PAMIDIGHANTAM SRI NARASIMHA, J.
1.A statute that creates Conciliation Officers, Labour Courts and Industrial Tribunals and hands them the power to order reinstatement and compel settlements needs to say with precision who falls within its reach. Section 2(j) of the Industrial Disputes Act, 1947, was Parliament’s attempt to say so. However, it neither settled its boundaries nor specified its constituents with certainty. It opened it. For more than 30 years, hospitals, universities, co-operative societies, gymkhana clubs and Government departments went to court to argue whether they are covered or not under that definition. The dispute persisted for over four decades, ultimately assuming such proportions as to warrant reference to a seven-judge Bench of the Supreme Court, which rendered its decision in Bangalore Water Supply & Sewerage Board v. A. Rajappa.1
2.Section 2(j), read literally, is wide enough to describe a factory and a family kitchen in the same breadth, and, on other readings, narrow enough to exclude workers it clearly meant to protect. So, the litigation 1 (1978) 2 SCC 213. continued despite the verdict of the seven-judge Bench. This nine-Judge Bench is now assembled to resolve the persisting eight-decade uncertainty.
3.The process of adjudication that we have undertaken is no different from the process undertaken by any of the Benches that delivered their judgments, till, of course, overruled by later determinations. The process of references, reconsiderations, reconstructions and then judgments cancelling each other continued, and may even continue before an eleven-Judge Bench to reconsider the views expressed by us. The problem, as I understand is not so much in our understanding of the definition of “Industry”, but in the way the definition is formulated. It suffers from certain structural errors.
4.We are told that this Court has no option except to keep interpreting and delivering its verdict. There is also a great disconnect between the legislature and the courts, i.e., between laws formulated by the parliament and interpretations rendered by the Courts. Justice Benjamin N. Cardozo, while addressing the Bar Association of New York, said; “The Courts are not helped as they could and ought to be in the adaptation of law to justice. The reason they are not helped is because there is no one whose business it is to give warning that help is needed.... We must have a courier who will carry the tidings of distress.... Today Courts and legislature work in separation and aloofness. The penalty is paid both in the wasted effort of production and in the lowered quality of the product. On the one side, the judges, left to fight against anachronism and injustice by the methods of Judge-made law, are distracted by the conflicting promptings of justice and logic, of consistency and mercy, and the output of their labours bears the tokens of the strain. On the other side, the Legislature, informed only casually and intermittently of the needs and problems of the Courts, without expert or responsible or disinterested or systematic advice as to the workings of one rule or another, patches the fabric here and there, and mars often when it would mend. Legislature and Courts move on in proud and silent isolation. Some agency must be found to mediate between them.”2
5.There must be some way out of this perpetuating cycle. In Yash Developers v. Harihar Krupa Coop. Housing Society Ltd.3, this Court recognised the obligation of the executive government to conduct performance audits of statutes. This Court declared that reviewing and assessing the implementation of a statute is an integral part of the Rule of Law. It is in recognition of this obligation of the executive government that the Court held that constitutional courts can direct Governments to carry out a performance audit of statutes. The reasoning of the Court is as follows; “58. Four aspects for achieving justice are well founded and articulated as: (i) distribution of advantages and disadvantages of society, (ii) curbing the abuse of power and liberty, (iii) deciding disputes, and (iv) adapting to change.4 Adapting to change is important for achieving justice, as failure to adapt produces injustice and is, in a sense, an abuse of power. Thus, failure to use power to adapt to change is in its own way an abuse of power. In fact, the issue is not one of change or not to change, but of the direction and the speed of change and such a change may come in various ways, and most effectively through legislation. Legal reform through legislative correction improves the legal system and it would require assessment of the working of the law, its accessibility, utility and abuse as well. 59. The Executive branch has a constitutional duty to ensure that the purpose and object of a statute is accomplished while implementing it. It has the additional duty to closely monitor the working of a statute and must have a continuous and a real time assessment of the impact that the statute is having. As stated above, reviewing and assessing 2 Also cited by Krishna Iyer, J. in Bangalore Water Supply (supra). 3 (2024) 9 SCC 606. 4 See: “Justice in Adapting to Change”, in R.W.M. Dias, Jurisprudence, pp. 305-327 (5th Edn., 2013). the implementation of a statute is an integral part of Rule of Law. The purpose of such review is to ensure that a law is working out in practice as it was intended. If not, to understand the reason and address it quickly. It is in this perspective that this Court has, in a number of cases, directed the Executive to carry a performance/assessment audit of a statute or has suggested amendments to the provisions of a particular enactment so as to remove perceived infirmities in its working.5
6.If proceedings initiated under the Industrial Dispute Act, 1947, are interdicted at the very threshold on the ground of a jurisdictional fact that the entity in question is not an industry as per the definition, and this question is raised frequently, and judicial review Courts keep staying the proceedings, then the very purpose and object of the beneficial legislation is lost. This Court cannot be a silent spectator of this phenomenon. Addressing such a situation arising due to legislative and executive actions, this Court recognised the role of judiciary in the following terms; 60. Constitutional courts are fully justified in giving such directions as they are in a unique position of perceiving the working of a statute while exercising judicial review, during which they could identify the fault-lines in the implementation of a statute…. 61….Though cases are decided on their own merit and the lis disposed of, what is left behind is the institutional memory of the Court about the working of the statute and its interpretation preserved as precedents. Over a period of time, a critical mass of adjudicatory determinations on the working of the statute is built. This critical mass, coupled with the experiences gained by the Judges and the Court on the working of the statute, is of immense value for auditing the working of the legislation. It enables the court to assess whether the purpose and object of the Act is being achieved or not. (…) 64. … In such circumstances, the judicial role does encompass, in this Court's understanding, the power, nay the duty to direct the executive 5 State of Haryana v. Mukesh Kumar, (2011) 10 SCC 404; Pravin Electricals (P) Ltd. v. Galaxy Infra & Engg. (P) Ltd., (2021) 5 SCC 671; Preeti Gupta v. State of Jharkhand, (2010) 7 SCC 667; Arif Azim Co. Ltd. v. Aptech Ltd., (2024) 5 SCC 313; Public Interest Foundation v. Union of India, (2019) 3 SCC 224. branch to review the working of statutes and audit the statutory impact. It is not possible to exhaustively enlist the circumstances and standards that will trigger such a judicial direction. One can only state that this direction must be predicated on a finding that the statute has through demonstrable judicial data or other cogent material failed to ameliorate the conditions of the beneficiaries. The courts will also do well, to arrive the very least, at a prima facie finding that much statutory schemes and procedures are gridlocked in bureaucratic or judicial quagmires that impede or delay statutory objectives. This facilitative role the judiciary compels audit of the legislation, promote debate and discussion but does not and cannot compel legislative reforms.”6
7.Following the above mandate, on an empirical examination, we find that Benches of varied quorum – four-judge,7 to a five-judge,8 to six9 and a seven-judge10 bench of this Court attempted to find certainty in the meaning of the expression ‘industry’. Further, there are at least 14 threejudge bench decisions and more than 27 two-judge bench verdicts of this Court grappling with the same issue. It is in this context that the interpretation clause, i.e., the definition of Industry under Section 2(j), needs to be examined.
8.Section 2(j) opens with the standard phrase of a legal definition: “industry means….” But the mere grammatical form of a definition does not guarantee that the sentence following it actually performs the function a definition is supposed to perform. Law needs a definition, not an explanation. Telling a labour officer why industrial disputes need to be 6 Yash Developers (supra). 7 Baroda Borough Municipality v. Workmen, (1956) 2 SCC 535. 8 D. N. Banerji v. P. R. Mukherjee, (1952) 2 SCC 619. 9 Management of Safdarjung Hospital, New Delhi v. Kuldip Singh Sethi, (1970) 1 SCC 735. 10 Bangalore Water Supply & Sewerage Board v. A. Rajappa, (1978) 2 SCC 213. resolved expeditiously, or how to prioritise either the labour or the capital on a certain philosophy, does not tell him whether the hospital in front of him is, or is not, within his jurisdiction. Section 2(j) is written in the grammatical shape of a definition; whether it actually behaves like one has been the question. What then is a good definition?
9.Definitions have a purpose to subserve. Every act of communication, spoken, written or argued in a court, relies on a shared understanding of what the words mean. In legal reasoning, this shared understanding is not an informal assumption but the very ground on which arguments are built, precedents applied, and judgments rendered. It is therefore compelling that we must have a rigorous and testable framework for what a definition must do and what disqualifies it.
10.To start with, a definition is neither an explanation nor a description of the subject; it is a precision instrument, whose function is to mark the boundary of a concept. It is not usage or convenience, but a matter of epistemological precision.
11.The structure of a definition consists of three elements: the subject matter- for example, “Industry” as in this very case, its properties - that is, the characteristic qualities or features that reside in the subject matter and then the relationship or connection between the two, i.e., the subject matter and its properties. If any one of these elements is uncertain, then cognisance of the subject matter becomes indeterminate. This indeterminacy arising due to uncertainty in/of the property(ies) of an ‘industry’ and their relationship with the subject matter has, in my opinion, been the fundamental problem in the definition of Industry.
12.The definition of a definition can be explained as comprising of two parts. In the first place, a definition must convey a property or a character held in common with nothing else. In other words, the defining property must be unique to the class – present in every genuine member and absent in everything that is not a member. Secondly, the property or quality of the subject matter of the definition must survive three independent tests: free from overextension, free from underextension, and also avoid structural impossibility.
13.Cognition of similar properties residing in all members of the defined class, coupled with exclusion of everything outside the defined class, and including every genuine member of the class, is the basis for certainty. The dual test of exclusion of dissimilar and inclusion of similar properties is integral to a valid definition. Any definition must be tested against both purposes independently. Passing one test while failing the other produces a definition that is either over-broad or over-narrow and is termed ineffective; in fact, it results in a defective definition.
14.The discussion about the compelling need to have a correctly formulated definition is only to indicate that the resolution of a dispute concerning a jurisdictional fact based on a defined term does not flow out of the interpretations when fundamental defects of over-inclusion, underinclusion and certain improbabilities come to be associated with definitions. This problem cannot be brushed away on the grounds that the solution is within the legislative province.
15.However, a detailed analysis of the definition in Section 2(j) is not necessary as the Industrial Disputes Act, 1947, along with the definition of ‘industry’ under Section 2(j), is now repealed. In its place, w.e.f. 21.11.2025, the Industrial Relations Code, 2020 has come into force and “industry” stands redefined under Section 2(p) of the 2020 Code. It is far more important to deal with the consequences of such repeal on the Reference to this nine-judge Bench for authoritative pronouncement.
16.On the preliminary issue, I believe there is no illegality in the procedure adopted for referring the ratio in Bangalore Water Supply (supra) to the bench of nine judges. The Reference is not in violation of the principles laid down by the Dawoodi Bohra11. I am also of the opinion that, but for the repeal, it would have been necessary to examine the merits of the matter, as I have no doubt in mind that the definition of ‘industry’ under Section 2(j) of the repealed Act, as it stood, had certain core as well as peripheral linguistic problems leading to uncertainty throughout its lifetime. I need not elaborate on this as Justice Krishna Iyer 11 Central Board of Dawoodi Bohra Community v. State of Maharashtra, (2005) 2 SCC 673. himself mentioned about the need for a better definition as also the judicial struggle for certainty about the scope and content of ‘industry’ from the very commencement of the Act. In his erudite opinion, Hon’ble Chief Justice has also referred to a number of decisions of this court after Bangalore Water Supply (supra), seeking settlement and certainty about the core and content of the definition. Therefore, the need to address the issue relating to the accurate scope of ‘industry’ under Section 2(j) was compelling when the Reference was made; however, for the reasons to follow and the position that has been taken, it is not necessary to answer the questions referred on merits. I will, in short, first refer to the perspective in which Hon’ble Chief Justice and my sister and brother judges have viewed the Reference on.
17.Hon’ble Chief Justice has suggested that the focus on interpreting the repealed Section 2(j) should shift towards the activity of the enterprise rather than the relationship between various actors and the organisational structure of the enterprise per se. In construing the text and structure of the statute, it was felt that industrial activity cannot be wholly divorced from commercial character. Thus, industrial activity can be seen as an undertaking carried on in an organised and systematic manner, involving cooperation between employer and employee, possessing some degree of commercial character. The Hon’ble Chief Justice has concluded that the commercial nature of the activity has to be a relevant factor and cannot be disregarded altogether. At the same time, the opinion reiterates the well-established position that the presence and absence of a profit motive is not a determinative criterion and hence, even charitable and welfareoriented activities would not automatically stand excluded from the ambit of the Act, depending on the nature and character of the activity undertaken. Further, the subtle distinction between activities carried on predominantly along commercial lines and those pursued primarily for public welfare, education, charitable, or humanitarian purposes is highlighted. A similar approach is suggested for construing sovereign functions performed by the State. In the ultimate analysis, a closer scrutiny and a case to case approach for classification of entities as ‘industry’, having regard to totality of circumstances is suggested.
18.In this perspective, the triple test could be calibrated, introducing commerciality as the primary test. As far as the reconsideration of institutional categorisation is concerned, it was felt that an approach that proceeds primarily by reference to pre-determined categories risks pigeonholing institutions without adequate examination of the true nature and dominant character of the activity undertaken. As regards the inquiry is concerned, it is based on substance rather than form, i.e., it is the nature and character of the activity undertaken in conjunction with other indicia that will guide the interpretation.
19.On the other hand, Sister Nagarathna has categorically held that the majority judgment in Bangalore Water Supply (supra) is good law and binding. She has also given detailed reasons as to why the Reference need not be answered at the present juncture, by also holding repeal of Industrial Disputes Act, 1947, and introduction of Industrial Relations Code, 2020, w.e.f. 21.11.2025 as reasons for not answering the Reference.
20.Brother Datta has reiterated the above position by holding the Reference not maintainable and the judgment in Bangalore Water Supply (supra) being good law. He has observed that the statutory framework under Section 2(j) of the Industrial Disputes Act, 1947, and its judicial exposition in Bangalore Water Supply (supra) are in complete harmony and without any quarrel.
21.On the other hand, Brother Bagchi, in agreement with Hon’ble Chief Justice, has held the Reference valid and maintainable. However, on merits of the matter, Brother Bagchi finds the ratio in the seven-Judge judgment a good law which ought to be retained for the reason that the Industrial Relations Code is enforced w.e.f. 21.11.2025. He also observes that any pronouncements on the correctness or otherwise of the judgment in Bangalore Water Supply (supra) would cast its shadow on the definition of Industry under Section 2(p) of the Industrial Relations Code, 2020, which should rather be interpreted independently.
22.I have no difficulty in appreciating and understanding the perspectives in which interpretations on repealed Section 2(j) are given by the majority in Bangalore Water Supply (supra), as well as the opinions of Hon’ble Chief Justice, and my sister and brother Judges’ while answering the Reference. Section 2(j) is open-textual, and interpretations based on the wording of repealed Section 2(j) permit wide and narrow constructs. It is about this very text that, while noting the “zig-zag course of the landmark cases and the tangled web of judicial thought…, resulting from obfuscation of the basic concept of ‘industry’…”, Justice Krishna Iyer suggested that “a careful, prompt amendment of Section 2(j) would have pre-empted this docket explosion before tribunals and courts”. The impact of interpreting the repealed definition of Section 2(j) is writ large, and the litigation that it has generated during its lifetime, commencing its birth on 11.03.1947, to its repeal on 21.11.2025, is self-evident.
23.My primary concern is that the litigation that has surrounded the interpretation of Section 2(j) should not cast its shadow on the new Industrial Code. We need to break away from the perpetuating interpretative cycle that has afflicted Section 2(j) and protect the Industrial Relations Code, 2020, from any preconceived notions. For effective and efficient interpretation and development of the industrial law, Section 2(p) of the Industrial Relations Code, 2020, must be freed of the bondage of ratio in Bangalore Water Supply (supra) or any new definitions that we may propose while deciding the Reference. In fact, Hon’ble Chief Justice as well as my sister and brother Judges have categorically stated that the views of the nine-Judge Bench should not have a bearing on the interpretation that may subsequently be given to the definition of Industry under Section 2(p) of the Industrial Relations Code, 2020. I am in full agreement with such a declaration. I think it is necessary.
24.Section 2(j), along with the entirety of the Industrial Disputes Act, 1947, on 21.11.2025, was repealed, lock, stock and barrel and from the very same day, the new Industrial Relations Code, 2020, has come into force. Section 2(p) of the Code defining “Industry” is not given retrospective effect. For transactions involving industrial disputes prior to 21.11.2025, it is only the repealed Section 2(j), as interpreted in Bangalore Water Supply (supra), that would hold the field. The ratio in Bangalore Water Supply (supra) alone would apply for disposing of all the pending cases in which the interpretation of 2(j) of the Industrial Disputes Act, 1947, is involved.
25.If by answering the Reference, the nine-Judge Bench modifies the ratio in Bangalore Water Supply (supra), then it will have the effect of creating the third category that would apply exclusively to the pending cases. After the decision in Bangalore Water Supply (supra) in 1978, thousands of cases would have been disposed of in accordance with the ratio laid down therein, and I see no justification for not applying the said ratio to the pending cases. It is not advisable to modify the ratio in Bangalore Water Supply (supra) only for the purpose of disposing of the few pending cases, particularly when we are making it clear that the principles that the nine-Judge Bench will have no bearing on the interpretation of the Industrial Relations Code, 2020.
26.Yet another reason for the nine-Judge Bench to refrain from modifying the ratio in Bangalore Water Supply (supra) is that an interpretation that restricts the scope and ambit of expression ‘Industry’ in the repealed Section 2(j) will have the effect of excluding certain entities from being an ‘Industry’. Such an interpretation will have the direct consequence of a number of pending cases moving out of the regulatory regime of the Industrial Disputes Act, 1947. In such an event, industrial disputants who have been contesting the case for years would have to seek ordinary civil remedies. It would be a sad story if we were to ask them to file fresh suits before the Civil Court. The consequences are serious, unnecessary, and contrary to the fundamental principle of easy, effective, and expeditious judicial remedies, an integral part of access to justice.
27.In conclusion, the questions referred for consideration of this bench
are answered as follows:
i. The procedure by which the ratio in Bangalore Water Supply (supra)
has been referred for reconsideration to a bench of nine judges is
valid.
ii. The endeavour of various decisions of the Court after Bangalore
Water Supply (supra), leading to the Reference by Jai Bir Singh to
bring about certainty about what ‘industry’ entails, is justified. The
Reference can be answered on merits.
iii. While an authoritative interpretation of the definition “Industry” was
compelling at the time of the Reference, such a determination has
now become unnecessary, with the repeal of the said provision with
effect from 21.11.2025.
iv. With the advent of the Industrial Relations Code, 2020, with effect
from 21.11.2025, the ratio in Bangalore Water Supply (supra) is now
confined to cases arising under the repealed Act. It is prudent to
dispose of the pending cases on the basis of the ratio laid down in
Bangalore Water Supply (supra) without attempting to create a third
set of principles applicable only to pending cases.
v. It is important to ensure that the future interpretation of the definition
of ‘Industry’ under Section 2(p) of the Industrial Relations Code,
2020, is not burdened by the existing interpretations based on the
repealed Section 2(j) of the Industrial Disputes Act, 1947. The
Industrial Relations Code, 2020, should be interpreted on its own
text and in its context alone.
vi. Further, if the Nine-Judge Bench modifies and restricts the ratio laid
down in Bangalore Water Supply (supra), it will have the serious
effect of excluding certain entities from the fold of the “Industry” as
defined under Section 2(j) of the repealed Act. This will have the
consequence of excluding long-pending disputes from the
regulatory regime of the Industrial Disputes Act, 1947, and the
parties will be relegated to remedies before the Civil Court. It is
therefore necessary to dispose of the disputes arising under the
repealed Act on the basis of the ratio laid down in Bangalore Water
Supply (supra).
AUGUST 20, 2026
CIVIL APPEAL No. 897 OF 2002
VS.
C.A. No.4646/2007, C.A. No.3647/2007, SLP(C) No.1112/2009,
C.A. No.2409/2002, SLP(C) No.20982/2002,
C.A. Nos.355-358/2003, SLP(C) No.14085/2004,
C.A. No.7994/2004, SLP(C) No.4139/2005, C.A. No.1274/2007,
C.A. No.1273/2007, C.A. Nos.1311-1312/2008,
SLP(C) No.4328/2008, C.A. No.296/2008,
C.A. No.5519/2012, C.A. No.5681/2010,
C.A. No.1131/2012, C.A. Nos.8149-8151/2012,
C.A. Nos.4505-4506/2013, C.A. Nos.4507-4508/2013,
SLP(C) Nos.12679-12682/2014, SLP(C) No.1857/2016,
This judgment is divided into the following sections:
CONSTITUTION BENCH – A QUESTION OF WHAT, NOT HOW MANY ................ 6
BEYOND LABOUR LAW – A QUESTION OF CREDIBILITY ............................. 11
WHAT DID BANGALORE WATER SUPPLY (SUPRA) PRECISELY LAY DOWN? ...... 12
REFERRING JUDGMENT – OTHER REASONS FOR THE REFERENCE .................. 26
EXAMINING JAI BIR SINGH [5-J] – A FALTERING REFERENCE ................... 35
RESTORING CLARITY TO THE DEFINITION OF ‘INDUSTRY’ IN SECTION 2(j) ... 64
PRELUDE
1. A single definition in a pre-independence statute, since repealed after a
little less than 8 (eight) decades of its existence, has troubled the
Supreme Court of India without end. Prior to its repeal by the Industrial
Relations Code, 20201, the Industrial Disputes Act, 19472 had defined
“industry” in Section 2(j): a definition which has, perhaps, been the most
litigated word in Indian labour jurisprudence, as would unfold hereafter.
2. Though the ID Act was enacted as a tool for securing industrial peace
and harmony, what counts as an industry – private business, welfare
work or government service – has been the focal point of discussion
since long. Benches have differed time and again in deciding, what
should the law cover – is it only business, or also schools, hospitals, and
government services? Even today, this Court remains engaged with the
same question it faced in 1952: “what is an industry?”, and a split verdict
is on the anvil.
3. Such engagement began with D.N. Banerji v. P.R. Mukherjee3 [5-J],
where a municipality’s conservancy department was held to be an
industry. Close on the heels followed Baroda Borough Municipality v.
Workmen & Ors4 [4-J], where it was held that municipal undertakings
can constitute an “industry” if their activities are analogous to trade or
business. In State of Bombay v. Hospital Mazdoor Sabha5 [3-J],
1 2020 Code 2 ID Act
the Court held that a government-run hospital can constitute an
“industry”. It emphasised that profit motive is irrelevant; what matters
is systematic activity organised through employer–employee
cooperation. A broad interpretation of “industry” was adopted,
extending it to welfare and service-oriented institutions like hospitals.
The decision in Corporation of the City of Nagpur v. Its Employees6
[3-J], rendered a couple of months after Hospital Mazdoor Sabha
(supra) by the same bench, held inter alia that the definition of the word
“industry” is very comprehensive and if a department of a municipality
discharges many functions, some pertaining to industry as defined in
the ID Act and other non-industrial activities, the predominant functions
of the department shall be the criterion for the purposes of the ID Act.
In Madras Gymkhana Club Employees’ Union v. Gymkhana Club7
[3-J], this Court referred to D.N. Banerji (supra), distinguished it and
held that the Madras Gymkhana Club does not constitute an “industry”
as it was not carrying on activities analogous to trade or business for
the public. Later, Safdarjung Hospital v. Kuldip Singh Sethi8 [6-J]
excluded hospitals from “industry”. Then came Bangalore Water
Supply and Sewerage Board v. A. Rajappa9 [7-J], which
rehabilitated Hospital Mazdoor Sabha (supra) while overruling
Madras Gymkhana Club Employees’ Union (supra), Safdarjung
Hospital (supra) and certain other decisions. It laid down the triple test
and dominant-nature doctrine for identification of an industry.
Interpretation of the word “industry” made in Bangalore Water Supply
(supra), however, started gathering doubt towards the end of the last
century and ultimately, State of Uttar Pradesh v. Jai Bir Singh10 [5-
J] considered it appropriate to make a reference by a detailed
judgment11.
4. Curiously, despite the Parliament amending the definition of “industry”
in Section 2(j) by the Industrial Disputes (Amendment) Act, 1982 (Act
No. 46 of 1982)12, it was not enforced and, thus, remained a dead letter
ever since.
5. Reading of each of the aforesaid precedents would reveal that this Court
has swung between text and purpose, thereby veering between narrow
and broad constructions, creating a body of law that is simultaneously
landmark and labyrinthine. The phases of conflict can be captured by
observing that while D.N. Banerji (supra) in 1952 advocated
expansion, Safdarjung Hospital (supra) in 1970 imposed tests that
were restrictive, Bangalore Water Supply (supra) in 1978
authoritatively felt inclined towards laying down the expansive triple
test, thereby walking the path of re-expansion, Jai Bir Singh [5-J]
(supra) preferred to make a reference in 2002 and now, in 2026, the
11 the referring judgment, wherever the context requires 12 1982 amendment
present 9-Judge Bench is constituted to reconsider all the precedents on
the point and to settle the law, hopefully, once and for all.
CONSTITUTION BENCH – A QUESTION OF WHAT, NOT HOW MANY
6. Jai Bir Singh [5-J] (supra) opens by recording that the “… appeal along
with other connected cases has been listed before this Constitution
Bench of five Judges on a reference made by a Bench of three Hon’ble
Judges …”. It is this reference to itself as a Constitution Bench that
triggers the need for a clarification, given the fact that this 9-Judge
Bench too is referred to in the “NOTE” portion of the cause-lists published
for 17th, 18th and 19th March, 2026 (i.e., the days when the reference
was heard) as a Constitution Bench.
7. Article 145 of the Constitution provides for “Rule of Court, etc”. Clause
(3) thereof stipulates the minimum number of judges who are to sit “for
the purpose of deciding any case involving a substantial question of law
as to the interpretation of this Constitution or for the purpose of hearing
any reference under Article 143”. On its own terms, the minimum
number shall be five. The proviso to clause (3) guides the course of
action where the Court, consisting of less than 5 (five) Judges may, refer
the question arising for opinion in an appeal under the Part, other than
an appeal under Article 132, to a Court to be constituted in terms of
clause (3) upon recording the requisite satisfaction. Thus, it seems to
be plain that a reference to a Constitution Bench can originate from
clause (3), the strength of which shall not be less than five, when such
reference necessarily involves either a substantial question of law as to
the interpretation of the Constitution or for the purpose of hearing any
reference under Article 143 (emphasis supplied). Also, in a case covered
by the proviso to clause (3) of Article 145, a Bench of 5 (five) Judges
may be required to be constituted. Thus, it is only when a Bench
consisting of no less than 5 (five) Judges is constituted in the scenarios
contemplated in clause (3) of Article 145 can such Bench be validly
regarded as a Constitution Bench.
