Workmen Of Indian Standards Institution vs Management Of Indian Standards Institution

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1975 Supreme(SC) 393

SUPREME COURT OF INDIA
A.Alagiriswami : P.K.Goswami : P.N.Bhagwati
Workmen Of Indian Standards Institution
Versus
Management Of Indian Standards Institution
Case No. : 1297 of 1970
Date of Decision : 10/6/75
Advocates Appeared: Bhandare M.C. : Bhandare Smanda : Jain A.K. : Mehta S.K. : Nagaraja K.R. : Parekh P.H. : Prakash Anand : Ramamurthi M.K. : Rao P.P. : Sen A.K. : Srivastava C.K.

Advocates:
A.K.JAIN, A.K.SEN GUPTA, ANAND PARKASH, C.K.SRIVASTAVA, K.R.NAGARAJA, M.C.BHANDARE, M.K.RAMAMURTHY, P.H.Parekh, P.P.Rao, S.K.MEHTA, SMANDA BHANDARE

Headnote:
Industrial Disputes Act, 1947 – Sections 2, 10 and 12 - Peace And Harmony - There have been various judicial ventures in this rather volatile area of law - Act gives a definition of industry but this definition is not very vocal and it has defied analysis so that judicial effort has been ultimately reduced merely to evolving tests by reference to characteristics regarded as essential for constituting an activity as an industry - Decided cases show that these tests have not been uniform they have been guided more by an empirical rather than a strictly analytical approach - Sometimes these tests have been liberally conceived sometimes narrowly - Latest exposition is to be found in judgment of a bench of six judges of this court - But while applying tests indicated in this decision it is necessary to remember that is a legislation intended to bring about peace and harmony between management and labour in an industry so that production does not suffer and at same time labour is not exploited and discontented – Held, Thus material service which institution renders is really a subsidized service and it is rendered in public interest - It is an institution interested and engaged in service to public - Its activities do not go to swell coffers of anybody - Applying therefore tests which have been evolved and applied in gymkhana club case and hospital case it is obvious that institution is not engaged in any industry - Judgments of this court in management of FICCI v workmen and textile industry research association v state are not relevant because in case of federation it was intended to benefit members of commercial community and not public in general - Textile Industry Research Associations activities were in nature of business or trade organized with object of discovering ways and means by which member-mills may obtain larger profits in connection with their industries - Activities of standards institution are not intended to benefit any class of businessmen or to enable them to increase their income - It is a public service institution and therefore must be held not an industry - Appeal is allowed.

Judgement Key Points

Based on the provided legal document, here are the key points regarding whether the Indian Standards Institution constitutes an "industry" under the Industrial Disputes Act, 1947:

The Legal Definition of Industry: The term "industry" under Section 2(j) is defined as any business, trade, undertaking, manufacture, or calling of employers, and includes any calling, service, employment, handicraft, or industrial occupation of workmen. While the definition has two parts, it must be read as a whole to denote a collective enterprise where employers and employees are associated (!) (!) (!) (!) .
The "Analogy to Trade or Business" Test: For an undertaking to be an industry, it must be analogous to trade or business. This requires the activity to be organized in a manner similar to trade or business, not be casual, and involve cooperation between employers and employees to produce material goods or render material services (!) (!) (!) (!) .
Irrelevance of Profit Motive: It is not necessary for an undertaking to have a profit motive or to involve investment of capital to be considered an industry. The absence of these features does not disqualify an activity from being an industry (!) (!) (!) (!) .
Public Interest vs. Commercial Character: The fact that an activity serves the public interest or is subsidized by the government does not automatically exclude it from the definition of industry. Many industries are designed to subserve public interest (!) . However, the enterprise must still be economic in nature, producing material goods or services (!) .
Material Services: Material services are those rendered through cooperation between employers and employees to provide the community with something like electric power, water, or transportation. They are distinguished from professional services (like doctors or lawyers) which benefit individuals based on their specific needs rather than being produced as a commodity (!) (!) .
Facts of the Case: The Indian Standards Institution (ISI) is a society registered under the Societies Registration Act, 1860, established by a Government of India resolution to prepare and promote standards for products and processes (!) (!) .
ISI's Activities: The Institution engages in systematic activities including:
- Preparing and publishing Indian standards (technical documents for quality and safety) (!) (!) .
- Issuing licenses for the use of the "Standard Mark" (ISI Certification Mark) to ensure products meet standards (!) (!) .
- Maintaining laboratories for testing articles and processes (!) .
- Maintaining libraries and disseminating technical information through publications like the ISI Bulletin (!) (!) .
Financial Operations: The Institution derives significant income from the sale of standards, commission from overseas standards, and fees for certification marks and testing services. In 1973-74, income from sales was approximately Rs. 16.24 million, and from certification marking, it was Rs. 5.2 million (!) (!) .
Majority Opinion (Allowing Appeal): The majority held that the Institution's activities are carried on systematically, are organized like a trade or business, and render material services to manufacturers, distributors, and consumers. The income generated and the commercial nature of the certification scheme indicate an economic activity analogous to trade or business, thus constituting an "industry" (!) (!) .
Dissenting Opinion (Dismissing Appeal): The dissenting judge argued that the Institution is a public service institution set up by the government to discharge duties in the public interest. He contended that since it is run without a profit motive, does not distribute profits, and its activities are essentially a manifestation of governmental duty, it does not bear the character of a business or trade and therefore is not an industry (!) (!) .
Final Decision: The appeal was allowed, and the Industrial Tribunal was directed to proceed with the reference on the basis that the activities of the Indian Standards Institution constitute an "industry" within the meaning of Section 2(j) of the Act (!) .

