT REPORTS [2005] SUPP. l S.C.R.

A a part of such community. It is needless to emphasize that in the case
ofliberal professions, the contribution of the usual type of employees
employed by the professions to be value of the end product (viz.
advice and services rendered to the client) is so marginal that the end
product cannot be regarded, as the fruit of the cooperation between
the professional and his employees.''
B
The judges delivered different opinions in the case of Bangalore Water,
(supra) at different points of time and in some cases without going through
or having an opportunity of going through the opinions of other judges. They
have themselves recorded that the definition clause in the Act is so wide and
C vague that it is not susceptible to a very definite and precise meaning. In the
opinions of all of them it is suggested that to avoid reference of the vexed
question of interpretation to larger Benches of the Supreme Court it would
be better that the legislative intervenes and clarifies the legal position by
simply amending the definition of 'industry'. The legislature did respond by
amending the definition of 'industry' but unfortunately 23 years were not
D enough for the legislature to provide Alternative Disputes Resolution Forums
to the employees of specifies categories of industries excluded from the
amended definition. The legal position thus continues to be unclear and to a
large extent uncovered by the dedsion of Bangalore Water case as well.

Krishna Iyer J. himself, who delivered the main judgment in the
E Bangalore Water case, at various places in his opinion expressed that the
attempt made by the Court to impart definite meaning to the words in the
wide definition of 'industry' is only a workable solution until a more precise
definition is provided by the legislature. See the following observations:

F "Our judgment here has no pontifical flavour but seeks to serve the
future hour till changes in the law or in industrial culture occur.

3. Law, especially industrial law, which regulates the rights and
remedies of the working class, unfamiliar with the sophistications of
definitions and shower of decisions, unable to secure expert legal
opinion, what with poverty pricing them out to the justice market and
G
denying them the staying power to withstand the multi-decked litigative
process, de facto denies social justice if legal drafting is vagarious,
definitions indefinite and Court rulings contradictory. ls it possible,
that the legislative chambers are too pre-occupied with other pre~sing
business to listen to Court signals ca/ling/or clarification ambiguous
H
STATE OF U.P. v. JAI BIR SINGH [DHARMADHIKARI, J.] 35
clauses? A careful, prompt amendment of Section 20) would have A
pre-empted this docket explosion before tribunals and Courts. This
Court, perhaps more than the legislative and Executive branches, is
deeply concerned with law's delays and to devise a prompt delivery
system of social justice.''

{Emphasis added] B
It is to be noted further that in the order of reference made to the seven
judges' Bench in the Bangalore Water Supply and Sewerage Board Case, the
judges referring the case had stated thus:

" ... the chance to confusion from the crop of case in an area where C
the common man has to understand and apply the law makes it
desirable that there should be a comprehensive, clear and conclusive
declaration as to what is an industry under the Industrial Disputes
Act as it now stands. Therefore, we think it necessary to place this
case before the learned Chief Justice for consideration by a larger D
• Bench. If in the meantime the Parliament does not act, this Court
may have to illumine the twilight area of law and help the industrial
community carry on smoothly. "

[Emphasis supplied}

In the separate opinion of other Hon. Judges in Bangalore Water case, E
similar observations have been made by this Court to give some precision to
the very wide definition of 'industry'. It was an exercise done with the hope
of a suitable legislative change on the subject which all the judges felt was
most imminent and highly desirable. See the following concluding remarks:-
F
" 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 re-
structure the rather clumsy, vaporous and tall-and-dwarf definition or
tidy up the scheme although judicial thesis and anti-thesis, disclosed G
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."

H
36 SUPREME COURT REPORTS (2005] SUPP. I S.C.R.