8. Not every Bench of 5 (five) or more judges, therefore, is a Constitution
Bench. As is evident from the preceding discussion, Article 145(3) makes
the test one of subject matter: a minimum of 5 (five) Judges must sit
only when the case involves “a substantial question of law as to the
interpretation of this Constitution or for the purpose of hearing any
reference under Article 143”. Cases covered by the proviso have an
additional requirement. The determination of the substantial question of
law as to the interpretation of this Constitution must be necessary for
the disposal of the appeal. The strength alone does not satisfy the
clause. Benches of 5 (five) or more could also be constituted for other
reasons – to resolve conflicts of opinion between decisions of smaller
Benches, to settle important questions of law (not necessarily requiring
constitutional interpretation) or to reconsider the opinion of an earlier
Bench of equal strength. This power flows from the Supreme Court’s
inherent jurisdiction and is regulated by Rule 213 of Order VI of the
13 Where in the course of the hearing of any cause, appeal or other proceeding, the Bench considers that the matter should be dealt with by a larger Bench, it shall refer the matter to the Chief Justice, who shall thereupon constitute such a Bench for the hearing of it.
Supreme Court Rules, 201314. Whenever a Bench doubts an earlier
decision and refers the question requiring an answer to the Hon’ble the
Chief Justice of India15 for constitution of a “larger Bench” (emphasis
supplied) and if, in fact, such larger Benches are constituted, such
Benches though numerically large are not Constitution Benches within
Article 145(3) unless a substantial question as to the interpretation of
the Constitution arises for an answer. They are, properly, to be regarded
as larger Benches. The difference is etymological: a Constitution Bench
takes its name from the Constitution it interprets; a larger Bench takes
its name from the size needed to settle precedent. To put it differently,
a Constitution Bench speaks for the Constitution while a larger Bench
speaks for certainty in the law. Thus, strength alone does not make a
Bench a Constitution Bench.
9. It is important to remember that the power of this Court to interpret the
Constitution is not dependent on the numerical strength of the Bench.
As the guardian of the Constitution, even a Single Bench may interpret
a constitutional provision where the issue arising so demands, yet,
designating every bench of 5 (five) or more Judges as a Constitution
Bench – irrespective of whether any constitutional question falls for
determination – detracts from the term’s constitutional purpose.
10. In the present reference, this Bench of 9 (nine) Judges is primarily
tasked to decide a reference under Rule 2 of Order VI of the 2013 Rules
14 2013 Rules 15 Chief Justice
and, therefore, in the detailed opinion that follows, we would consciously
not refer to any Bench consisting of 5 (five) or more Judges (which had
the occasion to deal with the issue of meaning of the word “industry”)
as a Constitution Bench.
GENESIS OF THE REFERENCE
11. This Bench of 9 (nine) Judges has been constituted by the Chief Justice
pursuant to the order dated 2nd January, 2017 of a bench of 7 (seven)
Judges in State of Uttar Pradesh v. Jai Bir Singh16 [7-J]. Jai Bir
Singh [7-J] (supra), considering the serious and wide ranging
implications of the issue that fell for determination as also the fact that
serious doubts had been expressed in Jai Bir Singh [5-J] (supra) about
the correctness of the view taken in Bangalore Water Supply (supra),
was of the view that the said decision requires reconsideration and,
accordingly, ordered the matter to be placed before the Chief Justice for
constitution of a 9-Judge Bench.
12. The seed for the reference to the 5-Judge Bench, as aforesaid, was
however sown by a Bench of 3 (three) Judges in its order dated 31st
January, 2002 in State of Uttar Pradesh v. Jai Bir Singh17 [3-J]. The
said order reads as follows:
Leave granted.
One of the contentions which arises for consideration is whether the Social Forestery (“sic forestry”) Department, which is a Welfare Scheme of the Government, is an ‘Industry’ or not? Our attention has been drawn to the two decisions of this Court. The first decision is reported as Chief Conservator of Forests and Anr. vs. Jagannath Maruti Kondhare and Anr.
17 C.A. No. 897 of 2002
(1996) 2 SCC 293 in which a three-Judge Bench of this Court held that the Forest department of the State was an ‘Industry’ even when it was undertaking a Welfare Scheme of Social Forestery (“sic forestry”) Department. On the other hand, another Bench of this Court (though of two-Judges) in the case of State of Gujarat & Ors. vs. Pratamsingh Narsinh Parmar JT 2001 (3) SC 26 has taken a different view and has sought to distinguish the earlier decision in Chief Conservator of Forests case (supra). In our opinion, it is an important question of law as to whether the Welfare Scheme of the Government, like the Social Forestery (“sic forestry”), would be regarded as an ‘Industry’. The matter is of considerable public importance, to be decided by a larger Bench. We, therefore, direct that the papers be laid before Hon’ble the Chief Justice for appropriate orders.
In the meanwhile, we direct that the respondent would be reinstated w.e.f. 1st February, 2002 but for the time being no back wages need to be paid. Back wages will be subject to the outcome of the appeal. (underlining in original)
13. Prior to constitution of this 9-Judge Bench, a 3-Judge Bench presided
over by the Chief Justice of India considered the issue of case
management required for final hearing of the appeals connected with
Jai Bir Singh [3-J] (supra). We find that by an order dated 16th
February, 2026, the 3-Judge Bench framed certain issues for
consideration of the 9-Judge Bench, presumably because no question
was framed in the referring judgment by the 5-Judge Bench. The issues
framed by the order dated 16th February, 2026 are reproduced
1. The instant appeals have been referred to a Nine-Judge Bench to consider the correctness of the judgment rendered by a Seven-Judge Bench in Bangalore Water Supply and Sewerage Board vs. A. Rajappa, (1978) 2 SCC 213 and concomitantly to also re-consider the interpretation of the expression “industry” as defined in Section 2(j) of the Industrial Disputes Act, 1947 (for short, `the ID Act’). A Nine-Judge Bench, to be constituted by Hon’ble the Chief Justice of India separately, through an administrative order, in our considered opinion, will have to adjudicate the following broad issues:
(i) Whether the test laid down in paragraphs 140 to 144 in the opinion rendered by Hon’ble Mr. Justice V.R. Krishna Iyer in Bangalore Water Supply and Sewerage Board’s case (supra) to determine if an undertaking or enterprise falls within the definition of “industry” lays
down correct law? And whether the Industrial Disputes (Amendment) Act, 1982 (which seemingly did not come into force) and the Industrial Relations Code, 2020 (with effect from 21.11.2025) have any legal impact on the interpretation of the expression “industry” as contained in the principal Act?
(ii) Whether social welfare activities and schemes or other enterprises undertaken by the Government Departments or their instrumentalities can be construed to be “industrial activities” for the purpose of Section 2(j) of the ID Act?
(iii) What State activities will be covered by the expression “sovereign function”, and whether such activities will fall outside the purview of Section 2(j) of the ID Act?
(iv) Any other issue(s) that may arise during the course of hearing before the Nine-Judge Bench.
BEYOND LABOUR LAW – A QUESTION OF CREDIBILITY
14. The long pendency of the reference arising out of Bangalore Water
Supply (supra) and the uncertainty that has followed does adversely
reflect on institutional resolve. Parliament’s 1982 amendment to the ID
Act sought to introduce a modified definition of “industry” in response
to the Court’s broad interpretation. Sadly, it was never brought into
force. For years together, the amendment remained dormant creating
uncertainty instead of settling the law. The later references in 2005 and
2017, both seeking reconsideration, only extended this period of
indecision. As a result, there has been no final ruling and the legal
position has remained unclear. Even when born of judicial caution, delay
of this order diminishes the Court’s institutional credibility.
15. If a settled precedent is doubted, the Court must offer a clear and
workable alternative. Doubt, without direction, only compounds
uncertainty. The law ought not to oscillate indeterminately, for, when a
question of this magnitude remains undecided for decades, it erodes
both the finality of judicial pronouncements and the stability an
institution like this Court is meant to secure. Neither the mere passage
of time nor the constitution of a 9-Judge Bench can, ipso facto, justify
reopening settled law; yet, considerations of institutional credibility
require this Bench to authoritatively settle, one way or the other,
whether the interpretation of “industry” in Bangalore Water Supply
(supra) should be left untouched or be diluted as Jai Bir Singh [5-J]
advocates.
16. In fine, this Bench must do more than settle the meaning of “industry”:
it must restore confidence that the Court speaks with clarity, authority,
and finality.
17. Bearing in mind that institutional credibility is non-negotiable, the
lingering uncertainty around Bangalore Water Supply (supra) must
now be set to rest.
18. It would be most appropriate at this stage, to remind ourselves of what
Bangalore Water Supply (supra) laid down. The conclusions from the
lead judgment are quoted first, followed by a resume of what the other
Hon’ble Judges in their respective opinions had expressed.
OPINION OF HON’BLE KRISHNA IYER, J. (FOR HIMSELF, HON’BLE BHAGWATI AND HON’BLE DESAI, JJ.)
19. Hon’ble Krishna Iyer, J. in Bangalore Water Supply (supra) summed
up the discussion in the manner following:
140. ‘Industry’, as defined in Section 2(j) and explained in Banerji, has a wide import.
“(a) Where (i) systematic activity, (ii) organized by co-operation 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 organization is a trade or business it does not cease to be one because of philanthropy animating the undertaking.”
II 141. Although Section 2(j) uses words of the widest amplitude in its two limbs, their meaning cannot be magnified to overreach itself.
(a) ‘Undertaking’ must suffer a contextual and associational shrinkage as explained in Banerji and in this judgment; so also, service, calling and the like. This yields the inference that all organized activity 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 the trade or business’. All features, other than the methodology of carrying on the activity viz. in organizing the co-operation between employer and employee, may be dissimilar. It does not matter, if on the employment terms there is analogy.”
III 142. 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 off 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, (iv) co-operatives, (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, co-operatives and even gurukulas and little research labs, may qualify for exemption if, in simple ventures, substantially 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 cause, 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.”
IV 143. 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 the University of Delhi case (AIR 1963 SC 1873) or 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.”
CONCURRENCE OF HON’BLE BEG CJ.
20. Hon’ble Beg, CJ. while concurring with Hon’ble Krishna Iyer, J. observed
that where statutory language is imprecise or admits of ambiguity, the
Court may legitimately discharge a quasi-legislative function; however,
such an exercise, must remain within well-defined limits so as not to
trench upon the exclusive domain of the legislature. His Lordship
appeared to favour a constructive and creative approach to
interpretation, not dissimilar to that adopted by Lord Denning, albeit
tempered by judicial restraint.
a) Hon’ble Beg, CJ. further opined that the judgment of Hon’ble Krishna
Iyer, J. did not discard the earlier judicial tests for determining
“industry”, but rather reaffirmed those principles as enunciated in
precedents such as D. N. Banerji (supra), Corporation of the City
of Nagpur (supra), and Hospital Mazdoor Sabha (supra).
b) On the approach to statutory interpretation, Hon’ble Beg, CJ.
underscored that where the literal meaning proves inadequate, the
interpretative process must necessarily travel beyond the text, with
the statute being read as a whole rather than in isolated fragments.
c) The inherently dynamic character of the term “industry”, it was ruled,
by Hon’ble Beg, CJ. is a concept that evolves in tandem with societal
developments. Thus, modern welfare legislation such as the ID Act
warrants a progressive, and not a narrow or pedantic, construction.
d) Hon’ble Beg, CJ. remarked upon the lack of precision and circular
nature of the definition of “industry”, particularly in view of the
interdependence between “industry” and “workman” under Section
2(s). The definition was intended to serve as a guiding framework
rather than an exhaustive delineation and did not predicate the
existence of “industry” upon a profit motive.
e) Traditional canons of construction such as ejusdem generis and
noscitur a sociis would not, according to Hon’ble Beg, CJ., furnish a
complete or satisfactory solution. Expressions such as “manufacture”
were indicative of processes in which employers are engaged, the
concept of an “employer” necessarily presupposing employee.
f) Hon’ble Beg, CJ. cautioned against employing the phrase “analogous
to industry” as a restrictive device and indicated that earlier narrow
interpretations warranted reconsideration. Finally, His Lordship held
that services governed by distinct constitutional or statutory regimes,
particularly those under Articles 310 and 311 of the Constitution,
ought to be excluded from the purview of “industry” by necessary
implication. In conclusion, it was observed that the meaning of
“industry” must be ascertained contextually, having due regard to the
scheme and object of the ID Act, and confined to the purposes for
which the legislation was enacted.
21. Taking a nuanced stand, Hon’ble Singh, J. observed that the definition
of “industry” ought to be confined to those activities which are
systematically or habitually undertaken on commercial lines by private
entrepreneurs, in cooperation with employees, for the production or
distribution of goods or for rendering material services to the community
or a section thereof.
a) Hon’ble Singh, J. took the view that such a definition would necessarily
exclude charitable institutions, hospitals run on a charitable basis or
as part of governmental or municipal functions, educational and
research institutions, and liberal professions such as those of doctors,
lawyers, and teachers. It was reasoned that in the case of such
professions, the contribution of employees to the ultimate service
rendered is minimal and cannot be said to constitute the product of
meaningful cooperation between employer and employee.
b) In support of this restrictive construction, reliance was placed upon
the judgment of Hon’ble Gajendragadkar, J. in Hospital Mazdoor
Sabha (supra), wherein it was emphasised that a line must be drawn
in a fair and reasonable manner within the wide statutory definition
under Section 2(j), so as to exclude certain categories of services.
Particular reference was made to services rendered in a purely
personal, domestic, or casual capacity which, it was held, ought not
to be brought within the sweep of the definition. Accordingly, it was
cautioned that the words employed in Section 2(j) ought not to be
accorded their widest possible meaning.
CONCURRENCE OF HON’BLE CHANDRACHUD, J.
22. In His Lordship’s concurring opinion with Hon’ble Krishna Iyer, J. and
Hon’ble Beg, CJ., Hon’ble Chandrachud, J. observed that His Lordship
was unable to concur with the dissenting opinion of Hon’ble Singh and
Hon’ble Tulzapurkar, JJ. While expressing partial disagreement with the
decision in Hospital Mazdoor Sabha (supra), His Lordship
acknowledged that the conclusion therein - that the J.J. Group of
Hospitals managed by the State Government constituted an “industry”
- was correctly arrived at. However, His Lordship did not approve of the
judicially crafted exceptions engrafted upon the statutory definition in
that decision.
a) Hon’ble Chandrachud, J. reiterated that the interpretative principle of
noscitur a sociis stood expressly rejected by Hon’ble Gajendragadkar,
J. in Hospital Mazdoor Sabha (supra). In that context, the
interrelated statutory definitions of “industrial dispute” under Section
2(k), “wages” under Section 2(rr), “workman” under Section 2(s), and
“employer” under Section 2(g), along with “public utility service”
under Section 2(n), were required to be read conjointly and affirmed
that it is the intrinsic character of the activity that determines whether
it falls within Section 2(j), and not the existence of profit motive,
capital investment, or a quid pro quo element, all of which were held
to be irrelevant considerations.
b) At the same time, Hon’ble Chandrachud, J. noted that the Court, in
Hospital Mazdoor Sabha (supra), had proceeded to carve out
exclusions from the otherwise wide amplitude of Section 2(j) by
delineating certain callings, services, or undertakings as falling
outside its scope. Such an exercise, it was observed, was overly
policy-oriented and more appropriately within the legislative domain.
In particular, the exclusion of sovereign functions of the State was
regarded as judicially unwarranted.
c) Hon’ble Chandrachud, J. proceeded to articulate that any activity
which is systematically or habitually undertaken on commercial lines
by private entrepreneurs, with the cooperation of employees, for the
production or distribution of goods or for rendering material services
to the community or a segment thereof, would fall within the ambit of
an “undertaking” under Section 2(j).
d) According to Hon’ble Chandrachud, J., sovereign functions are not
automatically excluded from Section 2(j); the decisive test is the
nature of the activity, not the identity of the actor. Even inherently
State activities like currency manufacture could qualify as an
“industry” if hypothetically performed by private persons, as
supported by the First Schedule and Section 2(n)(vi).
e) Consistent with this approach, Hon’ble Chandrachud, J. reiterated that
the presence or absence of profit motive is immaterial in determining
whether a given activity constitutes an “industry”.
f) On the inclusion of professions, Hon’ble Chandrachud, J. held that
liberal professions such as those of lawyers and doctors would also
fall within the ambit of “industry”. The test that the production of
goods or material services must be the direct and proximate result of
cooperation between employer and employee was characterised as
inherently subjective and likely to engender uncertainty in the
application of the law.
g) Hon’ble Chandrachud, J. also expressed agreement with the inclusion
of clubs within the fold of “industry”, broadly in line with the reasoning
adopted by Hon’ble Krishna Iyer, J.
ARGUMENTS BY ATTORNEY GENERAL
23. Mr. Venkataramani, learned Attorney General for India, appearing for
the Union of India, took us extensively through Jai Bir Singh [5-J]
(supra) and sought to highlight the reasons for the reference. He
submitted that the core principles laid down in Bangalore Water
Supply (supra), viz. the triple test of systematic organised activity,
employer-employee cooperation, and production or distribution of goods
and material services geared to satisfy human wants, represent a
correct exposition of law under Section 2(j) of the ID Act and call for no
reconsideration. He, however, urged that the application of the test
requires caution. Charitable institutions, sovereign functions and State
welfare schemes cannot be mechanically brought within the definition
merely because they involve organised labour; such an approach would
ignore the constitutional character of a modern welfare State. Further,
he submitted that the un-notified 1982 Amendment (by which the
Parliament indicated its disagreement with the expansive approach to
define the term industry as proposed in Bangalore Water Supply
(supra) and sought to narrow down the scope of the definition by
excluding several welfare and non-commercial institutions) and the
2020 Code [which retains the triple test in principle, however excludes
charitable/philanthropic institutions, sovereign government functions
(including defence, atomic energy, space), domestic services and other
activities notified by the Central Government] reflects the parliamentary
intent to exclude non-commercial and welfare activities from the ambit
of “industry”. Even though the 1982 Amendment was not notified, it and
the 2020 Code can still serve as an interpretative aid to understand
legislative intent – which is a more restrictive reading of “industry”.
Next, it was submitted that social welfare activities and schemes
undertaken by Government departments or their instrumentalities
should not be construed as industrial activities. Lastly, as regards
“sovereign function”, after referring to various precedents, it was
submitted that this Court has consistently refused to give an exhaustive
definition of the word. Building on this argument, it was submitted that
the same must remain flexible and not attempted to be exhaustively
defined. At the same time, certain functions remain inherently and
inalienably sovereign, forming the core attributes of Statehood, such as
defence of the nation, maintenance of public order, administration of
justice, legislative and policy-making functions, and matters relating to
citizenship, passports, and other coercive or regulatory powers. Beyond
this limited core, however, the classification of governmental activities
must be contextual and capable of severability, bearing in mind the
expanding role of the State in a welfare framework. The executive is
best placed to identify such functions, subject to limited judicial review
to prevent arbitrariness. In fine, while the triple test remains sound, its
application must be tempered by legislative intent and constitutional
context so that welfare and sovereign functions remain outside the
purview of industrial adjudication under the Act.
24. Ms. Indira Jaisingh, learned senior counsel, opposing the reference
contended, at the outset, that there was no conflict of views between
the opinions expressed in Chief Conservator of Forests v. Jagannath
Maruti Kondhare18 and State of Gujarat v. Pratamsingh Narsinh
Parmar19. Though Jai Bir Singh [3-J] (supra) recorded that the latter
decision took a view different from the one in the former and
distinguished it, the ground for such distinction, i.e., deficiency in
pleadings, was not taken note of and, as such, no doubt was cast on the
proposition laid down by the former decision. In any event, whether or
not the Social Forestry Division could be regarded as an “industry” was
the limited question that was referred by Jai Bir Singh [3-J] (supra)
and not that Bangalore Water Supply (supra) requires
reconsideration. According to her, Jai Bir Singh [5-J] (supra) while
making a further reference to a 7-Judge Bench trenched beyond its
jurisdiction and this Court ought to return the reference as incompetent.
25. This particular contention necessitates recording of a full and complete
satisfaction that a conflict of opinion did exist, which required resolution
by a larger Bench. Notwithstanding that a 9-Judge Bench is presently
seized of the matter to reconsider the opinion expressed in Bangalore
Water Supply (supra), we have to enter a caveat. In our considered
opinion, any reference made by a Bench of lesser strength to a larger
Bench in course of hearing a legal issue is in furtherance of and/or to
facilitate the core judicial function of the apex court of the country to
expound the law authoritatively for the same to be binding on all in
terms of Article 141 of the Constitution. Indubitably, a reference to a
larger Bench requires careful deliberation, not a casual or routine
exercise. If the Bench referring an issue for reconsideration by a larger
Bench, in its order of reference, fails to consider all relevant aspects and,
consequently, the larger Bench hearing the reference finds the same to
be flawed and, thus, incompetent, it is well within the authority and
competence of the larger Bench, upon hearing the parties, to return the
reference without answering it. Merely because the reference has
spiralled up to a larger Bench of 9 (nine) Judges over the years ought
not to be considered an overriding factor, particularly when Bangalore
Water Supply (supra) has held the field for a little less than half a
century and a new legislation is in place today defining “industry” for the
purpose of the 2020 Code, with effect from 7th February, 2026.
26. We find substance in the contention of Ms. Jaisingh that there was,
indeed, no conflict between Jagannath Maruti Kondhare (supra) and
Pratamsingh Narsinh Parmar (supra). This, we say, for the reason
that the latter decision of a bench strength of 2 (two) Judges while
neither doubting nor disputing the principle of law enunciated in the
former decision of 3 (three) Judges held, on facts, that the principle so
enunciated does not apply in the facts owing to omission on the part of
the respondent in the civil appeal to assert relevant facts in his writ
petition before the high court. We can do no better than reproduce the
relevant paragraphs from Pratamsingh Narsinh Parmar (supra)
5. If a dispute arises as to whether a particular establishment or part of it
wherein an appointment has been made is an industry or not, it would be
for the person concerned who claims the same to be an industry, to give
positive facts for coming to the conclusion that it constitutes “an industry”.
Ordinarily, a department of the Government cannot be held to be an
industry and rather it is a part of the sovereign function. To find out whether
the respondent in the writ petition had made any assertion that with regard
to the duty which he was discharging and with regard to the activities of
the organisation where he had been recruited, we find that there has not
been an iota of assertion to that effect though, no doubt, it has been
contended that the order of dismissal is vitiated for non-compliance with
Section 25-F of the Act. The State in its counter-affidavit, on the other hand,
refuted the assertion of the respondent in the writ petition and took the
positive stand that the Forest Department cannot be held to be an industry
so that the provisions of Section 25-F of the Act cannot have any
application. In the absence of any assertion by the petitioner in the writ
petition indicating the nature of duty discharged by the petitioner as well
as the job of the establishment where he had been recruited, the High Court
wholly erred in law in applying the principles enunciated in the judgment of
this Court in Jagannath Maruti Kondhare to hold that the Forest Department
could be held to be “an industry”.
6. The learned Single Judge as well as the Division Bench of the High Court
have failed to carefully examine the ratio of this Court’s judgment in
Jagannath Maruti Kondhare case inasmuch as in para 15 of the said
judgment, the Court has quoted the assertions made in the affidavit of the
Chief Conservator of Forests and then in para 17, the Court held that the
scheme undertaken cannot be regarded as a part of the sovereign function
of the State. We are afraid that the aforesaid decision cannot have any
application to the facts of the present case where there has not been any
assertion of fact by the petitioner in establishing that the establishment to
which he had been appointed is “an industry”. In this view of the matter, we have no hesitation to come to the conclusion that the learned Single
Judge as well as the Division Bench committed serious error of law in
holding that to the appointment in question, the provisions of the Act apply. We would accordingly set aside the judgment of the Division Bench as well
as that of the learned Single Judge and hold that the writ petition would
stand dismissed.
27. A reading of the above passages would leave none in doubt that the
principle of law laid down in Jagannath Maruti Kondhare (supra) was
not applied in Pratamsingh Narsinh Parmar (supra) because of
deficient pleadings. The 2-Judge Bench in Pratamsingh Narsinh
Parmar (supra) was perfectly justified in its approach having regard to
the settled law that one additional or different fact can make a world of
difference between conclusions in two cases even when the same
principles are applied in each case to similar facts. Jai Bir Singh [3-J]
(supra) though did not advert to any existing conflict of opinion, required
the larger Bench’s consideration limited to the point indicated in such
order, i.e., whether the Welfare Scheme of the Government, like the
Social Forestery, would be regarded as an industry.
28. Nonetheless, once the matter moved to the larger Bench in Jai Bir
Singh [5-J] (supra), it did not restrict its scrutiny to the point referred
but broadened the scope of discussion not strictly in line with what was
referred. The opening paragraphs of the referring judgment read as
follows:
1. This present appeal along with other connected cases has been listed
before this Constitution Bench of five Judges on a reference made by a
Bench of three Hon’ble Judges of this Court finding an apparent conflict
between the decisions of two Benches of this Court in the cases of Chief
Conservator of Forests v. Jagannath Maruti Kondhare of three Judges and
State of Gujarat v. Pratamsingh Narsinh Parmar of two Judges.
2. On the question of whether “Social Forestry Department” of State, which
is a welfare scheme undertaken for improvement of the environment, would
be covered by the definition of “industry” under Section 2(j) of the Industrial
Disputes Act, 1947, the aforesaid Benches (supra) of this Court culled out
differently the ratio of the seven-Judge Bench decision of this Court in the
case of Bangalore Water Supply & Sewerage Board v. A. Rajappa (shortly
hereinafter referred to as Bangalore Water case). The Bench of three Judges
in the case of Chief Conservator of Forests v. Jagannath Maruti Kondhare
based on the decision of Bangalore Water case came to the conclusion that
“Social Forestry Department” is covered by the definition of “industry”
whereas the two-Judge Bench decision in State of Gujarat v. Pratamsingh
Narsinh Parmar took a different view.
3. As the cleavage of opinion between the two Benches of this Court seems
to have been on the basis of the seven-Judge Bench decision of this Court
in the case of Bangalore Water, the present case along with the other
connected cases, in which correctness of the decision in the case of
Bangalore Water is doubted, has been placed before this Bench.
