Why Supreme Court Is Revisiting Justice Krishna Iyer's 48-Year Old Defintion Of 'Industry'

The Supreme Court is set to hear the correctness of the expansive definition of “industry” laid down in the 48 year old Bangalore Water Supply and Sewerage Board v. A. Rajappa(1978). A bench headed by the Chief Justice of India Surya Kant and will comprise Justices BV Nagarathna, PS Narasimha, Dipankar Datta, Ujjal Bhuyan, Satish Chandra Sharma, Joymalya Bagchi, Alok Aradhe and Vipul M. Pancholi.The hearing will commence on March 17, and it will conclude on March 18.In this piece, we look at how the Bangalore Water Supply judgment interpreted “industry” and why a reference to the large bench came to be made. What is the Bangalore Water Supply case?In this case, the respondents were employees who had their wages reduced by the Appellant Bangalore Water Supply and Sewerage Board('the Board') for misconduct. Various sums were recovered from their wages. Challenging this, they filed a claims application under Section 33C(2) of the Industrial Disputes Act, 1947 ('1947 Act') before the Labour Court, alleging that the punishment imposed violated the principles of natural justice. The issue arose when the Board raised a preliminary objection that it is not an industry under Section 2(j) of the 1947 Act.Under the 1947 Act, industry means “any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen”.It argued that the Board that it is a statutory board performing what is in essence a regal or sovereign function by providing the basic amenities to the citizens. The consequence of this plea was that the employees were not workmen and the Labour Court had no jurisdiction to decide the claim. The preliminary objection came to be overruled by the Labour Court, against which the Board filed a writ petition before the Karnataka High Court. The High Court held that the Board was indeed an industry within the Act and therefore dismissed the writ petition. Consequently, special leave petitions were filed against the order. What did the Supreme Court hold?The SLP was dealt with by a seven-judge bench of the Supreme Court and came to be dismissed. The bench was headed by then Chief Justice M. Hameedullah Beg and comprised of Justice Y.V. Chandrachud, Justice P.N. Bhagwati, Justice V.R. Krishnaiyer, Justice Jaswant Singh, Justice V.D. Tulzapurkar, and Justice D.A. Desai.The majority judgment was written by Justice Iyer(on behalf of Justice Bhagwati, Justice Desai and himself), and a separate opinion was penned by Chief Justice Beg, concurring with the main judgment. Justice Chandrachud also penned a separate opinion. Justice Singh wrote for Justice Tulzapurkar and himself. Justice Iyer's judgmentJustice Iyer laid down the triple test and the dominant nature test to give a wide import to the definition of industry with the intent to make the Act “worker-oriented”. It said that the word "undertaking" should be read down to conform to a restrictive characteristic shared by the society of words before or after. The decisive test is the nature of the activity with a special emphasis on the employer-employee relationship.In order to see if an organisation qualifies within the definition of industry, the triple test is to be applied. If an organisation has multiple activities, that's when the dominant test is applied to see if the organisation as a whole qualifies as an industry. The triple tests for 'industry' are :There must be an organised and systematic activity,by cooperation between employer and employee (the direct and substantial element is chimerical), and 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 for celestial blissAs per this test, clubs, professions, educational institutions, cooperatives, charitable organisations, etc. were also held to be 'industry'Other relevant factors Absence of profit motive or gainful objective is irrelevant, whether the venture is in the public, joint, private or other sector. Eg- charity is an industry within the definition. Government bodies performing welfare functions can still be industries Dominant test:The predominant nature of the services and the integrated nature of the departments will be the true test. Eg, universities may have teaching staff who may not be included within the definition of workmen, but other since other staff would fulfil the triple test, it would be industry.The whole undertaking will be 'industry', although those who are not 'workmen' by definition may not benefit from the status. Exceptions:Purely sovereign functions qualify for exemption. But does not include the welfare activities of economic adventures undertaken by the 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...

Why Supreme Court Is Revisiting Justice Krishna Iyer's 48-Year Old Defintion Of 'Industry'

Gursimran Kaur Bakshi

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Why Supreme Court Is Revisiting Justice Krishna Iyer's 48-Year Old Defintion Of 'Industry'

Gursimran Kaur Bakshi

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