A The separate opinion of Beg J. has the same refrain and he also observes
that the question can be solved only by more satisfactory legislation.
Chandrachud CJ (as he then was) in his separate opinion delivered on 7.4.1978
concurred partly but went a step further in expanding the definition of
'industry'. He has felt the necessity for legislative intervention at the earliest
B and has observed thus:-

"But having thus expressed its opinion in a language which left no
doubt as to its meaning, the Court went on to observe that though
Section 20) used words of a very wide denotation, "it is clear" that
a line would have to be drawn in a fair and just manner so as to
c exclude some callings, services or undertakings from
\ . ...
the scope of the-
definition. This was considered necessary because if all the words

D
used in the definition were given their ~idest meaning, all services
and all callings would come within the purview of the definition
including services rendered by a person in a purely personal or
domestic capacity o_r in a casual manner. The Court then undertook
for examination what it euphemistically called "a somewhat difficult"
-
problem to decide and it proceeded to draw a:· nne in order to ascertairi
what limitations could and should be reasonably implied in interpreting
the wide words used in Section 20). I consider, with great respect,
that the pr.ob/em is far too policy-oriented to he satisfactorily settled
by judicial decisions. The Parliament must step in and legislate in a
E manner which will leave no doubt as to its intention. That alone can
afford a satisfacfory solution to the question which has agitated and
perplexed the judiciary at all levels."

[Emph_asis added] ,..
l
F · The dissenting opinion. of~. Justice JaswanhSingh. for himself and
T~lzapurkar L con~ludes with th~ foUoivingibbs~ryaffons:_"-~ : '·. · ·
'"fo view of the difficulty experienced by all of us in defining the true.
denotation of the term 'industry' and divergence of opinion in regard
thereto - as has been the case with this B~nch also - we- think, it is
G
high time that the Legislature-steps in with a comprehensive bill to
clear up the fog and remove the doubts and set at rest once for all
the controversy which crops up from time to time in relation .to the
meaning of the aforesaid constituted which are .driven to the necessity

H
of evolving a working formula to cover particular cases. ''
[Emphasis added]
-
STATE OF U.P. v. JAi BIR SINGH [DHARMADHIKARI, J.] 37
The above observations contained in the dissenting view of Jaswant A
Singh J. have proved prophetic. The legislature has intervened and amended
the defin!tion of 'industry' in 1982 but for more than 23 years the amended
provision not having been brought into force, the unamended definition with
the same vagueness and lack of precision continues to confuse the courts and
the parties. The inaction of the legislative and executive branches has made
it necessary for the judiciary to reconsider the subject over and over again in B
the light of the experience of the working of the provisions on the basis of
the interpretation in the. Judgment of Bangalore Water case rendered as far
back as in the year 1978.

In the case of Coir Board v. Indira Devi, [1988] 3 SCC 259, a two C
judges'.Bench of this Court speaking through Sujata V. Manohar J. surveyed
all previous deci_sions of this Court including the seven judges Bench decision
in Bangalore Water, (supra) and passed an order of reference to the Chief
Justice for constituting a larger Bench of more than seven judges if necessary.
See the following part of that order:~
D
.'~ .
"Since the difficulty has arisen because Of 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 fonction of the Coir Board is to promote coir
industry, open markets for it and provide facilities to make the coir
industry's products more marketable. It is not set up to run any industry E
itself. Looking to the ptedoininant purpose for which it is set up we
would not call it an1indi.Jstry. However, if one were to apply the tests
laid down by Bangalore Water Supply and Sewerage Board case it is
. an organization where there are employers and employees. The
organization does S9file useful work for the benefit of others. F
Therefore, it will have to be called an industry under the Industrial
Disputes Act. ·
...
We do no think that such a sweeping tests was contemplated by the
Industrial Disputes Act, nor do we think that every organization which
does.useful service and employs people can be labelled as industry. G
We, therefore, direct that the matter be placed before the Hon. Chief
Justice of India to consider whether a larger Bench should be
constituted to reconsider the decision of this Court in Bangalore Water
Supply and Sewerage Board."

When the matter wa~ listed before a three judge Bench, in the case of H
38 SUPREME COURT REPORTS [2005] SUPP. I S.C.R.

