The National, Union of Commercial
Employees & ANR Vs. M. R. Meher, Industrial Tribunal, Bombay & Ors
 INSC 51 (13 February 1962)
13/02/1962 GAJENDRAGADKAR, P.B.
CITATION: 1962 AIR 1080 1962 SCR Supl. (3)
R 1964 SC 903 (13) RF 1968 SC 554 (14) R 1969
SC 9 (8) R 1969 SC 63 (7) R 1970 SC1407 (17) R 1970 SC1453 (8) R 1972 SC 763
(12) F 1976 SC 145 (9) O 1978 SC 548 (96,100,101,106,111,159,161) R 1988 SC1182
profession-Work of solicitor, if an industry Dispute with employee-Reference to
Tribu- nal--Competence-Industrial Disputes Act, 1947 (14 of 1947), s. 2 (j).
The respondents were a firm carrying on the
work of solicitors in Bombay. For the years 1956 and 1957 a claim for bonus was
made against them by their employees. Before.
the Industrial Tribunal to which the dispute
was referred by the State Government for adjudication under the provisions of
the Industrial Disputes Act, 1947, the respondents contended that the
profession followed by them was not an industry within the meaning of s. 2(j)
of the Act, that the dispute raised against them was not an industrial dispute
under the Act, and that, therefore, the reference made by the Government was
Held, that the work of solicitors is not an
industry within the meaning of s. 2(j) of the Industrial Disputes Act, 1947,
and that, therefore, any dispute raised by the employees of 158 the solicitors
against them cannot be made the subject of reference to the Industrial
The distinguishing feature of an industry is
that for the production of goods or for the rendering of service, co- operation
between capital and labour or between the employer and his employee must be
direct. A person following a liberal profession does not carry on his
profession in any intelligible sense with the active co-operation of his
employees, and the principal, if not the sole, capital which he brings into his
profession is his special or peculiar intellectual and educational equipment.
Consequently, a liberal profession like that of a solicitor is outside the
definition of "industry" under s. 2(j) of the Act.
State of Bombay v. The Hospital Mazdoor
Sabha, (1960) 2 S.C.R. 866, explained and distinguished.
Brij Mohan Bagaria v. N.(,. Chatterjee,
A.I.R. 1958 Cal. 460 and D. P. Dunderdele v. G. P. Mukherjee, A. 1. R. 1958
Cal. 465, approved..
Observations in Federated Municipal and Shire
Council Employees' Union of Australia v. Melbourne Corporation, (1919) 26
C.L.R. 508, relied on.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 24 of 1961.
APPeal from the judgment and order dated
November 20, 1958, of the Bombay High Court in Special Civil Application No. 2789
A.S. R. Chari and K. R. Choudhuri, for the
S.T. Desai, and V. J. Merchant, for
respondents Nos. 2 and 4 and the Intervener (The Bombay Incorporated Law
1962. February 13, The Judgment of the Court
was delivered by GAJENDRAGADKAR, J.-This appeal arises out of a dispute between
the appellants, the National Union of Commercial Employees & Anr, and the
respondents Pereira, Fazalbhoy and Desai who constitute an Attorneys' firm by
Pereira Fazalbhoy & Co. It appears that
in August, 1957 159 the appellant wrote to the respondent firm setting forth
certain demands on behalf of its employees. These demands related to bonus for
the years 195556 and 1956-57 and to certain other matters. As the parties could
not agree, the dispute was taken before the Conciliation Officer. The
Conciliation Officer also failed to bring about a settlement and so he
submitted his failure report to the Government of Bombay. Thereafter, the State
Government referred the dispute in regard to the bonus for the two years 1956
and 1957 for adjudication before an Industrial tribunal under section 12(5) of
the Industrial Disputes Act (No. 14 of 1947) (hereinafter called the Act).
Before the Tribunal, the respondents raised a preliminary objection. They urged
that the profession followed by them was not an industry within the meaning of
the Act, and so the dispute raised against them by the appellants was not an
industrial dispute within the meaning of the Act; the contention was that the
dispute not being an industrial dispute under the Act, the reference made by
the Government was incompetent and so, the Tribunal had no jurisdiction to
adjudicate upon this dispute. The Tribunal upheld the preliminary objection and
recorded its conclusion that it had no jurisdiction to adjudicate upon the
dispute as it was not an industrial dispute.
