PETITIONER:
DES RAJ, ETC. ETC.
Vs.
RESPONDENT:
STATE OF PUNJAB & ORS. ETC.
DATE OF JUDGMENT20/04/1988
BENCH:
MISRA RANGNATH
DUTT, M.M. (J)
CITATION:
1988 AIR 1182 1988 SCR (3) 616
1988 SCC (2) 537 JT 1988 (2) 145
1988 SCALE (1)771
ACT
lndustrial Disputes Act, 1947-Whether Irrigation Department of State Government of Punjab or Haryana is an ’industry’ as defined in Section 2(J)-of.
HEADNOTE
Each of these appeals by special leave was directed against the award made by the Labour Court.
The appellant in Civil Appeal No. 5415 of 1985, a foreman in the Mechanical Construction Division under the Irrigation Department, had filed an application under Section 33C-2 of the Industrial Disputes Act, 1947 (’the Act’) before the Labour Court for the recovery of arrears of annual increments.
The appellant in Civil Appeal No. 2168 of 1987 was a T. Mate in the P.W.D. Drainage Division. When his services were terminated without complying with the requirements of the law, he challenged the termination before the Labour Court.
The appellant in the remaining appeal was an operator in the Mechanical Division, under the Irrigation Department of Haryana State. His services were terminated and thereupon he approached the Labour Court challenging the order of termination.
In each of these cases, challenge was advanced by the Governmental authority to the maintainability of the application before the Labour Court on the ground that the employer was not an ’industry’ and the Act did not apply. The Labour Court upheld the objection and declined relief to the appellants.
Allowing the appeals with observations, the Court, ^
HELD: The common question in these appeals was whether the Irrigation Department was an ’industry’. The definition of ’industry’ is given in Section 2(j) of the Act. By Section 2(c) of the Amending Act (46 of 1982) this definition had been amended but the amendment has not 617 yet been brought into force. Since the amended statutory definition was not yet in force, the parent definition and the judicial pronouncements thereon had to be referred to for finding the law. The field is covered by pronouncements of this Court and is not necessary to go beyond the precedents such as decisions in D.N. Banerji v. P.R. Mukherjee & Ors., [1953] SCR 302; State of Bombay and Ors. v. The Hospital Mazdoor Sabha & Ors [1960] 2 SCR 866; Corporation of the City of Nagpur v. Its Employees, [1960] 2 SCR 942; Management of Safdarjang Hospital v. Kuldip Singh Sethi, [1971] SCR 177; and the decision of a seven-Judge Bench in Bangalore Water Supply and Sewerage Board v. A. Rajappa & Ors., [1978] 2 SCC 213. [621F-G]
In case the Irrigation Department was accepted to be an "industry", there was no dispute that each of the appellants would be a ’workman’ and each of the claims would constitute an "industrial dispute" as defined in Section 2(s) and (k) of the Act, respectively . [621G]
Judicial notice could be taken of the position that Haryana and Punjab originally constituted one State and Haryana became separate from 1966. The Irrigation Department of the erstwhile Punjab State was discharging the State’s obligations created under the Northern India Canal and Drainage Act, 1873. The Administration Report of the year 1981-82 of the Public Works Department, Irrigation Branch, which really deals with the Irrigation Department, was produced before the Court. [634B-C]
Counsel for the appellants placed before the Court some cases of different High Courts in support of his stand that the Irrigation Department should be considered as an industry, i.e. Madhya Pradesh Irrigation Karamchari Sangh v. State of Madhya Pradesh & Anr., [1972] LLJ 374; State of Rajasthan v. The Industrial Tribunal, Rajasthan, [1970] RLW 137; Dinesh Sharma & Ors. v. State of Bihar & Ors., [1983] Bihar L.J.R. 207 and Chief Engineer, Irrigations Orissa v. Harihar Patra & Anr., [1977] L.I.C. 1033. [638E-F]
On the tests, as already laid down in the judgments, the Court did not think the facts found in this case could take the Irrigation Department outside the purview of the definition of ’Industry’. The main functions of the Irrigation Department where subjected to the Dominant Nature test evolved by Krishna Iyer J. in Bangalore Water Supply and Sewerage Board v. A. Rajappa & Ors., [1978] 2 SCC 213, decided by a seven-Judges Bench, clearly come within the ambit of industry. 618 Perhaps keeping in view the observations of the learned Judges of the seven-Judges Bench, the definition of industry as occurring in section 2(j) of the Act was amended by Act 46 of 1982. However, the Court could not gather as to why even six years after the amendment to the definition of industry in section 2(j) of the Act came on the statute book, the same had not been brought into force. The court on more than one occasion had indicated that the position should be clarified by an appropriate amendment, and, when keeping in view the opinion of this Court, the law was sought to be amended, it was appropriate that the same should be brought into force as such or with such further alterations as might be considered necessary and the legislative view of the matter, made known and the confusion in the field, cleared up. Bare Acts and Commentaries on the Industrial Disputes Act had brought in the new definition, deleting the old one with a note that the new provision had yet to come into force. This situation had further added to the confusion. [639F-H; 640A-B]
The appeals succeeded. It was made clear that in the event of the definition of industry being changed either by enforcement of the new definition of industry or by any other legislative change, it would always be open to the aggrieved Irrigation Department to raise the issue again and the present decision would not stand in the way of such an attempt in view of the altered situation. [640B-C]
D.N. Banerji v. P.R. Mukherjee & Ors., [1953] SCR 302; State of Bombay & Ors. v. The Hospital Mazdoor Sabha & Ors., [1960] 2 SCR 365; Corporation of the City of Nagpur v. Its Employees, [1960] 2 SCR 942; Management of Safdarjang Hospital v. Kuldip Singh Sethi, [1971] 1 SCR 177; Bangalore Water Supply and Sewerage Board v. A. Rajappa & Ors., [1978] 2 SCC 213; om Prakash v. M/s Executive Engineer, SYL, Kurukshetra & Ors. [1984] Current L.J. 349; State of Punjab v. Kuldip Singh & Anr., [1983] 1 L.L.J. 307; Madhya Pradesh Irrigation Karamchari Sangh v. State of Madhya Pradesh & Anr., [1972] LLJ 374; State of Rajasthan v. The Industrial Tribunal, Rajasthan, [1970] RLW 137; Dinesh Sharrna & Ors. v. State of Bihar & Ors., [1983] Bihar L.J.R. 207 and Chief Engineer, lrrigation, Orissa v. Harihar Patra & Anr., [1977] L.I.C. 1033, referred to.