A Coir Board v. Indira Devi, (2000] 1 SCC 224 the request for constituting a ....
larger Bench for reconsideration of the judgment in the Bangalore Water case
was refused both on the ground that the Industrial Disputes Act has undergone
an amendment and that the matter does not deserve to be referred to a larger
Bench as the decision of seven judges in Bangalore Water case is binding on
B Benches of this Court of less than seven judges. The order refusing reference
of the seven judges Bench decision by the three judge Bench in Coir Board,
Ernakulam v. Indira Devi P.S., (2000] I SCC 224 reads thus:

"I. We have considered the order made in Civil Appeal Nos. 1720-
21 of 1990. The Judgment in Bangalore Water Supply and Sewerage

c Board v. A. Rajappa and Ors., delivered almost two .decades ago and
the law has since been amended pursuant to that judgment though the
date of enforcement of the amendment has not been notified.

2. The judgment delivered by seven learned Judges of this Court in
Bangalore Water Supply case does not, in our opinion, require any
D reconsideration on a reference being made by a two Judge Bench of
this Court, which is bound by the judgment of the larger Bench.

3. The appeals, shall, therefore, be listed before the appropriate Bench
for further proceedings.''

Thus, the reference sought by the two judges to a larger Bench of more
E than seven judges was declined by the three judge Bench. As has been held
by this Court subsequently in the case of Central Board of Dawoodi Bohra
Community v. State of Maharashtra, [2005] 2 SCC 673, it was open to the
Chief Justice on a reference made by two Hon. Judges of this Court, to
constitute a Bench of more than seven judges for reconsideration of the
F decision in the Bangalore Water case (supra).

In any case, no such inhibition limits the power of this Bench of five
judges which has been constituted on a reference made due to apparent
conflict between judgments of two benches of this Court. As has been stated
by us above, the decision of Bangalore Water is not a unanimous decision.
G Of the five Judges who constituted majority, three have given a common
opinion but tow others have given separate opinions projecting a view partly
different from the views expressed in the opinion to see the opinions delivered
by the other judges subsequent to his retirement. Krishna Iyer J., and the two
judges who spoke through him did not have the benefit of the dissenting
H opinion of the other two judges and the esparto, partly dissenting opinion of
STATE OF U.P. v. JAi BIR SINGH [DHARMADHIKARI, J.] 39

.r Chandrachud J. as those opinions were prepared and delivered subsequent to A
the deliv_ery of the judgment in the Bangalore Water case.

In such a situation, it is difficult to ascertain whether the opinion of
Krishna Iyer J. given on his own behalf and on behalf of Bhagwati and Desai
JJ., can be held to be an authoritative precedent which would require no
reconsideration even though the judges themselves expressed the view that B
the exercise of interpretation done by each one of them was tentative and was
only a temporary exercise till the legislature stepped in. The legislature
subsequently amended the definition of th_e word 'industry' but due to the
., lack of will both on the part of the Legislature and the Executive, the amended
definition, for a long period of 23 years, has remained dormant.
c
Sri Andhyarujina, learned Senior Counsel appearing for Mis National
Remote Sensing Agency, which is an agency constructed by the Government
in discharge of it sovereign functions dealing with Defence, Research, Atomic
Energy and Space falling in the excluded category in Clause (6) of the amended
definition of 'industry' in Section 20), relies on the following decisions in D
support of his submission that where the unamended definition in the Act is
. ambigious and has been interpreted by the court not exhaustively but tentatively
until the law is amended, the amendment actually brought into the statute can
be looked at for construction of the unamended provisions. K. Brandy v.
England Revenue Commissioner, ( 1921) 2 Kings Bench 403 followed in
Yogender Nath Naskar v. CIT, [1969) 3 SCR 742 referred to and relied in E
Kajri Lal Agarwal v. UOI, AIR (1966) SC 1538-41; State of Bihar v. SK
Roy, AIR (1966) SC 1995 at 1998 (para 6) and Thiru Manickam and Co. v.
State of Tamilnadu, AIR (1977) SC 518 at para 10.

