• The Industrial Disputes Act,1947(hereinafter “ID Act”) which was repealed by the Industrial Relations Code, 2020 (hereinafter “IR Code”) was passed to investigate and settle Industrial Disputes.
• The government has yet to notify the effective date of the code.
• The following adjudicatory mechanism has been provided under the code:
• Industrial Tribunal
• National Tribunal
• Conciliation officer
• Provisions for voluntary arbitration grievances redressal committee and work committee.

Workmen Of Dimakuchi Tea Estate V. The Management of Dimakuchi Tea Estate[1]–

• In this case the scope of workmen and the nature of industrial dispute was discussed. It was held that-
• Promotion of measures for securing amity and goods relations between employer and workmen.
• An investigation and settlement of industrial dispute between the employer and employee; employer and workmen; workmen and workmen.
• Prevention of illegal strikes and lockouts
• Relief (compensation) in matters of lay-off, retrenchment, and closure of an undertaking.
• Collective Bargaining.

INDUSTRY

• Definition for Industry is defined under Section 2 (p) of IR code 2020 which states that industry means any systematic activity carried on by cooperation 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/distribution of goods or services with a view to satisfying human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature).

whether or not,

Any capital has been invested for the purpose of carrying on such activity; or

Such activity is carried on with a motive to make any gain or profit,

But does not include:

Institutions owned or managed by organizations wholly or substantially engaged in any charitable, social, or philanthropic service; or

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 defense research, atomic energy, and space; or

Any domestic service; or

Any other activity as may be notified by the Central Government

• But according to the ID Act industry means any business, trade, undertaking, manufacture, or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen.

whether or not:

Any capital has been invested for the purpose of carrying on such activity; or

Such activity is carried on with a motive to make any gain or profit,

And includes:

Any activity of the Dock Labour Board established under section 5A of the Dock Workers (Regulation of Employment) Act, 1948;

Any activity relating to the promotion of sales business or both carried on by an establishment, club, or other like body of individuals in relation to such activity is less than ten.

WE CAN UNDERSTAND THE DEFINITION IN 3 PHASES-

• Pre-1963
• Post-1963 and pre-1978
• Post-1978

PRE 1963-

• In 1963, the Supreme Court in the leading case of DN Bannerjee v. PN Mukherjee [2]the issue raised was whether the Municipality is an industry or not.
• It was held that municipality is analogous to Trade and Business i.e., similar but not same.
• So, if a dispute arises between the worker municipality, then that dispute will be considered under the ID Act only.
•  In the leading case of State of Bombay v. Hospital Mazdoor Sabha[3] the issue was discussed regarding whether a hospital falls under the ambit of industry or not.
• Also, In the case of the Corporation of the city of Nagpur v. its employees and others [4]it was held that any such activity that is analogous to trade and business would be an industry within the meaning of industry. However, the definition does not include Regal (related administration of justice, law, and order) or the sovereign function of the state.
• The court in these cases sought to interpret the definition widely and held that even though the second part of the definition includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen, the court held that hospital, whether it is commercial, private, public, it is analogous to trade and business although provides inclusive definition it interferes to several other items of industry (Mazdoor Seva case) hence hospital is an industry.

POST-1963 AND PRE 1978-

•  In 1963, the Supreme Court in the leading case of the University of Delhi v. Ram Nath [5]in which -The University of Delhi and The Principle were the first petitioners in this case, whereas Miranda House, a university college for women, is the second petitioner. The two respondents, Ram Nath and Asgar Masih filed the case under section 33c of the Industrial Dispute Act, 1947, against the petitioners, claiming that they were both employed by the principal as drivers and that they had been let go with a month’s advance salary in lieu of notice. The respondents contended that the educational institution falls under the purview of industry and therefore they are both eligible for reimbursement from the school. After considering the issue, the tribunal decided in favor of the respondents and declared that each respondent should receive compensation of Rs. 1050. The tribunal also denied the appellants’ requests. Later, the ruling was challenged in the Supreme Court, where it was decided whether or not the Industrial Dispute Act of 1947 included educational institutions in its definition of an industry.
• This case overruled all the above cases and interpreted the definition narrowly hence while deciding whether a university comes under the ambit of industry or not it was held that a university is not an industry This gave rise to the theory that the University of Delhi case was resolved not on the basis of logic but rather on the fear that if the Industrial Dispute Act’s application is expanded to include educational institutions, it may negatively impact academic discipline.
• Later, in 1967 and 1969, in the cases of Cricket Club of India vs. Bombay Labour Union[6] and Madras Gymkhana Club Employees’ Union vs. Management of Gymkhana Club[7] the court held that members of the club could not fall under the ambit of industry under according to section 2(j) if ID Act,1947
• The Apex Court overturned the Hospital Mazdoor Sabha case[8] in 1970 in the case of Management of Safdarjung Hospital v. Kuldip Singh Sethi[9], held that the hospital is not an industry. It was also held that if the hospital is established only for commercial purposes, then only it can fall under the ambit of Industry otherwise not.
• In the case of the National Union of Commercial Employees v. M. R. Meher, Industrial Tribunal, Bombay[10], the same trend followed in the solicitor case.
• The issue in this case the question of “whether a firm of solicitors constitutes an industry?” emerged. It was also decided that the basic principle of industrial disputes is that they must originate between labor and capital in businesses where both parties work together to produce goods or render services.
• The essential basis was absent.
• A person practicing a liberal profession cannot carry on his profession in any meaningful way without the active cooperation of his employees, and the main, if not the only, capital that he brings into his profession is his special or intellectual & educational equipment.
• So, a profession like that of an attorney must be deemed to be outside the definition of the industry.