29. We may, at once, notice that from the very inception, Jai Bir Singh [5-
J] (supra) proceeded on the premise as if there was a cleavage of
opinion between Jagannath Maruti Kondhare (supra) and
Pratamsingh Narsinh Parmar (supra) which, for reasons assigned in
the aforesaid paragraphs, is incorrect.
30. The preliminary objection of Ms. Jaisingh, therefore, appears to be of
substance and valid.
REFERRING JUDGMENT – OTHER REASONS FOR THE REFERENCE
31. Jai Bir Singh [5-J] (supra), thereafter, proceeded to assign multiple
reasons why Bangalore Water Supply (supra) merits reconsideration.
Rather than extensively quoting from the opinion expressed in the
referring judgment, we consider it appropriate to encapsulate the same
(i) The decision in Bangalore Water Supply (supra) is not based on
the unanimous opinion of the Judges comprising the Bench. The
majority comprised of 5 (five) Judges. While 3 (three) Judges had
agreed to a common opinion, 2 (two) of the Judges comprising the
majority had given separate opinions projecting a view partly
different from the views expressed in the common opinion. Hon’ble
Beg, CJ., who was presiding over the Bench having retired, had no
opportunity to see the opinions delivered by the other Judges
subsequent to his retirement. The author of the lead opinion (Hon’ble
Krishna Iyer, J.) and the two Judges (Hon’ble Bhagwati and Hon’ble
Desai, JJ.) who spoke through him did not have the benefit of the
dissenting opinion of the other two Judges (Hon’ble Singh and Hon’ble
Tulzapurkar, JJ.) and the separate partly dissenting opinion of
another Judge (Hon’ble Chandrachud, J.), as those opinions were
prepared and delivered subsequent to the delivery of the judgment
in Bangalore Water Supply (supra). In such a situation, the
referring judgment opined that it is difficult to ascertain whether the
opinion of Hon’ble Krishna Iyer, J. given on his own behalf and on
behalf of Hon’ble Bhagwati and Hon’ble Desai, JJ., can be held to be
an authoritative precedent which would require no reconsideration
even though the Judges themselves expressed the view that the
exercise of interpretation done by each one of them was tentative
and was only a temporary exercise till the legislature stepped in.
(ii) The worker-oriented approach in construing the definition of
“industry” by the Bench in Bangalore Water Supply (supra),
unmindful of the interest of the employer or the owner of the industry
and the public, who are the ultimate beneficiaries, is a one-sided
approach and not in accordance with the ID Act.
(iii) The notion of sovereign functions ought to expand to encompass
public welfare initiatives undertaken by the Government in fulfilment
of its constitutional responsibilities, thereby excluding them from the
ambit of “industry”. Despite the 1982 Amendment having amended
the definition of “industry”, the amended definition remains
unenforced, perpetuating uncertainty. The judicial interpretation of
the term “industry” in Bangalore Water Supply (supra) appears to
be a hindrance to implement the amended definition. Bearing in mind
the object of the ID Act, interpretation of the word “industry” must
be a balanced one having regard to the interest of the workers, the
employers as well as the public.
(iv) The view expressed by a 6-Judge Bench in Safdarjung Hospital
(supra) [which was overruled in Bangalore Water Supply (supra)]
was unanimous. It was held in Safdarjung Hospital (supra) that
although profit motive is irrelevant, in order to encompass the activity
within “industry” the “activity must be analogous to trade or business
in a commercial sense” and mere enumeration of “public utility
service” in Section 2(n) of the ID Act read with the First Schedule
thereof should not be held decisive. This interpretation was affirmed,
suggesting that Bangalore Water Supply (supra), not being a
unanimous decision, was not quite right in overruling Safdarjung
Hospital (supra).
(v) In Coir Board, Ernakulam v. Indira Devi P.S.20 [2-J], an order
for reference to a larger bench of more than 7 (seven) Judges was
made to reconsider Bangalore Water Supply (supra). A Bench
presided over by the Chief Justice, however, expressed in Coir Board
Ernakulam State Kerala v. Indira Devai P.S.21 [3-J] that, in its
opinion, Bangalore Water Supply (supra) does not require any
reconsideration on a reference being made by a 2-Judge Bench,
which is bound by the larger Bench judgment. Thus, the reference
sought by the bench of two Judges to a larger Bench of more than 7
(seven) Judges was declined in Coir Board Ernakulam [3-J]
(supra). The workers argued before Jai Bir Singh [5-J] (supra) that
the observations in paragraph 19 of Coir Board Ernakulam [2-J]
(supra) were unsupported by any material on record. However, Jai
Bir Singh [5-J] (supra) rejected this criticism and held that the
observations in Coir Board Ernakulam [2-J] (supra) did have a
valid basis. Further, it was held that the experience of Judges in the
apex court is not derived from the case in which the observations
were made; the experience was from the cases regularly coming
before it through the Labour Courts. According to Jai Bir Singh [5-
J] (supra), past experience indicated the majority view in Bangalore
Water Supply (supra) having led to numerous awards passed by
industrial tribunals/labour courts favouring reinstatement of
workmen and significant amounts on account of back wages,
ultimately forcing employers with limited resources to shut down,
adversely affecting employers, workers and the public.
(vi) Though the legislature, subsequent to Bangalore Water Supply
(supra), amended the definition of the word “industry”, due to the
lack of will both on the part of the legislature and the executive, the
amended definition, for a long period of 23 (twenty-three) years, has
remained dormant. It was pointed out to the Bench, as recorded in
paragraph 8 of the referring judgment, that “… earlier an attempt was
made to seek enforcement of the amended Act through this Court”
and reference was made to Aeltemesh Rein v. Union of India22.
The referring judgment records, the Union came forward with an
explanation that for employees of the categories of industries
excluded under the amended definition, no alternative machinery for
redressal of their service disputes has been provided by law and,
therefore, the amended definition was not brought into force.
Pressing demands of the competing sectors of employers and
employees and the helplessness of the legislature and the executive
in bringing into force the Amendment Act, were seen as compelling
reasons in Jai Bir Singh [5-J] (supra) to make the reference (see:
paragraph 45).
32. It is considered apposite to first refer to Keshav Mills Co. Ltd. v. CIT23
[7-J], a precedent which was available for Jai Bir Singh [5-J] (supra)
to follow. Certain principles were enunciated in Keshav Mills Co. Ltd.
(supra) with regard to what constitutes grounds for a valid reference or
review of prior decisions of the Supreme Court. Arising out of a tax
matter, this Court rejected the revenue’s contention that its earlier
decisions in New Jehangir Vakil Mills v. CIT24 [2-J] and Petlad
Turkey Red Dye Co. Ltd, Petlad v. CIT25 [5-J] required
reconsideration. In so rejecting, Hon’ble Gajendragadkar, CJ. speaking
for the 7-Judge Bench held that:
23. In dealing with the question as to whether the earlier decisions of this
Court in New Jehangir Mills case [AIR 1959 SC 1177], and Petlad Co. Ltd.
case [AIR 1963 SC 1484] should be reconsidered and revised by us, we
ought to be clear as to the approach which should be adopted in such cases. Mr Palkhivala has not disputed the fact that in a proper case, this Court has inherent jurisdiction to reconsider and revise its earlier decisions, and so, the abstract question as to whether such a power vests in this Court or not need not detain us. In exercising this inherent power, however, this Court would naturally like to impose certain reasonable limitations and would be reluctant to entertain pleas for the reconsideration and revision of its earlier decisions, unless it is satisfied that there are compelling and substantial reasons to do so. It is general judicial experience that in matters of law involving questions of construing statutory or constitutional provisions, two views are often reasonably possible and when judicial approach has to make a choice between the two reasonably possible views, the process of decision making is often very difficult and delicate. When this Court hears appeals against decisions of the High Courts and is required to consider the propriety or correctness of the view taken by the High Courts on any point of law, it would be open to this Court to hold that though the view taken by the High Court is reasonably possible, the alternative view which is also reasonably possible is better and should be preferred. In such a case, the choice is between the view taken by the High Court whose judgment is under appeal, and the alternative view which appears to this Court to be more reasonable; and in accepting its own view in preference to that of the High Court, this Court would be discharging its duty as a court of appeal. But different considerations must inevitably arise where a previous decision of this Court has taken a particular view as to the construction of a statutory provision as, for instance, Section 66(4) of the Act. When it is urged that the view already taken by this Court should be reviewed and revised, it may not necessarily be an adequate reason for such review and revision to hold that though the earlier view is a reasonably possible view, the alternative view which is pressed on the subsequent occasion is more reasonable. In reviewing and revising its earlier decision, this Court should ask itself whether in the interests of the public good or for any other valid and compulsive reasons, it is necessary that the earlier decision should be revised. When this Court decides questions of law, its decisions are, under Article 141, binding on all courts within the territory of India, and so, it must be the constant endeavour and concern of this Court to introduce and maintain an element of certainty and continuity in the interpretation of law in the country. Frequent exercise by this Court of its power to review its earlier decisions on the ground that the view pressed before it later appears to the Court to be more reasonable, may incidentally tend to make law uncertain and introduce confusion which must be consistently avoided. That is not to say that if on a subsequent occasion, the Court is satisfied that its earlier decision was clearly erroneous, it should hesitate to correct the error; but before a previous decision is pronounced to be plainly erroneous, the Court must be satisfied with a fair amount of unanimity amongst its members that a revision of the said view is fully justified. It is not possible or desirable, and in any case it would be inexpedient to lay down any principles which should govern the approach of the Court in dealing with the question of reviewing and revising its earlier decisions. It would always depend upon several relevant considerations:—What is the nature of the infirmity or error on which a plea for a review and revision of the earlier view is based? On the earlier occasion, did some patent aspects of the question remain unnoticed, or was the attention of the Court not drawn to
any relevant and material statutory provision, or was any previous decision
of this Court bearing on the point not noticed? Is the Court hearing such
plea fairly unanimous that there is such an error in the earlier view? What
would be the impact of the error on the general administration of law or on
public good? Has the earlier decision been followed on subsequent
occasions either by this Court or by the High Courts? And, would the
reversal of the earlier decision lead to public inconvenience, hardship or
mischief? These and other relevant considerations must be carefully borne
in mind whenever this Court is called upon to exercise its jurisdiction to
review and revise its earlier decisions. These considerations become still
more significant when the earlier decision happens to be a unanimous
decision of a Bench of five learned Judges of this Court.
****
25. …………… The principle of stare decisis, no doubt, cannot be pressed into
service in cases where the jurisdiction of this Court to reconsider and revise
its earlier decisions is invoked; but nevertheless, the normal principle that
judgments pronounced by this Court would be final, cannot be ignored, and
unless considerations of a substantial and compelling character make it
necessary to do so, this Court should and would be reluctant to review and
revise its earlier decisions. …….
33. The ratio decidendi, when culled out, is that for revising or reviewing its
earlier decisions multifarious considerations must arise which inter alia
include i) whether it is in the interests of public good; ii) the nature of
the infirmity or error on which a plea for a review or revision of the
earlier view is based; iii) whether the earlier decision has been followed
on subsequent occasions by the Supreme Court or the High Courts; iv)
whether on the earlier occasion some patent aspects of the question
before the Court remained unnoticed; and v) would the reversal of
earlier decision result in public inconvenience, hardship or mischief.
Furthermore, the Court held that it is imperative on it to maintain a
certain degree of certainty, consistency and continuity in the
interpretation of law in the country. Therefore, before a previous
decision is pronounced to be erroneous, the Court must be satisfied that
a revision of such a decision is justified and there are valid and
compelling reasons for the same.
34. Not too long ago, in Dr Shah Faesal v. Union of India26 [5-J], a
specific issue was framed:
“16.1.(i) When can a matter be referred to a larger Bench?”
In answer thereto, this Court speaking through Hon’ble N.V. Ramana,
CJ. observed:
17. This Court’s jurisprudence has shown that usually the courts do not
overrule the established precedents unless there is a social, constitutional
or economic change mandating such a development. The numbers
themselves speak of restraint and the value this Court attaches to the
doctrine of precedent. This Court regards the use of precedent as
indispensable bedrock upon which this Court renders justice. The use of
such precedents, to some extent, creates certainty upon which individuals
can rely and conduct their affairs. It also creates a basis for the
development of the rule of law. As the Chief Justice of the Supreme Court
of the United States, John Roberts observed during his Senate confirmation
hearing, “It is a jolt to the legal system when you overrule a precedent.
Precedent plays an important role in promoting stability and even-
handedness”. [Congressional Record—Senate, Vol. 156, Pt. 7, 10018 (7-6-
2010).]
18. Doctrines of precedents and stare decisis are the core values of our
legal system. They form the tools which further the goal of certainty,
stability and continuity in our legal system. Arguably, Judges owe a duty to
the concept of certainty of law, therefore they often justify their holdings
by relying upon the established tenets of law.
19. When a decision is rendered by this Court, it acquires a reliance interest
and the society organises itself based on the present legal order. When
substantial judicial time and resources are spent on references, the same
should not be made in a casual or cavalier manner. It is only when a
proposition is contradicted by a subsequent judgment of the same Bench,
or it is shown that the proposition laid down has become unworkable or
contrary to a well-established principle, that a reference will be made to a
larger Bench. …
35. This Court cautioned that a reference “should not be made in a casual
or cavalier manner” and, inter alia, should be made only when it is
shown that the proposition laid down in a case has become unworkable
or is contrary to a well-established principle.
36. A few months before the decision in Shah Faesal (supra), this Court in
Srimanth Balasaheb Patil v. Speaker, Karnataka Legislative
Assembly27 [3-J] had reiterated the same law. It was held:
157. There is no doubt that the requirements under Article 145(3) of the
Constitution have never been dealt with extensively and, more often than
not, have received mere lip service, wherein this Court has found existence
of case laws which have already dealt with the proposition involved, and
have rejected such references. Normatively, this trend requires
consideration in appropriate cases, to ensure that unmeritorious references
do not unnecessarily consume precious judicial time in the Supreme Court.
158. In any case, we feel that there is a requirement to provide a
preliminary analysis with respect to the interpretation of this provision. In
this context, we need to keep in mind two important phrases occurring in
Article 145(3) of the Constitution, which are, “substantial question of law”
and “interpretation of the Constitution”. By reading the aforesaid provision,
two conditions can be culled out before a reference is made:
(i) The Court is satisfied that the case involves a substantial question
of law as to the interpretation of this Constitution;
(ii) The determination of which is necessary for the disposal of the
case.
159. We may state that we are not persuaded for referring the present
case to a larger Bench as the mandate of the aforesaid Article is that this
Court needs to be satisfied as to the existence of a substantial question of
law on the constitutional interpretation. However, this does not mean that
every case of constitutional interpretation should be compulsorily referred
to a Constitutional Bench.
160. Any question of law of general importance arising incidentally, or any
ancillary question of law having no significance to the final outcome, cannot
be considered as a substantial question of law. The existence of substantial
question of law does not weigh on the stakes involved in the case, rather,
it depends on the impact the question of law will have on the final
determination. If the questions having a determining effect on the final
outcome have already been decided by a conclusive authority, then such
questions cannot be called as “substantial questions of law”. In any case,
no substantial question of law exists in the present matter, which needs
reference to a larger Bench. The cardinal need is to achieve a judicial
balance between the crucial obligation to render justice and the compelling
necessity of avoiding prolongation of any lis.
37. In short, the Court emphasized that references to a larger Bench (for
matters involving substantial question of law as to interpretation of
Constitution) should be made only in exceptional circumstances and not
as a matter of routine. It cautioned that unmeritorious references
unnecessarily consume judicial time. Moreover, a question that has
already been settled by an authoritative decision cannot be regarded as
a substantial question of law.
38. We have the highest of regard for the Hon’ble Judges who comprised
the Bench in Jai Bir Singh [5-J] (supra). Nonetheless, upon threadbare
examination of the referring judgment, we cannot but regret our inability
to concur therewith. None of the reasons noted above appear to us at
all convincing and/or compelling requiring a reference to be made. For
reasons more than one, the referring judgment is not free from
fundamental flaws. Painfully, we venture to say why each of the reasons
assigned by the 5-Judge Bench, noted by us in the six sub-paragraphs
of paragraph 31, are not justified and/or acceptable. Our answers are
given hereunder, seriatim.
(i) Decision in Bangalore Water Supply (supra), not unanimous?
a) It seems that Jai Bir Singh [5-J] (supra) missed the woods for the
tree. A major portion of the referring judgment (paragraphs 11 to
21) is devoted to the thought process germinating in the mistaken
conclusion that Bangalore Water Supply (supra) was not a
unanimous decision. The judgment in Bangalore Water Supply
(supra) was pronounced on 21st February, 1978, a day prior to
Hon’ble Beg, CJ. demitting office. Hon’ble Krishna Iyer, J.
pronounced the lead judgment speaking for himself, as well as
Hon’ble Bhagwati and Hon’ble Desai, JJ. Hon’ble Beg, CJ. also
pronounced his supplementing/concurring judgment. From the
opening paragraph of the judgment of Hon’ble Chandrachud, J.
pronounced on 7th April, 1978 [paragraph 171 of the SCC report], it
is found that His Lordship on 21st February, 1978 had dictated a short
order on behalf of himself and his brethren, Hon’ble Singh and
Hon’ble Tulzapurkar, JJ. [referred to in paragraph 170 of the SCC
report] expressing agreement with the views of Hon’ble Krishna Iyer,
J. and Hon’ble Beg, CJ. that the appeal of Bangalore Water Supply
and Sewerage Board be dismissed. It was also recorded that the area
of concurrence or divergence with the rest of the judgment, if
necessary, would be indicated later. It was only on 7th April, 1978,
much after Hon’ble Beg, CJ. had demitted office, that the judgments
penned by Hon’ble Chandrachud, J. for himself and Hon’ble Singh, J.
(for himself and Hon’ble Tulzapurkar, J.) were placed in the public
domain. The opinion of Hon’ble Singh, J. was circulated first among
the Hon’ble Judges, as it appears from the opinion of Hon’ble
Chandrachud, J. His Lordship noticed “divergent views expressed by
Jaswant Singh and Tulzapurkar, JJ. on certain aspects of the matter”
and having “given a further thought to the frustrating question as to
what falls within and without” the statutory concept of “industry”,
was “unable to accept the basis on which Jaswant Singh and
Tulzapurkar, JJ. have expressed their dissent”. Significantly, neither
did Hon’ble Chandrachud, J. nor Hon’ble Singh, J. disagree with
either Hon’ble Krishna Iyer, J. or Hon’ble Beg, CJ. insofar as the
outcome (read: dismissal) of the appeal before the 7-Judge Bench.
b) Each Hon’ble Judge being a member of a Bench of the apex court
has the freedom to express his own view regarding a specific
question. It is well-nigh conceivable that multiple Judges on the
Bench may arrive at a conclusion, which is congruent, but the line of
thinking, the analytical pathways and the underlying reasoning
employed to attain it exhibit some degree of variability. Therefore,
in essence, disparate approaches could yield a singular, concordant
result. Different shades of interpretation of the definition of
“industry” by the Hon’ble Judges and the reasoning given in each of
the individual opinions for reaching the same conclusion of the
appeal deserving dismissal notwithstanding, to emphatically state
that the 7-Judge Bench was divided in its opinion [with Hon’ble
Krishna Iyer, J. speaking for the majority and Hon’ble Singh, J.
speaking for the minority] or that Hon’ble Chandrachud, J., on the
one hand, partly dissented with the majority and, on the other, that
Hon’ble Singh and Hon’ble Tulzapurkar, JJ. dissented with the
majority is, in our appreciation and analysis of what is evident,
narration of a version of events that seem to diverge from factual
accuracy. The starting point of discussion in Jai Bir Singh [5-J]
(supra) [after the first three paragraphs which missed noting that
there was no cleavage of opinion (as demonstrated above)] took off
at a tangent, ignoring what was so very vital and important: the
opening words of Hon’ble Chandrachud, J.’s opinion. In fact, it is
conspicuous by its absence in the referring judgment. Thus, the very
foundation of the referring judgment is tenuous and, unwittingly, has
yielded an undesirable outcome of Bangalore Water Supply
(supra) being doubted based on an untenable reason (emphasis
supplied).
c) Discussion in the referring judgment to drive home the point that the
judgment of Hon’ble Krishna Iyer, J. and the concurring opinion of
Hon’ble Beg, CJ. were rendered without looking into the opinions of
Hon’ble Chandrachud, J. and Hon’ble Singh, J. is, in our opinion,
wholly irrelevant and serves no purpose at all for doubting the
efficacy of Bangalore Water Supply (supra) as a binding
precedent. It does not appear from the opinions of Hon’ble
Chandrachud, J. and Hon’ble Singh, J., rendered subsequently, that
Their Lordships had no occasion to peruse the judgment of Hon’ble
Krishna Iyer, J. and the concurring opinion of Hon’ble Beg, CJ. before
the same were pronounced. Their Lordships might have had genuine
reasons impeding rendering of the respective opinions by 21st
February, 1978; but any delayed rendering of opinions by Their
Lordships could not have formed the basis of a reference on the
specious ground that neither Hon’ble Krishna Iyer, J. nor Hon’ble
Beg, CJ. had the occasion to peruse such subsequent opinions.
d) Quite apart, labelling the judgment of Hon’ble Krishna Iyer, J. in
Bangalore Water Supply (supra) as not unanimous and critically
viewing it in light of the reasons assigned by Hon’ble Singh, J. for
himself and Hon’ble Tulzapurkar, J. for expressing disagreement,
and not doubt, with the purpose of making a reference for a
reconsideration of the meaning of “industry” as propounded in
Bangalore Water Supply (supra) proceeds on a patent ignorance
of the dictum in Union of India v. Raghubir Singh28 read with
Article 145(5) of the Constitution.
e) Law seems to be well settled that it is the numerical strength of the
Bench that matters and not whether an Hon’ble Judge or a couple of
Hon’ble Judges on the Bench has/have differed forming the minority.
Bangalore Water Supply (supra) has to be seen as the judgment
of a 7-Judge Bench and not as a split verdict (emphasis supplied).
This, possibly escaped the attention of the 5-Judge Bench.
f) To find a precedent, one need not travel too far back. Aligarh
Muslim University v. Naresh Agarwal29 is a decision of fairly
recent origin where a 7-Judge Bench overruled S. Azeez Basha v.
Union of India30, a unanimous decision rendered by a 5-Judge
Bench. Incidentally, Aligarh Muslim University (supra) was
decided by a majority of 4:3 and, thus, factually 4 (four) Hon’ble
Judges overruled a unanimous 5-Judge Bench decision; yet, in law,
the effect is that Aligarh Muslim University (supra) has to be seen
as overruling the unanimous 5-Judge Bench decision in S. Azeez
Basha (supra) because of the strength of the Bench (seven).
g) Per the law as it stands now, the numerical strength of the Bench
irrespective of the differences in reasoning adopted by the Hon’ble
Judges comprising such bench would be determinative of the binding
nature of a judgment and not the number of Judges comprising the
majority.
(ii) Worker-oriented approach?
a) A judgment should not and cannot be characterised as “worker-
oriented”, merely because its ultimate outcome happens to favour
the working class. It is axiomatic that judicial determinations are
founded on reasons; it is those reasons that sustain the conclusion.
Where the reasons are sound, the ultimate conclusion has to be
respected and not viewed with reproach simply because it follows a
particular path. The proper course, if at all the judgment is to be
doubted, is to test the reasoning on which the conclusion rests and
then to explain why it calls for reconsideration. To question a
judgment solely on the ground that its outcome is labour-centric is,
in our considered view, not only untenable but an egregious breach
of Article 141 discipline. Be that as it may!
b) The criticism of the opinion penned by Hon’ble Krishna Iyer, J. in
Jai Bir Singh [5-J] (supra) as evincing a one-sided approach in
favour of the workers, with respect, fails to comprehend that the ID
Act is a social welfare legislation. Construing such a legislation in
favour of labour is a settled canon. To fault Bangalore Water
Supply (supra) for taking such a view is to fault the statute itself,
which amounts to a glaring error of interpretive method.
c) The referring judgment also does not take into account precedents
of this Court acknowledging that the ID Act is a social welfare
legislation, which has been enacted in the interest of workmen.
d) Workmen v. Firestone Tyre & Rubber Co. of India (P) Ltd.31
is a reminder of the settled law that in construing the provisions of
a welfare legislation like the ID Act, the Courts should adopt what
is described as a beneficent rule of construction. If two
constructions are reasonably possible to be placed on the section,
it follows that the construction which furthers the policy and object
of the enactment and is more beneficial to the employees, has to
be preferred. It was also emphasized that the ID Act, which intends
to improve and safeguard the service conditions of an employee,
demands an interpretation liberal enough to achieve the legislative
purpose.
e) In Workmen of Indian Standards Institution v. Management
of Indian Standards Institution32 [3-J], speaking for the
majority, Hon’ble Bhagwati, J. after considering Safdarjung
Hospital (supra) highlighted that the ID Act is a legislation
intended to bring about peace and harmony between management
and labour in an “industry” so that production does not suffer and
at the same time, labour is not exploited and discontented;
therefore, the tests must be so applied as to give the widest
possible connotation to the term “industry”. It was also observed
that whenever a question arises whether a particular concern is an
“industry”, the approach must be broad and liberal and not rigid or
doctrinaire; such an interpretation ought to be made which would
advance the object and purpose of the legislation and give full
meaning and effect to it in the achievement of its avowed social
objective.
f) A few months before the referring judgment was delivered, this
Court in Steel Authority of India Ltd. v National Union
Waterfront Workers33 [5-J], though dealing with a different
labour legislation, propounded that after the advent of the
Constitution of India, the State is under an obligation to improve
the lot of the workforce. Referring to Article 23 (prohibiting, inter
alia, begar and other similar forms of forced labour), Article 38
(mandating the State to secure a social order for promotion of
welfare of the people and to establish an egalitarian society), Article
39 (enumerating the principles of policy of the State which include
welfare measures for the workers), Article 43 (requiring the State
to endeavour to secure, by a suitable legislation or economic
organisation or in any other way for all workers, agricultural,
industrial or otherwise, work, a living wage, conditions of work
ensuring a decent standard of life and full enjoyment of leisure and
social and cultural opportunities), Article 43-A (enjoining the State
to take steps by suitable legislation or in any other way to secure
the participation of workers in the management of undertakings,
establishment, or other organisations engaged in any industry) and
Articles 14 and 16 enshrining the guarantee of equality before law
and equality of opportunity in public employment, with the
Preamble to the Constitution as the lodestar guiding those who find
themselves in a grey area while dealing with and interpreting a
beneficial legislation enacted to give effect to the Directive
Principles of State Policy which is otherwise constitutionally valid, it
was held that the consideration of the Court cannot be divorced
from those objectives. Should there be any ambiguity in the
language of a beneficial labour legislation, the 5-Judge Bench was
emphatically unanimous that the Courts have to resolve the
quandary in favour of conferment of, rather than denial of, a benefit
on the labour by the legislature but without rewriting and/or doing
violence to the provisions of the enactment.
g) Notwithstanding the aforesaid observations, if one were to proceed
further on this path of enquiring into what the ID Act ought to
signify in terms of its perceived policy objectives, i.e., whether
worker-centric or employer-centric, this Court would, in effect, be
treading the very ground that invites criticism of the approach
adopted in the referring judgment, as can be evinced from the
paragraphs below:
32. In the judgment of Bangalore Water [(1978) 2 SCC 213:1978 SCC (L&S) 215] Krishna Iyer, J. speaking for himself and on behalf
of the other two Hon’ble Judges agreeing with him proceeded to deal with the interpretation of the definition of “industry” on a legal premise stating thus: (SCC p. 230, para 12) “A worker-oriented statute must receive a construction where,
conceptually, keynote thought must be the worker and the community, as the Constitution has shown concern for them, inter
alia, in Articles 38, 39 and 43.”