Shri Andhiyarujina further argues that by the Industrial Disputes
F
Amendment Act of 1982, not only was the definition of' industry' as provided
in the clause amended but various other provisions of the principal Act were
also amended. Sub-section (2) of Section 1 of the Amendment Act states that
the Act "shall come into force on such date as the Central Government may,
by notification in the Gazette appoints." It is submitted that either the whole
of the Act should have been notified for enforcement or not at all. The G
Amendment Act does not contemplate a situation where the Central
Government may notify only some of the provisions of the Amendment Act
for enforcement and withhold from enforcement other provisions of the
Amendment Act. It is argued that such piecemeal enforcement of the Act is
not permissible by sub-section (2) of Section l of the Amendment Act.
+ H
40 SUPREME COURT REPORTS (2005) SUPP. I S.C.R.

A Statutory Interpretation, 3rd Edition of FAB Bennian is relied on in support
of the submission that when the Amendment Act mandates the Central
Government to issue a notification specifying the date on which the provisions
of the Act should be brought into force, such enabling provision implies that
the enforcement of the Act has to be done within a reasonable time. Failure
to enforce the Act for a period of more than 23 years is an unconstitutional
B attempt by the Executive Branch of the State to frustrate the clear intention
of the legislature. Reliance has been placed by Senior Advocate, Shri
Andhiyarujina, on the Court of Appeal decision in Regina v. Secretary of
State for the Home Department, (1995) 2 weekly Law Reports page 2 which
was upheld by the House of Lords in the decision reported in the same
C volume at page 464. It was held in that case thus:

"Having regard to the overriding legislative role of Parliament, the
enacted provisions represented a detailed scheme approved by the
legislature w~ich ·until repealed stood as an enduring statement of its
will; that while the provisions remained unrepealed it was not open
D to the Secretary of State to introduce a radically different scheme
under his prerogative powers; and that, accordingly, in purporting to
implement the tariff scheme, he had acted unlawfully and in abuse of
those powers.''

The House of Lords in approving the decision of Court of Appeal held:
E
"That section 171(1) of the Criminal, Justice Act 1988 imposed a
continuing obligation on the Secretory of Sate to consider whether to
bring the statutory scheme in sections 108 to 117 into force; that he
could not lawfully bind himself not to exercise the discretion conferred
on him; that the tariff scheme was inconsistent with the statutory
F scheme; and that, accordingly, the Secretary of State's decision not
to bring sections 108 to 117 into force and to introduce the tariff
scheme in their place had been unlawful.''

Senior Advocates Ms. Indira Jaising and Mr. Colin Gonsalves, Counsel
G appearing for the employees, very vehemently oppose the prayer made on
behalf of the employers for referring the matter to a larger Bench for
reconsideration of the decision in the Bangalore Water case. It is submitted
that even though the definition in the Industrial Disputes Acthas been amended
in 1982, it has not been brought into force for more than 23 years and the
reasons disclosed to the Court, when the enforcement of the Amendment Act
H was sought in the case of Alt.:mesh Rein v. Union of India, (1988] 4 SCC 54,
STATE OF U.P. v. JAI BIR SINGH [DHARMADHIKARI, J.] 41
is a sound justification. The stand of the union of India was that for the A
category of ind·ustries excluded in the amended definition no alternative
Industrial Disputes Resolution forums could be created. For the aforesaid
reason, the Central Government did not enforce the provisions of the
Amendment Act which provided a new and restrictive definition of'industry'.
Learned counsel on behalf of the employees relied on A.K. Roy v. Union of
India, [ 1982] 1 sec 271 in support of their submissions that it is not open B
to the Court to issue a mandamus to the Government to bring into force the
provisions of an Act. It is submitted that it is the prerogative of the Government
in accordance with the provisions of Sections (1) and (2) of the Amendment
Act to enforce the provisions of the Act when it finds that there are conditions
suitable to take out of the purview of the definition of 'industry' certain C
categories of'industries' in which the employees have been provided separate
forums for redressal of t'!_eir industrial disputes.