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5415 of 1985 etc.
From the Order dated 7.1.1985 of the Presiding officer, Labour Court, Amritsar in Application No. 547 of 1979. 619
Jitendera Sharma, P. Gaur, D.K. Garg, K.K. Mohan and R.C. Kaushik for the Appellants.
S.C. Mohanta, Mahabir Singh and C.M. Nayar for the Respondents.
The Judgment of the Court was delivered by
RANGANATH MISRA, J. Each of these appeals is by special leave and is directed against the Award made in different disputes by the Labour Court. The common justification for ignoring the High Court and approaching this Court directly by way of special leave, according to Mr. Jitendra Sharma for each of the appellants, is that there are a couple of Full Bench decisions of the Punjab and Haryana High Court holding that the Irrigation Department of the State Government of Punjab is not an ’industry’ and no useful purpose would have been served by routing the matters through the High Court as the Full Bench decision would have been followed.
The appellant in Civil Appeal No. 5415 of 1985 was a Foreman in the Mechanical Construction Division under the Irrigation Department and had applied under Section 33 C-2 of the Industrial Disputes Act, 1947, (hereinafter referred to as ’the Act’) before the Labour Court for recovery of arrears of annual increments.
The appellant in Civil Appeal No. 2168 of 1987 was a T. Mate in the P.W.D. Drainage Division. When his services were terminated without complying with the requirements of the law, he challenged the termination before the Labour Court. The appellant in the remaining appeal was an operator in the Mechanical Division, Rohtak under the Irrigation Department of Haryana State. His services were terminated and thereupon he approached the Labour Court disputing the validity of the said order. In each of these cases challenge was advanced by the governmental authority to the maintainability of the application before the Labour Court on the ground that the employer was not an ’industry’ and the Act did not apply. The Labour Court by different orders made in each of these cases upheld the objection and declined relief to the employees. The common question in these appeals, therefore, is as to whether the Irrigation Department of either Government is an ’industry’.
The definition of ’industry’ occurring in Section 2 of the Act has now to be seen. The Act defines ’industry’ in Section 2(J) to mean: 620
"any business, trade undertaking, manufacturer or
calling of employers and includes any calling
service, employment, handicraft, or industrial
occupation or avocation of workmen. " By Section 2(c) of the Amending Act (46 of 1982), this definition has been amended but the amendment has not yet been brought into force. The amended definition of "industry" is as follows:
"Industry means any systematic activity carried on
by co operation between an employer and his
workmen (whether such workmen are employed by such
employer directly or by or through any agency,
including a contractor) for the production, supply
or distribution of goods or services with a view
to satisfy human wants or wishes (not being wants
or wishes which are merely spiritual or religious
in nature), whether or not,-
(i) any capital has been invested for the purpose
of carrying on such activity; or
(ii) such activity is carried on with a motive to
make any gain or profit, and includes-
(a) any activity of the Dock Labour Board
established under Section 5A of the Dock Workers
(Regulation of Employment) Act, 1948;
(b) any activity relating to the promotion of
sales or business or both carried on by an
establishment, but does not include-
(1) any agricultural operation except where such
agricultural operation is carried on in an
integrated manner with any other activity (being
any such activity as is referred to in the
foregoing provisions of this clause) and such
other activity is the predominant one,
Explanation:- For the purposes of this sub-clause,
’agricultural operation’ does not include any
activity carried on in a 621
plantation as defined in clause (f) of Section 2
of the Plantations Labour Act, 1951; or
(2) hospitals or dispensaries; or
(3) educational, scientific, research or training
institutions; or
(4) institutions owned or managed by organisation
wholly or substantially engaged in any charitable,
social or philanthropic service; or
(5) khadi or village industries; or
(6) any activity of the Government relatable to
the sovereign functions of the Government
including all the activities carried on by the
departments of the Central Government dealing with
defence research, atomic energy and space; or
(7) any domestic service; or
(8) any activity, being a profession practised by
an individual or body of individuals, if the
number of persons employed by the individual or
body of individuals in relation to such profession
is less than ten; or
(9) any activity, being an activity carried on by
a cooperative society or a club or any other like
body of individuals, if the number of persons
employed by the cooperative society, club or other
like body of individuals in relation to such
activity is less than ten;" Since the amended statutory definition is not yet in force, the parent definition and judicial pronouncements have to be referred to for finding the law. The field is covered by pronouncements of this Court and it is not necessary to go beyond these precedents. In case the Irrigation Department is accepted to be "industry", there is no dispute that each of the appellants would be a "workman" and each of the claims would constitute an "industrial dispute" as defined in Section 2(s) and (k) respectively.
