Bangalore Water Supply and Sewerage Board vs. A Rajappa and Others 1978 SCR (3) 207

 Facts of the Case:

The respondent employees were found guilty of misconduct and thereby, were fined by the appellant board. Dissatisfied with this, the employees filed a claims application before the Labour Court under the Industrial Disputes Act, arguing that the punishment was against natural justice. The appellant board argued that it was not an ‘industry’ according to the terms of Industrial Disputes Act, and consequently, the Labour Court had no jurisdiction to adjudicate the case. This claim was overruled. Subsequently, the appellant board filed two writ petitions before the Karnataka High Court which were again dismissed on the basis that the appellant board was an ‘industry’ under Industrial Disputes Act. The case finally reached the Supreme court considering the confusion that persisted on the definition of ‘industry’ according to the Industrial Dispute Act.

 


Key issues:

The key issue in this case was the question of the definition of ‘Industry’ in the Industrial Disputes Act and what all entities it encompassed.

 

Decision of the court:

The seven-judge bench exhaustively considered the scope of ‘industry’. With a majority of five judges and two with a dissenting opinion, no amendment was made in the definition of ‘Industry’. However, a broader and more comprehensive scope was given to the term. The appeal was thus dismissed.

 

Final Ratio:

The judges observed that although the words used in section 2(j) of the Industrial Disputes Act has a broad scope, their meaning cannot be magnified to overreach itself. For instance, the term ‘undertaking’ must suffer an associational and contextual shrinkage. It also stated that the aim of the act being industrial peace, resolution, and regulation of disputes between employer and employees, the range of the statutory interpretation much keep in mind the reach of the statutory definition. They also stated through example of pious or altruistic missions wherein no fee is charged for services, that such an institution is not an industry for there is no master-servant relationship. The court laid down a Triple test for identifying an industry. An entity is considered to be an industry when there is a (1) systematic activity; (2) organized by cooperation between employer and employee and (3) for the distribution or production of goods and services that seek to satisfy human wants. Besides this test, it was also emphasized that industry does not include spiritual or religious services, single doctor, casual activities and small clubs or schools. There is also expected to be a special emphasis on employer-employee relations while considering an industry. It also laid down through the Dominant Nature test that even if in an entity, all departments do not pass the triple test but most of them do, that entity will still be an ‘Industry’. The court thus observed that industry cannot be strictly defined or described. To understand the definition of industry, the court considered it best to broaden the scope and look at a “rough rule of guidance”. It was finally concluded by the court that the appellant board was an industry by the Industrial Disputes Act and the appeal was dismissed.

 Personal Observations:

The above judgment has indeed cleared the scope and definition of industry. It discussed the issue to depth before giving the judgement. However, in my opinion, the judgement focused too much on the employees and failed to consider the perspectives of employers. Furthermore, the bench, in this case, was divided on various issues, making this judgement a little vague and indecisive. The court also expanded the scope of industry to an extent that it might vary from case to case. Even though, on one hand it helps the judges to expand their scope, on the other, it is likely to cause confusion on the definition of industry. Nevertheless, the court solved the confusion of the definition of ‘industry’ to a large extent, which makes this case important in labour laws.


Author:
Varuni Agarwal, 
2nd Year, OP Jindal Global University


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