(emphasis supplied in original) 33. With utmost respect, the statute under consideration cannot be looked at only as a worker-oriented statute. The main aim of the
statute as is evident from its preamble and various provisions contained therein, is to regulate and harmonise relationships between employers and employees for maintaining industrial peace and social harmony. The definition clause read with other provisions
of the Act under consideration deserves interpretation keeping in view interests of the employer, who has put his capital and expertise
into the industry and the workers who by their labour equally
contribute to the growth of the industry. The Act under consideration has a historical background of industrial revolution inspired by the philosophy of Karl Marx. It is a piece of social legislation. Opposed to the traditional industrial culture of open competition or laissez faire, the present structure of industrial law is an outcome of long-term
agitation and struggle of the working class for participation on equal
footing with the employers in industries for its growth and profits. In
interpreting, therefore, the industrial law, which aims at promoting
social justice, interests both of employers, employees and in a democratic society, people, who are the ultimate beneficiaries of the
industrial activities, have to be kept in view.
h) In this context, it must be observed that the decision in Bangalore
Water Supply (supra) could not have been subjected to
reconsideration in a reference merely on the basis of a perceived
need to substitute the policy view that informed it. The exercise of
reference jurisdiction is intended to correct defects in reasoning,
not disagreement with policy. To entertain such a judicial course
would be to traverse de hors the settled confines of judicial
discipline, which proscribes questioning a precedent solely on the
ground that an alternative policy perspective may seem more
desirable.
i) Viewed through the prism of the above-referred decisions [referred
to in sub-paragraphs (d) to (f)] and many others, which are not
referred to here (to avoid prolixity), and considering the objective
of the ID Act, we disagree with the departure made in the referring
judgment from the earlier liberal interpretation without proper
justification. The only justification that can reasonably be traced is
to protect the industry, and by extension the employer. We propose
to discuss these facets a little later while dealing with the sixth
reason. In any event, the shift appears unwarranted given the way
this Court previously interpreted legislations origin whereof is
traceable to the Directive Principles of State Policy.
(iii) Sovereign Functions
a) In our view, the continued invocation of the idea of “sovereign
functions” as a threshold device to exclude an activity from the
definition of “industry” is misplaced. In Bangalore Water Supply
(supra), Hon’ble Krishna Iyer, J. did recognise a limited exception
for sovereign functions, but the judgment itself shows the difficulty
in defining what exactly falls within that category. Furthermore,
Hon’ble Krishna Iyer, J. had also acknowledged in his opinion that
even the inalienable functions of the State might have some
elements of “industry”, which could be severable so as to bring
them within the ambit of “industry” under Section 2(j)34.
b) This lack of clarity was later noticed in the referring judgment,
where it was pointed out that there was no unanimity amongst the
Hon’ble Judges on the meaning and contours of “sovereign
functions”. Hon’ble Beg, CJ., in fact, expressed doubt about the use
of the term altogether and suggested that exclusion should depend
only on whether a service is governed by distinct constitutional or
statutory rules, such as those under Articles 310 and 311 of the
Constitution35. Hon’ble Chandrachud, J. went a step further and
opined that sovereign function did not call for any exemption from
the definition of “industry”. His Lordship held that it is the nature of
the activity that matters, not the identity of the employer. If an
activity would be an industry when carried on by a private person,
it does not cease to be so merely because it is undertaken by the
State36.
34 [see paragraph 143(b) of Bangalore Water Supply (supra)]. 35 [see paragraph 163 of Bangalore Water Supply (supra)]. 36 [see paragraph 179 of Bangalore Water Supply (supra)].
c) The said reasoning is also fortified by the scheme of the ID Act
itself. The First Schedule [which provides for a list of “industries
which may be declared to be public utility services under sub-clause
(vi) of clause (n) of section 2” when “public emergency or public
interest so requires”] includes industries (emphasis supplied) such
as “Defence establishment” (Entry 8), Fire Brigade Service (Entry
10), India Government Mints (Entry 11), India Security Press (Entry
12), Service in the Uranium industry (Entry 19) and Services in the
Bank Note Press, Dewas (Entry 22) – areas which are ordinarily
understood as sovereign functions. The legislative intent is clear
and unequivocal. The legislature did not intend to exclude industries
associated with sovereign functions from the definition of
“industry”.
d) These inclusions predate Bangalore Water Supply (supra).
However, the legislative interventions that ensued the judgment
further accentuate the same intent. Notably, these include the
Currency Note Press (Entry 25), Services in the International
Airports Authority of India (Entry 27), and Industrial establishments
manufacturing or producing Nuclear Fuel and components, Heavy
Water and Allied Chemicals and Atomic Energy (Entry 28).
e) This shows that the legislature did not intend to exclude such
activities merely because they are performed by the State. The
arguments noticed in the referring judgment, which seek either to
expand “sovereign functions” to cover all welfare activities or to
confine it narrowly to inalienable functions, only highlight the
confusion surrounding the concept. In either case, what is
“inalienable functions” becomes uncertain and subjective.
f) For these reasons, we are of the view that whether an activity is
described as a “sovereign function” has little relevance in
determining if it is an “industry” under Section 2(j). The correct
approach, therefore, is to apply the functional test laid down in
Bangalore Water Supply (supra), focusing on the nature of the
activity and the employer-employee relationship. Any exclusion
must emanate from a clear constitutional or statutory provision,
and not from an uncertain and undefined notion of sovereignty.
(iv) Decision in Safdarjung Hospital (supra)
a) Safdarjung Hospital (supra) was expressly overruled by
Bangalore Water Supply (supra) but, according to Jai Bir Singh
[5-J] (supra), the former was rightly decided and presents the
correct position of law as to what is and what is not comprehended
within “industry”.
b) Question arising for decision in Safdarjung Hospital (supra) was
whether a hospital is an “industry” within the meaning of the ID
Act. A restricted meaning was attributed to the word “industry” by
observing that industry would mean only trade and business,
manufacture or undertaking analogous to trade or business for the
production of material goods or wealth or material services. It is
not necessary that there must be a profit motive but the enterprise
must be analogous to trade or business in the commercial sense.
c) Probing further, it is found that the 6-Judge Bench in Safdarjung
Hospital (supra) discussed whether a public utility service is
susceptible of being classified as an industry, merely by reason of
its inclusion in the First Schedule by the Parliament or by the
executive. Under consideration was Entry 9 of the First Schedule,
viz. “service in hospitals and dispensaries”. The Court rejected the
contention that every public utility service included in the First
Schedule would be classified as an “industry”. In doing so, the Court
first discussed Section 2(n)(vi) of the ID Act which states that any
industry specified in the First Schedule which the appropriate
Government may, if satisfied that public emergency or public
interest so requires, by notification in the Official Gazette, declare
to be a public utility service. The Court held that the services
mentioned in the First Schedule have to answer the test of an
“industry” run on commercial lines to produce something which the
community can use. These goods are brought into existence in a
commercial way analogous to a business where such production
takes place. The Court also held that entries in the First Schedule
are general in nature. For e.g. “Coal” by itself is not an industry;
but certain aspects of dealing in it can be classified as an industry.
However, the Parliament cannot add something which was not an
industry in the first place. In conclusion, the Court held that mere
notification in the First Schedule is insufficient to convert non-
industries under the ID Act to industries.
d) With all the respect, reverence and admiration we have for the
author of the decision in Safdarjung Hospital (supra) and the
other Hon’ble Judges comprising the 6-Judge Bench, we find
ourselves unable to subscribe to the line of reasoning that was
adopted to rule in favour of the appellants/hospitals of not being
covered by the definition of “industry”. Why it does not commend
to us is sought to be explained with reference to a simple illustration
as well as the provisions of the ID Act.
e) Let us assume that a technician is employed by the management
of a hospital pursuant to a service agreement on monthly wages in
a hospital having an X-ray unit. Patients are advised by the doctor
to undergo X-ray examination. The technician is required to position
the affected part of the patient’s body under the X-ray machine.
Once the image is captured, the condition of the affected part is
reflected on the plate which along with a report of the radiologist is
made over to the patient. The technician is not concerned whether
the hospital is run for profit or as a charity; his concern is confined
to performing the work for which he has been hired to the best of
his ability and the payment of wages due for the work performed
by him. Can it be contended with any degree of conviction that the
work performed by the technician is not part of a systemic activity37
37 considered in greater details, at a later part of this opinion
carried on in cooperation between the employer and the workman
and is, therefore, not covered by the expression “industry” as
defined in Section 2(j) of the ID Act? We think not. It would,
however, be an entirely different proposition if it is shown by the
management that the technician, fully aware of the charitable
nature of the hospital, did not intend to enter into and there was,
in fact, no employer-employee relationship but agreed to put in
gratuitous work for an honorarium.
f) Moving now to the statutory scheme of the ID Act, more particularly
Sections 2(n)(vi) and 22 read with the First Schedule [the heading
of which reads “INDUSTRIES WHICH MAY BE DECLARED TO BE PUBLIC UTILITY
transpires that the Parliament has been conferred power to include
certain industries (emphasis supplied) falling under the ambit of
public utility services as defined in the ID Act. It rightly presupposes
that the other entries, including those noted in the previous
segment, in the First Schedule are industries whether wholly or in
part. To say that after inclusion, the entries would then have to
satisfy the test of an “industry” under the ID Act in a separate
inquiry based on whether production of goods is on commercial
lines which the community can use or whether such goods are
brought into existence in a commercial way analogous to a business
where such production takes place, that would run contrary to the
express statutory scheme as mentioned hereinabove (emphasis
supplied). When the language of the statute is plain and clear and
no absurd result is produced, it is not proper to read in the statute
what does not appear or is not intended by its object. If one reads
Section 2(n)(vi) with the First Schedule, the legislative intent is
clear that the stated industries included in pursuance of such clause
[clause (vi)] are providing public utility services and hence ought
to be protected from strikes as in Section 22(1). Entry 9 is relatable
to “services in hospitals and dispensaries”. Though this entry was
not there in the ID Act, as originally enacted, by a legislative
amendment it was included in the First Schedule.
g) Rightly so, Safdarjung Hospital (supra) stands expressly
overruled by Bangalore Water Supply (supra).
(v) Reliance on Coir Board, Ernakulam [2-J] (supra), misplaced
a) Reliance placed by Jai Bir Singh [5-J] (supra) on the decision of
Coir Board Ernakulam [2-J] (supra) to draw support for the view
that Bangalore Water Supply (supra) requires reconsideration to
our mind, again, is quite unsound. The request for a reference
having been declined in Coir Board Ernakulam [3-J] (supra) and
the appeals having been directed to be listed before the appropriate
Bench for further proceedings, the order attained finality insofar as
the question of reference of Bangalore Water Supply (supra) to
a larger Bench is concerned. However, in the process of its
reasoning, the referring judgment resurrected the view in Coir
Board Ernakulam [2-J] (supra) as if the Bench in Jai Bir Singh
[5-J] (supra) were exercising intra-court appellate jurisdiction over
the order passed in Coir Board Ernakulam [3-J] (supra). This
was plainly impermissible.
b) That apart, reference made by Jai Bir Singh [5-J] (supra) to past
experience of the Supreme Court [since the time Bangalore Water
Supply (supra) has been holding the field] being flooded with
litigation arising from numerous awards of reinstatement with huge
amounts as back wages, has left us disturbed and dazed,
interminably, so to say. With respect, it is beyond our
comprehension that such a ground could at all have weighed in the
mind of the 5-Judge Bench as imperative, to make a reference. If
the justice of a case before the tribunal/court arising out of an
industrial dispute demands reinstatement of a workman/workmen
with back wages, obviously upon a satisfaction being reached that
the termination is illegal, and the same is reflected in the award, it
is indeed unimaginable and sad that such awards were
characterised as burdensome and a critical view thereof is taken to
refer Bangalore Water Supply (supra) to a larger Bench. The
overarching preambular promise to secure justice for all seems to
have passed into oblivion while the 5-Judge Bench made the
observation in paragraph 35 of the referring judgment that “awards
granting heavy packages of back wages, sometimes result in taking
away the very substratum of the industry”. More than anything
else, this clearly evinces a drift towards a “pro-employer/anti-
labour” approach without supporting reasons, which we find to be
repugnant and odious.
(vi) Reference to Aeltemesh Rein (supra), untenable
a) Reference to Aeltemesh Rein (supra) by the 5-Judge Bench
appears to be a plain and simple mistake. However, it is unknown
to what extent such mistake had a bearing on the decision-making
process. Aeltemesh Rein (supra) centred around non-
enforcement of Section 30 of the Advocates Act, 1961 and had, not
even remotely, anything to do with the ID Act. In any event, the
observation made in paragraph 45 of the referring judgment that
“the pressing demands of the employers and the employees and
the helplessness of the legislature and the executive in bringing into
force the Amendment Act”, i.e., the amended definition of
“industry” post-1982, is an imperative for a reference casts grave
doubts about the acceptability of such a reason. Aeltemesh Rein
(supra) and the decisions referred to therein are authorities for the
proposition that even the Supreme Court cannot issue a mandamus
to the Central Government to notify a particular law, enacted by
the legislature. Once this proposition is accepted, it defies reason
as to why (despite the legislature having amended the definition of
“industry” accepting the interpretation placed on such word by the
7-Judge Bench) this Court should be goaded to revisit such
interpretation. Certainly, the legislature and the executive are no
pushovers. All three organs have their independent spheres of work
and each organ must be left free to do what the Constitution ordains
it to do. Mr. C.U. Singh, learned senior counsel for a particular trade
union is right in contending that the gun is sought to be placed on
the Court’s shoulder to fire. We conclude by observing that the
reason in paragraph 45 of the referring judgment falls far short of
an acceptable reason for ordering a reference and is plainly
unacceptable.
b) Moreover, the referring judgment records that in Aeltemesh Rein
(supra), the Union of India had offered an explanation that, “for
employees belonging to categories of industries excluded under the
amended definition, no alternative mechanism for redressal of
service disputes had been provided, and that this constituted the
reason for not bringing the amended definition into force”.
However, upon repeated reading of Aeltemesh Rein (supra), we
are unable to locate any such observation, submission, or
explanation attributed to the Union of India. The record of that
decision does not reflect the reasoning ascribed to it in the referring
judgment. In the absence of any such material in the original
judgment, we are constrained to hold that the referring judgment
proceeds on an erroneous premise in this regard, having attributed
to Aeltemesh Rein (supra) a position that is not borne out from
the text of the decision.
39. The short order dated 2nd January, 2017 in Jai Bir Singh [7-J] (supra),
noticed above, did not go as far to examine the reasons for the reference
in depth as we have undertaken; hence, no discussion is found there.
40. Moving ahead, there is one other aspect that bears serious
consideration. It is premised on the observations made by this Court in
State of Tamil Nadu v. Nellai Cotton Mills Ltd.38 [2-J].
41. The genesis of the lis in Nellai Cotton Mills (supra) traces back to the
enactment of the Tamil Nadu Industrial Establishments (Conferment of
Permanent Status to Workmen) Act, 1982, which was brought into force
with the object of conferring permanent status upon workmen who had
rendered continuous service for a period of 480 days within 24 calendar
months in an industrial establishment. Section 3 of the said enactment,
being pivotal, not only mandated such conferment but also elaborated
the concept of “continuous service” by including interruptions
occasioned by sickness, authorised leave, strike, lockout, and other
contingencies. The Explanation appended thereto bore significance
inasmuch as it expanded the computation of days worked to include
periods of lay-off, leave with wages, temporary disablement and
maternity leave.
42. The constitutional validity of the said enactment came to be assailed
before the High Court of Madras in a cluster of writ petitions by several
industrial establishments. Upon consideration, the High Court partly
allowed the challenge, inter alia, holding the Explanation to Section 3 to
be unenforceable and redundant, striking down a portion of Section 3(2)
on the anvil that it imposes an unreasonable restriction on the
employer’s rights, and clarifying that apprentices and badli workers
would not fall within the ambit of “workman” for the purposes of the
provision. The High Court further held that the Act would neither
supersede settlements between employers and workmen nor operate
retrospectively.
43. Aggrieved thereby, the State preferred an appeal and, during its
pendency, introduced amendments by way of Amending Act 44 of 1985
with a view to obviate the practical impediments highlighted in the
judgment. The Amendment Act recalibrated the Explanation to Section
3 by deeming certain periods as amounting to continuous service and
introduced an additional Explanation expanding the meaning of “law” to
subsume awards, agreements and settlements as well. A validation
clause was also incorporated vide the amending Act to retrospectively
validate actions taken under the principal Act.
44. In this backdrop, the interpretative question arose as to whether the
subsequent legislative amendments evinced an intention to depart from,
or to endorse, the construction placed by the High Court.
45. It is in this milieu that the principle assumes relevance that subsequent
legislative action/inaction, post any judicial engagement with the
legislation, may furnish a legitimate indicator to discern legislative
approval or disapproval of the ratio laid down in the judgment.
Interestingly, while the legislature therein addressed certain operational
difficulties through the amendment, it did not re-enact or validate the
portion invalidated by the High Court, thereby lending credence to the
inference that the judgment of the High Court stood accepted to that
limited extent.
46. It would be profitable for the present discussion to quote the relevant
paragraph from such decision hereinbelow:
8. When the Act has been judicially interpreted, courts may study the
subsequent action or inaction of the legislature for clues as to legislative
approval or disapproval of judicial interpretation. After the statute has
been judicially interpreted in a certain way and if the legislature by
taking note of the judgment amended the statute appropriately so as to
give it a different meaning from the one asserted by the courts, or not
giving any different meaning from the view taken by the court, it may
be argued with some justification that the legislature has expressly or
by implication ratified the judicial interpretation. In the instant case, the
legislature has expressly taken note of the High Court verdict and
removed the practical difficulties caused thereby in implementing the
provisions of the Act, by appropriate amendments. No provision,
however, was inserted to rewrite and validate the portion which was
struck down by the High Court. It could therefore, be reasonably held
that the legislature has accepted the judgment of the High Court to the
extent indicated.
47. The exposition of law in Nellai Cotton Mills Ltd. (supra) is that events
transpiring after a judicial interpretation of a term in an opinion are
material to ascertain the legislative approach of approval or disapproval
of such interpretation. If approved, the legislature may not intervene;
however, if it is disapproved, the legislature may step in with a
legislation to remove the basis of such interpretation. With utmost
respect, this exposition in Nellai Cotton Mills Ltd. (supra) does not
appear to have engaged the attention of either Jai Bir Singh [3-J]
(supra) or Jai Bir Singh [5-J] (supra). Though Nellai Cotton Mills
Ltd. (supra), being a 2-Judge Bench decision was not binding on
Benches of larger strength, Coir Board Ernakulam [2-J] (supra) was
certainly bound unless it differed. Nevertheless, the exposition in Nellai
Cotton Mills Ltd. (supra) leaves its own imprint, particularly when read
with the caveat in Bangalore Water Supply (supra) that its
construction of “industry’ was, prima facie, to endure till the legislature
steps in to substitute it by a more precise definition. Parliament by the
1982 amendment did step in. It did not completely disapprove
Bangalore Water Supply (supra): the triple test was approved but the
definition of “industry” was calibrated by narrowing its width as
explained therein by excluding hospitals, charitable institutions, clubs,
etc. What none could scarcely have imagined was that, though the
legislature did act and step in by partial approval and partial disapproval,
the executive would stall the enforceability of the new/amended
definition. It is evident from the Lok Sabha records that enforcement of
the amended definition of “industry” was deferred pending review due
to representations submitted by stakeholders, while all other provisions
of the 1982 amendment were brought into force. For four decades
thereafter, both the legislative and executive wings accepted the status
quo - the 1982 amendment on paper, Bangalore Water Supply
(supra) in practice till such time the 2020 Code was enacted and
enforced quite recently. To equate such executive deferral with
legislative acquiescence is to invert separation of powers. Thus, when
legislative response had intervened to calibrate Bangalore Water
Supply (supra), the will of the people did not translate into law for a
reason not anticipated, and the political branches themselves
acquiesced in the prevailing arrangement since 1985, it is indeed
questionable whether the reference made by Jai Bir Singh [3-J]
(supra) did clothe Jai Bir Singh [5-J] (supra) with the competence and
authority to doubt Bangalore Water Supply (supra), rendering the
reconsideration otiose.
48. Proceeding further ahead, we may observe that the doctrine of stare
decisis enjoins that a precedent, particularly one laid down by a larger
bench of 7 (seven) Judges and followed for decades, be revisited only
upon satisfaction of exacting tests: manifest error, public mischief, or a
conflict of decisions of coordinate Benches. Mere disagreement with a
prior view or the mere passage of time requiring a relook does not
warrant a reference to a larger Bench. Judged by that standard, Jai Bir
Singh [5-J] (supra) carries chinks in its armour too prominently so as
to justify unsettling Bangalore Water Supply (supra). Jai Bir Singh
[5-J] (supra) neither identified any ‘manifest error’ nor inter-bench
conflict; at its extreme, it only had a policy discomfort with the width of
the triple test. Unfortunately, Jai Bir Singh [5-J] (supra) pointed to no
alternative workable formulation to the triple test it faulted, and omitted
in undertaking the inquiry required by Keshav Mills Co. Ltd. (supra)
as to why a 27-years old rule settled across multiple Benches should be
unsettled. Its reliance on Safdarjung Hospital (supra), a precedent
Bangalore Water Supply (supra) had expressly overruled, further
offended settled canons of precedent. In seeking to pierce the patina of
permanence that Bangalore Water Supply (supra) had acquired, Jai
Bir Singh [5-J] (supra) fails the procedural discipline [emphasized in
Shah Faesal (supra)] and the substantive discipline of stare decisis.
Sadly, Jai Bir Singh [5-J] (supra) sought to destabilise the old order
without erecting any jurisprudential structure to replace it.
49. In Chandra Prakash v. State of U.P.39 [5-J], this Court, after
considering a series of precedents, reiterated the principle of binding
precedent in following words:
22. A careful perusal of the above judgments shows that this Court took
note of the hierarchical character of the judicial system in India. It also held
that it is of paramount importance that the law declared by this Court should
be certain, clear and consistent. As stated in the above judgments, it is of common knowledge that most of the decisions of this Court are of
significance not merely because they constitute an adjudication on the
rights of the parties and resolve the disputes between them but also
because in doing so they embody a declaration of law operating as a binding
principle in future cases. The doctrine of binding precedent is of utmost
importance in the administration of our judicial system. It promotes
certainty and consistency in judicial decisions. Judicial consistency
promotes confidence in the system, therefore, there is this need for
consistency in the enunciation of legal principles in the decisions of this
Court. … .
50. We should not be misunderstood in our critique of the referring
judgment as if, being part of the 9-Judge Bench that has been
constituted, we are sitting in appeal thereagainst. This exercise has been
necessitated solely for the limited purpose of ascertaining whether due
process had been followed or not.
51. Finally, the raison d’être behind the referring judgment to make the
reference is captured in the first couple of lines of paragraph 24, reading
thus:
24. In any case, no such inhibition limits the power of this Bench of five
Judges which has been constituted on a reference made due to apparent
conflict between judgments of two Benches of this Court. As has been
stated by us above, the decision in Bangalore Water is not a unanimous
decision.
52. We unhesitatingly conclude by recording that the reasoning in Jai Bir
Singh [5-J] (supra) does not satisfy the aforementioned principles for
reviewing earlier decisions of this Court as laid down in Keshav Mills
Co. Ltd. (supra). To reconsider the definition of “industry” and giving it
a narrower frame than what is elaborated in Bangalore Water Supply
(supra) would run contrary to public good. It would result in defeating
the purpose of the ID Act which, undoubtedly, is a social welfare and
worker-oriented legislation. Furthermore, since 1978, the decision in
Bangalore Water Supply (supra) has been followed/relied on by this
Court in at least 84 decisions40 and no compelling reasons do appear for
disturbing the field set by it. We are also unable to accept the reasons
given in Jai Bir Singh [5-J] (supra), which inter alia include the
Government’s difficulty and reluctance in bringing the amended
definition of “industry” into force, as either valid or sufficiently
compelling for the present reference. Lastly and most importantly, to
reconsider the decision at this distance of time would inevitably result in
tremendous public inconvenience and hardship for the workmen as well
40 list furnished by Mr. C.U. Singh
as other parties embroiled in pending reference / litigation under the ID
Act.
53. Having furnished our own reasons as to why the reasons given in Jai
Bir Singh [5-J] (supra) and Jai Bir Singh [7-J] (supra) are insufficient
to warrant a reference, we record having failed to find any discussion
there on how the decision in Bangalore Water Supply (supra) has
become unworkable. Not to speak of the tests laid down in Keshav Mills
Co. Ltd. (supra), even in view of the principles laid down in Dr Shah
Faesal (supra), there does not exist any valid ground which could justify
referring Bangalore Water Supply (supra) to a larger Bench.
54. Arguendo, assuming for once, that Bangalore Water Supply (supra)
has become unworkable, declaring it so at a point when the ID Act no
longer survives in the same form, and when the number of pending
cases before the Industrial Tribunals and the Labour Courts may not be
substantial, is a factor that militates against the need for
reconsideration. If reconsideration was indeed required, the same ought
to have been undertaken soon after the opinion in Jai Bir Singh [5-J]
(supra) was expressed in 2005; or even in 2017, soon after Jai Bir
Singh [7-J] (supra) referred the issue to the Chief Justice for
constituting a 9-Judge Bench. This reference has come before this 9-
Judge Bench only 9 (nine) years after Jai Bir Singh [7-J] (supra). The
numbers may be a mere coincidence but the coincidence ends there:
the intervening years have hardened the law on the ground, and the
Court now faces a test of doctrine and of institutional resolve.