A five-Judge Bench in D.N. Banerji v. P.R. Mukherjee & Ors., 622 [1953] SCR 302 considered the scope of the definition of industry. Chandrashekhara Aiyer, J. speaking for the Court stated:
"It is therefore incumbent on us to ascertain
what the statute means by industry and industrial
dispute, leaving aside the original meaning
attributed to the words in a simpler state of
society, when we had only one employer perhaps,
doing a particular trade or carrying on a
particular business with the help of his own
tools, material and skill and employing a few
workmen in the process of production or
manufacture, and when such disputes that occurred
did not go behind individual levels into acute
fights between rival organisations of workmen and
employers; and when large scale strikes and lock-
outs throwing society into chaos and confusion
were practically unknown. Legislation had to keep
pace with the march of times and to provide for
new situations. Social evolution is a process of
constant growth, and the State cannot afford to
stand still without taking adequate measures by
means of legislation to solve large and momentous
problems that arise in the industrial field from
day to day almost .. When our Act came to be
passed, labour disputes had already assumed big
proportions, and there were clashes between
workmen and employers in several instances. We can
assume therefore that it was to meet such a
situation that the Act was enacted, and it is
consequently necessary to give the terms employed
in the Act referring to such disputes as wide an
import as reasonably possible. Do the definitions
of industry, industrial dispute and workman take
in the extended significance or exclude it? Though
the word undertaking in the definition of industry
is wedged in between business and trade on the one
hand and manufacture on the other, and though
therefore it might mean only a business or trade
undertaking, still it must be remembered that if
that were so, there was no need to use the word
separately from business or trade. The wider
import is attracted even more clearly when we look
at the latter part of the definition which refers
to calling, service, employment or industrial
occupation or avocation of workmen. Undertaking in
the first part of the definition and industrial
occupation or avocation in the second part
obviously mean much more than what is ordinarily
understood by trade or business. The definition
was apparently intended to 623
include within its scope what might not strictly
be called a trade or business venture." The ratio in Mukherjee’s case was relied upon by a three- Judge Bench in State of Bombay & Ors. v. The Hospital Mazdoor Sabha & Ors., [1960] 2 SCR 866 and Gajendragadkar, J. who spoke for the Bench observed:
"There is another point which cannot be
ignored. Section 2(j) does not define industry in
the usual manner by prescribing what it means: the
first clause of the definition gives the statutory
meaning of industry and the second clause
deliberately refers to several other items of
industry and brings them in the definition in an
inclusive way. It is obvious that the words used
in an inclusive definition denote extension and
cannot be treated as restricted in any sense.
Where we are dealing with an inclusive definition
it would be inappropriate to put a restrictive
interpretation upon terms of wider denotation."
"Besides, it would be relevant to point out
that too much reliance cannot be placed on what
are described as the essential attributes or
features of trade or business as conventionally
understood. The conventional meaning attributed to
the words trade and business has lost some of its
validity for the purpose of industrial
adjudication. Industrial adjudication has
necessarily to be aware of the current of socio-
economic thought around; it must recognise that in
the modern welfare State healthy industrial
relations are a matter of paramount importance and
its essential function is to assist the State by
helping a solution of industrial disputes which
constitute a distinct and persistent phenomenon of
modern industrialised States in attempting to
solve industrial disputes, industrial adjudication
does not and should not adopt a doctrinaire
approach. lt must evolve some working principles
and should generally avoid formulating or adopting
abstract generalisations. Nevertheless it can’t
harp back to old age notions about the relations
between employer and the employee or to the
doctrine of laissez faire which then governed the
regulation of the said relations. That is why, we
think, in construing the wide words used in
section 2(j) it would be erroneous to attach undue
importance to the attributes 624
associated with business or trade in the popular
mind in days gone by." The Bench thereafter adverted to the negative side and stated:
"It would be possible to exclude some
activities from section 2(j) without any
difficulty. Negatively stated the activities of
the Government which can be properly described as
regal or sovereign activities are outside the
scope of section 2(j). These are functions which a
constitutional government can and must undertake
for governance and which no private citizen can
undertake. This position is not in dispute. An
attempt is, however, made by the appellant to
suggest that in view of the Directive Principles
enunciated in Part IV of the Constitution and in
view of the ideal of a welfare state which has
been placed before the country, Governments, both
at the level of States as well as at the Centre
undertake several welfare activities; and the
argument is that the field of governmental or
regal activities which are excluded from the
operation of section 2(j) should be extended to
cover other activities undertaken by the
Governments in pursuit of their welfare policies.