The order thus passed by the Tribunal was
challenged by the appellants before the High Court at Bombay by special Civil
Application No. 2789 of 1958 filed under Articles 226 and 227 of the
Constitution. The High Court considered the rival contentions raised before it
by the appellants and the respondents and came to the conclusion that the
respondent's firm did not constitute an industry and so the dispute between the
said firm and its employees was nut ail industrial dispute which could validly
form the subject- matter of a reference under the Act. In that view of the matters
the High Court hold that the Industrial Tribunal was 160 right in refusing to
make an order on the reference and so the appellants' writ petition was
dismissed. The appellants then applied for and obtained a certificate from the
High Court and it is with the said certificate that the present appeal has come
to this Court; and the short question which it raises for our decision is
whether the respondents' firm which carries on the work of Solicitors in Bombay
can be aid to constitute an industry under s. 2(j) of the Act.
In dealing with this question, it would be
necessary to refer to the decision of this Court in the State of Bombay v. The
Hospital Mazdoor Sabha (1). Both parties agreed that the present dispute would
have to be determined in the light of the decision of this Court in that case.
Let us, therefore, indicate the effect of the said decision. In the Hospital
case (1), this Court had occasion to consider whether the services of workmen
engaged as ward servants in the J.J. Group of Hospitals, Bombay, under State
control were workmen and whether the Hospital Group itself constituted. an
industry under the Act or not. Both the questions were answered in the
affirmative and in rendering those answers, the scope and effect of the
definition of the word industry' used in s. 2(j) of the Act was considered.
This Court held that the words used by s. 2
(j) in defining industry' in an inclusive manner were of' wide import and had
to be read in their wide denotation. Even so, this Court stated "that
though s. 2(j) uses words of very wide denotation, a line would have to be
drawn in a fair and just manner so as to exclude some callings, services or
undertakings from its purview. If all the words used are given their widest
meaning all services and all callings would come within the purview of the
definition; even service rendered by a servant purely in a personal or domestic
matter (1) 2 S. C.; R.866.
161 or even in a casual way would fall within
It is not and cannot be suggested that in its
wide sweep the word "service' is intended to include service howsoever
rendered in whatsoever capacity and for whatsoever reason." (p. 876). That
is why this Court proceeded to consider where the line should be drawn and what
limitations can and should be reasonably implied in interpreting the wide words
used in s. 2(j).
In dealing with the somewhat difficult
question of drawing a line, this Court observed. ,"as a working principle,
it may be stated that an activity systematically or habitually undertaken for
the production or distribution of goods or for the rendering of material
services to the community at large or a part of such community with the help of
employees is an undertaking. Such an activity generally involves the
co-operation of the employer and the employees; and its object is the
satisfaction of material human needs It must be organised or arranged in a
manner in which trade or business is generally organised or arranged. It must
not be casual nor must it be for oneself' nor for pleasure. Thus, the manner in
which the activity in question is organised or arranged, the condition of the
(co-operation between employer and the, employee necessary for its success and
its object to render material service to the community can be regarded as some
of the features which are distinctive of activities to which s. 2 (1)
applies." (P. 879).
It was in the light of this working principle
that this Court came to the conclusion that the State was carrying on an
undertaking in running the Group of Hospitals in question In dealing with the
question of hospitals, this Court also referred to a material circumstance
which supported the conclusion that running of hospitals is an industry under
the Act. Section 2 (n) of third Act defines "public utility service and
under it five separate categories 162 of public utility service are enumerated.
Clause (VI) of s. 2 (n) provides that any industry specified in the Schedule as
therein indicated would also be a public utility service.
In 1956, Entry No. 9 among others, was added
in the First Schedule specifying another public utility service. This Entry
refers to service in hospitals and dispensaries.
Therefore, it was clear that since the
validity of this entry was not disputed, after service in hospitals and dispensaries
was included in the First Schedule. it was inarguable that the hospital would
not be an industry under the Act ; unless a hospital was an industry under the
Act, service in the hospitals could not be regarded as public utility service.