POST 1978-

• In the years following 1978, the trend began to shift once more. The Court adopted a more expansive stance and worked to create a comprehensive definition that would meet societal needs.
• The Supreme Court gave the term “industry” a liberal interpretation in the landmark case of Bangalore Water Supply and Sewerage Board v. A. Rajappa[11] in 1978, ruling that hospitals, clubs, educational institutions, research centers, and charitable organizations all qualified as industries.
• In Safdarjung Hospital v. K.S. Sethi[12], National Union of Commercial Employees v. M.R. Meher[13], University of Delhi v. Ram Nath[14], Madras Gymkhana Club employees v. Management of Gymkhana Club[15], and India Cricket Club vs. Bombay Labour Union[16], it overruled its previous rulings.
• A triple test was established by the court to ascertain whether an organization belongs to an industry or not.
• Were,
  • systematic activity,
  • organized by cooperation between employer and employee
  • 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 i.e., making, on a large scale or prasad or food), prima facie, there is an ‘industry’ in that enterprise.
• The absence of a profit motive or gainful objective is irrelevant, be the venture in the public, joint, private, or other sectors.
• The true focus is functional and the decisive test is the nature of the activity with special emphasis on employer-employee relations.
• If the organization is a trade or business, it does not cease to be one because of philanthropy animating the undertaking, i.e.IR code has followed the triple test but has not followed philanthropy.

LIST OF ITEMS THAT ARE NOT INCLUDED UNDER THE DEFINITION OF INDUSTRY ACCORDING TO IR CODE 2020.

1. any agricultural operation except where such agricultural operation is carried on in an integrated manner with any other activity (being any such activity as is referred to in the foregoing provisions of this clause) and such other activity is the predominant one.
2. hospitals or dispensaries;
3.   educational, scientific, research or training institutions;
4.  institutions owned or managed by organizations wholly or substantially engaged in any charitable, social, or philanthropic service; or
5.  khadi or village industries; or
6. any activity of the Government relatable to the sovereign functions of the Government including all the activities carried on by the departments of the Central Government dealing with defense research, atomic energy, and space; or
7.  any domestic service; or
8. any activity, being a profession practiced by an individual or body of individuals, if the number of persons employed by the individual or body of individuals in relation to such profession is less than ten; or
9.  any activity, being an activity carried on by a co-operative society or a club or any other like body of individuals, if the number of persons employed by the co-operative society, club, or other like body of individuals in relation to such activity is less than ten.
10. In the 2000 case of Coir Board Ernakulam Kerela state vs. Indira Devai P.S.[17], a three-judge Supreme Court stated that they did not think the verdict rendered by a seven-judge bench in the Bangalore water supply issue needed to be reconsidered.
11. The Supreme Court’s majority ruling in State of U.P. v. Jai Bir Singh[18]in 2005 articulated the belief that interpretation was merely provisional and transient until the legislature intervened to eliminate ambiguity and misunderstanding.
12. Later, three statutes were repealed in order to establish the Industrial Relations Code, 2020. (The Trade Unions Act of 1926, the Standing Orders Act of 1946, and the Industrial Disputes Act of 1948).

CONCLUSION-

The definition of the industry has evolved over decades and because of excessive discussion on this definition, many changes in the definition of workmen, industrial disputes, the introduction of the concept of fixed-term employment, and worker re-skilling fund along with this constitution of industrial tribunal has also changed.

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[1] 1958 AIR 353, 1958 SCR 1156

[2] AIR 1963 SC 58

[3] AIR 1960 SC 610

[4] AIR 1960 SC 675

[5] AIR 1963 SC 1873

[6] AIR 1969 SC 276

[7] AIR 1968 SC 554

[8] AIR 1960 SC 610

[9] AIR 1970 SC 1407

[10] AIR 1962 SC 1080

[11] AIR 1978 SC 548

[12] AIR 1970 SC 1407

[13] AIR 1962 SC 1080

[14] AIR 1963 SC 1873

[15] AIR 1968 SC 554

[16] AIR 1969 SC 276

[17] (2000) 1 SCC 224

[18] (2005) 5 SCC 1

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Author: Anshita Agarwal

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