In our opinion, this contention cannot be
accepted. The activities which do not fall within
section 2(j) and which are described as
governmental or regal or sovereign have been
pithily described by Lord Watson as ’the primary
and inalienable functions of a constitutional
Government’; and it is only these activities that
are outside the scope of section 2(j). It sounds
incongruous and self-contradictory to suggest that
activities undertaken by the Government in the
interests of socio-economic progress of the
country as beneficial measures should be exempted
from the operation of the Act which in substance
is a very important beneficial measure itself." Applying the stated principles, this Court in that case held that the J.J. Group of Hospitals came within the definition of industry.
Within a couple of weeks from the Hospital Mazdoor Sabha’s case (supra), the same Bench in the case of Corporation of the City of Nagpur v. Its Employees, [1960] 2 SCR 942, this time Subba Rao, J., as he then was, speaking for the Court examined the self-same question. Before the Court were available two precedents -Mukherjee’s case 625 (supra) and Hospital Mazdoor Sabha’s case (supra) and it was stated:
"Before considering the positive aspects of
the definition, what is not an industry may be
considered. However wide the definition of
industry may be, it cannot include the regal or
soveriegn functions of State. This is the agreed
basis of the arguments at the Bar though the
learned counsel differed on the ambit of such
functions. While the learned counsel for the
Corporation would like to enlarge the scope of
these functions so as to comprehend all the
welfare activities of a modern State, the learned
counsel for the respondents would seek to confine
them to what are aptly termed the primary and
inalienable functions of a constitutional
Government " The Court analysed the activities of the various departments of the Corporation and observed:
"We can also visualize different situations.
A particular activity of a municipality may be
covered by the definition of industry. If the
financial and administrative departments are
slowly in charge of that activity, there can be no
difficulty in treating those two departments also
as part of the industry. But there may be cases
where the said two departments may not only be in
charge of a particular activity or service covered
by the definition of industry but also in charge
of other activity or activities falling outside
the definition of industry. In such cases a
working rule may be evolved to advance social
justice consistent with the principles of equity.
In such cases the solution to the problem depends
upon the answer to the question whether such a
department is primarily and predominantly
concerned with industrial activity or incidentally
connected therewith. "
"The result of the discussion may be summarised
thus: (1) the definition of industry in the Act is
very comprehensive. It is in two parts one part
defines it from the stand point of the employer
and the other from the stand point of the
employee. If an activity falls under either part
of the definition it will be an industry within
the meaning of the Act. (2) The history of
industrial disputes and the legislation recognises
the basic concept that the activity shall be an
orga- 626
nised one and not that which pertains to private
or personal A employment. (3) The regal functions
prescribed as primary and inalienable functions of
State though statutorily delegated to a
corporation or necessarily excluded from the
purview of the definition. Such regal functions
shall be confined to legislative power,
administration of law and judicial power. (4) If a
service rendered by an individual or a private
person would be an industry, it would equally be
an industry in the hands of a corporation. (5) If
a service rendered by a corporation is an
industry, the employees in the department
connected with that service, whether financial,
administrative or executive, would be entitled to
the benefits of the Act. (6) If a department of a
municipality discharges many functions some
pertaining to industry as defined in the Act and
the other non-industrial activities, the
predominant functions of the department shall be
the criterion for the purposes of the Act." Applying these tests, this Court examined as to whether the various departments of the Corporation came within the definition or not. Then came the decision of a Constitution Bench in the case of Management of Safdarjung Hospital v. Kuldip Singh Sethi, [1971] 1 SCR 177 where Chief Justice Hidayatullah spoke for the Court. Referring to the definition of industry. the learned Chief Justice observed:
"This definition is in two parts. The first
part says that it means any business, trade,
undertaking, manufacture or calling of employers
and then goes on to say that includes any calling,
service, employment, handicraft or industrial
occupation or avocation of workmen .. ".
"Therefore, an industry is to be found when
the employers are carrying on any business, trade,
undertaking, manufacture or calling of employers.
If they are not, there is no industry as such.