For the purpose of these cases, we need not go into the aforesaid side-
issue because neither is there any substantive petition nor has a prayer been
made in any of the cases before us seeking issuance of mandamus to the D
Government to publish notification in the Official Gazette for enforcement of
the amended definition of 'industry' as provided in the Amendment Act of
1982. The only question before us is as to whether the amended definition,
which is now undoubtedly a part of the statute, although not enforced, is a
relevant piece of subsequent legislation which can be taken aid of to amplify E
or restrict the ambit of the definition of 'industry' in Section 2G) of the act
as it stands in its original form.

On behalf of the employees, it is submitted that pursuant to the decision
in Bangalore Water case, although the legislature responded by amending the
definition of 'industry' to exclude certain specified categories of industries F
-I Trom the.purview of the Act, employees of the excluded categories of industries
could not he provided with alternative forums for redressal of their grievances.
The unamended definition of industry, as interpreted by the Bangalore Water
case, has been the settled law of the fand in the industrial field. The settled
legal position, it is. urged, has operated well and no better enunciation of
scope and effect of the 'definition' could be made either by the legislature G
.or by the Indian Labour Organization in its report.

After hearing learned counsel for the contesting parties, we find there
are compelling reasons more than on before us for making a reference on the
interpretation of definition of' industry' in section 2G) of the Act, to a larger H
42 SUPREME COURT REPORTS (2005] SUPP. I S.C.R.

A Bench and for reconsideration by it, if necessary, the decision rendered in the
case of Bangalore Water Supply and Sewerage Board. The iarger Bench will
have to necessarily go into all legal questions in all dimensions and depth.
We briefly indicate why we find justification for a reference although it is
stiffly opposed on behalf of the employees.

B In the judgement of Bangalore Water, Krishna Iyer J. speaking for
himself and on behalf of the other two Hon'ble judges agreeing with him
proceeded to deal with the interpretation of the definition of 'Industry' on a
legal premise stating thus:- 'a worker-oriented statute must receive a
construction where conceptual keynote thought must be the worker andthe
C community, as the Constitution has shown concern for them inter alia in
Articles 38, 39 and 43 '.

With utmost respect, the statute under consideration cannot be looked
at only as a worker-oriented statute. The main aim of the statute as is evident
from its preamble and various provisions contained therein, is to regulate and
D harmonize relationships between employers and employees for maintaining
industrial peace and social harmony. The definition clause read with other
provisions of the Act under consideration deserves interpretation keeping in
view interests of the employers, who has put his capital and expertise into the
industry and the workers who by their labour equally contribute to the growth
of the industry. The Act under consideration has a historical background of
E industrial revolution inspired by the philosophy of Karl Marx. It is a piece
of social legislation. Opposed to the traditional industrial culture of open
competition or laissez faire, the present structure of industrial law is an
outcome of long term agitation and struggle of the working class for
participation on equal footing with the employers in industries for its growth
F and profits. In interpreting, therefore, the industrial law, which aims at
promoting social justice, interests both of employers and in a democratic
society, people, who are the ultimate beneficiaries of the industrial activities,
have to be kept in view.

Ms. Indira Jaising fervently appealed that in interpreting industrial law,
G in India which is obliged by the Constitution to uphold democratic values, as
has been said in some other judgement by Krishna Iyer J., 'the Court should
be guided not by 'Maxwell' but 'Gandhi' who advocated protection of the
interest of the weaker sections of the society as the prime concern in democratic
society. In the legal field, the Court has always derived guidance from the
H immortal saying of the great judge Oliver W. Holmes that 'the life of law has
STATE OF U.P. v. JAi BIR SINGH [DHARMADHIKARI, J.] 43

never been logic, it has been experience.' The spirit of law is not to be A
searched in any ideology or philosophy which might have inspired it but it
may be found in the experience of the people who made and put it into
practice.