That is how this Court held that in running the J.J. Hospital Group in Bombay,
the State , Government was carrying on an undertaking which was an industry
under s. 2(j). The question which calls for our decision in the present appeal
is : what would be the result of the application of the working test laid down
by this Court in the Hospital case 1 in relation to the controversy between the
parties in the present appeal ? Mr. Chari for the appellants contends that in
dealing with the question as to whether the respondents carried on an industry
under a. 2 (j), it is necessary to distinguish between professional service
rendered by an individual acting by himself and similar service rendered by a
firm consisting of several partners, because he suggests that professional service
individually rendered stands on a different footing from professional service
which is rendered in an organised and institutionalised manner. The
Organisation of professional service which leads to its institutionalization
attracts 'the provisions of s. 2(j) inasmuch as in such organised service there
is bound to be co-operation between the employers and the employees engaged by
the firm for doing different categories of work According to Mr Chari, the
employment of (1)  2S.C.R. 86, 163 different categories of staff
facilitates the work of the solicitors and it enables them to dispose of more
work more quickly and more efficiently and he suggests that the presence of
such co-operation between the employees and their employers in the Organisation
of the solicitors' firm satisfies the working test laid down by this Court in
the Hospital case(1).
In our opinion, the distinction sought to be
drawn by Mr. Chari between professional service rendered by an individual
acting by himself and that rendered by a firm is not logical for the purpose of
the application of the test in question.
What is true about a firm of solicitors would
be equally true about an individual Solicitor working by himself. As.
the firm engages different categories of
employees a single solicitor also engages different categories of employees to
carry out different types of work and so the presence of co- operation between
the employees working in a solicitor's office and their employers the
solicitor, could be attributed to 'the work of a single solicitor as much as to
the work of the firm ; and, therefore, if Mr. Chari is right and if the firm of
solicitors is 'held to be an industry under the Act, the office of an
individual solicitor cannot escape the application of the definition of s.
2(j). That is why we think it would not be reasonable to deal with the matter
on the narrow ground suggested by Mr. Chari by confining our attention to the
organisational or institutionalised aspect of a solicitors firm.
When in the Hospital case (1) this Court
referred to the Organisation of the undertaking involving the co-operation of
capital and labour or the employer and his employees, it obviously meant the,
cooperation essential and necessary for the purpose of rendering material
service or for the Purpose of production. It would realised that the concept of
industry postulates partnership (1)  2. S.C.R. 866 164 between capital
and labour or between the employer and his employees. It is under this
partnership that the employer contributes his capital and the employees their
labour and the joint contribution of capital and labour leads directly to the
production which the industry has in view. In other words, the co-operation
between capital and labour or between the employer and his employees which is
treated as a working test in determining- whether any activity amounts to an
industry, is the co. operation which is directly involved in the production of
goods or in the rendering of service.
It cannot be suggested that every form or aspect
of human activity in which capital and labour cooperate or employer and
employees assist each other is an industry. The distinguishing feature of an
industry is that for the production of goods or for the rendering of service,
co- operation between capital and labour or between the employer and his
employees must be direct and must be essential.
Take, for instance, a textile mill. The
employer contributes capital and installs the machinery requisite for the mills
and the employees contribute their labour and by their cooperation assist the
employer in producing the textile goods. When we refer to textile labour in
relation to industrial disputes under the Act, we refer to workmen who are
engaged in the work of producing textile goods. It is obvious that in regard to
textile- mills, a large majority of workmen concerned in carrying out the
activities of most of the departments of the textile mills contribute directly
in one form or another to the production of textile goods. It may be that even
in a textile mill a very small minority of workmen may not be directly
concerned with the production of textile goods ; but even so, their work is so
integrally connected with the work carried on by the majority of workmen
employed that they are treated as forming part of the same labour force. Thus,
there can be no doubt that 165 when a textile mill is regarded as an industry,
it is, because capital and labour jointly contribute to the' production of
goods which is the object of the mill.
Let us consider the case of the hospitals.