What is meant by these expressions was discussed
in a large number of cases which have been
considered elaborately in the Gymkhana Club case
[1968] 1 SCR 742. The conclusions in that case may
be stated:
’Primarily, therefore, industrial disputes
occur when operation undertaken rests upon
cooperation between employer and employees
with a view to production and distribution of
material goods, in other 627
words, wealth, but they may arise also in
cases where the cooperation is to produce
material services. The normal cases are those
in which the production or distribution is of
material goods or wealth and they will fall
within the expressions trade, business or
manufacture.’ " In Safdarjung Hospital’s case the decision in Hospital Mazdoor Sabha case was analysed and the Court came to the following conclusion:
"In our judgment, the Hospital Mazdoor
Sabha’s case took the extreme view of the matter
which was not justified. " Then came the case of Bangalore Water Supply and Sewerage Board v. A. Rajappa & Ors [1978] 2 SCC 213. This time the same point was before a seven-Judge Bench of this Court. This judgment undertood a review of the entire law. Krishna Iyer, J. spoke for himself, Bhagwati and Desai, JJ. In paragraph 139 of the judgment it was stated:
"Banerjee (supra) amplified by Corporation of
Nagpur (supra), in effect met with its waterloo in
Safdarjung (supra). But in this latter case two
voices could be herard and subsequent rulings
zigzagged and conflicted precisely because of this
built-in ambivalence. It behoves us, therefore,
hopefully to abolish blurred edges, illumine
penumbral areas and overrule what we regard as
wrong. Hesistency, half-tones and hunting with the
hounds and running with the hare can claim heavy
penalty in the shape of industrial confusion,
adjudicatory quandary and administrative
perplexity at a time when the nation is striving
to promote employment through diverse strategies
which need, for their smooth fulfilment, less
stress and distress, more mutual understanding and
trust based on a dynamic rule of law which speaks
clearly, firmly and humanely. If the salt of law
lose its savour of progressive certainty where
with small it be stalled? So we proceed to
formulate the principles, deducible from our
discussion which are decisive, positively and
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, authoritatively, until overruled by a
larger bench or superseded by the legislative
branch." 628
"Industry as defined in section 2(j) and
explained in Banerjee (supra) has a wide import.
(a) Where (i) systematic activity, (ii)
organised by cooperation 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 e.g. making, on
a large scale prasad or food), prima facie, there
is an industry in that enterprise.
(b) Absence of profit motive or gainful
objective 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 the employer-employee
relations.
(d) If the organisation is a trade or
business it does not cease to be one because of
philanthropy animating the undertaking.
Although section 2(j) uses words of the
widest amplitude in its two limbs, their meaning
cannot be magnified to over-reach itself.
Undertaking must suffer a contextual and
associational shrinkage as explained in Banerjee
and in this judgment; so also, service, calling
and the like. This yields the inference that all
organized activities possessing the triple
elements in I, although not trade or business, may
still be industry provided the nature of the
activity, viz. the employer-employee basis, bears
resemblance to what we find in trade or business.
This takes into the fold of industry undertakings,
callings and services, adventures ’analogous to
the carrying on of the trade or business’. All
features, other than the methodology of carrying
on the activity viz. in organizing the cooperation
between employer and employee, may be dissimilar.
It does not matter, if on the employment terms
there is analogy. 629
Application of these guidelines should not
stop short of their 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 workmen,
the range of this statutory ideology must inform
the reach of the statutory definition. Nothing
less, nothing more.
(a) The consequences are (i) professions,
(ii) clubs, (iii) educational institutions, (h)
cooperatives, (v) research institutes, (vi)
charitable projects and (vii) other kindred
adventures, if they fulfil the triple tests listed
in I cannot be exempted from the scope of section
2(j).
(b) A restricted category of professions,
clubs, cooperatives and even gurukulas and little
research labs, may qualify for exemption if, in
simple ventures, substantial 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.
(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 case, 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 of the
holiness, divinity or like central personality,
and the services are supplied free or at 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
undertakings alone are exempt-not other
generosity, compassion, developmental passion or
project.
The dominant nature test:
(a) Where a complex of activities, some of
which qualify for exemption others not, involves
employees on the total undertaking, some of whom
are not workmen as in 630
the University of Delhi v.Ram Nath, [1964] 2 SCR
703 or A 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, will be the true
test. The whole undertaking will be industry
although those who are not workmen by definition
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.
(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 2(j).
(d) Constitutional and competently enacted
legislative provisions may well remove from the
scope of the Act categories which otherwise may be
covered thereby."
Beg, CJ., wrote a separate judgment and prefaced it by
saying:
"I am in general agreement with the line of
thinking adopted and the conclusions reached by my
learned brother Krishna Iyer." In paragraph 149 of the judgment, the learned Chief Justice observed:
"In his heroic efforts, my learned brother
Krishna Iyer, if I may say so with great respect,
has not discarded the tests of industry formulated
in the past. Indeed, he has actually restored the
tests laid down by this Court in D.N. Banerjee’s
case, and, after that, in Corporation of the City
of Nagpur v. Its Employees, and State of Bombay v.