In the case of Coir Board Ernakulam Kera/a State and Anr. (Supra)
Sujata V. Manohar J., speaking for the Bench while passing an order of B
reference to the larger Bench for reconsideration of the judgment of Bangalore
Water Supply and Sewerage Board, (supra) has observed thus:-

"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), C
it is necessary that the decision in Bangalore Water Supply and
Sewerage Board case 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 D
application of the Industrial Disputes Act to organizations which were,
quite possibly, not intended to be so covered by the machinery set up
under the Industrial Disputes Act, might have done more damage
than good, not merely to the organizations but also to employees by
the curtailment of employment opportunities."
E
The above quoted observations were criticized on behalf of the
employees stating that for making them, there was no material before the
Court. We think that the observations of the learned Judges are not without
foundation. The experience of judges in the Apex Court is not derived from
the case in which the observations were made. The experience was from the
cases regularly coming to this Court through the labour courts. It is experienced F
by all dealing in industrial law that over-emphasis on the rights of the workers
and undue curtailment of the rights of the employers to organize their business,
through employment and non-employment, have given rise to large number
of industrial and labour claims resulting in awards granting huge amounts of
back wages for past years, allegedly as legitimate dues of the workers, who G
are found to have been illegally terminated or retrenched. Industrial awards
granting heavy packages of back wages, sometimes result in taking away the
very substratum of the industry. Such burdensome awards in many cases
compel the employer having moderate assets to close down industrial causing
harm to interests of not only the employer and the workers but also the
'· general public who is the ultimate beneficiary of material goods and services H
44 SUPREME COURT REPORTS [2005] SUPP. I S.C.R.

A from the iruiustry. The awards of reinstatement and arrears of wages for past
years by labour courts by treating even small undertakings of employers and
entrepreneurs as industrial is experienced as a serious industrial hazard
particularly by those engaged in private enterprises. The experience is that
many. times idle wages are required to be paid to the worker because the
B employer has no means to find out whether and where the workman was
gainfully employed pending adjudication of industrial dispute raised by him.
Exploitation of workers and the employers has to be equally checked. Law
and particularly industrial law needs to be so interpreted as to ensure that
neither the employers nor the employees are in a position to dominate the
other. Both should--be able to cooperate for their mutual benefit in the growth
C of industry and thereby serve public good. An over expansive interpretation
of the definition of 'industry' might be a deterrent to private enterprise in
India where public employment opportunities are scarce. The people should,
therefore, be encouraged towards self-employment. To embrace within the
definition of' industry' even liberal pr9fessions like lawyers, architects, doctors,
chartered accountants and the like, which are occupations based on talent,
D skill and intellectual attainment, is experienced as a hurdle by professionals
in their self pursuits. In carrying on their professions, if necessarily, some
employment is generated, that should not expose them to the rigours of the
Act. No doubt even liberal professions are required to be regulate and
reasonable restrictions in favour of those employed for them can, by law, be
E imposed, but that should be subject of a separate suitable legislation.

If we adopt an ideological or philosophical approach, we would be
treading on the wrong path against which learned Shri Justice Krishna Iyer
himself recorded a caution in his inimitable style 1hus:-

F ''He.re we have to be cautious not to fall into the trap of definitional
expansionism borderi~g on reduction and absurdum nor to truncate
the obvious ampliti.Ide9fthe-provision to fit_ it into our mental mould
of beliefs and prejudic-es or social philosophy conditioned by class
interests. Subjective wish shall not be father to the forensic thought,
if credibility with a pluralist community is a value to be cherished.
G Courts do not substitute their social and economic beliefs for the
judgment of legislative bodies."

