Important point
Considering that on the meaning of word ‘industry’ as defined in Section 2(j) of the Industrial Disputes Act, the decision of the seven Judges in Bangalore Water case is not a unanimous decision and the amended definition not having been enforced for more than 23 years, there are compelling reasons for making a reference on the interpretation of definition of ‘industry’ to a larger Bench.

Headnote:Industrial Disputes Act, 1947—Section 2(j)—Industry—Definition as given by Bangalore Water case—On the question of whether ‘social forestry’ department of State would be covered by the definition of ‘industry’, two Benches of the Supreme Court having difference of opinion regarding the ratio of seven Judges Bench in Bangalore Water case—Reference made by a Bench of three Judges of the Supreme Court doubting correctness of the decision in case of Bangalore Water—Amended provisions redefining the word ‘industry’ has not been brought into force—Notification to bring those provisions into effect has not been issued in accordance with sub-section (2) of Section 1 of the Amendment Act of 1982—Whether a reference to a larger Bench for reconsideration of Bangalore Water case is required—(Yes)—Judges delivered different opinions in case of Bangalore Water—Unamended definition with the same vagueness and lack of precision continues to confuse the Courts and the parties—Inaction of legislative and executive branches has made it necessary for the judiciary to reconsider the subject over and over again.
       Held : There are compelling reasons more than one before us for making a reference on the interpretation of definition of ‘industry’ in section 2(j) of the Act, to a larger Bench and for reconsideration by it, if necessary, the decision rendered in the case of Bangalore Water Supply & Sewerage Board. The larger 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. In the judgment 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 and the 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 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 employer, 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 industrial revolution inspired by the philosophy of Kari 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 and profits. In interpreting, therefore, the industrial law, which aims at promoting social justice, interests both of employers, employees and in a democratic society, people, who are the ultimate beneficiaries of the industrial activities, have to be kept in view. (Paras 35 to 37)
       The awards of reinstatement and arrears of wages for past years by labour courts by treating even small undertakings of employers and entrepreneurs as industries 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 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 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 professions like lawyers, architects, doctors, chartered accountants and the like, which are occupations based on talent, skill and intellectual attainments, 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 rigors of the Act. No doubt even liberal professions are required to be regulated and reasonable restrictions in favour of those employed for them can, by law, be imposed, but that should be subject of a separate suitable legislation. (Para 40)
       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 not in accordance with the provisions of the Act. (Para 42)
       The learned judges in the Bangalore Water Supply & Sewerage Board 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. 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 sovereignty vests in the people and the State is obliged to discharge its constitutional obligations contained in the Directive Principles of the State Police 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 falling 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 words used in the definition of industry. (Para 43)
       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. 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 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 professions could be clearly included or 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 case. The judicial interpretation seems to have been the one of the inhibiting factors in the enforcement of the amended definition of the Act for the last 23 years. (Para 45)
       This Court must, therefore, reconsider where the line should be drawn and what limitations can and should be reasonably implied in interpreting the wide words used in section 2(j). 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 law dormant on the statute book. (Para 52)
       Pressing demands of the competing sectors of employers and employees and the helplessness of legislature and executive in bringing into force the Amendment Act compel us to make this reference. (Para 53)

Judgment

Dharmadhikari, J.—This present Appeal along with other 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 Chief Conservator of Forests vs. Jagannath Maruti Kondhare, 1996(2) SCC 293 of three judges and State of Gujarat vs. Pratamsingh Narsinh Parmar, 2001(9) SCC 713 of two judges.

2. On the question 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. 2(j) of the Industrial Disputes Act, 1947, the aforesaid Benches (supra) of this Court culled out differently the ratio of the seven judges’ Bench decision of this Court in the case of Bangalore Water Supply & Sewerage Board vs. 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 vs. Jagannath Maruti Kondhare (supra) based on the decision of Bangalore Water case came to the conclusion that ‘Social Forestry Department’ is covered by the definition of ‘industry’ whereas the two judges Bench decision in State of Gujarat vs. Pratamsingh Narsinh Parmar (supra) took a different view.

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

4. 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. It 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 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 ‘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 professions and philanthropic activities.

5. 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 to the observations made by the judges in their different opinions in the judgment of Bangalore Water (supra), the legislature responded and amended 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 effec

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2005 Supreme(SC) 793

Cases Referred (13)