The Hospital Mazdoor Sabha to their pristine
glory." The learned Chief Justice again stated:
"Each of us is likely to have a subjective
notion about industry. For objectivity, we have to
look first to the words 631
used in the statutory provision defining industry
in an attempt to find the meaning. If that meaning
is clear, we need proceed no further. But, the
trouble here is that the words found there do not
yield a meaning so readily. They refer to what
employers or workers may do as parts of their
ordinary avocation or business in life .. "
"Thus, in order to draw the circle of
industry, to use the expression of my learned
brother Iyer, we do not find even the term workman
illuminating. The definition only enables us to
see that certain classes of persons employed in
the service of the State are excluded from the
purview of industrial dispute which the Act seeks
to provide for in the interests of industrial
peace and harmony between the employers and
employees so that the welfare of the nation is
secured. The result is that we have then to turn
to the preamble to find the object of the Act
itself, to the legislative history of the Act, and
to the socio-economic ethos and aspirations and
needs of the times in which the Act was passed." After quoting the definition of industry, the learned Chief Justice proceeded to say in paragraph 158 of the judgment:
"It seems to me that the definition was not
meant to provide more than a guide. It raises
doubts as to what could be meant by the calling of
employers even if business, trade, undertaking or
manufacture could be found capable of being more
clearly delineated. It is clear that there is no
mention here of any profit motive. Obviously, the
work manufacture of employers could not be
interpreted literally. It merely means a process
of manufacture in which the employers may be
engaged. It is, however, evident that the term
employer necessarily postulates employees without
whom there can be no employers ...... " In paragraph 165 of the judgment, the learned Chief Justice added: G
"I have contended myself with a very brief
and hurried outline 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 I have dictated 632
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
cases cited before us, including those what are
known as sovereign functions." Chandrachud, J., as he then was, on behalf of himself Jaswant Singh and Tulzapurkar, JJ. added a note by saying:
"We are in respectful agreement with the view
expressed by Krishna Iyer, J. that the appeal
should be dismissed. We will give our reasons
later indicating the area of concurrence and
divergence, (underlining is ours) if any, on the
various points in controversy on which our learned
Brother has dwelt." On 7th of April, the reasonings were delivered by Chief Justice Chandrachud for himself as by then Jaswant Singh, J. delivered a separate set of reasonings for himself and Tulzapurkar, J. The learned Chief Justice (because by then he had assumed that office) referred to several authorities and tests and in paragraph 181 of the judgment stated:
"........ These refinements are, with
respect, are not warranted by the words of the
definition, apart from the consideration that in
practice they make the application of the
definition to concrete cases dependent upon a
factual assessment so highly subjective as to lead
to confusion and uncertainty in the understanding
of the true legal position. Granting that the
language of the definition is so wide that some
limitation ought to be read into it, one must step
at a point beyond which the definition will skid
into a domain too rarefied to be realistic.
Whether the cooperation between the employer and
the employee is the proximate cause of the
ultimate product and bears direct nexus with it is
a test which is almost impossible of application
with any degree of assurance or certitude. It will
be as much true to say that the solicitor’s
assistant, managing clerk, librarian and the
typist do not directly contribute to the
intellectual end product which is a creation of
his personal professional skill as that, without
their active assistance and cooperation it will be
impossible for him to function effectively. The
unhappy state of affairs in which the law is
marooned will 633
continue to baffle the skilled professional and
his A employees alike as also the Judge who has to
perform the unenviable task of sitting in judgment
over the directness of the cooperation between the
employer and the employee, until such time as the
legislature decides to manifest its intention by
the use of clear and indubious language. Besides
the fact that this Court has so held in National
Union of Commercial Employees v. M.R. Meher,
lndustrial Tribunal, Bombay, [1962] Supp. 3 SCR
157 the legislature will find a plausible case for
exempting the learned and liberal professions of
lawyers, solicitors, doctors, engineers, chartered
accountants and the like from the operation of
industrial laws. But until that happens, I
consider that in the present state of the law it
is difficult by judicial interpretation to create
exemptions in favour of any particular class." The remaining two learned Judges added their separate opinion and in the concluding part stated:
"In 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 Bench also-
we think, it is 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
term rendering it necessary for larger Benches of
this Court to be constituted which are driven to
the necessity of evolving a working formula to
cover particular cases." The ultimate position available from the seven-Judge Bench decision, therefore, is that while three learned Judges delivered their view through Krishna Iyer, J., Beg CJ spoke somewhat differently, yet agreed with the conclusion reached by Krishna Iyer J. Chandrachud, CJ. also agreed with the majority while the remaining two learned Judges looked for legislative clarification to meet the situation.
Perhaps keeping in view the observations of the learned Judges constituting the seven-Judge Bench, the definition of industry as occurring in section 2(j) of the Act was amended by Act 46 of 1982. Though almost six years have elapsed since the amendment came on to 634 the Statute Book, it has not been enforced yet. Bare Acts and Commentaries on the Industrial Disputes Act have, however, brought in the new definition by deleting the old one with a note that the new provision has yet to come into force. This situation has further added to the confusion.
It is now time to turn to the facts of the case. Judicial notice can be taken of the position that Haryana and Punjab originally constituted one State and Haryana has become separate from 1966. The Irrigation Department of the erstwhile Punjab State was discharging the State’s obligations created under the Northern India Canal and Drainage Act, 1873. The Administration Report of the year 1981-82 of the Public Works Department, Irrigation Branch, which really deals with the irrigation department has been produced before us with notice thereof to the appellants’ learned counsel. We may extract a part of the Report:
"The irrigation department which was set-up
more than 100 years ago is mainly responsible to
provide water supplies for the substance and
development of agriculture in the 30.36 hectare
cultivable area of the State covered by canal
command. This requires harnessing of the surface
and grounds water resources of the State and their
equitable distribution to the beneficiaries,
within Canal Command area. This task involves
construction of multipurposes, major, medium and
minor irrigation projects, maintenance of net work
of channels, regulation of canal supplies,
enforcement of water laws etc. and levying of
crop-wise water supply rates on the irrigators for
recovery through the state Revenue Department.
Extension, improvement and modernisation of the
age old canal system is also continued to be done
simultaneously by the Department. Besides the
irrigation the department also provides water for
drinking purposes to villages and towns in the
State. The canal water supplies are also being
made available for the industrial development in
areas where no other source for water supplies
exists".