A worker oriented approach in construing the definition of industry,
unmindful of the interest of the employer or the owner of the industry and
the public who are ultimate beneficiaries, would be a one sided approach and
H
STA TE OF U.P. v. JAi BIR SINGH [DHARMADHIKARI, J.] 45
··>-- not in accordance with the provisions of the Act. A
We also wish to enter a caveat on confining 'sovereign functions' to
the traditional so described as 'inalienable functions' comparable to those
performed by a monarch, a ruler or a non-democratic government. The learned
judges in the Bangalore Water Supply and Sewerage Board case seem to
have confined only such sovereign functions outside the purview of' industry' B
which can be termed strictly as constitutional functions of the three wings of
the State i.e. executive, legislature and judiciary. The concept of sovereignty
in a constitutional democracy is different from the traditional concept of
sovereignty which is confined to 'law and order', 'defence~, 'law making'
and 'justice dispensation'. In a democracy governed by the Constitution the C
sovereignty vests ill the people and the State is obliged to discharge its
constitutional obligations contained in the Directive Principles of the State
Policy in Part -IV of the Constitution of India. From that point of view,
wherever the government undertakes public welfare activities in discharge of
its constitutional obligations, as provided in part-IV of the Constitution, such
activities should be treated as activities in discharge of sovereign functions D
f<~lling outside the purview of 'industry'. Whether employees employed in
such welfare activities of the government require protection, apart from the
constitutional rights conferred on them, may be a subject of separate legislation
but for that reason, such governmental activities cannot be brought within the
fold of industrial law by giving an undue expansive and wide meaning to the E
words used in the definition of industry.

In response to the Bangalore Water Supply and Sewerage Board case,
the Parliament intervened and substituted the definition of 'industry' by
ineluding within its meaning some activities of the government and excluding
some other specified governmental activities and 'public utility services' F
i11:volving sovereign functions. For the past 23 years,. the amend~d definition
has remained unenforced on the statute book. The government has been
experiencing difficulty in bringing into effect the new definition. Issu_ance of
notification as requireaby sub-section 2 of sub-section 1 of Amendment Act,
1982 · has been withheld so far. It is, therefore, high time for the coti'rt to
reexamine the judicial interpretation given by it to the definition 9( 'industry'. G
The Legislature should be allowed greater freed-Om to come forward with a
more comprehensive_ legislation to meet the demands of employers and
employees in the public and private sectors. The inhibition and the difficulties
which are being exercis~d by the legislature and the executive in oringing
into force the amended Industrial Law, more due to judicial .interpretation__of H
46 SUPREME COURT REPORTS [2005] SUPP. 1 S.C.R.
...(.'.
A the definition of 'industry' in the Bangalore Water Supply and Sewerage
Board case, need to be removed. The experience of the working of the
provisions of the Act would serve as a guide for a better and more
comprehensive law on the subject to be brought into force without inhibition.

The word industry seems to have been redefined under the Amendment
B Act keeping in view the judicial interpretation of the word industry in the
case of Bangalore water . Had there been no such expansive definition of
industry given in Bangalore Water case, it would have been open to the
parliament to bring in either a more expansive or a more restructive definition
of industry by confining it or not confining it to in,dustrial activities other
C than sovereign functions and public welfare activities of the State and its
departments. Similarly, employment generated in carrying on of liberal
professions could be clearly included or excluded depending on social
conditions and demands of social justice. Compreherysive change in law and/
or enactment of new law had not been possible because of the interpretation
given to the definition of industry in Bangalore Water case. The judicial
D interpretation seems to have been the one of the inhabiting factors in the
enforcement of the amended definition of the Act for the last 23 years.