55. When a reference itself lingers for more than 2 (two) decades, the
doctrine of stare decisis is tested twice over – first against the standards
set by Keshav Mills Co. Ltd. (supra) and second, against the Court’s
own inability to give finality. Bangalore Water Supply (supra) has
been applied by smaller Benches of this Court, the high courts, the
tribunals, and employers every day of that delay. To disturb it now
without meeting the highest threshold would suggest that judicial doubt,
not judicial reasoning, drives the law.
56. It is trite, no court should feel inhibited to do whatever the justice of a
case demands, based on the principle of ex debito justitiae; but a little
more introspection could have dispelled the unfounded notion that
Bangalore Water Supply (supra) requires reconsideration and,
thereby, clear the doubt as to its efficacy as a binding precedent.
57. In fine, while Jai Bir Singh [5-J] (supra) omitted to consider several
precedents which is striking, the coup de grace is its failure to notice
that Bangalore Water Supply (supra) was self-limiting.
58. We, thus, have no hesitation to reject the reference.
59. Having said thus, we intend to assign our brief reasons why the
elaborate and enlightening opinion in Bangalore Water Supply (supra)
on interpretation of the term “industry” in the ID Act requires no
tinkering at all, much less any reconsideration.
60. Primarily the question before this larger Bench is, how to interpret
Section 2(j) of the ID Act defining “industry”? Hence, it would be
profitable to begin by reading portions of the definition clause [Section
2 of the ID Act] and then some of the other provisions having a bearing
on the said question. The need to navigate through the ID Act itself
arises owing to scant reference being made to it by learned senior
counsel/counsel for the parties advocating a reconsideration of
Bangalore Water Supply (supra).
61. Relevant clauses of Section 2 read as under:
“Section 2. - In this Act, unless there is anything repugnant in the subject
or context,-
(j) ‘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.
(g) ‘employer’ means—
(i) in relation to an industry carried on by or under the authority of any
department of the Central Government or a State Government, the
authority prescribed in this behalf, or where no authority is prescribed, the
head of the department;
(ii) in relation to an industry carried on by or on behalf of a local authority,
the chief executive officer of that authority.
(s) ‘workman’ means any person (including an apprentice) employed in any
industry to do any manual, unskilled, skilled, technical, operational, clerical
or supervisory work for hire or reward, whether the terms of employment
be express or implied, and for the purposes of any proceeding under this
Act in relation to an industrial dispute, includes any such person who has
been dismissed, discharged or retrenched in connection with, or as a
consequence of, that dispute, or whose dismissal, discharge or
retrenchment has led to that dispute, but does not include any such
person—
(i) who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act,
1950 (46 of 1950), or the Navy Act, 1957 (62 of 1957); or
(ii) who is employed in the police service or as an officer or other employee
of a prison; or
(iii) who is employed mainly in a managerial or administrative capacity; or
(iv) who, being employed in a supervisory capacity, draws wages exceeding
ten thousand rupees per mensem or exercises, either by the nature of the
duties attached to the office or by reason of the powers vested in him,
functions mainly of a managerial nature.
(k) ‘industrial dispute’ means any dispute or difference between employers
and employers, or between employers and workmen, or between workmen
and workmen, which is connected with the employment or non-employment
or the terms of employment or with the conditions of labour, of any person;
(n) ‘public utility service’ means—
(i) any railway service or any transport service for the carriage of
passengers or goods by air;
(i-a) any service in, or in connection with the working of, any major port or
dock or any industrial establishment or unit engaged in essential defence
services;
(ii) any section of an industrial establishment, on the working of which the
safety of the establishment or the workmen employed therein depends;
(iii) any postal, telegraph or telephone service;
(iv) any industry which supplies power, light or water to the public;
(v) any system of public conservancy or sanitation;
(vi) any industry specified in the First Schedule which the appropriate
Government may, if satisfied that public emergency or public interest so
requires, by notification in the Official Gazette, declare to be a public utility
service for the purposes of this Act, for such period as may be specified in
the notification:
Provided that the period so specified shall not, in the first instance, exceed
six months but may, by a like notification, be extended from time to time,
by any period not exceeding six months, at any one time, if in the opinion
of the appropriate Government, public emergency or public interest
requires such extension;
…”.
62. Pausing for a moment, it would be worthwhile to understand what the
objective of a definition clause is. Useful reference can be made to the
decision in SBI v. M.J. James41 where, after noting precedents and
Bennion on Statutory Interpretation, this Court speaking through
Hon’ble Sanjiv Khanna, J. ruled that:
“20. … The objective of definition clauses is to avoid frequent repetition in
describing the subject-matter to which the word or expression is intended
to apply. [Nahalchand Laloochand (P) Ltd. v. Panchali Cooperative Housing
Society Ltd. : (2010) 9 SCC 536]. This is useful when the same word or
expression is used more than once in the same enactment [Bhagwati
Developers (P) Ltd. Peerless General Finance and Investment Co. : (2013)
9 SCC 584]. The raison d’être behind the definition clause is that while
interpreting a provision, the defined word or expression would carry the
same meaning as the defined words or expression are employed and used
by the maker in the sense appropriate to the definition. The definition can
be with the intent to attract a meaning already established by law; expand
the meaning by adding a meaning; or narrow the meaning by exclusion
[Part XII, Rules of Construction Laid Down by Statute, Sections 199 and
200 at p. 517, Bennion on Statutory Interpretation, Indian Reprint, 6th
Edn.]. This general rule of construction laid down by the enactment is
subject to the context. Albeit, the interpreter, to deviate from the defined
meaning, should record reasons to show that the word/expression in that
particular provision carries a different meaning. Contrary context is not to
be assumed or accepted easily, in the absence of indication and reason to
differ from the defined meaning. The repugnancy will arise when the
definition meaning does not agree with the subject in the context.
63. Now reverting to the definition of the word “industry” noted above, it
means any business, trade, undertaking, manufacture or calling of
employers; and includes any calling, service, employment, handicraft,
or industrial occupation or avocation of workmen.
64. To carry forward the discussion, one may trace what trade, business,
undertaking, etc. appearing in Section 2(j) means in the common
parlance.
(i) Trade means exchange of goods for goods or goods for money.
(ii) Business means an enterprise which is an occupation as
distinguished from pleasure.
(iii) Undertaking is a word of variable meaning. As a noun, it can mean
a formal promise or an assurance. The said word, as a noun, can be
also used interchangeably with a project or enterprise or even
business. However, when used in the sense of undertaking a
business, it is a transitive verb. In the given context, the noun would
fit into the second meaning.
(iv) Manufacture is a kind of productive activity in which the making of
articles or material (often on a large scale) is by physical labour or
mechanical power.
(v) Calling denotes the following of a profession or trade.
(vi) Service again has different shades of meaning. Work done for
somebody fits the context best.
(vii) Employment is a noun derived from the word ‘employ’, which is a
transitive verb. The word ‘employ’ for the purpose of understanding
employment would mean payment made by one to the other in lieu
of work done by him. A common example would be, the company
employs hundreds of persons.
(viii) Insofar as workmen are concerned, apart from calling, service and
employment, we find the words “handicraft, or industrial occupation
or avocation of workmen”.
(ix) Handicraft is an activity needing skill with the hands as well as artistic
ability. An object that is produced by this activity is also called
handicraft. The first meaning is what seems apt in the context.
(x) Industrial occupations refer to jobs focused on transforming
materials into finished products and are characterised by being
manual-labour intensive.
(xi) Finally, avocation is some activity which is done for enjoyment and
pleasure outside of one’s regular profession; it is sort of a non-work
interest.
65. We find no reason to deviate from the common parlance meaning of
these words/nouns while construing the defined meaning of the noun
“industry”.
66. Now, the word “industry” wherever it is used in the ID Act has to be
understood by tracing its meaning to Section 2(j) unless, of course, the
context otherwise requires. The word “industry” is used in various
provisions of the ID Act42 where it is to be read as a noun. However, at
least in 3 (three) sections of the ID Act43, the words “industry being
carried out” have been used. While ascertaining the meaning of such a
phrase, one needs to fall back on Section 2(j). Thus, “industry being
carried out” would be akin to trade or business or undertaking or
manufacture or employment or handicraft or industrial occupation being
carried out. When the statute says “industry being carried out”, the
focus is on the action, making “industry” describe an activity in the sense
of a verb. Similarly, when read like trade or business or employment or
handicraft or industrial occupation being carried out, all these words
which are nouns, i.e., trade, business, undertaking, employment,
handicraft, industrial occupation, etc. are more like activities, focusing
on the action involved in course thereof, thereby leaning towards a verb
rather than a noun. Although Section 2(j) has a ‘means’ part as well as
an ‘includes’ part, each such part is not to be read in isolation but both
parts are to be read in conjunction to understand what the word
“industry” connotes qua both employer and workmen.
67. It is this planned, organised, regular, interconnected and continuous
activity carried out by the employer and the workmen in collaboration
with each other according to a system or method – not a random or one-
off – for an identified purpose is what is a systematic activity. According
42 Sections 2(ee), 2(i), 2(j), 2(q), 2(n), 2(s), 9B, 10H, 25F, 36 43 Sections 2(a)(i), 2(g), 2(ka)
to Hon’ble Krishna Iyer, J. the activity must be systematic in the sense
of being organised as a system. Such prong is now read by courts as
systemic activity. Though the word used was systematic, the meaning
given was systemic. Core systemic activities in a typical industry would
include procurement, production/manufacturing, quality control, human
resources management, inventory and logistics, marketing and sales,
finance and accounts maintenance, research and development, and
compliance of statutory requisites. To wit, manufacture is a systemic
activity which would ordinarily include procurement, processing and
assembling of raw materials and distribution of the finished product
through coordinated steps. When the Bench referred to systemic activity
in Bangalore Water Supply (supra), it pointed to this web of
organised, interdependent functions.
68. Thus, systemic activity is the foundation on which the legal concept of
“industry” rests.
69. Though the ultimate object of undertaking such systemic activity
resulting in the production of goods and materials, provision of services,
generation of energy, and the like is to cater to human needs and fulfil
desires, in reality as well as in law, the motive that drives an employer
to run an industry and the object with which a workman puts his labour
are distinct and different. At the advent of the ID Act in 1947, industries
were synonymous with profit making establishments. However, over the
course of decades, manufacturing and consequently, industries, have
evolved in a dynamic manner. Profit no more remains the fulcrum of an
industry. Thus, as enunciated above, profit need not be a sine qua non
for an industry and even a non-profit making establishment would be
classified as an industry. To a poor workman, the employer’s gains from
the activity are immaterial; his concern is with the wages earned at the
end of the day/month.
70. Leaving aside legal semantics and reading each word used in clause (j)
of Section 2, it is clear that the several expressions which appear after
‘means’, viz. business, trade, undertaking, manufacture or calling, and
after ‘includes’, viz. calling, service, employment, handicraft, industrial
occupation, avocation, are activities which satisfy the triple test as
propounded by Hon’ble Krishna Iyer, J. and, therefore, are covered by
the definition of “industry” in the ID Act (emphasis supplied). In this
context, the expressions business, trade, undertaking, manufacture,
calling, service, employment, etc. have been used in the sense of a noun
and the adjective ‘any’, qualifying such noun (the activities), should be
given its ordinary meaning; it cannot be given a restricted meaning so
that the activities other than trade and business, if they do not align
with or are not related with trade or business, would remain out of the
purview of the word “industry” (emphasis supplied).
71. In our considered opinion, the statutory framework engrafted in Section
2(j) of the ID Act and the judicial exposition for determining what
constitutes an “industry”, namely, the triple test, operate in complete
harmony, each reinforcing the other (emphasis supplied).
72. Even, the learned Attorney did not find fault with the triple test but he
only appealed for exercise of caution. The learned Attorney, in fact,
expressly accepted the continued validity of the triple test as a sound
exposition of law under the ID Act, and limited his submission to cautious
application of the said test. Be that as it may, we advert to the
concession of the learned Attorney only in passing, for it does not
constitute the basis of our determination.
73. This briefly is our understanding of the word “industry” which, in our
considered opinion, aligns with the meaning attributed to it in
Bangalore Water Supply (supra).
74. The discussion on the topic would, however, remain incomplete without
noticing paragraph 145 of Bangalore Water Supply (supra) where
Hon’ble Krishna Iyer, J. made it clear that the meaning attributed to the
word “industry” was transient in nature. The relevant passage reads:
145. We conclude with diffidence because Parliament, which has the
commitment to the political nation to legislate promptly in vital areas like
Industry and Trade and articulate the welfare expectations in the
“conscience” portion of the Constitution, has hardly intervened to re-
structure the rather clumsy, vapourous and tall-and-dwarf definition or tidy
up the scheme although judicial thesis and anti-thesis, disclosed in the two-
decades-long decisions, should have produced a legislative synthesis
becoming of a welfare state and socialistic society, in a world setting where
ILO norms are advancing and India needs updating. We feel confident, in
another sense, since Counsel stated at the bar that a bill on the subject is
in the offing. The rule of law, we are sure, will run with the rule of life —
Indian life — at the threshold of the decade of new development in which
labour and management, guided by the State, will constructively partner
the better production and fair diffusion of national wealth. We have stated
that, save the Bangalore Water Supply and Sewerage Board appeal, we are
not disposing of the others on the merits. We dismiss that appeal with costs
and direct that all the others be posted before a smaller Bench for disposal
on the merits in accordance with the principles of law herein laid down.
75. What was conceived as an interim judicial formulation, however, has,
through more than four decades of executive inertia, acquired the
character of settled law. Time, by itself, cannot confer permanence upon
what was intended to be transient; yet, neither can the passage of time
and consistent reliance upon a legal position be disregarded without
compelling justification. In our considered view, the reference before us
discloses no such justification.
76. To be clear: the reference made by Jai Bir Singh [5-J] (supra),
followed by Jai Bir Singh [7-J] (supra), was not necessary and serves
no practical, jurisprudential or doctrinal purpose. The reference seeks to
disturb a quietus that has held the field for nearly half a century. The
uninterrupted application of the law in Bangalore Water Supply
(supra) having converted an arrangement, transient in origin, into the
institutional and in light of the 2020 Code becoming operational since
February, 2026, we conclude by observing that while the reference
requires no answer, it must be said plainly: Bangalore Water Supply
(supra) does not require reconsideration (emphasis supplied). Finality in
law would be undermined without any corresponding public interest
being served. We must remember: institutional credibility lies in
respecting finality, not in perpetuating doubt; and, absent compelling
justification, none of which exists here, the chapter must be treated as
closed.
77. In light of the foregoing discussions, we answer the three questions
framed by the 3-Judge Bench vide order dated 16th February, 2026 as
follows:
Question (i) – The opinion rendered by Hon’ble Krishna Iyer, J. in
Bangalore Water Supply (supra) [for 3 (three) of the member Judges
of the 7-Judge Bench, with which Hon’ble Beg, CJ. and Hon’ble
Chandrachud, J. concurred], correctly interprets “industry” as defined in
Section 2(j) of the ID Act. The 1982 amendment and the definition of
“industry” in the 2020 Code would have no impact on the interpretation
of the expression “industry” as contained in the ID Act, which was to
remain operational till legislature stepped in with a new legislation.
Question (ii) – The question has to be answered in the affirmative in
view of our reasoning above.
Question (iii) – In view of the conclusions recorded in the precedents
which were affirmed by Bangalore Water Supply (supra) and regard
being had to our concurrence with the said decision, this question is
redundant and we need not separately explore which of the activities
would constitute “sovereign functions”.
78. We, therefore, order that all pending references arising out of industrial
disputes made under the ID Act ought to be taken to its logical
conclusion in accordance with the law on interpretation of the word
“industry” subsisting prior to operationalisation of the 2020 Code.
79. Since the Bench was informed of a likely challenge to the 2020 Code,
nothing observed here shall have any effect on such challenge.
80. To conclude, we reject the reference for the reasons discussed above
and hold that the term “industry” as interpreted and explained in
Bangalore Water Supply (supra) requires no reconsideration.
81. All pending matters may now be placed before an appropriate Bench,
upon obtaining orders from the Chief Justice.
82. We sincerely appreciate the efforts of the learned Attorney, all learned
senior counsel/counsel for the parties and the learned amici curiae, Mr.
Jamshed Cama and Mr. P.S. Sen Gupta, senior advocates for their
wholehearted and erudite assistance in enlightening us to facilitate
rendition of this opinion.
CIVIL APPEAL NO.897 OF 2002
State of Uttar Pradesh …..Appellant(s)
VERSUS
Jai Bir Singh …..Respondent(s)
AND
SLP(C) No.12679-12682/2014
DEFINITION OF INDUSTRY: PRE-BANGALORE MUSINGS ................................... 18
B. Concurring opinions of M.H. Beg, C.J., and Y.V. Chandrachud, C.J. 32
LEGISLATIVE INTERVENTIONS POST BANGALORE WATER SUPPLY .................. 36 A. Formulation of the triple test and interpretation of ‘Undertaking’ with
respect to ‘Noscitur A Sociis’ in Bangalore Water Supply .......................... 38
B. Do sovereign functions include ‘welfare activities’? ......................... 52
STARE DECISIS AND RECONSIDERATION OF BANGALORE WATER SUPPLY ..... 70
A. Is Bangalore Water Supply ratio patently erroneous? .................... 73
B. Does the ratio require reconsideration in light of changed
C. Would unsettling the ratio cause greater public harm than good? . 78
IMPACT OF LEGISLATIVE AMENDMENTS ON BANGALORE WATER SUPPLY ...... 79
Joymalya Bagchi, J.
1.I am in humble agreement with the opinions of the Hon'ble the Chief Justice and my revered brother Justice Narasimha, that the reference was validly made. But with the deepest respect and humility, I am unable to agree with the reformulation of the triple test propounded in Bangalore Water Supply & Sewerage Board v. A Rajappa1 vis-a-vis the definition of “industry” by Hon’ble the Chief Justice. In this regard, I respectfully concur with the opinions of my revered sister Justice Nagarathna and revered brother Justice Datta, that the triple test propounded in Bangalore Water Supply (supra) correctly determines the scope and ambit of "industry" under the Industrial Disputes Act, 19472. However, I am ad idem with the Hon’ble the Chief Justice and my revered colleagues on the final outcome that the ratio in Bangalore Water Supply (supra) would be confined to disputes pending under the repealed law, and the new law, namely the Industrial Relations Code, 20203 shall be independently interpreted.
2.With these prefatory words, I proceed to answer the reference. INTRODUCTION
3.The present reference is the culmination of nearly five decades of judicial experiment with the definition of “industry” in Section 2(j) of the ID Act, 2 Hereinafter “ID Act” 3 Hereinafter “IR Code” a provision situated within a legislative framework designed to preserve industrial peace, secure social harmony, and balance the competing claims of labour, capital, and the consuming public.
4.Bangalore Water Supply (supra) was an inclusive interpretive exercise to distil the true import of the word “industry”. Speaking through Krishna Iyer, J., the majority articulated what has since come to be known as the “triple test”, expanding the definition to cover any systematic activity organised through employer employee cooperation for the production or distribution of goods and services calculated to satisfy human wants4. Interrogating this expansive understanding of industry forms the backdrop of the present reference. Though for four decades Bangalore Water Supply (supra) sought to settle the law, its breadth continued to be a source of continuing debate. The definition, as interpreted, brought within the sweep of industry a wide range of activities in the nature of welfare schemes, Government departments, statutory bodies, hospitals, educational and religious institutions, clubs, research bodies and liberal professions. In doing so, it set into motion a series of judicial responses - some accepting, some refining, and others quietly resisting its reach. TRACING THE REFERENCE
5.To understand how the reference questioning Bangalore Water Supply (supra) came into being, it is necessary to refer to the first inflection point in this long journey, namely, Coir Board, Ernakulam, Cochin & Anr v. Indira Devai P.S. & Ors (2J)5. A two Judge Bench, while applying Bangalore Water Supply (supra), recorded reservations as to its correctness and the matter was directed to be placed before the Chief Justice to consider whether a larger Bench should be constituted to reconsider the decision in Bangalore Water Supply (supra).
6.The proposed reference in Coir Board (2J) (supra) came to be placed before a three Judge Bench in Coir Board, Ernakulam, Kerala State & Anr v. Indira Devai P.S. & Ors (3J)6. The request for reference was declined on two grounds. First, the Bench was of the view that a two Judge Bench could not seek reconsideration of Bangalore Water Supply (supra), which had been rendered by a seven Judge Bench. Secondly, on merits, it found no occasion to reopen the issue, since the ratio in Bangalore Water Supply (supra) had held the field for more than two decades and Parliament had, in the meantime, introduced a new definition of “industry”7, though the amended provision had not yet been brought into force.
7.The present reference stems from the doubt expressed with regard to the expansive formulation of the definition of industry in State of Gujarat & Ors v. Pratamsingh Narsinh Parmar8, where the Court was called upon to consider whether the Forest Department is an “industry”. The Bench 7 Industrial Disputes (Amendment) Act, 1982 (Act No. 46 of 1982) noted that the High Court had erred in mechanically following an earlier case, namely, Chief Conservator of Forests & Anr v. Jagannath Maruti Kondhare & Ors9 (where the same question had arisen), without examining the factual matrix that the employee had failed to assert the nature of duties discharged by him and the character of the establishment in which he had been recruited, so as to prove that the latter was an “industry”. While distinguishing Chief Conservator (supra) on facts, the Bench observed that “ordinarily, a department of the Government cannot be held to be an industry and rather it is a part of the sovereign function.” This observation appears to sit uneasily with the ratio in Chief Conservator (supra), where the three Judge Bench had given a restricted meaning to sovereign functions, to be understood as such functions for which the State is not answerable in a Court of law, and not to include public and statutory duties. Noticing the cleavage between Chief Conservator and Narsinh Parmar (supra), the three Judge Bench in State of U.P. v. Jai Bir Singh (3J)10 directed as follows: “The matter is of considerable public importance, to be decided by a larger Bench. We, therefore, direct that the papers be laid before Hon’ble the Chief Justice for appropriate orders.” 10 Order dated 31.01.2002 in SLP (C) No. 10411/2001 – State of UP v. Jai Bir Singh
8.The matter thereafter reached the five Judge Bench in State of U.P. v. Jai Bir Singh (5J)11. The Bench culled out several foundational reasons for doubting the Bangalore Water Supply (supra) ratio, namely: I. Bangalore Water Supply (supra) was not unanimous, and the principal opinion of Krishna Iyer, J., did not have the benefit of the separate opinions delivered later by the other judges. Further, the judges themselves treated the interpretive exercise as provisional pending legislative intervention12 II. Parliament had amended the definition of industry by Act 46 of 1982, yet the amended provision had remained unenforced for more than two decades. This prolonged non-enforcement was viewed not merely as legislative inaction, but as reflecting the difficulty faced by the legislature and executive in bringing the amended law into force after Bangalore Water Supply (supra)13 III. The working experience of the law after Bangalore Water Supply (supra) had revealed practical difficulties, including proliferation of industrial claims, awards of heavy back wages, and the possible consequences of an overextended definition on employers, employees, and the public14 13 See Paras 21 & 40 IV. A purely workman centric reading of the ID Act could not be accepted, since the statute was intended to harmonise employer employee relations in the larger interest of industrial peace15 V. The narrow treatment of sovereign functions in Bangalore Water Supply (supra) required reconsideration, particularly because welfare activities undertaken by the State in discharge of its obligations under Part IV may also bear a sovereign character in a constitutional democracy16 VI. The restrictive principle in Safdarjung Hospital (supra) had considerable force. Although profit motive may not be determinative, the activity must still be analogous to trade or business in a commercial sense, especially when applied to institutions such as hospitals and schools, where industrial action may frustrate their core public purpose17
9.On the cumulative force of these aforestated reasons, the Bench concluded as follows18: “Let the cases be now placed before Hon'ble Chief Justice of India for constituting a suitable larger Bench for reconsideration of the judgment of this Court in the case of Bangalore Water” 15 See Paras 32-33 & 37
10.When the matter was placed before the Chief Justice, presumably bearing in mind the lesser strength in Jai Bir (5J), the Chief Justice placed the matter for reconsideration of the ratio in Bangalore Water Supply (supra) before a bench of co-equal strength, that is, a seven Judge Bench. The seven Judge Bench in State of U.P. v. Jai Bir Singh (7J)19, presided over by the Chief Justice, accepted the doubts expressed by the five Judge Bench about the correctness of the view taken in Bangalore Water Supply (supra) and noted the issue that fell for determination had wide ranging implications. The appeals were directed to be placed before the Chief Justice for constituting an appropriate nine Judge Bench to answer the questions raised in the reference order passed by the five Judge Bench. Accordingly, the present nine Judge Bench came to be constituted.
11.Before turning to the arguments advanced during the course of hearing and examining the ratio in Bangalore Water Supply (supra) on merits, one preliminary objection may be noticed. Ms. Jaising strenuously argued that the two Judge Bench in Narsinh Parmar (supra) did not take a different view from that of the judgment in Chief Conservator (supra). According to her, Narsinh Parmar (supra) merely distinguished Chief Conservator (supra) on facts. It was, therefore, urged that the subsequent references made in Jai Bir by Benches of lesser strength, doubting the correctness of Bangalore Water Supply (supra), a seven Judge Bench decision, were not maintainable.
12.I am unable to agree with this demurrer. The validity of the present reference cannot be tested solely by reference to the original trigger. When the matter reached the five Judge Bench in Jai Bir (5J) (supra), the Court did not rest the reference merely on the perceived tension between Chief Conservator (supra) and Narsinh Parmar (supra). It doubted the ratio in Bangalore Water Supply (supra) for various other reasons and directed that the papers be placed before the Chief Justice for constitution of a suitable larger Bench. Thereafter, the Chief Justice, keeping in mind that Jai Bir (5J) (supra) was a Bench of lesser strength than Bangalore Water Supply (supra), a seven Judge Bench decision, placed the matter before a Bench of co-equal strength for consideration. That seven Judge Bench, in turn, directed that the matter be placed before the Chief Justice for constitution of a nine Judge Bench. Such state of affairs squarely falls in line with the settled position of law governing references, as laid down in Central Board of Dawoodi Bohra Community v. State of Maharashtra20.