In' the hospitals, the service to the patients begins with proper diagnosis
followed by treatment, either medical or surgical, according to the
requirements of the case. In the case of medical treatment, the patients
receive medical treatment according to the prescription and are kept in the
hospital for further treatment. In surgical cases the patients receive surgical
treatment by way of operation and then are kept in the hospital for further
treatment until they are discharged. During the period of such treatment, all
their needs have to be attended to, food has to be supplied to them, nursing
assistance has to be given to them, medical help from time to time has to be
rendered and ail incidental services required. for their recovery have also to
be rendered. Now, in the case of the activities of an organised Hospital, the
co-operation of the employees is thus directly involved in rendering one kind
of service or another which it is the duty of the hospital to render. It is
true that the patients are drawn to the hospitals primarily because of the
doctors or surgeons associated with them. But there can be no doubt that the
work of the hospital and its purpose are not achieved merely when a surgical
operation is performed or medical prescription provided. After medical
treatment is determined or a surgical operation is performed, the patient
coming to a hospital as an indoor patient needs all kinds of medical assistance
until he is discharged and the services rendered to him both initially and
thereafter until his discharge are all services which the hospital has been
established to render and it is in the rendering of the said services that the
employees of the hospital co-operate and play their part. That is how the test
of cooperation between 166 the employer and his employees is satisfied in
regard to hospitals which are properly organised and maintained. It is, of
course, true that the quality, the importance and the nature of the service
rendered by different categories of employees in a hospital would not be the
same, but nevertheless, all the categories of service rendered by respective
classes of employees in a hospital are essential for the purpose of giving
service to the patients which is the objective of the hospital. That is how the
hospitals satisfy the test of co-operation between the employer and his
Does a solicitors' firm satisfy that test ?
Superficially considered, the solicitors' firm is no doubt organised at;
an industrial concern would be organised.
There are different categories of servants employed by a firm, each category,
being assigned separate duties and functions. But it must be remembered that
the service rendered by it solicitor functioning either individually or working
together with partners is service which is essentially individual ; it depends
upon the professional equipment, knowledge and efficiency of the,- solicitor
Subsidiary work which is purely of an
incidental type and which in intended to assist, the solicitor in doing his job
has no direct relation to the professional service ultimately rendered by the
solicitor. For his own convenience, a solicitor may employ a clerk because a.
clerk would type his opinion ; for his convenience., a solicitor may employ
menial servant to keep his chamber clean and in order ; and it is likely that
the number of clerks may be large if the concern is prosperous and so would be
the number of menial servants. But the work done either by the typist or the
stenographer or by the menial servant or other employees in a solicitor's firm
is not directly concerned with the service which the solicitor renders to his
client and cannot, therefore, be said to 167 satisfy the test of co-operation
between the employer and the employees which is relevant to the purpose. There
can be no doubt that for carrying on the work of a solicitor efficiently,
accounts have to be kept and correspondence carried on and this work would need
the employment of clerks and accountants. But has the work of the clerk who
types correspondence or that of the accountant who keeps accounts any direct or
essential nexus or connection with the advice which it is the duty of the
solicitor to give to his client? The answer to this question must, in our
opinion, be in the negative. There is, no doubt, a kind of co- operation
between the solicitor and his employees, but that co-operation has no direct or
immediate relation to the professional service which the solicitor renders to
his client. Therefore, in our opinion it is difficult to accept the plea that a
solicitor's firm carrying on the work of an Attorney is an industry within the
meaning of s. 2(j).
There is no doubt that the words used in s.
2(1) are very wide, but as has been held by this Court in the can of Hospital
is necessary to draw a line in a fair and just manner putting some limitation
upon the width of the said words and a working test has been enunciated in that
The application of the said teat to the facts
in the present appeal leads to the conclusion that the work of solicitors Which
the respondents are carrying on as a firm is not an industry under s. 2(j) of
the Act. That is the view taken by the Bombay High Court and we think, that
view is right.
It may be added that the same view has been
taken by the Calcutta High Court in the case of Brij Mohan Bagaria v. N. C.
Chaterjee (2) and D.P. Dunderdele v. G. P. Mukherjee(3').
Looking at this question in a broad and
general way, it is not easy to conceive that a liberal profession like that, of
an. attorney could have been (1)  2 S.C.R. 668.
(2) 1958 A.I.R. 1938 Cal. 460.
(3) A.I.R.Cal. 465.