In the Bangalore Water case not all the judges in interpreting the
definition clause invoked the doctrine of noscitur-a"sociis. We are inclined to
accept the view expressed by the six judges' Bench in the case of the
E Management of Safdarjung Hospital, (supra) that keeping in view the other
provisions of the Act and words used in the definition clause, although profit
motive is irrelevant, in other to encompass the activity within the word industry
the activity must be 'analogous to trade or business in a commercial sense'.
We also agree that the mere enumeration of 'public utility services' in section
p 2(n) read with the First Schedule should not be held decisive. Unless the
public utility service answers the test of it being an 'industry' as defined in
clause U) of section 2, the enumeration of such public utility service in the
First Schedule to the Act would not make it an 'industry'. The six judges also
considered the inclusion of services such as hospitals and dispensaries as
public utility services in the definition under section 2(n) of the Act and
G rightly observed thus:-

"When Parliament added the sixth clause under which other services
could be brought within the protection afforded by the Act to public
utility services, it did not intend that the entire concept of industry in
the Act, could be ignored and anything brought in. Therefore, it said
H
STATE OF U.P. v. JAi BIR SINGH [DHARMADHIKARI, J.] 47
..... that on industry could be declared to be a public utility service. But A
what could be so declared had to be an industry in the first place.''

The decision in the case of Management of Safdarjung Hospital (supra)
was a unanimous decision of all the six judges and we are inclined to agree
with the following observations in the interpretation of the definition clause:-
B
"But in the collocation of the terms and their definitions these terms
have a definite economic content of a particular type and on the
authorities of this Court have been uniformly accepted as excluding
professions and are only concerned with the production, distribution
and consumption of wealth and the production and availability of
material services. Industry has thus been accepted to mean only trade c
and business, manufacture, or undertaking analogous to trade or
business for the production of material goods or wealth and material
services."

The six judges unanimously upheld the observations in Gymkhana Club
case (supra):- D

" ... before the work engaged in can be described as an 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 goods or material services''.
E
In construing the definition clause and determining its ambit, one has
not to lose sight of the fact that in activities like hospitals like hospitals and
education, concepts like right of the workers to go on 'strike' or the employer's
right to 'close down' and 'lay off are not contemplated because they are
services in which the motto is 'service to the community'. If the patients or F
students are to be left to the mercy of the employer and employees exercising
... their rights at will, the very purpose of the service activity would be frustrated .

We are respectfully inclined to agree with the observation ofShri Justice
P.B. Gajendragadkar [AIR 1964 SC 903 at pg. 906] in the case of Harinagar
Cane Farm (supra):- G
''As we have repeatedly emphasized, in dealing with industrial matters,
industrial adjudication should refrain from enunciating any general
principles or adopting any doctrinaire considerations. It is desirable
that industrial adjudication should deal with problems as aud when
they !'!rise and confine its decisions t_o the points which strictly arise H
48 SUPREME COURT REPORTS (2005] SUPP .. 1 S.C.R.

A on the pleadings between the parties. .... .''

We conclude agreeing with the conclusion of the hon'ble judges in the
case of Hospital Mazdoor Sabha and Ors. (supra):-

"Though section 2(j) used words of very wide denotation, a line would
B have to be drawn in a fair and just manner so as to exclude some calling •
service or undertakings. .. , "

[Emphasis supplied]

This Court must, therefore, reconsider where the line should be drawn
C and what limitations can and should be reasonably implied in interpreting the
wide words used in section 20). That no doubt is rather a difficult problem
to resolve more _so when both the legislature and executive are silent and
have kept an important amended provision of l;iw dormant on the statute
book.

D We do not consider it necessary to say anything more and leave it to
the larger Bench to give such meaning and effect to the definition clause in
the present context with the experience of all these years and keeping in view
the amended definition of 'industry' kept dormant for Jong 23 years. Pressing
demands of the competing sectors of employers and employees and the
E helplessness oflegislature and executive in bringing into force the Amendment
Act compel us to make this reference.

Let the cases be now placed before Hon'ble Chief Justice of India_Jor
constituting a suitable larger Bench for reconsideration of the judgment of
this Court in the case of Bangalore Water, (supra).
F I
B.B.B. "Matter·. ,referred to .w'larger Bench.
J. 'lJ:... : ·, '·· ·~. 'II: '':i ·. : .• / . .