13.In Dawoodi Bohra (supra), a two Judge Bench sought reconsideration of the five Judge Bench decision in Sardar Syedna Taher Saifuddin Saheb v. State of Bombay21, and directed that the case be listed before a seven Judge Bench22. Pursuant to such direction, the matter initially came up before a seven Judge bench and subsequently was placed before a five 20 (2005) 2 SCC 673, See Para 12 22 WP (C) No. 740/1986, order dated 18.03.1994 Judge bench to consider the validity of such reference. While laying down the governing principle that a Bench of lesser strength is bound by the law declared by a Bench of larger strength and cannot dissent from or disregard such law, the five Judge Bench in Dawoodi Bohra (supra) underscored that where a Bench of lesser strength entertains doubt about the correctness of a larger Bench decision, it may only invite the attention of the Chief Justice to that doubt. The Chief Justice is not bound to constitute a larger Bench in every such case and, as master of the roster, retains the discretion to place any matter before a Bench of such strength as he considers appropriate. Applying that principle to the facts of Dawoodi Bohra (supra), the Bench held that the matter should first be placed before a Bench of five Judges, and not directly before a larger Bench of seven Judges. It was only if that co-equal Bench doubted the correctness of Sardar Syedna (supra) that it could opine in favour of a reference to a larger Bench of seven Judges, or such other strength as the Chief Justice, in exercise of his power to frame the roster, may deem fit to constitute.
14.The ratio in Dawoodi Bohra (supra) again fell for interpretation before a seven Judge Bench in Aligarh Muslim University v. Naresh Agarwal23. In Aligarh Muslim University (supra), the preliminary objection was that the two Judge Bench in Anjuman-e-Rahmaniya v. District Inspector of Schools24 could not have directly referred the correctness of S. Azeez 24 WPs (C) Nos. 54-57 of 1981, order dated 26-11-1981 (SC) Basha v. Union of India25, a five Judge Bench decision, to a seven Judge Bench. Anjuman-e-Rahmaniya (supra) concerned an institution founded in 1938 and registered under the Societies Registration Act, 1860 in 1940. A two Judge Bench found that the case raised questions as to whether an institution established mainly by a minority, but with participation from members of other communities, could claim the protection of Article 30(1), and whether subsequent registration as a society altered its minority character. Since certain observations in Azeez Basha (supra) bore upon these questions and its correctness had also been doubted, the Bench directed that the matter be placed before the Chief Justice for being heard by a Bench of at least seven Judges. The matter was thereafter tagged with T.M.A. Pai Foundation v. State of Karnataka26 before an eleven Judge Bench, where a similar question on the indicia of a minority educational institution was framed, but left unanswered. The decision stated that a regular Bench would adjudicate the question. However, the regular Bench also disposed of the matter without answering the query27.
15.When the question arose again in Aligarh Muslim University v. Naresh Agarwal28, a three Judge Bench presided over by the Chief Justice noticed that Anjuman-e-Rahmaniya (supra) had already referred the correctness of Azeez Basha (supra) on the same issue to a seven Judge 27 Shahal H. Musaliar v. Union of India, 2003 SCC OnLine SC 1479 Bench, but no authoritative answer had yet been rendered. The three Judge Bench, therefore, directed that the matter be placed before a seven Judge Bench. It was in this backdrop that the majority in Aligarh Muslim University (supra) affirmed the ratio in Dawoodi Bohra (supra) and held as follows: “40. In Central Board of Dawoodi Bohra Community, a Constitution Bench discussed the legal precepts which apply to orders of reference and reiterated the position of law as below 40.1. Decisions of this Court rendered by a Bench of larger strength are binding on Benches of a less or equal strength; 40.2. If a Bench of lower strength is doubtful about the correctness of a judgment delivered by a Bench of larger strength, it cannot disagree or dissent from the view taken by the larger Bench. In case of doubt, it can invite the attention of the Chief Justice of India to its opinion and request the Chief Justice to list the matter before a Bench, the strength of which is greater than that which delivered the judgment which has been doubted; 40.3. The correctness of the view taken by any Bench can only be doubted by a Bench of equal strength. The matter will then be placed for hearing before a Bench of greater strength; 40.4. There are two exceptions to the rules discussed above: (i) The discretion of the Chief Justice is not bound by the rules. As the master of the roster, the Chief Justice may list any case before any Bench of any strength; (ii) Despite the rules discussed above, if a particular case has come up for hearing before a Bench of larger strength and that Bench is of the opinion that the judgment of the Bench of lower strength requires reconsideration or correction, or is otherwise doubtful of its correctness, it may dispense with the need for a reference in the terms described above or an order of the Chief Justice and hear the matter for reasons given by it. 41. The position of law laid down in Central Board of Dawoodi Bohra Community is correct. The decisions of a larger Bench are binding precedent, and judicial discipline and propriety dictate that Benches of lower strength must adhere to such decisions. This will also avoid inconsistencies in the development of law. Questions concerning the correctness of judgments must ordinarily be referred only by a Bench which is equal in strength to the Bench whose judgment is doubted. We also agree with the two exceptions to this rule, as detailed by this Court in Central Board of Dawoodi Bohra Community. They must remain exceptions and not transmogrify into the rule itself.”
16.Interpreting the ratio in Dawoodi Bohra (supra) as aforesaid, the majority held that the reference in Anjuman-e-Rahmaniya (supra), while doubting but not dissenting from Azeez Basha (supra), a five Judge Bench decision, to the Chief Justice for constitution of a seven Judge Bench, fell within the permissible limits laid down in Dawoodi Bohra (supra), as explained in sub-para 40.229.
17.It may not be out of place to note that in Aligarh Muslim University (supra), the minority view did not doubt the ratio in Dawoodi Bohra (supra) but interpreted sub-para 40.2 differently. Kant, J. (as he then was)30, and Sharma, J.31, interpreted sub-para 40.2 to mean that a Bench of lesser strength, upon doubting the correctness of a decision rendered by a Bench of larger strength, could not request the Chief Justice to constitute a Bench larger than the Bench whose decision was doubted, unless the Chief Justice was himself a member of the referring Bench. Such Bench of lesser strength could only direct placing of the matter before the Chief Justice for appropriate directions. Datta, J.32, understood sub-para 40.2 to mean that if a two Judge Bench doubts the correctness of a larger Bench decision, it may place the matter before the Chief Justice for constitution of a three Judge Bench, and the matter may thereafter move, if necessary, to Benches of progressively larger strength, but not directly to a Bench larger than the Bench whose decision is under doubt.
18.If the course by which the correctness of the ratio in Bangalore Water Supply (supra) came to be referred is traced, it becomes clear that a Bench of lesser strength (Jai Bir (5J)) expressed doubt as to that ratio and placed the matter before the Chief Justice for constituting a larger Bench for reconsideration of the decision in Bangalore Water Supply (supra)33. The Bench did not specify the strength of the suitable larger Bench and left it to the discretion of the Chief Justice, who correctly placed the matter, in the first instance, before a Bench of co-equal strength, namely, a seven Judge Bench. Thereafter, the seven Judge Bench, which included the Chief Justice himself, considered it appropriate that the matter be referred to a nine Judge Bench. The course thus adopted does not run counter to Dawoodi Bohra (supra), understood in terms of the majority opinion in Aligarh Muslim University (supra). Even tested in the minority view expressed by Kant, J., (as he then was) and Sharma, J., in Aligarh Muslim University (supra), the reference by the seven Judge bench presided over by the then Chief Justice to the present nine Judge bench cannot be faulted. The reference, having travelled from a three Judge bench to a five Judge bench to a seven Judge bench and ultimately the present nine Judge bench, is also in consonance with the other minority view expressed by Datta, J.
19.Given this situation, it would not be proper to decline to answer the reference at the threshold on account of the form or manner in which the matter came to be placed before this Bench. There is, in any event, a clear distinction between making a reference and answering one. A referring Bench only records why, in its view, the existing position of law may require reconsideration by a Bench of larger strength. The larger Bench is not bound by those reasons. It may accept them, reject them, or answer the issue on an altogether different footing. That inquiry belongs to the merits of the matter before the larger Bench. DEFINITION OF INDUSTRY: PRE-BANGALORE MUSINGS
20.In light of the above discussion, I may now proceed to examine the ratio in Bangalore Water Supply (supra) on merits. That inquiry must begin, not with Bangalore Water Supply (supra) in isolation, but with the line of cases through which this Court grappled with the definition of industry and gradually identified the elements which later crystallised into the triple test.
21.Section 2(j) of the ID Act defines “industry” as follows: “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”
22.Historically, the statutory formulation of Section 2(j) of the ID Act may be traced to the definition contained in the 1911 Amendment of Section 4 of the Commonwealth Conciliation and Arbitration Act, 1904 of Australia which defined “industry” in the following terms: “Industry includes(a) any business, trade, manufacture, undertaking, or calling of employers, on land or water; (b) any calling, service, employment, handicraft, or industrial occupation or avocation of employees, on land or water; and (c) a branch of an industry and a group of industries” Consequently, this Court has consistently drawn inspiration from the observations of the highest Constitutional Court of Australia while determining the contours of Section 2(j) of the ID Act.
23.The first significant step in this interpretive discourse was D.N. Banerji v. P.R. Mukherjee & Ors34, where the Court was faced with the question whether a municipality, while discharging its normal civic duties and not trade and business, could fall within the ambit of “industry”. Rejecting a narrow understanding of “industry”, Chandrasekhara Aiyar, J., construed Section 2(j) in light of the object of the ID Act, holding that the term could not be confined to profit-oriented trade or business, particularly when the separate use of undertaking and the latter part of the definition indicated a wider legislative reach covering the calling, service, employment, industrial occupation or avocation of workmen35.
24.Relying on the decision of the Australian High Court in Federated Municipal & Shire Council Employees’ Union of Australia v. Melbourne Corporation36, the Bench held that profit motive or capital investment was not essential, and that the real test lay in the nature of the activity. Thus, if an activity would constitute an industry in the hands of a private person, it would not lose that character merely because it was carried on by a municipality without profit motive. What mattered was whether the activity involved systematic cooperation between employer and employees for the satisfaction of human wants, in a manner analogous to trade or business37.
25.The principle that the nature of the activity must prevail over the character of the body performing it was carried further in Corporation of the City of Nagpur v. Its Employees38, where Subba Rao, J., examined whether the activities of the Nagpur Corporation (including departments like tax collection etc.) fell within the definition of “industry”. The Bench declined to apply the rule of noscitur a sociis to narrow the definition, holding that the legislative intention of preserving industrial peace mandated a broader construction. It further held that the definition was 36 (1918) 26 CLR 508 in two parts and both parts should be read independently. Its first part viewed industry from the standpoint of the employer, while the latter part from the standpoint of an employee. If an activity answered either part, it fell within the definition39. To deal with situations where the same municipal body or department discharged multiple functions, some industrial and others non-industrial, the Bench evolved the “predominant nature test”, under which the undertaking was to be viewed as an integrated whole and classified according to its dominant function40.
26.In State of Bombay v. Hospital Mazdoor Sabha41, the Bench was required to address whether hospitals could constitute an industry under Section 2(j). The Bench referred to the dual-chambered character of the definition industry and held that both parts of the definition contained wide expressions which amplified one another, calling for an expansive interpretation, as opposed to a restrictive one42. The Bench emphasised that the inquiry turned on the nature of the activity, not the presence of profit, capital investment, or a strict commercial form43. Holding so, it proceeded to give an in-principle definition of the term undertaking to include (I) any activity systematically or habitually undertaken (II) with the co-operation of the employer and employees (III) for the production 39 See Paras 9-10 & 13-18 43 See Para 11 & 13 or distribution of goods or for rendering of material services to the community for the satisfaction of human needs44.
27.It is also relevant to bear in mind that after giving a working definition of industry in Hospital Mazdoor Sabha (supra), Gajendragadkar, J., drew a “fair and just line” exempting certain activities, namely, personal or domestic services and primary inalienable sovereign functions of the State, from the ken of industry45. In fact, the decision in Hospital Mazdoor (supra) sowed the seed that ultimately sprouted into the comprehensive definition of industry in Bangalore Water Supply (supra).
28.Soon after the pronouncement of Hospital Mazdoor Sabha (supra), the wide definition of industry was questioned and liberal professions46, education47 and private clubs48 were carved out of its definitional orbit. This restrictive trajectory finally reached its zenith when the ratio in Hospital Mazdoor (supra) was referred to a six Judge Bench in Management of Safdarjung Hospital, New Delhi v. Kuldip Singh Sethi49.
29.In Safdarjung Hospital (supra), the question was whether Government and charitable hospitals could be treated as industries merely because they were organised undertakings rendering services with the assistance 45 See Para 12 & 14 46 National Union of Commercial Employees & Anr v. M.R. Meher, Industrial Tribunal, Bombay & Ors, 1962 SCC OnLine SC 132, Paras 12-14 47 University of Delhi and Anr v. Ram Nath and Ors, 1963 SCC OnLine SC 117, Paras 5-17. 48 Secretary, Madras Gymkhana Club Employees’ Union v. Management of the Gymkhana Club, 1967 SCC OnLine SC 51, Para 19, 29-31; Cricket Club of India Ltd. v. Bombay Labour Union, 1968 SCC OnLine SC 132, Paras 4 & 7-10 of employees. Answering in the negative, the Bench dismantled the reasoning in Hospital Mazdoor Sabha (supra) which, according to it, had read two parts of the definition in Section 2(j) in isolation and not in an integrated manner as two counterparts of one industry. A workman could be regarded as employed in an industry only where his service was rendered in aid of an employer’s undertaking which itself bore the character of trade, business, manufacture, undertaking or calling in the commercial sense.
30.The Bench further held that Hospital Mazdoor Sabha (supra) had misapplied the observations of Issacs and Rich, JJ., in Melbourne Corporation (supra) that the cooperation between capital and labour in producing goods or services for the satisfaction of human wants and desires would mean any activity where such goods or services were produced by a Government department or charitable institution since the same could be produced by a private person. As per Safdarjung Hospital (supra), this expression was used in Melbourne Corporation (supra) to merely distinguish the activities of the Government in industrial venture, though bereft of profit-making or absence of capital investments, and not to attribute the character of industrial activity to services undertaken by Government as public duties and even by individuals for charitable purposes50.
31.It is against this background of doctrinal uncertainty that Bangalore Water Supply (supra) came to be decided. By then, the law under Section 2(j) had entered a difficult terrain. On one side stood D.N. Banerji (supra), Corporation of the City of Nagpur (supra), Hospital Mazdoor Sabha (supra), which had given the definition a broad and functional reach. On the other stood National Union (supra)51, University of Delhi (supra)52, Madras Gymkhana Club (supra)53, Cricket Club of India (supra)54, and finally Safdarjung Hospital (supra), which had sought to confine that reach by insisting upon an activity analogous to trade or business in a commercial sense. The task before the seven Judge Bench in Bangalore Water Supply (supra) was, therefore, to reconcile a body of precedent which had pulled the definition of industry in competing directions. BANGALORE WATER SUPPLY – RATIO DECIDENDI
A. Opinion of Krishna Iyer, J.
32.Krishna Iyer, J., speaking for himself, Bhagwati and Desai, JJ., undertook that exercise by returning to the object and purpose of the ID Act, namely industrial peace and resolution of industrial disputes. The Hon’ble Judge opined that a narrow doctrinaire approach to fit the definition within the traditional frame of industry or business in a commercial sense would be a misfit for the ever-evolving activities of a 51 Excluded ‘Liberal Professions’ 52 Excluded ‘Educational Institutions’ 53 Excluded ‘Self-serving Clubs’ 54 Id diverse nature that cater to the growing needs of a welfare State, and would ultimately defeat the very object of the legislation itself. To achieve this end, Krishna Iyer, J., while endorsing the broad formulation in Hospital Mazdoor Sabha (supra) proceeded to give a more comprehensive working definition which would “abolish blurred edges, illumine penumbral areas and over-rule what we regard as wrong”55. In doing so, the Court expressly overruled the restrictive line of authority represented by Safdarjung Hospital (supra), National Union (supra), University of Delhi (supra), and Madras Gymkhana Club (supra). The comprehensive working definition so formulated by Krishna Iyer, J., commonly referred to as the “triple test”, may be best expressed in his own words: “140. “Industry”, as defined in Section 2(j) and explained in Banerji, has a wide import. “(a) Where (i) systematic activity, (ii) organized by co-operation 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 organization is a trade or business it does not cease to be one because of philanthropy animating the undertaking.” 141. Although Section 2(j) uses words of the widest amplitude in its two limbs, their meaning cannot be magnified to overreach itself. “(a) ‘Undertaking’ must suffer a contextual and associational shrinkage as explained in Banerji and in this judgment; so also, service, calling and the like. This yields the inference that all organized activity 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 co-operation between employer and employee, may be dissimilar. It does not matter, if on the employment terms there is analogy.” 142. 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, (iv) co-operatives, (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, substantially and, going by the dominant nature criterion, substantively, no employees are entertained but in minimal matters, marginal employees are hired without destroying the nonemployee 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 cause, 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.” 143. 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 the University of Delhi case [University of Delhi v. Ram Nath], or 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. 144. We over-rule Safdarjung, Solicitors' case, Gymkhana, Delhi University, Dhanrajgirji Hospital and other rulings whose ratio runs counter to the principles enunciated above, and Hospital Mazdoor Sabha is hereby rehabilitated.”
33.The central shift brought about by this formulation was that the expression analogous to trade or business was not to be searched for in the commercial object of the undertaking. The relevant resemblance lay in the manner in which the activity was carried on. An activity, though not trade or business in the ordinary sense, could still fall within Section 2(j) if it involved systematic activity organised through cooperation between employer and employee for the production or distribution of goods or services calculated to satisfy human wants and wishes. The analogy, therefore, was not in the motive which prompted the activity, nor in the destination of its output, but in the organisation of work and the relationship between labour and management. Once these elements were present, absence of profit motive, absence of a gainful objective, the public or private character of the venture, or the philanthropic object animating it, did not by itself take the activity outside the definition.
34.On this anvil, Krishna Iyer, J., rejected the cramped approach that had sought to place liberal professions, educational institutions, research bodies, charitable establishments, clubs, and cooperatives beyond the purview of industries. The Court made it plain that no activity could claim exemption merely by virtue of its label. The focus must remain fixed on the nature of the activity itself. Therefore, the real question was whether the undertaking, in its actual working, satisfied the three elements identified by the Court. If it did, the institution could not claim immunity by invoking its purpose or description. If it did not, the statute would not apply merely because some persons were employed in its establishment.
35.At the same time, Bangalore Water Supply (supra) was equally conscious that industry could not be magnified to include casual or non-systematic activities. A simple venture would not become an industry where, substantially and by its dominant nature, it retained an unorganised or casual character and only a few employees were engaged. In liberal professions, Krishna Iyer, J., exempted individual professionals with marginal employee engagement in contradistinction to organised professional activity. Similarly, a pious or altruistic mission would not become an industry where those associated with it were themselves inspired by charity and served the cause free of remuneration, or for small honoraria, without being engaged on the basis of a master-servant relationship. In such cases, the presence of stray manual or technical staff was not decisive.
36.Krishna Iyer, J., then supplied the rule for composite undertakings through the dominant nature test, as explained in Corporation of the City of Nagpur (supra). Where an undertaking consisted of several activities, some capable of exemption and others not, its character was not to be determined by breaking it into isolated departments or by treating incidental features as controlling. The true inquiry was into the predominant nature of the services rendered and the integrated character of the departments. If, so viewed, the undertaking bore an industrial character, it would fall within Section 2(j) as a whole, although persons who were not workmen within the meaning of the ID Act would not acquire that status merely because the undertaking was an industry.
37.The aforestated principle informed the treatment of Government departments. Sovereign functions, strictly understood, alone qualified for exemption, and not welfare activities or economic ventures undertaken by Government or statutory bodies. Even in a department discharging sovereign functions, a substantially severable unit bearing an industrial character could still be brought within Section 2(j). The formulation was also made subject to any constitutional or statutory provision56 which, expressly or by necessary implication, removed particular categories from the operation of the ID Act.
38.The opinion of Krishna Iyer, J., however, was not the only voice in Bangalore Water Supply (supra). Beg, C.J., and Chandrachud, C.J., delivered separate opinions broadly agreeing with the ratio of Krishna Iyer, J., while Jaswant Singh, J., speaking for himself and Tulzapurkar, 56 Articles 309 to 311 of the Constitution of India, the enactments dealing with the Defence Forces and other legislation dealing with employment under statutory bodies (See Para 50) J., partly dissented. It is therefore necessary to notice those opinions and the concurrences, qualifications and disagreements with the formulation enunciated by Krishna Iyer, J. B. Concurring opinions of M.H. Beg, C.J., and Y.V. Chandrachud, C.J. (i) M.H. Beg, C.J.57
39.Beg, C.J., expressly agreed with the reasoning and conclusions of Krishna Iyer, J., and held that, having regard to the preamble, legislative history, constitutional setting, and socio-economic conditions in which the ID Act operates, noscitur a sociis was not an appropriate tool for construing the term “industry”.
40.In relation to Governmental activity, Beg, C.J. was clear that the mere presence of the State could not exclude the application of the ID Act, since the modern State had entered fields of industry, trade, public transport, public utilities and welfare services. Exclusion would arise only where constitutional provisions such as Articles 310 and 311, separate service rules, or special enactments displaced the general law expressly or by necessary implication. The same functional approach informed his treatment of liberal professions and charitable institutions. If the work of a lawyer or doctor assumed an organised and systematised form comparable to business or trade, employed several persons, and generated conditions in which disputes could arise between employer and employees, it could fall within Section 2(j). Likewise, when services rendered by individuals arise out of missionary zeal and purely charitable motives, they would be excluded from the ambit of the ID Act. (ii) Y.V. Chandrachud, C.J.58
41.Chandrachud, C.J., accepted the definition formulated by Krishna Iyer, J., in toto, but observed that, once Section 2(j) was found to employ words of deliberate width, the task of identifying what limitations should be read into it was a matter of policy, and where the language was clear, the definition had to be given the meaning its words conveyed, leaving no scope for judicially devised exceptions. The Hon’ble Judge saw little justification for excluding even inalienable sovereign functions once the nature of the activity bore an industrial character. If municipal water supply, sewerage and firefighting establishments could be industries, there was no reason why activities such as manufacture of coins and currency, arms and ammunition, or winning of oil and uranium should stand excluded merely because they were carried on by the State.
42.Similarly, for liberal professions, Chandrachud, C.J., rejected any broad immunity. The test of direct and proximate cooperation between employer and employee was, in his view, too uncertain, since assistants, managing clerks, librarians or typists may not produce the final intellectual product, but without their active assistance the professional establishment may not function effectively. The same approach governed charitable enterprises and clubs. Charity, membership structure, selfserving character, or limited access to members and guests could not be decisive. The real inquiry was whether the activity was organised or arranged in the manner in which trade or business is normally organised. C. Dissenting opinion of Jaswant Singh, J. 59
43.Jaswant Singh, J., speaking for himself and Tulzapurkar, J., agreed with the dismissal of the appeal made by Bangalore Water Supply Board, but did not accept the wider formulation adopted by Krishna Iyer, J. In his view, Section 2(j) would be attracted only where the activity was systematically or habitually undertaken on commercial lines, with the cooperation of employees, for the production or distribution of goods or for rendering material services to the community or a section of it. This conclusion was reached by applying noscitur a sociis. The words in Section 2(j) had to take colour from their setting and from the associated expressions used in the definition.
44.Such an understanding had direct consequences for charitable and welfare institutions. Hospitals run on a charitable basis, or as part of the functions of Government, municipalities or local bodies, were not to be brought within the reach of Section 2(j). The same reasoning extended to educational and research institutions, whether run privately or by Government. Their object, structure and manner of functioning were treated as insufficiently connected with activity undertaken on commercial lines for the production of goods or rendering of material services.
45.Liberal and learned professions were also placed outside the definition. The dissent treated professions such as those of doctors, lawyers and teachers as resting upon the individual’s education, intellectual attainments and special expertise. In such cases, the work of the usual type of employees was considered too remote from the final service rendered to the client, patient or student. The end product could not, on this view, be treated as the result of industrial cooperation between the professional and his employees.
46.Krishna Iyer, J., in his principal opinion, had shifted the emphasis away from commercial analogy to the organised employer employee basis of the activity. However, the dissent insisted that Section 2(j) was not attracted unless the organised activity also bore the character of an undertaking carried on commercial lines.
47.Before proceeding further, it is imperative, at the very outset, to answer some arguments which were advanced to the effect that the opinions of Chandrachud, C.J., and Jaswant Singh, J., were delivered on a later date and Beg, C.J., did not have the benefit of going through the other two opinions. This is also one of the reasons for reference given in Jai Bir (5J) (supra). I am afraid that the retirement of Beg, C.J. before he could peruse the deferred opinions does not affect the majority view or its binding effect.
48.Firstly, it is trite that when multiple opinions are handed down by a polyvocal Bench, the majority view binds the minority and constitutes the view of the Bench itself60. Secondly, the deferred opinion delivered by Chandrachud, C.J., concurs with the majority view. Even for argument's sake, if we were to assume that Beg, C.J. could have been persuaded by the minority opinion of Jaswant Singh, J., to alter his view, the opinion penned by Krishna Iyer, J., concurred in by Chandrachud, C.J., would nonetheless have remained the majority one. LEGISLATIVE INTERVENTIONS POST BANGALORE WATER SUPPLY
49.Parliament, by the Industrial Disputes (Amendment) Act, 198261, amended the definition of “industry”. The triple test was broadly retained to identify entities falling within the ambit of Section 2(j) of the ID Act, subject to exceptions enumerated therein. However, the 1982 Amendment Act was never brought into force.
