Charity & Profession Can't Be Excluded From Definition Of 'Industry' Under ID Act : Indira Jaising Argues Before Supreme Court

The Supreme Court today(March 18) continued hearing a reference in regards to the expansive definition of "industry" given by the then Justice VK Krishna Iyer in Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978).

Senior Advocate Indira Jaising(supporting the 1978 judgment) submitted that the now-repealed Industrial Disputes Act, 1947, was a beneficial legislation for the security of employment. She said that it was a pre-constitutional legislation which was drafted in the backdrop of the industrial development taking place in England, but it provided against the hire and fire rule, which was applicable in common law. 

A bench headed by Chief Justice of India Surya Kant and comprising Justices BV Nagarathna, PS Narasimha, Dipankar Datta, Ujjal Bhuyan, Satish Chandra Sharma, Joymalya Bagchi, Alok Aradhe and Vipul M Pancholi is hearing on the limited issue of whether the Bangalore Water Supply judgment was rightly decided.

The Court has limited itself to this issue since it was informed that the 1947 Act has now been repealed, and there is a challenge pending to the 2020 Industrial Relations Code. 

Yesterday, and even today, some of the counsels seeking the 1978 judgment to be overruled had termed that the judgment was not unanimous. Senior Advocate Sanjay Hegde today continued from that argument. He stressed that the then Chief Justice Beg was to retire, and perhaps this may have been why the bench's thinking may not have been "fruitified".

He added that in this regard, the reasoning offered by the Safdarjung Hospital, New Delhi v. Kuldip Singh Sethi (1971), which said the hospital was not an industry, offered better reasoning. His argument is that profit may not be the purpose of the activity, but the activity must bear an analogy to trade or business in character. 

Justice Datta had yesterday commented that there was no discussion by the five-judge bench, from which the reference arose, as to why it had felt that the seven-judge bench's judgment was not unanimous. He again reiterated today that it was a unanimous decision. 

"On 21 February, all seven judges spoke in one voice. What is the order recorded by J Chandrachud? He says we are in respectively in agreement, but we will give judgment later on the area of convergence and divergence. That means, there is consensus but in some respects there could be divergence of opinion. Later, if two judges takes a view that they don't agree, that doesn't erode the binding precedent," he said.

Adding to this, CJI told Hegde that the issue of whether the judgment was unanimous or not has no "material bearing". 

On this point, Jaising remarked that she is surprised that Bangalore Water Supply is being called a judgment of five judges. She added that she was curious why a six-judge bench decided Safdargunj, and added that perhaps because there were not many judges available. 

She added that the reference is actually based on incorrect information that there is a conflict between the Chief Conservator of Forests v. Jagannath Maruti Kondhare(1996) of three judges and State of Gujarat v. Pratamsingh Narsinh Parmar,(2001) of two judges. It is on an assumption of conflict that the five judges in State of U.P vs Jai Bir Singh(2005) referred the matter to the Chief Justice to be referred to a larger bench.

ID Act an example of beneficial legislation

Jaisingh explained that the 1947 Act was meant to give workmen security of tenure, which ordinary civil law could not give. Ordinary Civil Courts are meant to be bound by the law of Master and Servant, which prevails under the Common Law, and therefore they cannot exercise jurisdiction for the grant of reinstatement or proportional punishment etc. 

"When we want protection under the Industrial Disputes Act, we are asking for protection of security of tenure. It departs from the rule of hire and fire, which is a classical rule under common law. This is not a futile fight or fight for gratitutiy. Labour law has two components- one is security of employment, which is the most critical and the second is welfare benefits such as gratuity, maternity leave, provident fund, ESI, etc. But primary security of employment comes from the rule of hire and fire," she said.

She added that the constitutional regime from Article 309 to Article 311 provides for the conditions of service for employees working for the Union or the State Governments. So, if the employees are covered here, she is not asking that they should be covered under the 1947 Act. But the issue is with respect to those who are not covered. This is where the 1947 Act gives access to judicial form. 

"It[Industrial Disputes Act] does not create any major substantive rights. It gives me access to justice in relation to unfair dismissals, in relation to victimisation, and in relation to mala fide dismissals. This is what this Court has said. And, I will place the judgment before you on how the law came to be challenged after S. 11A was introduced- Workman of Firestone v Management (1976)."

She explained that Section 11A gave security of employment and also introduced the doctrine of proportionality. To this, CJI Kant commented that this was such an important aspect that the industrial tribunal could reduce the removal to minor punishment, a power which the High Courts do not even exercise in Article 226.

Jaising also pointed out that the 1947 Act provides for a red line on the right to strike. It provides that when a dispute is admitted to conciliation, the strikes become illegal. 

Charity begins at home- Jaising

Jaising also opposed arguments advanced by counsels that "charity" should be excluded from the definition of industry. She said that if an organisation wants to do charity, can it ignore that it has to provide fair wages to the ones it has employed.

She remarked: "There is a single attack on the judgment that charity should be excluded from the purview of this Act. Now, the answer is simple. The answer is, charity begins at home. Justice Krishna Iyer says that by all means, you do charity to everybody, but have you done it to your workers?If a worker comes to you and says, give me a fair wage. What will you tell him? That I am a charitable institution and I am doing charity to the world, but I will not give you a fair wage?!"

She also attacked the arguments of Senior Advocate Jaideep Gupta(who appeared for the Commission of Hindu Religious and Charitable Establisment) that temples should be excluded from the definition of industry.

Gupta had argued that the temples do not have any profit element, as even if they generate a surplus, that goes into managing the temples. He submitted that the approach adopted by Bangalore Water Supply was not good in terms of the fact that broad principles were laid down, and applied indiscriminately to all activities. He also advocated that the nature of the activity must be commercial. 

He added, "Charitable work may throw up a surplus. If you utilise it for a charitable purpose, it is not a commercial entity. In the state of Kerala, the Devasom Board generates its income primarily from 3 temples: the Guruvayoor Temple, Sabrimala, and the Padmanabhaswamy Temple, and it has thousands of temples within it that do not generate any income. The surplus generated is utilised for the purpose of running other temples."

Countering this, Jaising remarked: "And, the temples are before you. They are the richest entity in this country. Ladyship referred to prasad. Justice Krishna Iyer deals with it. He says the spiritual aspect may not concern us, but the person who is making ladoos in the department, what about his wages?What Justice Iyer said is that it does not matter to the worker whether you put the surplus back into the organisation. I am concerned with the labour you are putting in it. You are putting surplus, and I am putting labour."

Jaising also stated that the Court must ask for data from the States on the pending cases for which this reference will be applied. 

Non-lawyers and staff work proportionately. What will happen if they are excluded: Justice Nagarathna

At one point, Jasing took the example of a lawyer as a profession. She said: "We are told that dispensing justice is a divine function, so it cannot be covered by the definition of industry. But I ask you a question, what about a sweeper working in your courtroom?"

She questioned how it can be excluded when lawyers are declaring a three crore annual income. To this, Justice Nagarathna pointed out that in early 1970s, there was a reason for exclusion because most lawyers were working in their individual capacity or with small firms. She added that today, that's not the case anymore.

She averred: "One of the reasons for exclusion is that in 70s, it was small law firms or individuals, whereas nowadays, you have huge law firms. The contribution made by non-lawyers in a law firm is very proportionately higher than it was in 70s. That is what Justice Jaswant Singh said. Now the clerks, stenographer and other who take out thousands of copies, , and so many non-lawyer staff are now employed in a huge law firms, now, should they be out?"