168 intended by the Legislature to fall
within the definition of "industry" under s. 2(j). The very concept
of the liberal professions has its own special and distinctive features which
do not readily permit the inclusion of the liberal professions into the four
corners of industrial law. The essential basis of an industrial dispute is that
it is a dispute arising between capital and labour in enterprises where capital
and labour combine to produce commodities or to render service. This essential
basis would be absent in the case of liberal professions. A person following a
liberal profession does not carry on his profession in any intelligible sense
with the active co-operation of his employees and the principal, if not the
sole, capital which he brings into his profession is his special or peculiar
intellectual and educational equipment. That is why on broad and general
considerations which cannot be ignored, a liberal profession like that of an
attorney must, we think, be deemed to be outside the definition of
"industry" under section 2(j) In this connection, it would be useful
to refer to the observation made by Isaccs and Rich JJ., in the Federated
Municipal and Shire Council Employees' Union of Australia v. Melbourne
Corporation (1). "The concept of an industrial dispute", said the
learned Judges.,. may thus be formulated:
Industrial disputes occur when, in relation
to operations in which capital and labour are contributed in cooperation for
the satisfaction of human wants or desires, those engaged in co-operation
dispute as to the basis to be observed, by the parties engaged, respecting
either a share of the product or any other terms and conditions of their
co-operation. This formula excludes the two extreme contentions of the claimant
and the respondents respectively. It excludes, for instance, the legal and the
medical professions, because they are not carried on in any intelligible sense
by the Cooperation of (1) (1919)26C.L.R.508,554.
169 capital and labour and do not come within
the sphere of industrialism. It includes, where the necessary co- operation
exists, disputes between employers and employees, employees and employees, and
employers and employers. It implies that "industry" to lead to an
industrial dispute, is not, as the claimant contends, merely industry in the
abstract sense, as if it alone effected the result, but it must be acting and
be considered in association with its co- operator "capital" in some
form so that the result is, in a sense, the outcome of their combined
efforts". Those observations support the view which we have taken about
the character of co-operation between the employer and employees which affords
a relevant test in determining whether the enterprise in question is an
industry or not. Co-operation to which the test refers must be co-operation
between the employer and his employees which is essential for carrying out the
purpose of the enterprise and the service to be rendered by the enterprise
should be the direct outcome of the combined efforts of the employer and the
There is one more minor point which still
remains to be considered. Mr. Chari argued that it would be idle for the
respondents to contend. that the work of their firm is not an industry under a.
(2j) because they have-themselves described their work as the work of carrying
on business of solicitors. It appears that the document of partnership executed
between the different partners of the firm provided, inter alia, that all
expenses of the business of the partnership or losses incurred in carrying on
the business of the partnership shall be. borne out of the profits or capital
of the partnership. It is on the use of the word "business" in this
clause that Mr. Chari relies.
In support of his argument he referred us to
a decision of Farwell, J., in Dickson v. Jones (1). In that case, the Court was
concerned to examine the validity of an agreement between the, plaintiff,
solicitor, and his junior clerk, who (1)  3 All. E. R. 182.
170 was subsequently articled to him. This
agreement provided that the latter would not ,,at, any time hereafter practice
as a solicitor within a radious of 15 miles from the Town Hall, Hanley,
aforesaid, or solicit any client of the solicitor". Farwell J., held that
"the combination of a restriction over an area so great as a radious 15
miles and one extending to the whole life of the defendant, articled clerk,
was, in the circumstances, wider than was necessary for the protection of the
plaintiff and was, therefore, unenforceable as being in Undue restraint of
trade". The argument is that the validity of an agreement between a
solicitor and his articled clerk was tested on the ground that it was an
agreement in restraint of trade, and so the solicitor's work must be held to be
a "'trade," under s.
2(j). There is obviously no force in this
argument. If in their deed of partnership the respondents described the work of
partnership as the business of solicitors, that can hardly assist the
appellants in contending that the work carried on by the firm is industry under
s. 2(j). The work of a solicitor is, in a loose sense, of course, of business,
and so if the solicitors entered into an agreement in restraint of trade, its
validity would have to be judged on the basis that their work in the nature of
business. That, however, is hardly relevant in determining the question as to
whether the said work is an industry under section 2(j);
as we have already made it clear, the
definition of the word ,'industry" is couched in words of very wide
But that precisely is the reason why a line
has to be drawn in a just and fair manner to demarcate the limitations of their
scope and that necessarily leads to the adoption of some working test. Therefore,
in our opinion, the argument that the respondents themselves have called their
work as "business" is of no assistance.
The result is, the appeal fails; there would
be no order as to costs.