Manager, Telecom Vs. S.Srinivasa Rao & Ors  INSC 824 (18 November
B.N. KIRPAL, V.N. KHARE
18TH DAY OF NOVEMBER, 1997 Present:
the Chief Justice Hon'ble Mr. Justice B.N Kripal Hon'ble Mr. Justice V.N. Khare
N.N. Goswami, Sr. Adv., Arvind Kumar Sharma, Ms. Anubha Jain, Ms. Kanupriya Mittal,
Advs. with him for the appellant.
Luthra, Ms. Pooja Dua and L.R. Singh, Advs., for the Respondents.
following Judgment of the Court was delivered:
C.J.I. Delay condoned.
matter comes up before a three-judge Bench because of a Reference made by a
two-judge Bench which doubted the correctness of an earlier two-judge Bench
decision of this Court in Sub-Divisional Inspector of Post, Vaikam & Ors. vs.
Theyyam joseph & Ors. (196) 8 SCC 489. It was stated at the Bar that a
later two-judge Bench decision reported as Bombay Telephone Canteen Employees'
Association vs. Union of India - AIR 1997 Supreme Court 2817 also takes the
same view as in the case of Theyyam Joseph.
only point for decision in this in this appeal is whether the Telecom
Department of the Union of India is an industry within the meaning of the
definition of 'industry' in Section 2(j) of the Industrial Disputes Act, 1947.
It may here be observed that the amendment made in that definition in 1982 has
not been brought into force by the Central Government by issuance of
notification required for the purpose. It is, therefore, not necessary for us
to consider whether the telecommunication Department of the Union of India
would be an 'industry' within the meaning thereof in the amended provision
which is not yet brought into force.
are, in this matter, concerned with the earlier definition of 'industry' which
continues to be in force and which was subject of consideration by a seven
judge Bench in Bangalore Water supply and Sewerage Board vs. A Rajappa &
Ors. (1978) 2 SCC 213.
above point arises for consideration out of a reference made under Section 10A
of the Industrial Disputes Act, 1947, which matter is now pending in the High
contention of the appellant throughout has been that the Reference was
incompetent wince the Telecommunication Department of the Union of India is not
an 'industry' within the meaning of its definition contained in the existing
un- amended Section 2(j) of the Industrial Disputes Act, 1947.
this question has to be answered according to the decision of this Court in Bangalore water Supply (supra) which is a
binding precedent. The dominant nature test for deciding whether the
establishment is an 'industry' or not is summarised in para 143 of the judgment
of justice Krishna Iyer in Bangalore Water Supply case (supra) which is as
The dominant nature test:
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 the University of Delhi case (supra) or 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 (supra), will be the true test. The whole undertaking
will be 'industry' although those who are not 'workmen' by definition may not
benefit buy status.
Notwithstanding the previous clauses sovereign functions, strictly understood,
(alone) qualify for exemption, not the welfare activities or economic
adventures under-taken by government or statutory bodies.
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).
and competently enacted legislative provisions may well remove from the scope
of the Act categories which otherwise may be covered thereby." It is
rightly not disputed by the learned counsel for the appellant that according to
this test the Telecommunication Department of the Union of India is an 'industry'
within that definition because it is engaged in a commercial activity and the
Departments not engaged in discharging any of the sovereign functions of the
two-Judge bench of this Court in Theyyam Joseph's case (1966)8 SCC 489 (supra)
held that the functions of the Postal Department are part of the sovereign
functions of the state and it is, therefore, not an 'industry' within the
definition of Section 2(j) of the Industrial Disputes Act, 1947. Incidently,
this decision was rendered without any reference to the seven-judge Bench
decision in Bangalore Water Supply (supra). In a later two-judge Bench decision
in Bombay Telephone Canteen Employees' Association case - AIR 1997 SC 2817,
this decision was followed for taking the view that the Telephone Nigam is not
an 'industry'. Reliance was placed in Theyyam joseph's case (1996) 8 SCC 489
(supra) for that view. However, in Bombay Telephone Canteen Employees'
Association case (i.e. the latter decision), we find a reference to the Bangalore Water supply case. After referring
to the decision in Bangalore Water Supply, it was observed that if the doctrine
enunciated in Bangalore Water Supply is strictly applied, the consequence is
'catastrophic'. With respect, we are unable to subscribe to this view for the obvious
reason that it is in direct conflict with the seven judge Bench decision in
Bangalore Water Supply case (supra) by which we are bound. It is needless to
add that it is not permissible for us, or for that matter any Bench of lesser
strength, to take a view contrary to that in Bangalore Water Supply (supra) or
to by pass that decision so long as it holds the field. Moreover, that decision
was rendered long back - nearly two decades earlier and we find no reason to
think otherwise. Judicial discipline requires us to follow the decision in
Bangalore Water Supply case (1978) 2 SCC 213. We must therefore, add that the
decisions in Theyyam Joseph (1996) 8 SCC 489 and Bombay Telephone Canteen
Employees' Association (AIR 1997 Supreme Court 2817) cannot be treated as
laying down the correct law. This being the only point for decision in this
appeal, it must fail.
the appeal is dismissed. No Costs.