"The State of Punjab was reorganised in the
year 1966 and a number of disputes on the sharing
of water/powers with successor States croped up.
The issues regarding apportionment of Ravi Beas
Waters over the preparation uses falling to the
share of erstwhile Punjab, 635
apportionment of rights and liabilities of Bhakra
Nangal Project, retention of control of Irrigation
Head Works of Harike, Ropar and Ferozepur by
Punjab, restoration of Bhakra Nangal Project and
Beas Project to Punjab etc. etc. are also dealt
with by the Department."
"The Irrigation Department is also
responsible to provide protection to the valuable
irrigated lands and public property from flooding,
river action and water logging. This requires
construction of flood protection, river training,
drainage and anti-waterlogging works and their
maintenance. "
"The Department has also to plan ahead for
irrigation development in the State for which
purpose proposal of irrigation schemes are
investigated, surveyed and prepared in advance.
Feasibility of irrigation schemes for hydropower
generation from the existing and proposed
irrigation schemes is also investigated by the
Department and their execution undertaken. The
execution of new irrigation schemes, extention and
improvement of existing schemes requires
preparation of detailed designs of channels and
their necessary works. This work is also done by
the Department."
"During designs, execution and maintenance of
the irrigation, flood control and drainage
projects, field problems arise for the solution of
which research, model studies and laboratory
experiments have to be conducted. The Department
undertakes this work as well."
"Having shared with the neighbouring States
almost entire water resources of the rivers
flowing through the Punjab water has now become a
constraint to keep the tempo of the development of
irrigated agriculture in the State. For this
purpose it has not only become necessary to
evaluate the total water resources of the State
but also plan conjunctive use of surface and
ground water for the optimum development of this
precious resource. Further it has become necessary
to conserve irrigation supplies and propogate
their use economically through innovative water
distribution system like sprinklers, drip system,
etc." 636
"The Irrigation Department plans and execute
reclamation of salt or thur affected areas within
cannal command. Measurements of discharges in the
Ravi, the Beas and the Sutlej desides the beings
and drains in the State is also carried out by the
irrigation department. These observations which
are being made for the last over 60 years have
provided basic data to the design of multipurposes
Bhakhra Nangal, Beas and Beas Sutlej Link projects
which have transformed economies not only of the
State of Punjab but also of the State of Haryana
and Rajasthan. The fact extracted from the Report apparently give a picture of the activities of the Irrigation Department. There is a full-Bench judgment of the Punjab and Haryana High Court in the case of Om Prakash v. M/s Executive Engineers, SYL, Kurukshetra & Ors.[1984] Current L.J. 349 where the question that came up for consideration before the full Bench was thus stated; whether the irrigation department of the State (of Punjab) comes within the ambit of industry in section 2(j) of the Industrial disputes Act, 1947? The Court took into account the judgment of another full-Bench decision of the same Court in the case of State of Punjab v. Kuldip Singh & Anr., [1983] 1 L.L.J. 307 where the question for consideration was whether the Public Works Department of the State Government was an industry. In Om Prakash’s case (supra), the full Bench barely took note of the decision of this Court in Bangalore Water Supply case (supra) but did not deal with it. It also took into account the position of the Irrigation Department in Punjab keeping in the background the provisions of the Northern India Canal and Drainage Act of 1873 and stated:
"The irrigation department is a branch of the
public works department. It provides a reasonably
assured source of water for crops through the net
work of canals. The irrigation department also
carries out schemes and takes measures for
protecting crops from the menace of floods during
the times of abnormal rainfall. In the olden times
when there was no canals, agriculture was very
limited and cultivators depended solely on
rainfall. By the passage of time it was thought
necessary to build irrigation and drain age works
for the purpose of providing better water
facilities to the farmers on whom depends the
economy of this country. These works could only be
built by the Government. 637
The western Jamuna canal which serves the
State of A Haryana was the first major irrigation
work which was initially constructed by Feroze
Shah Tuglaq in 1351. It was reconditioned by Akbar
in 1568 and was extended in 1626 in the reign of
Shahjahan. The canal was constructed in a
reasonably serviceable form by the British during
1817-1823. Then the Upper Bari doab canal, Sirhind
canal, Lower Chinah canal and Lower Jhelum canal
etc., were constructed. Thereafter, many other
projects have come up and the ones which need
mention are Bhakra Nangal project with its network
of Bhakra System and the Beas project. All these
projects have been carried out by the state at the
state expense. It is understandable that such
projects could not at all be undertaken by private
enterpreneurs or could be left in their hands for
execution. Further, water is a state subject as
per entry 17 in List II of Seventh Schedule of the
Constitution. Even before coming into force of the
Constitution, water of rivers and streams was
considered to be belonging to the State ..... Thus
it would be evident that the water has at all
times been a State subject and the State can
exercise full executive powers in all matters
connected with the water. The State supplies water
to the farmers through the network of canals. It
is correct that water rates are realised from the
farmers but they are not realised for the cost of
the water. In other words, the State does not sell
water to the farmers. As contended justifiably by
the learned Advocate General, the water charges
are not even sufficient to meet the establishment
and maintenance expenses of the department.
