1998 Supreme(SC) 316

1998(3) Supreme 39
Supreme Court of India
Sujata V. Manohar & D.P. Wadhwa, JJ.
Coir Board, Ernakulam, Cochin & Anr. -Appellants
versus
Indira Devi P.S. & Ors. -Respondents
Civil Appeal Nos. 1720-21 of 1990
Decided on 4-3-1998
Counsel for the Parties :
For the Appellants : K. Sukumaran, Sr. Advocate, Ms. Baby Krishnan, Advocate.
For the Respondents : Mrs. Prasantha Prasad and N. Sudhakaran, Advo­cates.

Important Point
In order to consider whether the appellant Coir-Board is an “Industry” under Section 2(j) of Industrial Disputes Act, 1947, controversial decision of this Court in Bangalore Water Supply case [(1978) 2 SCC 213 : AIR 1978 SC 548] is required to be re-examined by a larger Bench and matter is directed to be placed before the Hon’ble CJI to consider whether a larger Bench be constituted to re-consider the decision of this Court in Bangalore Water Supply and Sewerage Board’s case (supra).

Headnote:Industrial Disputes Act, 1947-Section 2(j)-Definition of Industry r/w Section 2(g) and (s)-Defini­tions of Employer and Workmen Coir Industry Act, 1953-Section 10-Function of Coir Board-Judi­cial expansion of the term “Under­taking” included in term “industry” vis-a-vis-The words “service, employment and avocation of workman” - Whether appellant-Coir Board is an industry as defined in the I.D. Act, 1947?-FB of Kerala High Court holding it to be an industry-But difficulty caused by varying judicial interpretation and unnotified legislative mandate in 1982-`Dominant nature’ test-Re-examination-Doubt-Appellant is not an “industry” - That such a sweeping test of Bangalore Water Supply case was not contemplated by I.D. Act-Proper course-Matter be placed before CJI to consider whether a larger Bench should be constituted to reconsider the 7 Judges Bench’s decision of, this Court in Bangalore Water Supply case.

       Held (Overruling earlier view, in Bangalore Water Supply case) : The definition of industry under the Industrial Disputes Act was held to cover all professions, clubs, educational institutions, co-operatives, research institutions, charitable projects and anything else which could be looked upon as organised acti­vity where there was a relationship of employer and employee and goods were produced or service was rendered. Even in the case of local bodies and administra­tive organisations the court evolved 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 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, departing 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 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 traditionally understood would also not be classified as industry though Government departments which could be severed and lebelled as industry would not escape the Industrial Disputes Act. (Para 15)

       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 Board’s case (supra) 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 more damage than good, not merely to the organisations but also to employees by the curtailment of employment opportunities. (Para 20)

       In fact, in 1982, the Legislature itself decided to amend the definition of ‘industry’ under the Industrial Disputes Act, 1947 by enacting the Amending Act 46 of 1982. Unfortunately, despite the legislative mandate the definition has not been notified by the Executive as having come into force. (Para 24)

       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 function 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 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 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. (Para 25)

       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 useful service and employs people can be label­led as industry. We, therefore, direct that the matter be placed 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 (supra). (Para 26)