50.The ID Act has since been repealed upon the coming into force of the IR Code, 202062, which defines “industry” under Section 2(p) in the following terms: 60 Trimurthi Fragrances (P) Ltd. v. State (NCT of Delhi), (2024) 20 SCC 709, See Para 19 61 Hereinafter “1982 Amendment Act” 62 Enforced w.e.f. 21.11.2025, vide S.O. 5320(E) “p) "industry" means any systematic activity carried on by co-operation between an employer and worker (whether such worker is 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, but does not include — (i) institutions owned or managed by organisations wholly or substantially engaged in any charitable, social or philanthropic service; or (ii) any activity of the appropriate Government relatable to the sovereign functions of the appropriate Government including all the activities carried on by the departments of the Central Government dealing with defence research, atomic energy and space; or (iii) any domestic service; or (iv) any other activity as may be notified by the Central Government”
51.It is at this cusp of transition from the ID Act to a new industrial law regime that this Bench has assembled to answer the following questions: “(i) Whether the test laid down in paragraphs 140 to 144 in the opinion rendered by Hon’ble Mr. Justice V.R. Krishna Iyer in Bangalore Water Supply and Sewerage Board’s case (supra) to determine if an undertaking or enterprise falls within the definition of “industry” lays down correct law? And whether the Industrial Disputes (Amendment) Act, 1982 (which seemingly did not come into force) and the Industrial Relations Code, 2020 (with effect from 21.11.2025) have any legal impact on the interpretation of the expression “industry” as contained in the principal Act? (ii) Whether social welfare activities and schemes or other enterprises undertaken by the Government Departments or their instrumentalities can be construed to be “industrial activities” for the purpose of Section 2(j) of the ID Act? (iii) What State activities will be covered by the expression “sovereign function”, and whether such activities will fall outside the purview of Section 2(j) of the ID Act? (iv) Any other issue(s) that may arise during the course of hearing before the Nine-Judge Bench.” ANALYSIS A. Formulation of the triple test and interpretation of ‘Undertaking’ with respect to ‘Noscitur A Sociis’ in Bangalore Water Supply
52.In the aftermath of the Second World War, industrial unrest had begun to intensify, and the limitations of the existing legal framework had become impossible to ignore. It was in these circumstances that the ID Act came to be enacted, with the preamble making its legislative purpose unmistakably clear: “An Act to make provision for the investigation and settlement of industrial disputes, and for certain other purposes”
53.The ID Act pursues this preambular object through a negotiated balance between the interests of labour, capital, and the State, ensuring that productivity is never chased in oblivion of the rights of workers. Though the ID Act preceded the Constitution, its welfare-oriented scheme reflects the social philosophy which the Constitution later institutionalised. Article 38 requires the State to secure a social order informed by political, economic and social justice, and to minimise inequalities in status, income and opportunity. Article 39 carries that commitment into the economic sphere by directing the State to ensure adequate means of livelihood and prevent concentration of wealth to the common detriment. Article 43 completes that vision by contemplating living wages, humane conditions of work and a decent standard of life for all workers. These directives ought to be read harmoniously with the fundamental rights to equality and human dignity, collectively embodying the constitutional promise that each individual is entitled to a dignified life rather than a mere animal existence. This acknowledgement while binding the State to a particular economic philosophy63, seeks a fine balance between the individuals’ pursuit of higher productivity and wealth and the rights of employees to a fair and humane life, including effective access to justice through a responsive grievance redressal mechanism. Any interpretation of the ID Act must remain profoundly conscious of the reality that true industrial efficacy emanates from industrial peace, not from trampling the rights of a key stakeholder.
54.The salient features of the ID Act are as follows: i) It establishes a structured institutional framework comprising Works Committees64, Conciliation Officers65, Boards of Conciliation66, Courts of Inquiry67, Labour Courts68, Industrial Tribunals69 and National Tribunals70 for the investigation and settlement of industrial disputes ii) It empowers the appropriate Government to refer industrial disputes for adjudication71, while also permitting the parties to submit disputes to voluntary arbitration72 63 See Property Owners Association & Ors v. State of Maharashtra & Ors, (2024) 18 SCC 1 70 Section 7-B, ID Act iii) It regulates strikes and lock-outs, particularly in public utility services73, and prohibits their commencement or continuance during specified stages of conciliation, arbitration and adjudicatory proceedings74 iv) It enables the appropriate Government to declare specified industries or services as public utility services where uninterrupted operation is necessary in the public interest75 v) It prescribes substantive and procedural safeguards governing layoff, retrenchment, transfer and closure of undertakings, including requirements of notice, compensation and, in specified cases, prior Governmental permission76 vi) It accords binding force to settlements and adjudicatory awards upon the parties and other persons covered by the statute77, and regulates the period for which such settlements and awards remain operative78 vii) It protects workmen against punitive or prejudicial action during the pendency of industrial proceedings79 and empowers adjudicatory authorities to examine the legality and proportionality of discharge or dismissal80 75 Section 2(n)(vi), ID Act 76 Chapter VA, ID Act
55.The ID Act achieves its purpose and ensures access to justice by providing a remedial framework that is far more efficacious, specialised, and socially responsive for resolution of industrial conflict and preservation of industrial peace than the labyrinth of ordinary civil law remedies, which a workman can ill-afford81. Section 2(s) of the ID Act defines ‘workman’ as follows: “‘Workman’ means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge, or retrenchment has led to that dispute...”
56.Only an individual who classifies as a ‘workman’ engaged in an ‘industry’ in case of an ‘industrial dispute’82 can seek refuge under the protective garb of the ID Act and avail the unique remedies contemplated therein such as reinstatement, back-wages, regularisation, retrenchment 81 Chandrakant Tukaram Nikam v. Municipal Corporation of Ahmedabad, (2002) 2 SCC 542 (See Paras 5-6) 82 As defined in Section 2(k) - "industrial dispute" means any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person compensation and collective settlements83. These stand in marked contrast with civil remedies, which move through the slower, adversarial grammar of private litigation. As correctly pointed out by Ms. Jaising, the ‘security of tenure’ guised as reinstatement under Section 11A of the ID Act has no true equivalent in ordinary civil law. By virtue of this provision, the Labour Courts can not only examine whether a dismissal is unfair or disproportionate but also, where necessary, direct reinstatement or substitute the punishment imposed with a lesser penalty. On the contrary, an ordinary Civil Court, constrained by the traditional common law conception of “master and servant”, may at best award damages for wrongful termination. Constitutional remedies, too, cannot always serve as an adequate substitute, particularly where industrial conflicts involve disputed questions of fact.
57.Perhaps, the greatest achievement of the ID Act is in instilling a spirit of dialogue that starts at the workplace itself, through works committees84, conciliation officers85, and boards of conciliation86, all intended to prevent industrial tensions from crystallising into open conflict. At the heart of this architecture lies collective bargaining, through which the otherwise scant bargaining power of an individual workman is strengthened by the representative voice of the union, and disputes concerning conditions of employment are resolved by agreement rather 83 S. 11 & 11A, ID Act (Also see Chapter VA & VB, ID Act) 85 S.4 & 12, ID Act 86 S.5 & 13, ID Act than coercion. Industrial democracy is the bedrock of the ID Act, with the individual workman receding into the background and the union espousing the common cause of the body of workmen.
58.Section 18 of the ID Act gives legal effect to voluntary collective bargaining by recognising settlements arrived at both within and outside conciliation proceedings. While a settlement arrived at otherwise than in the course of conciliation binds the parties to the agreement under Section 18(1), a settlement reached during conciliation is accorded an extended binding force under Section 18(3), encompassing not merely the immediate parties but all persons and workmen statutorily connected with the industrial dispute.
59.Even if matters reach the stage of adjudication in a courtroom, disputes are entrusted to Labour Courts87 and Industrial Tribunals88 possessing the requisite subject-matter expertise. The pro-welfare approach of the ID Act is further reinforced by the fact that post adjudication, if the workman is entitled to more favourable benefits under any other law, award, or contract of service than those already bestowed by the ID Act, he may avail the same89.
60.The ID Act is not an ordinary commercial statute but a beneficial social legislation providing a complete code for resolution of industrial disputes. Its provisions must receive a purposive construction that advances the 89 Proviso to S. 25J, ID Act remedy90 and sustains the object of the larger legislative scheme91. To ensure that the ID Act baulks a restrictive definition of industry or industrial disputes, Bangalore Water Supply (supra) while approving the wide and inclusive interpretation adopted in D.N. Banerji (supra)92, Corporation of the City of Nagpur (supra)93 and Hospital Mazdoor Sabha (supra)94, rejected the associational shrinkage of the term undertaking to a mere synonym of trade and business in the commercial sense.
61.Ld. Amicus, Mr. Cama, disputes such an expansive construction and contends that the legislature, by employing the expression “means” in Section 2(j), intended to provide an exhaustive definition confined only to activities answering a narrow commercial understanding of trade or business. Relying on the interpretation adopted in Safdarjung Hospital (supra), he further submits that unless an undertaking satisfies the commercial requirements contained in the first exhaustive part of Section 2(j), the latter part of the definition cannot be invoked.
62.I am unable to accept the interpretation canvassed by Mr. Cama, for the following reasons. Firstly, the definition clause, comprises two limbs. The first limb, though prefaced by the word “means” which ordinarily denotes an exhaustive definition, must be read holistically with the second limb which is couched in wide and inclusive terms. The usage of the word 90 Ameer Trading Corporation Ltd. v. Shapoorji Data Processing Ltd., (2004) 1 SCC 702, See Paras 23-25 & 27 91 National Insurance Co. Ltd. v. Laxmi Narain Dhut, (2007) 3 SCC 700, See Paras 27, 28, 30 & 33; Poppatlal Shah v. State of Madras, (1953) 1 SCC 492, See Para 9 “includes” followed by expressions of wide import such as calling, service, handicraft and industrial occupation and avocation of workmen in the second limb of the definition industry, indicates that the legislature did not intend the definition to remain confined within rigid or exhaustive limits of the first limb. Rather, it widened the scope of the expression so as to bring within its fold matters which may not be expressly enumerated in the definition clause. Read in this manner, the structure of Section 2(j) itself resists the restrictive interpretation advanced by Mr. Cama.
63.Secondly, Mr. Cama’s argument that the two limbs of the word industry must be read conjunctively, i.e., an activity would fall within the definition of industry when it satisfies the exhaustive test qua the employer irrespective of the inclusive definition qua the employee, even if accepted, would not justify a restrictive reading of the first limb of the definition. The first limb of the definition itself employs expressions of considerable breadth. The term “undertaking”, for instance, though undefined under the ID Act, is defined in the Oxford Dictionary95 as follows: “A task or project, especially one that is important and/or difficult” 95 Oxford Advanced Learner’s Dictionary (2005) 7th Edn, Oxford University Press 1667 Hence, in common parlance, the term is not restricted to trade and commerce alone and may include any activity. Equally expansive is the term “calling”. The dictionary meanings of the term read thus: “A strong desire or feeling of duty to do a particular job, especially one in which you help other people; a profession or career.”96 “Carrying on a school is calling; the profession of teaching is a calling.”97 The lexical import of calling makes it clear that the expression carries an exceptionally broad sweep, which can be extended to diverse fields such as professions, spiritual pursuits, education and charitable activities. Thus, even in their ordinary and everyday sense, these expressions travel far beyond the narrow world of commerce and profit. It is for this very reason that this Court in D.N. Banerji (supra), Corporation of the City of Nagpur (supra) and Hospital Mazdoor Sabha (supra) recognised the inherently wide import of the term “undertaking”. To confine such wide words within a commercial window would be to lose sight of the very object for which industrial law came into being.
64.Finally, the ID Act essentially deals with the terms of organised engagement between employer and employee for the production of goods and services that satisfy human wants and needs. Whether such goods 96 Id 97 Greenberg D (ed), Stroud’s Judicial Dictionary of Words and Phrases (8th edn, Sweet & Maxwell 2012) or services (having material worth) are consumed on commercial or altruistic lines does not affect the relationship between the employer and employee engaged in bringing them into existence. The ‘heart and soul’ of the definition lies in this structured cooperation, and not in the profit motive or commercial character of the undertaking. The expression analogous to trade or business used in earlier judgments, starting from D.N. Banerji (supra), must necessarily mean any activity whose ‘systematic and organised’ cooperation between employer and employee is akin to trade and commerce. Viewed thus, Mr. Cama’s argument, premised on Safdarjung Hospital (supra), that the expression industry must be confined to activities pursued for a commercial purpose, does not warrant acceptance. Krishna Iyer, J., by correctly shifting the focus from profit/business motive to the nature of the activity, has developed a formulation that wholly aligns with the object of the ID Act. In doing so, the definition rightly makes room for exclusion of casual, sporadic and unorganised activities, such as domestic service, small informal associations of persons, or individual professional practice, in contradistinction to social clubs or firms of professionals which are established and run systematically through an organised employer employee structure.
65.Petitioners have further argued that the expressions “business”, “trade”, “undertaking”, “manufacture” and “calling” occurring in Section 2(j) must be interpreted in light of the maxim Noscitur a Sociis, under which associated words derive colour and meaning from one another. According to them, the word “undertaking”, being placed alongside “business” and “trade”, cannot be construed in isolation so as to include every organised activity, but must be confined to undertakings bearing a commercial character.
66.The principle of Noscitur a Sociis stipulates that words derive meaning from the company they keep98. When words susceptible of analogous meanings are grouped together, the more general expression may legitimately draw colour from the narrower expressions surrounding it and may thus be confined to a cognate sense. However, this Court in D.N. Banerji99 (supra), Corporation of the City of Nagpur100 (supra) and Hospital Mazdoor Sabha101 (supra) had declined to apply Noscitur a Sociis for confining the word “undertaking” only to commercial or profitoriented activities. The prevailing understanding was that the wider phraseology of Section 2(j) was consciously adopted to ensure that the definition remained sufficiently broad to respond to the changing realities of organised industrial activity and the larger objective of preserving industrial peace in a welfare State. In Bangalore Water Supply (supra), the opinions of Beg, C.J.102, and Chandrachud, C.J.103, echoed the same sentiment and did not apply Noscitur a Sociis as an interpretive tool to read down the width of Section 2(j). Per contra, the partly dissenting 98 Maxwell, Interpretation of Statutes, 11th edn, p. 321 opinion of Jaswant Singh, J., departed from this line of reasoning and applied Noscitur a Sociis in a far more restrictive sense so as to curtail the ambit of industry to activities bearing a distinctly commercial character.
67.It is relevant to note that Krishna Iyer, J., does not outrightly reject the application of Noscitur a Sociis, but adopts a far more nuanced stance. The Hon’ble Judge accepted that the expression undertaking must indeed “suffer a contextual and associational shrinkage” and should derive colour from the surrounding expressions like trade and business104, which are to be understood as systematic activities producing goods and services through organised cooperation between employer and employee. But while invoking Noscitur a Sociis, the relevant enquiry was still anchored on the nature of activity and not the commercial motive of the employer. Therefore, if an undertaking answered the functional formulation of the triple test, it would be deemed to be analogous to trade or business and consequently, an industry.
68.The ratio in Bangalore Water Supply (supra), whether viewed through the approach of Beg, C.J., and Chandrachud, C.J., who declined to apply Noscitur a Sociis to define ‘undertaking’ in a restrictive manner, or through the more textured understanding adopted by Krishna Iyer, J., advances the object of the Act far more effectively than the narrow construction favoured by Jaswant Singh, J., which proceeds on the assumption that undertaking must derive a purely commercial colour from the accompanying terms trade and business. Noscitur a sociis, being a tool of purposive interpretation, cannot be applied in a manner that defeats the very purpose of the legislation.
69.One must always bear in mind that a workman seldom enters the field of negotiation as an equal. Across the table, often stands an employer larger than him in every conceivable sense, armed with greater resources and bargaining strength. The ID Act attempts to soften that imbalance. It gives the solitary worker a language through which he may collectively speak, and a one-stop forum before which his grievance is effectively remedied. The legislation seeks to ensure that industrial relations do not harden into a landscape where unequal bargaining power alone determines outcomes. It was with this larger constitutional and social vision in mind that Krishna Iyer, J., formulated the triple test in Bangalore Water Supply (supra). The test was never intended to erase all limits upon the definition of “industry”, but to preserve industrial peace through civilised dialogue and prompt adjudication wherever organised human effort and labour converge in a form capable of generating claims, demands, tensions and stress.
70.In light of such discussion, I hold that the test laid down in paragraphs 140 to 144 in the opinion rendered by Krishna Iyer, J., in Bangalore Water Supply to determine if an undertaking or enterprise falls within the definition of “industry” lays down correct law. Having affirmed the triple test, the next stage of analysis would be its application vis-à-vis the different categories of activity, starting with sovereign functions. B. Do sovereign functions include ‘welfare activities’?
71.Sovereign functions are not excluded by any express words in Section 2(j) of the ID Act. The exclusion has been recognised by judicial interpretation, because certain functions of the State are so closely tied to its core identity that they cannot be treated as ordinary industrial activity. The danger lies in allowing a narrow exception, meant for truly inalienable functions of the State, to expand into a general protection for every activity undertaken by the Government.
72.Traditionally, sovereign was understood as regal, that is, the King. From this perspective, Crown functions which cannot be delegated were understood as ‘sovereign’. In a constitutional democracy, sovereign powers vest in the people and the State exercises them as a representative of the ‘will of the people’. That is to say, the State is answerable to none but the people while exercising sovereign powers. Unlike statutory or even constitutional powers where the State is amenable to judicial review, in exercise of sovereign powers, the State as the representative of vox populi is only answerable to the populus in the political-democratic domain. The task is to then isolate that narrow inalienable and non-justiciable field of activities without letting sovereignty become a convenient shield for every public, statutory, or welfare-oriented enterprise, and the cue for resolving this quandary lies in the opinion of this Court in N. Nagendra Rao & Co. v. State of A.P.105.
73.Although born within the law of torts, the decision in Nagendra Rao (supra) serves as a vital compass for defining the modern content of inalienable sovereign functions. Writing for the Court, Sahai, J., held that only when a State was carrying on activities which are politically and jurisprudentially categorised as pure acts of State did they remain insulated from the jurisdiction of ordinary Civil Courts. A citizen cannot sue the Government for negligence in making a law or for policy decisions, because in this exclusive sphere, the jurisdiction of the Courts is impliedly barred as a matter of public interest. Nagendra Rao (supra) also sounds a profound caution by declaring that the immunity of the State terminates precisely where this narrow sovereign core ends106.
74.The judgment in Chief Conservator (supra) serves as the vital bridge carrying the principles of Nagendra Rao (supra) directly into the specific terrain of industrial jurisprudence. When the State sought to extend the protective guard of sovereignty over the entire Forest Department, the three judge Bench drawing inspiration from Nagendra Rao (supra) confirmed that the sovereign shell covers only those core functions “which are indicative of external sovereignty and are political in nature”107. For these activities, the State is fundamentally not answerable in an ordinary Court of law. Because this sovereign core is so uniquely confined, the vast expanse of the State’s welfare activities irrespective of their public utilitarian import cannot fall within the immunized sovereign core.
75.Various public duties may be vested in the State through primary legislation or even under the Constitution. These statutory or constitutional duties, even those undertaken to achieve the lofty ideals of Part IV, do not, merely by the strength of their public character or welfare nature, constitute sovereign functions, unless such functions form the core of a nation's sovereign existence. Such reasoning draws a clear distinction between the inalienable sovereign powers of a nation, in exercise of which the State is answerable to the people, and its constitutional and statutory duties, including welfare activities, where the State is amenable to judicial review under the constitutional scheme. Importing such a narrow sovereign exception while testing whether a Governmental activity constitutes an industry fits well with the purposive interpretation of the ID Act, furthering its objective of ensuring industrial peace and the seamless adjudication of industrial disputes in all conceivable spheres of Governmental activity, welfare or otherwise. Even within the core sovereign area, Bangalore Water Supply (supra) was right to hive off substantial severable units that operate as industries under the law.
76.In such view of the matter, there is no wrong in saying that the contours of sovereignty have steadily contracted as the modern State has moved from command to service, from prerogative to responsibility, and from a distant ruler to an everyday employer, regulator and provider. Two working tests may be invoked for locating that narrow sovereign core. The first is the test of non-justiciability and absolute immunity articulated in Nagendra Rao (supra) and applied to industrial law by Chief Conservator (supra), which looks at whether the state's action is purely political and completely insulated from the scrutiny of ordinary Civil Courts. The second is the private person test/inalienability test, which runs through D.N. Banerji (supra), Nagpur Corporation (supra), Hospital Mazdoor Sabha (supra), and Agricultural Produce Market Committee (supra). If the activity is of a kind that private persons or nonState agencies may perform, it cannot be described as essentially and inalienably sovereign in the strict sense, for such a function is one which is inseparable from the State and can be performed only by the State.
77.These tests point towards a restricted domain comprising functions such as defence, foreign affairs, war and peace, treaty making, legislation, taxation, eminent domain, core police power, justice, maintenance of law and order, internal and external security, repression of crime and grant of pardon. Even while indicating these categories, caution is necessary. The boundaries of sovereignty cannot be fixed by yesterday’s assumptions. Frédéric Mégret, writing on “inherently sovereign functions”108 traces how power once concentrated in the State has, in 108 Frédéric Mégret, Are There “Inherently Sovereign Functions” in International Law?, American Journal of International Law, Volume 115, Issue 3, July 2021, pp. 452 - 492 modern times, been steadily unbundled into private hands, with privatisation reaching areas once instinctively associated with sovereignty, including policing, military activity, intelligence, prisons and border control.
78.Therefore, ordinary administrative, developmental or welfare activities of the State cannot, by any automatic rule, be treated as naturally immune. The question must always be whether the function is so bound to the constitutional personality of the State that it cannot be alienated, delegated, or made answerable in the ordinary course of civil adjudication or constitutional torts. Everything outside that small chamber must return to the discipline of Section 2(j).
79.Mr. Nataraj, ASG, attacks this premise by arguing that while Bangalore Water Supply (supra) purports to exclude primary and inalienable functions, it fails to provide a workable methodology for identifying them amid contemporary governance. He contends that the realities of the modern state involve deep layers of delegation, outsourcing, and incidental assistance, warning that reading inalienability with literal rigidity would inevitably reduce the sovereign exception to a vanishing point. Mr. Sanjay Hegde elevates this critique by submitting that in an Indian welfare setting, the focus must shift away from a narrow preoccupation with alienability, arguing instead that the Court must weigh the source of power, the gravity of constitutional obligations, and the breadth of public purpose. Taking a more cautious stance, Mr. Venkataramani, Attorney General, submits that the concept cannot be frozen into a static catalogue and suggests that the executive remains better situated to determine what possesses a sovereign character in any given context.
80.These contentions undoubtedly identify a genuine operational complexity, because the category of sovereign functions cannot be reduced to a rudimentary checklist sealed for all time. However, the remedy for a fluid and evolving role of a welfare State cannot be to make sovereignty co-extensive with every statutory duty or constitutional aspiration. Environmental protection, irrigation, sanitation, hospitals, and public utilities may all be matters of deep constitutional importance, but the test remains whether the function belongs to the core, nonjusticiable authority of the State. While primary inalienable political actions stand outside the ID Act, organised Government enterprises rendering public services, implementing schemes or pursuing welfare objectives through employees cannot be excluded merely because the work carries a public purpose or a constitutional duty. As correctly submitted by the Respondents, to dilute the decision of this Court in Bangalore Water Supply (supra) would be to create a large and unprincipled exemption for Government departments, unless such activities are governed by special laws which substitute for the ID Act by providing equally effective and efficacious remedies in the arena of employer employee disputes.
81.A careful reading of the post Bangalore Water Supply (supra) decisions shows that this Court has not permitted Government departments or statutory bodies to claim immunity merely by invoking public character. In Des Raj v. State of Punjab109, the Irrigation Department was held to fall within Section 2(j) on the application of the dominant nature test, and this position was later reaffirmed in Agricultural Produce Market Committee v. Ashok Harikuni110, where this Court held that statutory creation, regulatory powers and levy of fees do not, by themselves, confer sovereign character on the market committee. The reliance placed by the Petitioners on State of Madhya Pradesh v. Somdutt Sharma111, does not carry the matter further, since that case concerned the narrower question whether the Irrigation Department was a “factory” for the purposes of Chapter VB, and not whether it was an “industry” under Section 2(j). A department may not be a factory but could yet be an industry. Likewise, General Manager, Telecom v. A. Srinivasa Rao112, restored the binding force of Bangalore Water Supply (supra) by overruling Sub-Divisional Inspector of Post, Vaikam v. Theyyam Joseph113 and Bombay Telephone Canteen Employees’ Association, Prabhadevi v. Union of India114, to the extent they had treated postal and telecommunication functions as part of the inalienable sovereign core. These decisions serve as a persistent reminder that the promise of industrial justice must remain accessible to all those who labour within the vast and varied machinery of the welfare State.
82.Ld. Amicus Mr. Partha Sarathi rightly reminds us that the legislature has left numerous footprints of its intent to bring State entities within the statutory fold. For example, Section 2(a) specifically contemplates industries carried on by or under the authority of the Central Government and Section 2(n), read with the First Schedule, explicitly weaves railways, major ports, defence establishments, and hospitals into the framework of public utility services.
83.Safdarjung Hospital (supra) noticed this scheme of public utility services but read it through the wrong lens. It held that an entry in the First Schedule does not itself make an activity an industry, and that the activity must first answer the test of “industry” before it can be declared a public utility service. The error lay in the test it applied. By insisting that the activity must be analogous to trade or business in a commercial sense, Safdarjung Hospital (supra) drained the First Schedule of its real significance. Once that commercial approach is rejected, as it must be, the inclusion of hospitals, defence establishments, fire brigade services, railways, ports and similar services shows that Parliament did not regard public or statutory character, Governmental control, absence of profit, or welfare purpose as reasons for exclusion. The statutory scheme treats such services not as strangers to industrial law, but as sensitive sectors requiring special regulation.
84.This legislative design carries its own safeguard. Having drawn public utility services into the ID Act, Parliament did not leave their regulation unguarded. The ID Act itself subjects such services to a stricter discipline, requiring under Section 22 advance notice of any strike or lock-out and a mandatory cooling-off period before industrial action may commence, over and above the general restrictions in Section 23 that operate during conciliation, adjudication and arbitration across all industrial establishments. Where even this is found wanting, the Essential Services Maintenance Act, 1981 furnishes a further and more direct safeguard, empowering the appropriate Government to prohibit strikes in services it notifies as essential, so that the continuity of vital services is preserved without disturbing their underlying character as industries. The norm, therefore, is to treat these public utility services as industries under the ID Act. Relief from the ordinary incidents of industrial action is the exception, available only where the public interest so demands, and even then, it operates not by removing these services from the ID Act but by regulating the exercise of industrial action through the safeguards the law itself provides and the procedure it prescribes.
85.The repercussions of a contrary view are far from academic and they strike most heavily at those on the lowest rungs of public employment. Many of these workers endure severe occupational hazards and social vulnerability, yet a blanket exclusion of Government departments would mean that the very people who most require the protection of the law are the first to be denied it. It would be a profound irony if a doctrine intended to safeguard the State is used to unprotect labour. This also offends the equality principle enshrined in Article 14, for a gardener, driver, or maintenance employee does not perform a different species of labour simply because their wage slip bears the seal of the State.
