Des Raj,
Vs. State of Punjab & Ors [1988] INSC 113 (20 April 1988)
Misra
Rangnath 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
CITATOR
INFO : D 1991 SC 915 (6,7)
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.
HEAD NOTE:
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.
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.
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