Moreover, the water rates have never been realised
on the basis of the quantity of the water
supplied. These rates are dependant upon the class
of crops raised by the farmers and have been fixed
in terms of per acre. It may be noted that rates
for crops, such as wheat, sugarcane, cotton, rice
are higher than the other crops such as gram, oil
seeds, bajra and maize etc. In other words, the
water charges have been linked on the principle of
bearability, that is, paying capacity of the
farmer dependant upon his income from the kind of
crop raised by him. The water is supplied on the
basis of the holding of each farmer in terms of
cultivable commanded area, that is, on the basis
of uniform and equitable yardstick. Again, the
water charges are remitted when the crops are
damaged by natural 638
calamities such as locust, hailstroms, floods or
drought etc. Further, the construction of canals,
dams, barrages, and other projects cannot be
entrusted to some private hands. The construction
of these works involves compulsory acquisition of
land which can also be done by the State. Merely
this fact that water is supplied by charging
certain rates cannot warrant a finding that the
state is indulging in trade or business activity
or an activity which is analogous to trade,
business or economic venture. From what has been
stated above, there can be gainsaying that the
functions of the irrigation department cannot at
all be left to private enterprise. The facts which
weighed in holding that the construction and
maintenance of national and state highways by the
State does not come within the ambit of industry
in Kuldip Singh’s case (supra) are present so far
as the irrigation department is concerned .. In
this view of the matter, I hold that the functions
of the irrigation departments are essentially
government functions and that these functions
neither partake of the nature of trade and
business nor are even remotely analogous thereto
and that this department does not come within the
ambit of industry as defined in section 2(j) of
the Act."
Mr. Shalma for the appellants placed before us some cases of different High Courts in support of his stand that the Irrigation Department should be considered as industry. The first of these cases is that of Madhya Pradesh Irrigation Karamchari Sangh v. State of Madhya Pradesh & Anr., [1972] LLJ 374 where the Madhya Pradesh High Court found the Chambal Hydel Irrigation Project to be an industry. The facts of that case reveal that the Project therein was a multipurpose one which was used for generating electricity as also for irrigation purposes. On the facts found therein, the High Court came to the conclusion that it came within the definition under section 2(j) of the Act.
In State of Rajasthan v. The Industrial Tribunal, Rajasthan, [1970] RLW 137 the question for consideration before the Rajasthan High Court was whether the Survey and Investigation Division of Irrigation Department was an industry. In paragraph 26, the learned Judge came to the conclusion by saying:
"In view of the aforesaid decisions of the
Supreme Court, I find it difficult to hold that
the activities of the 639
State Government by organising its Survey and
Investigation. Division in the Irrigation
Department through which the State Government
rendered services in the matter of supplying water
by constructing canals and dams does not fall
within the ambit of the sovereign or regal
functions of the State. Such service to the people
at large, in my opinion, comes within the ambit of
the expression industry as defined in section 2(i)
of the Act." The finding runs contrary to the conclusion. If in the opinion of the learned Judge, it was difficult to hold that the activities did not fall within the ambit of the sovereign or regal functions, then the conclusion should have been different.
In Dinesh Shanna & Ors. v. State of Bihar & Ors., [1983] Bihar L.J.R. 207, a Division Bench of the Patna High Court was considering if the Public Health Engineering Department of the State of Bihar was an industry. In paragraph 8 of the judgment, reliance was placed on the Bangalore Water Supply case (supra) and the Nagpur Corporation case (supra) and it was held that the said department of the State Government of Bihar was an industry. In Chief Engineer, Irrigation, Orissa v. Harihar Patra & Anr., [1977] L.I.C. 1033 a Division Bench of the orissa High Court was considering whether the Salandi Irrigation Project in that State was an industry. The High Court relied upon the earlier full-Bench decision of its own Court and some of the decisions of this Court which we have referred to above, and came to hold that the irrigation project was an industry.
The Administrative Report of the facts found by the High Court in the instant case have attempted to draw out certain special features. The legal position has been indicated in the earlier part of our judgment. On the tests, as already laid down in the judgments, we do not think these facts found in this case can take out the Irrigation Department outside the purview of the definition of ’industry’. We have already referred to the Dominant Nature test evolved by Krishna Iyer, J. The main functions of the Irrigation Department where subjected to the Dominant Nature test clearly come within the ambit of industry. We have not been able to gather as to why even six years after the amendment has been brought to the definition of industry in section 2(j) of the Act the same has not been brought into force. This Court on more than one occasion has indicated that the position should be clarified by an appropriate amendment and when keeping in view the opinion of this Court, the law was sought to be amended, it is 640 appropriate that the same should be brought into force as such or with such further alterations as may be considered necessary, and the legislative view of the matter is made known and the confusion in the field is cleared up.
For the reasons we have indicated above, these appeals succeed. We make it clear that in the event of the definition of industry being changed either by enforcement of the new definition of industry or by any other legislative change, it would always be open to the aggrieved Irrigation Department to raise the issue again and the present decision would not stand in the way of such an attempt in view of the altered situation. The appeals are allowed without costs. S.L. Appeals allowed. 641