86.It is not a sufficient answer to suggest that Government employees are protected elsewhere by Articles 309 to 311 of the Constitution, as those provisions protect only those who hold civil posts and do not cover the vast army of daily wagers, casual workers, or contractual employees. Service rules, where they exist, do not occupy the same field as the ID Act, which provides a forum for conciliation, adjudication, protection against retrenchment, regulation of changes in service conditions, and scrutiny of unfair labour practices. To remove that field through an enlarged idea of sovereignty is not to preserve governance, but to close the statutory door on those who were meant to enter through it.
87.The apprehension of the Petitioners that the application of the ID Act will burden Government departments with litigation is also overstated, for the Act is not a hindrance to good administration, but a framework for redressing industrial conflict and ensuring industrial peace. Bringing an organised Government activity within the ID Act is a method of preserving order within administration, as public governance becomes more arbitrary, not stronger, when workers are pushed outside remedies. In Bhola Nath v. State of Jharkhand115, this Court held that the State, as a model employer, bears a heightened obligation to act with fairness, dignity and constitutional responsibility towards those who serve it. Therefore, if the State organises labour and accepts the fruit of that work, it should not be eager to retreat into the sanctuary of sovereignty the moment statutory rights are asserted. A State which claims to be a model employer cannot wear the Crown when the worker asks for a remedy.
88.For these reasons, treatment of sovereign functions by Krishna Iyer, J., in Bangalore Water Supply (supra) calls for affirmation as a principled adjustment between State authority and State accountability. It leaves untouched the inalienable core of Government, but refuses to allow welfare, service and organised administration to be withdrawn from Section 2(j) merely by invoking public purpose. To side with the Petitioners would invariably convert sovereignty from a narrow inalienable core function into a convenient escape from labour law. That course must necessarily be rejected.
89.Narsinh Parmar (supra) runs counter to the ratio in Bangalore Water Supply (supra) and is not good law insofar as it casts a procedural burden on a workman to claim relief under the ID Act against a blanket presumption of sovereign immunity for all Government departments. This view is wholly erroneous as it traces sovereignty to the structure, i.e., to the State and not to the nature of the activity, i.e., which inalienable functions are accountable solely through democratic processes. To allow a general presumptive bias regarding the sovereign character of Government departments to become a governing rule would be to place a mask of immunity upon the State at the very threshold of litigation. This would effectively require the workman to break through a wall of State privilege before the actual organisation of work is ever examined. C. Charitable Undertakings
90.In Bangalore Water Supply (supra), Krishna Iyer, J., identified three categories of charitable enterprises. The first comprises enterprises that earn profits in the ordinary course but divert the whole or a substantial part of such profits to altruistic objects. The second comprises institutions that make no profit but employ workers on ordinary economic terms to produce or supply goods and services that are made available, at low or no cost, to those who cannot afford them. The third comprises establishments oriented towards a humane mission, where persons work not for wages but out of shared devotion to the cause, such as ashrams or spiritual orders. The Court held that the first two categories are industries, since in both cases there exists a systemic and organised cooperation between employer and employee, and the destination of the profits or the presence of a charitable object makes no difference to that relationship. The third category alone falls outside the definition, not because of any charitable character, but because no economic relationship of employer and employee, as ordinarily understood, exists at all116.
91.The aforesaid classification is reasonable and has a rational nexus with the object of the ID Act. What is decisive under the Act is the nature of the relationship between the institution and those it employs to carry out its activity. So long as that relationship bears the hallmarks of ordinary employment, wages paid for work done, and an organised, systematic cooperation between employer and employee, the institution falls within the definition of industry, regardless of whether its object is charitable or its surplus is devoted entirely to public good. So far as the workman is concerned, it matters little whether the products of his labour are made available to the poor free of charge, for he contributes his labour in return for wages and conditions of service exactly as he would for any commercial employer. The fallacy in contending otherwise lies in shifting the focus from the worker and the industrial activity to the disposal of the end product, a consideration with which the ID Act has nothing to do.117 It is only where an employer-employee relationship is absent and both the stakeholders combine in an altruistic manner to produce goods and services for charity, as in the third category identified in Bangalore Water Supply (supra), that the institution escapes the definition, and even then, the exclusion rests on the nature of employment itself being on charitable lines and not on the charitable nature of the enterprise.
92.One may be tempted to argue, at this stage, that charitable institutions ought to be accorded the same exemption under the ID Act as they are under other statutes, such as the Income Tax Act118. This argument, however, proceeds on a flawed equation of two enquiries that serve 118 Sections 11 to 13, The Income Tax Act, 1961 entirely different purposes. The Income Tax Act brings profits and gains to tax, and exemptions under Sections 11 to 13 thereof proceed on the footing that income applied towards charitable purposes such as relief of the poor, education or medical relief is not income retained for private gain and ought not to bear the same burden as commercial profit. The exclusion of charity from the rigours of that statute is for an enquiry into taxability and hence is necessarily an enquiry into the character of the income and the purpose to which it is applied. The ID Act, however, proceeds on an altogether different footing. Its object is not the taxation of income or the regulation of profit, but the resolution of industrial disputes and the maintenance of industrial peace between employers and employees. Viewed thus, the charitable or non-profit character of an institution, which is determinative of its treatment under the Income Tax Act, has no bearing whatsoever on the existence of an employer-employee relationship or on the organised cooperation between the two that the ID Act seeks to regulate. D. Temples
93.Petitioners have argued that temples should be kept outside the rigours of the ID Act as their main function is wholly spiritual and religious in character, directed solely towards the satisfaction of the devotional needs of worshippers, and incapable of being bought and sold in any commercial market. It was further urged that the right to close down an undertaking is not applicable to temples and that application of principles of industrial law to temples would disrupt the daily conduct of worship for thousands of devotees.
94.Such contention is wholly misguided. Similar to charitable institutions, the object and motive of the employer to establish a temple for religious and spiritual pursuits is not the correct parameter with regard to its inclusion or exemption from industrial law. As rightly pointed out by Krishna Iyer, J., it would amount to an unreasonable and hostile classification if employees engaged in the preparation of ladoos are treated differently with regard to adjudication of their disputes on the criterion whether such ladoos are sold for profit or offered as prasadam to a deity. Further, inapplicability of the closure clauses under the ID Act to a temple would give little solace to the cooks, sweepers and watchmen engaged by the temple administration when they are subjected to unfair labour practices, including retrenchment. Inapplicability of certain provisions of the Act due to the peculiar nature of the establishment cannot be a criterion to defeat the applicability of the statute itself. E. Educational Institutions
95.The absence of a profit motive, the vocational or charitable character of an activity, or the perceived social nobility of its object does not, by itself, remove an undertaking from the ambit of Section 2(j) of the ID Act. The inquiry must instead be directed towards the organised relationship between the institution and those engaged in carrying on its activities. It is this same focus on the character of the cooperation between employer and employee that assumes significance in considering educational establishments. Educational institutions must not be judged from the relation between the undertaking and the consumers of their output, but from the nature of the relationship between the promoters or owners of such entity and their employees who directly or incidentally contribute to the production of such output. It is true educational institutions are established to impart knowledge and such activities are carried on by teachers who may not fall within the definition of “workman”. Notwithstanding such character, these institutions also engage various other employees who fall within the definition and participate in organised systematic activity, directly or incidentally contributing to creation of services catering to human needs.
96.In T.M.A. Pai Foundation (supra)119, an eleven Judge Bench construing Article 19(1)(g) held that education falls within the expression "occupation", even where no element of profit is involved, since the establishment and running of an educational institution employing teachers and administrative staff to impart knowledge to students is an activity undertaken as a means of livelihood or a mission in life. In reaching that conclusion, the Court gave "occupation" a wide connotation embracing a calling, trade or business. The significance of this lies in the vocabulary employed, for these are the very expressions used in the definition of "industry" under Section 2(j), which, as already discussed, carry an exceptionally broad sweep extending well beyond commerce and profit. If education, though long regarded as charitable and never treated as a trade or business for profit, nonetheless answers the description of "occupation" for the purposes of Article 19(1)(g), there is no reason in principle why the systematic and organised activity of running an educational institution, contributed directly or incidentally, through an employer employee (who is a workman) relationship, should not equally answer the description of industry under Section 2(j). F. Clubs
97.Most clubs, whether gentlemen's clubs, service clubs or sports clubs, when examined from the industrial angle, project a picture typical of employers hiring employees for wages to render services and supply goods on a systematic basis at specified hours, with the club management providing the capital, raw material and appliances while cooks, waiters, bell boys and other staff render the services for which members pay by way of subscriptions or bills. The character of a club being exclusive of members and their families or friends, and run through their contributions and services, does not change the organised and systemic nature of activity undertaken in producing goods and services which may be solely for the consumption of its own members. The relationship between such club members and staff engaged by them bears the hallmark of an organised systematic engagement akin to an employer employee relationship in a commercial enterprise amenable to the ID Act.
98.Madras Gymkhana Club (supra) incorrectly applied the exclusivity test thus excluding clubs and similar institutions from the ambit of industry. The only exception, as rightly pointed out by Krishna Iyer, J., in cases of such clubs or self-serving institutions would be small entities like casual association of persons where engagement of employees is marginal. Large clubs, organised on corporate lines, maintaining big establishments with multitudinous employees and running in an organised, systematic manner would, by no means, be treated at par with the exempted casual associations. Madras Gymkhana Club (supra) has failed to appreciate that the scale of operation of such voluntary associations is a relevant criterion in determining whether the engagement of employees follows an organised and systematic structure. G. Liberal Professions
99.A solicitor's firm, a medical polyclinic or an architect's office, where a body of employees works in coordination to enable professional services to be delivered to clients and patients, displays every feature of an industry within the meaning of Section 2(j). The professional standing of the person at its head cannot place the establishment as a whole beyond the reach of the ID Act. Nor can it be said that the solicitor's clerk, the stenographer or the librarian contributes nothing merely because the legal advice ultimately rendered is the product of the solicitor's own skill, for without their assistance the solicitor could not function at all. The dignity or intellectual character of a profession has no bearing on the only question the definition asks, which is whether the establishment functions through organised cooperation between employer and employee for the rendering of services to those it serves.
100.This conclusion must, however, be confined to establishments where such organised labour genuinely exists. A single practitioner, whether a lawyer, a rural doctor or a small-town engineer, working alone or with a solitary assistant, cannot be said to run an industry. This is not because that assistant's work is unimportant, but because the organisational structure which the concept of industry presupposes is simply absent. It is this distinction, between the organised professional establishment and the solitary practitioner, that ought to govern the application of the definition to liberal professions. STARE DECISIS AND RECONSIDERATION OF BANGALORE
101.Having approved the majority view in Bangalore Water Supply (supra), I shall now examine whether its ratio nonetheless calls for reconsideration when tested against the well settled principles of stare decisis.
102.Stare decisis, literally understood, requires Courts to stand by things decided and not to disturb what is settled. The underlying logic of the doctrine is to promote certainty and consistency in judicial decisions and enable an organic development of the law, while providing assurance to the individual regarding the consequences of transactions forming part of daily affairs120. Yet, continuity does not require the Court to preserve demonstrable error or compel the law to remain fixed while the world to which it applies has materially changed. Stare decisis is a principle of continuity, not a command of immobility, and this Court has broadly recognised three exceptional situations in which departure from the doctrine is warranted.
103.In Bengal Immunity Company Ltd. v. State of Bihar, this Court held that nothing in the Constitution prevents it from departing from a previous decision if convinced of its error and its baneful effect on the general interests of the public121. It is not enough that the earlier decision is debatable, that some of its expressions are broad, or that another construction may appear preferable. The first exception to stare decisis is applicable only when the error is manifest in principle or method and sufficiently grave that its continuation perpetuates injury to the administration of law or the general public. As laid down in Raghubir Singh (supra), a legal rule, once authoritatively declared, does not remain open for reconsideration merely because another interpretation is also reasonably possible, or because a later Bench might have chosen differently had the question arisen before it in the first instance122. 120 Union of India & Anr v. Raghubir Singh (Dead) By Lrs. Etc, (1989) 2 SCC 754, See Para 9 121 1955 SCC OnLine SC 2, See Para 22
104.The second exception is attracted where a rule, though sound when declared, has ceased to fit the conditions upon which it was premised. In Maganlal Chhaganlal (P) Ltd. v. Municipal Corporation of Greater Bombay & Ors123, this Court observed: “As in life so in law things are not static. Fresh vistas and horizons may reveal themselves as a result of the impact of new ideas and developments in different fields of life. Law, if it has to satisfy human needs and to meet the problems of life, must adapt itself to cope with new situations” Such adaptation is warranted when later experience demonstrates that the rule rests upon factual assumptions which no longer hold, has become incapable of consistent application, or frustrates rather than advances the purpose it was intended to serve. However, it must be borne in mind that although law must change with time, it cannot be so fickle as to change with every change of guard124.
105.The third exception concerns the consequences of reversal. In Keshav Mills Co. Ltd. v. Commissioner of Income Tax125, this Court held that an earlier decision should be reviewed only for compelling and substantial reasons. Among the matters which must enter that assessment are whether the earlier view has been followed in subsequent decisions, whether people and institutions have acted upon it, and whether its 123 (1974) 2 SCC 402, See Para 22 124 State of Gujarat v. Mirzapur Moti Kureshi Kassab Jamat, (2005) 8 SCC 534, See Paras 171-125 1965 SCC OnLine SC 80, See Para 23 reversal would produce “public inconvenience, hardship or mischief”. Therefore, the longer a rule has endured, the more closely it is integrated into the administration of a statute, and the greater the reliance placed upon it, the more compelling must be the justification for its displacement.
106.Therefore, three inquiries assume particular importance when reconsideration of a long-standing precedent is sought: i. Whether the earlier ruling is patently erroneous, and its continued enforcement injurious to the public interest? ii. Whether a substantial alteration in social, economic, technological or legal conditions has rendered the rule unworkable, outmoded or bereft of its original justification? iii. Whether the dislocation, inequity and public harm likely to be caused by unsettling the decision would outweigh any juridical benefit secured by its reversal?
107.I shall now test the ratio in Bangalore Water Supply (supra) against these three considerations. A. Is Bangalore Water Supply ratio patently erroneous?
108.For the reasons already discussed, the ratio in Bangalore Water Supply (supra) cannot be characterised as patently erroneous. It lies closest to the object of the ID Act, which is concerned not with the commercial identity of an establishment but with the orderly resolution of industrial conflict wherever labour is organised under an employer in a systematic activity for the production of goods or the rendering of services. B. Does the ratio require reconsideration in light of changed circumstances?
109.Tennyson’s familiar lines capture the necessity which sometimes compels a settled rule to yield126: “The old order changeth, yielding place to new, And God fulfils Himself in many ways, Lest one good custom should corrupt the world.” A legal rule may require reconsideration where the circumstances to which it applies have so substantially altered that the rule now operates outside its original context. This too was among the reasons which prompted the five Judge Bench in Jai Bir (5J) (supra) to make the reference, for it took the view that the working experience of the law after Bangalore Water Supply (supra) had revealed practical difficulties, including the proliferation of industrial claims, awards of heavy back wages, and the possible consequences of an overextended definition on employers, employees and the public. Thus, the question is whether the economic and technological transformations since Bangalore Water 126 Alfred, Lord Tennyson, “The Passing of Arthur” in Idylls of the King Supply (supra) have rendered its definition of industry outmoded or, on the contrary, reinforced the necessity for its continued application.
110.The advancement of technology has brought automation and computerisation into the means of production and has enhanced the efficiency and quality of goods and services. Such development is part of the march of science and civilisation and is most welcome. Its consequential impact, however, is a diminution of the role of human agency in the production of goods and services. Work once performed by a large body of labour may now be undertaken through machines, algorithms and automated systems requiring a substantially smaller workforce. Increasing shift of businesses to e-commerce platforms while enabling easier access to goods and services through e-aggregators has dismantled the organised labour sector and given rise to gigemployments with little or no employment rights127.
111.Coupled with these transformative changes in commerce and means of production, the advent of a globalised economy has increased manifold the potential movement of capital across national boundaries. Capital has become more mobile, technologically amplified and capable of swiftly switching from one area of activity to another. Labour, by contrast, remains locally embodied, and its demand restricted by geographic and other limitations. This evolving matrix has increased the gradient 127 As per 2025-26 Economic Survey of India, the workers in the gig sectors have increased to 12 million in F.Y. 2025 from 7.7 million in F.Y. 2021. They now represent 2% of the total workforce in India and are projected to constitute 6.7% of the workforce by 2029-30, contributing ₹ 2.35 lakh crore to India’s GDP between capital and labour and has produced a more unequal bargaining plane between the two in recent times. The displacement or increasing marginalisation of manual labour does not make industrial protection irrelevant. It makes the preservation of an effective remedial framework more imperative.
112.The response of the State to automation, liberalisation and globalisation is principally a matter of legislative and executive policy, in which Courts are ordinarily slow to intervene. The approach of the Court to these emerging challenges should not be to impede technology, arrest economic reform or choose between competing models of economic policy, but should essentially be rooted in constitutional obligations and sensitivities. It must ensure that constitutional guarantees of equality and human dignity, illuminated by the Directive Principles and particularly Articles 38 and 39, remain assured to those whose bargaining positions are becoming increasingly unequal.
113.The continued application of Bangalore Water Supply (supra) does not depend upon a socialistic pattern of State ownership or economic governance. It rests upon the more elementary proposition that where capital organises labour for the systematic production of goods or rendering of services, the law must provide a level and accessible field for resolution of disputes between them. The ID Act remains the surest statutory platform for such resolution. Its machinery enables disputes to be addressed through conciliation and adjudication before they harden into industrial unrest. That objective is as relevant to a liberalised economy as it was to the economic order in which the statute was enacted.
114.It is often suggested that industrial legislation is unduly sympathetic to employees and thereby hinders commercial output, economic efficiency or the functioning of altruistic institutions. This misconception proceeds from an erroneous perspective that the rights of one stakeholder must be curtailed either to increase output or to relieve certain employers from industrial obligations. Such an outcome-oriented approach to beneficial legislation is fallacious. On a jurisprudential plane, Courts interpret legislation by reference to its object, purpose and the rights and obligations which it creates. They do not first select a desirable economic outcome and then constrict the statutory text to secure it.
115.Further, when a law provides access to justice and adjudication in disputes between stakeholders occupying unequal positions, their relative status cannot be ignored. Where the bargaining field is substantially lopsided, a beneficial enactment must receive a construction which extends its ameliorative sweep to the disadvantaged group rather than augmenting the position of the already powerful. This does not require every dispute to be decided in favour of the employee. It requires that the employee is not denied the statutory forum itself by an artificial narrowing of the jurisdictional threshold.
116.Seen against these changes, a rights-based approach giving the widest reasonable coverage to systematic and organised activity conducted through cooperation between an employer and employees is not an anachronism. It is a means of ensuring smooth, effective and, where necessary, adjudicated resolution of industrial disputes. The reduction in the numerical strength of labour through automation cannot become a reason to weaken the protection available to those who remain. The law must not allow the rights of labour to be forgotten in the rush for greater efficiency and profit. C. Would unsettling the ratio cause greater public harm than good?
117.The final consideration is the effect which overruling Bangalore Water Supply (supra) would have upon the administration of industrial law. Decisions construing statutes attract a particularly strong claim to continuity. Parliament may amend the provision if the judicial construction does not accord with its policy. Where the legislature has allowed an interpretation to govern for several decades and thereafter replaces the statute prospectively, a Court should be slow to alter the settled meaning of the former enactment for the residual class of matters governed by it.
118.It is all the more inadvisable, in the case of a sunset legislation like the ID Act, to unsettle the existing state of law and affect rights of individuals which are at various stages of adjudication. For nearly five decades, Courts, tribunals, employers, employees and trade unions have ordered their conduct and litigation upon the understanding that the triple test governs Section 2(j). References have been made, claims entertained, settlements reached, awards rendered and remedies granted or refused on that basis. Numerous proceedings instituted under the ID Act remain at different stages of the judicial hierarchy. To substitute a new test at this stage would alter the jurisdictional premise upon which these proceedings were commenced and contested. No exceptional circumstances could be demonstrated to take recourse to such a drastic stance.
119.One has to keep in mind that the disputes arising after the commencement of the IR Code are governed by the new definition which Parliament has enacted in Section 2(p). The practical effect of altering the Bangalore Water Supply (supra) ratio would thus fall upon legacy rights, liabilities and proceedings arising under the repealed ID Act. It would change the goalposts after parties have travelled substantial distances through the adjudicatory process and would require pending matters to be reassessed under a standard of which the parties were unaware when the causes of action arose. The triple test in Bangalore Water Supply (supra) has, for nearly five decades, kept the doors of industrial adjudication open to those who labour within organised undertakings. Those doors I decline to close. IMPACT OF LEGISLATIVE AMENDMENTS ON BANGALORE
120.The final aspect to be considered is whether the provisions of an inert legislation can cast a shadow on adhering to the wide and inclusive interpretation of industry under the repealed ID Act.
121.A judgment interprets an existing law to further its object and purposes and Bangalore Water Supply (supra) seeks to achieve that end to the fullest extent. The narrow scope of the 1982 Amendment Act and the IR Code did not fall for interpretation in Bangalore Water Supply (supra). It may be argued that such amendment or new law is an expression of the legislative will to give a narrow interpretation to the expression ‘industry’. The object and purpose of the ID Act, therefore, need to be reviewed and Bangalore Water Supply (supra) revisited.
122.A legislature has ample powers to amend/repeal an existing law to address present necessities. To achieve such end, the legislature may even delegate power to the executive to give retrospective operation to such amendment/repeal. In such cases, the substratum of the law changes retrospectively rendering the applicability of existing precedents to the relevant law subject to legislative changes. The delegated power to notify the date and manner of operation of an amendment is a legislative process. Courts do not have the power to give effect to an inert amendment which has not been notified, far less direct its retrospective operation128. Such power cannot be traced to judicial legislation in the occupied field as it would amount to encroaching on an existing law. 128 Aeltemesh Rein, Advocate, Supreme Court of India v. Union of India & Ors, (1988) 4 SCC 54, See Paras 5 - 6
123.Admittedly, the executive chose not to notify the 1982 Amendment Act for more than four decades. This merely shows the State’s disinclination and lack of unanimity in giving effect to such amendment. The judiciary ought not use such inert provisions kept on the back burner as an interpretative tool to revisit a binding precedent. What the Court cannot do directly, i.e., issue a mandamus to notify an inert amendment, it cannot indirectly do by referring to a stillborn amendment to reconsider the Bangalore Water Supply (supra) ratio.
124.Parliament has now made its own prospective adjustment through Section 2(p) of the IR Code. It retained the systematic employer-worker cooperation test while expressly excluding certain charitable, social, philanthropic and sovereign activities. It would be incongruous for this Court to take exclusions designed for the new Code and project them backwards into Section 2(j) of the ID Act, especially when there is no provision which gives Section 2(p) of the IR Code retrospective operation over causes governed by the repealed ID Act. The new definition being wisely made prospective in operation ought not, by way of judicial rethinking, affect the contours of a binding precedent.
125.In light of such discussion, I answer the reference in the following manner: I. The manner in which the ratio in Bangalore Water Supply (supra) has been referred for reconsideration is in conformity with the law declared in Dawoodi Bohra (supra), as affirmed in Aligarh Muslim University (supra). As such, the reference requires to be answered on merits. II. On merits, I hold the triple test laid down by Krishna Iyer, J., in paragraphs 140-144 of Bangalore Water Supply (supra) exhibits a rare felicity in judicial interpretation. Through such triple test, Bangalore Water Supply (supra) while remaining faithful to the text, extended the beneficial object of the law to all employer employee disputes wherever the stakeholders are engaged in an organised systematic activity akin to trade and commerce to produce goods and services for the satisfaction of human needs and did not restrict it merely to activities which are run on commercial lines. The criticism that it converts every organised human endeavour into an industry is misplaced, for the triple test, in fact, carves out just and proper exceptions in cases of casual and non-systematic activities like domestic service, individual professionals, small and unorganised clubs/association of persons. III. In a constitutional democracy, the concept of sovereignty has undergone a jurisprudential contraction and is restricted to core inalienable duties for which the State is not answerable to Courts of law but to the people in a political-democratic discourse. Viewed from this perspective, welfare activities of the State and schemes undertaken by Government departments and their instrumentalities are not, by reason only of their public, charitable or welfare character, placed beyond Section 2(j). Mere vesting of a duty in the State by statute or by the Constitution, even a duty undertaken to fulfil the lofty mandate of Part IV, does not clothe it with sovereign immunity from industrial law. Articles 309 to 311 give little solace as they cover a narrow sliver of civil posts. In these circumstances, unless appropriate legislation engrafting equally efficacious remedies for access to justice is passed, to exempt statutory or welfare activities discharged by Government departments or their instrumentalities from the beneficial scope of the ID Act on the specious plea of sovereign functions would leave a great multitude of workmen engaged in the organised undertakings of the State without the remedies which the said Act was enacted to secure. IV. From the lens of industrial law, charitable undertakings, temples and educational institutions are all viewed not by the spiritual, religious or benevolent object they pursue, but by the character of the employer employee relationship through which they function. Where such activities are carried on through an organised and systemic relationship between employer and employee, they answer the triple test and the absence of profit or the presence of a benevolent object does not take them outside the ambit of the beneficial legislation. V. The 1982 Amendment Act was never notified. It is settled law that Courts cannot direct the Government to notify an amendment which is a part of the legislative process. In view of such disinclination, it would be wrong to rely on an inert law to redraft the Bangalore Water Supply (supra) ratio. Similarly, the new definition of industry in the IR Code has been given prospective operation and in light of Section 6 of the General Clauses Act, 1897 preserving rights and liabilities acquired or incurred under the repealed law, the ratio in Bangalore Water Supply (supra) dealing with cases under the repealed ID Act ought not to be disturbed with reference to the new definition. VI. The ratio in Bangalore Water Supply (supra) applies to a sunset legislation dealing with legacy matters and has been consistently followed for decades. Given this situation, in view of the settled principles of stare decisis, such interpretation which yields to no manifest error, needs to be retained keeping in mind the fact that the economic and technological changes since it was decided have weakened rather than strengthened the case for revisiting it. To overrule it now, would unsettle rights and proceedings doing more harm than good. VII. However, it is apposite to note that the ratio in Bangalore Water Supply (supra) limited itself till a new definition was introduced. As a new law redefining “industry” has come into force, the ratio in Bangalore Water Supply (supra) would remain restricted to the proceedings pending under the repealed law and the provisions of the new law, i.e. IR Code shall be independently interpreted. (JOYMALYA BAGCHI) NEW DELHI AUGUST 20, 2026