Report No. 62
2.34. Section 2(2).-
We now come to section 2(2). There are certain provisions of the Act where the existence of "a trade or business" of the employer is material.1 The activities carried on by a local authority may or may not amount to trade or business.2 In the case of Government Departments also, the activity is often not an economic activity3 analogous to trade or business. Nevertheless, section 2(2) makes a wide provision whereunder activity of a local authority or of a department acting on behalf of the Government is considered a trade or business.
The reason for the provision is that in the case of activities of the Government or a local authority, it would be difficult to distinguish between activities by way of trade or business and other activities. We do not wish to disturb the substance of the provision. But we think that in section 2(2), the Government should be mentioned before the local authority. We are also of the view that the present wording in this respect which refers to a "department acting on behalf of the Government" is not appropriate and should be replaced simply by the words "the Government".
1. B.G. section 2(1), definition of "workman", and section 12, and the Second Schedule, item 4.
2. As to "business", see AIR 1968 SC 554.
3. See AIR 1970 SC 1407 (1416) (case regarding the Safdarjung Hospital), New Delhi.