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1978 Supreme(SC) 78

JASWANT SINGH, M. H. BEG, P. N. BHAGWATI, V. D. TULZAPURKAR, V. R. KRISHNA IYER, Y. V. CHANDRACHUD, D. A. DESAI
Bangalore Water Supply And Sewerage Board: A. P. State Co Operative Union LTD. : Gujarat State Co Operative Union, Ahmedabad: State Of M. P. : S. V. S. Marwari Hospital: Management Of Y. M. C. A. Tourist Hotel: Management Of Shri Ram Institute For In – Appellant
Versus
A. Rajappa: Labour Court: Workmen Employed Under Gujarat State Co-operative Union: M. P. Irrigation Karmachari Sangh: Their Workmen: Its Workmen: Its Workmen: Workmen Of Kshetriya Gandhi Ashram: Their Workmen – Respondent


Advocates:
A.Gupta, A.K.GANGULY, A.K.Gupta, A.K.SEN GUPTA, AMBRISH KUMAR, ARUNESHVAR GUPTA, ASHOK JAIN, ASHWINI KUMAR, B.RAM RAKHIANI, C.B.SINGH, D.N.Mishra, D.P.MUKHERJI, D.V.PATEL, E.C.AGARWAL, G.B.PAI, G.N.Rao, H.K.PURI, H.L.KUMAR, H.S.PARIHAR, I.M.SHROFF, J.RAMAMURTHY, K.J.JOHN, K.N.BHATT, K.RAJENDRA CHAUDHARY, KAILASH VASUDEV, Kamlesh Bansal, L.M.SINGHVI, M.C.Narasimhan, M.K.RAMAMURTHY, M.L.DHINGRA, M.V.GOSWAMY, M.VIRAPPA, MADAN MOHAN DAS, MANJU SHARMA, MOHAN JHA, N.Nettra, NARAIN, Navnit Lal, O.C.MATHUR, P.G.GOKHALE, P.H.Parekh, P.P.Rao, R.K.GARG, S.C.AGRAWAL, S.K.Gambhir, S.V.Gupta, S.V.SUBRAMANIAM, SHOBHA DIXIT, Shri Narain, T.V.S.N.Chari, URMILA KAPUR, V.J.Francis, V.M.TARKUNDE, VIVEK SETH

Judgement Key Points

Key Principles on Definition of "Industry" under Section 2(j) of the Industrial Disputes Act

  • Wide import of "industry": The definition encompasses any business, trade, undertaking, manufacture, or calling of employers, including any calling, service, employment, handicraft, or industrial occupation or avocation of workmen, requiring a broad, functional interpretation informed by the Act's objectives of industrial peace and welfare. (!) (!) (!) (!) (!)

  • Triple test for prima facie industry: (i) systematic activity; (ii) organized by co-operation between employer and employee (direct and substantial element not chimerical); (iii) for production and/or distribution of goods and services to satisfy human wants and wishes (material things or services, excluding purely spiritual/religious wants). (!) (!) (!) (!) (!)

  • Irrelevance of profit motive: Absence of profit motive or gainful objective does not exclude an activity from being an industry, regardless of public, joint, private, or other sector. (!) (!) (!) (!) (!) (!)

  • Functional focus and decisive test: True focus is on the nature of the activity, with special emphasis on employer-employee relations patterned like in trade or business; philanthropy does not alter this if organized similarly. (!) (!) (!) (!)

  • Contextual shrinkage of terms: "Undertaking," service, calling, etc., must be read in context; organized activity with triple elements, even if not strictly trade/business, qualifies if employer-employee basis resembles trade/business methodology. (!)

  • Ideology of the Act guides scope: Industrial peace, regulation/resolution of disputes between employers and workmen; creeds, cults, motivations, or economic results do not override; professions, clubs, educational institutions, co-operatives, research institutes, charities qualify if meeting triple tests. (!) (!)

  • Restricted exemptions for small-scale: Minimal employees in simple ventures (e.g., small professions, gurukulas, labs) may qualify for exemption if dominant nature is non-employee based. (!)

  • True charity exemption: Pious/altruistic missions where participants (e.g., volunteers, ashramites) serve without master-servant remuneration basis, free/nominal cost services, exclude industry status; mere generosity or compassion does not exempt. (!) (!)

  • Dominant nature test: In complex activities, some exempt/others not, predominant nature and integrated departments determine if whole is industry; non-workmen employees do not alter status. (!) (!) (!)

  • Sovereign functions exemption: Strictly understood sovereign functions (alone) exempt; welfare/economic activities by government/statutory bodies not exempt; severable industrial units in sovereign departments may qualify. (!) (!) (!) (!)

  • Legislative override possible: Constitutional/legislative provisions may exclude categories otherwise covered. (!)

  • Overruling of narrow views: Prior restrictive interpretations rejected in favor of expansive, dynamic approach aligned with welfare state needs. (!) (!)

  • Hospitals as industry: Hospitals (government-run, charitable, research/training) qualify as rendering material services, regardless of profit, sovereign function, or ancillary research/training. (!) (!) (!) (!)

  • Educational institutions as industry: Universities, colleges, schools, research institutes are industries; education renders service to community; teachers' non-workman status irrelevant; predominant activity is education. (!) (!) (!) (!) (!) (!)

  • Professions as industry (with limits): Liberal professions (lawyers, doctors, etc.) qualify unless small-scale (e.g., single rural practitioner with minimal help); employee contribution not marginal; rejects direct nexus/partnership tests. (!) (!) (!) (!) (!)

  • Clubs as industry (mostly): Clubs with employer-employee cooperation for goods/services (e.g., catering, sports) are industries; self-serving members' clubs with minimal hired help exempt. (!) (!) (!) (!) (!)

  • Charitable/research institutions: Qualify unless fitting true charity exemption (volunteer-based, no wage relations); research produces valuable services/goods. (!) (!) (!)

  • Co-operatives as industry: Credit/marketing/producers'/consumers' societies are industries due to employer-employee relations and trade-like activities. (!) (!) (!)

  • Public utility/municipal activities: Water supply, sanitation, education, health departments are industries if analogous to private enterprise. (!) (!) (!) (!)

  • Integrated/ancillary departments: Administrative, tax, transport units in larger entities qualify if predominant/integrated with industrial activities. (!) (!)


152. Hidayatullah, C. J. considered the facts of the appeals, clubbed together there and held that all the three institutions in the bunch of appeals were not industries. Abbreviated reasons were given for the holding in regard to each institution, Which we may extract for precise understanding:

"It is obvious that Safdarjung Hospital is not embarked on an economic activity which can be said to be analogous to trade or business. There is no evidence that it is more than a place where persons can get treated. This is a part of the functions of Government and the Hospital is run as a Department of Government. It cannot, therefore, be said to be an industry. The Tuberculosis Hospital is not an independent institution. It is a part of the Tuberculosis Association of India. The hospital is wholly charitable and is a research institute. The dominant purpose of the hospital is research and training, but as research and training cannot be given without beds in a hospital, the hospital is run. Treatment is thus a part of research and training. In these circumstances the Tuberculosis Hospital cannot be described as industry.

The objects of the Kurji Holy Family Hospital are entirely charitable









































































































































































































































































































































































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