BHAGWATI, J. (alongwith Goswami, J.)ALAGIMSWAMI, J. (Disagreeing)

(1) HERE, in this case, once again arises the question as to what is an industry within the meaning of the Industrial Disputes Act, 1947. This question has continually baffled and perplexed the courts in our country. There have been various judicial ventures in this rather volatile area of the law. The Act gives a definition of industry in S. 2(j) but this definition is not very vocal and it has defied analysis, so that judicial effort has been ultimately reduced merely to evolving tests by reference to characteristics regarded as essential for constituting an activity as an industry. The decided cases show that these tests have not been uniform; they have been guided more by an empirical rather than a strictly analytical approach. Sometimes these tests have been liberally conceived, sometimes narrowly. The latest exposition is to be found in the judgment of a bench of six Judges of this Court in Safdarjung Hospital v. K. S. Sethi. But while applying the tests indicated in this decision, it is necessary to remember that the Industrial Disputes Act, 1947 is a legislation intended to bring about peace and harmony between management and labour in an industry so that production does not suffer and at the same time, labour is not exploited and discontented and, therefore, the tests must be so applied as to give the widest possible connotation to the term industry. Whenever a question arises whether a particular concern is an industry, the approach must be broad and liberal and not rigid or doctrinaire. We cannot forget that it is a social welfare legislation we are interpreting and we must place such an interpretation as would advance the object and purpose of the legislation and give full meaning and effect to it in the achievement of its avowed social objective. With these prefatory observations, we proceed to state the facts giving rise. to the appeal.

(2) THE Indian Standards Institution (hereinafter referred to as the Institution) is a society registered under the Societies Registration Act, 1860. The workmen of the Institution represented by the Indian Standards Institution Employees Union (hereinafter referred to as the Union) made certain demands which were not accepted by the management and a dispute accordingly arose between the management and the workmen. The dispute was taken in conciliation but the Conciliation Officer was unable to bring about settlement and he made, what is commonly known as a "failure report" to the Lt. governor of Delhi. The Lt. governor, thereupon, by an order dated 28/09/1968, referred the dispute for adjudication to the Industrial tribunal under S. 10(1)(d) and 12(5) of the Act. The order of the Lt. governor set out the demands which were to form the subject matter of adjudication by the Industrial tribunal. The union representing the workmen filed a statement of claim in support of these demands. The management opposed the demands on merits but in addition to the defence on merits, they raised a preliminary objection which, if well founded, would strike at the very root of the jurisdiction of the Industrial tribunal to entertain the reference. The preliminary objection was that the institution was not an industry within the meaning of S. 2(j) of the Act and, therefore, the dispute between the management of the institution and its workmen was not an industrial dispute as defined in S. 2(k) and the Lt. governor had no jurisdiction to refer it for adjudication under the provisions of the Act. Issue no. 1 arising out of this preliminary objection was in the following terms: "Is Indian Standards Institution an industry or not", and this issue was directed to be tried as a preliminary issue.

(3) THE Industrial tribunal proceeded to examine the legal position for the purpose of determining when a particular activity can be regarded as an industry within the meaning of S. 2(j) of the Act. It observed th

Click Here to Read the rest of this document

1975 Supreme(SC) 393

Cases Referred (12)