Bangalore Water Supply & Sewerage Board Vs. R. Rajappa (Supreme Court)

Bangalore Water Supply & Sewerage Board, Etc. Vs. R. Rajappa & Others (Supreme Court), Equivalent citations: 1978 AIR 548, 1978 SCR (3) 207, Dated: 21 February, 1978

INTRODUCTION

The Supreme Court of India’s landmark judgement in this case looked at the definition of “industry” under section 2(j) of the Industrial Disputes Act of 1947. The term was thoroughly examined by the Supreme Court of India. The Supreme Court’s ruling rendered invalid and void the consensual flow of presumptions developed with reference to the idea of “industry.”

When defining the definition that assumes enormous relevance as a method of settlement and compensation in connection with industrial disputes, which can only be settled in a proposition when industry-related variations exist, it becomes uncertain. The verdict reversed numerous earlier Supreme Court rulings while simultaneously lessening the legislative burden by placing the issues in the correct perspective. The Supreme Court examined many aphorisms to determine what should and should not be included in the defining region.

THE FACTS OF THE CASE ARE AS FOLLOWS:

• The Appellant Board penalized the respondent workers for misbehavior and collected various monies from them. As a result, they filed Claims Application No. 5/72 under Section 33C (2) of the Industrial Disputes Act, claiming that the punishment was unconstitutional.
• The appellant Board filed a preliminary objection with the Labour Court, claiming that the Board, as a statutory body performing what is essentially a regal function by providing basic amenities to citizens, is not an industry under section 2(j) of the Industrial Disputes Act, and thus the employees were not workers, and the Labour Court lacked jurisdiction.
• After this objection was overruled, the appellant Board filed two Writ ‘Petitions with the Karnataka High Court in Bangalore. The petitions were dismissed by the High Court Division Bench, which determined that the appellant Board is “industry” under section 2(i) of the Industrial Disputes Act of 1947.
• The Special Leave appeals were referred to a larger Bench for consideration, citing “the possibility of confusion from the crop of cases in an area where the common man has to understand and apply the law, as well as the desirability of a comprehensive, clear, and conclusive declaration as to what is an industry under the Industrial Disputes Act as it stands.”

QUESTIONS RAISED:

• Is the Bangalore Waterworks and Sewerage Board covered by section 2(j) of the Industrial Disputes Act of 1947?
• Are the following activities/services considered industry?

1. 1. Sovereign powers
   2. Charitable organizations
   3. Professional Corporations
   4. Hospitals 
   5. Municipalities 

RELATED PROVISIONS:

Section 2 (j) of the 1947 Industrial Disputes Act

(j) “industry” refers to any systematic activity carried out by collaboration between an employer and his workmen (whether such workmen are employed directly by such employer or by or through any agency, including a contractor) for the production, supply, or distribution of goods or services with a view to satisfying human wants or wishes (not being wants or wishes that are merely spiritual or religious in nature), whether or not

(i) any capital has been invested in the pursuit of such an activity, or

(ii) Such conduct is carried out with the intent of gaining or profit and includes-

(a) any Dock Labour Board activity created under Section 5A of the Dock Workers (Regulation of Employment) Act of 1948 (9 of 1948),

(b) any action carried out by an establishment to promote sales or business or both. however does not include:

(1) any agricultural operation, unless such agricultural operation is carried out in conjunction with any other activity (as defined in the preceding provisions of this section) and such other activity is the dominant one.

Explanation – For the purposes of this sub-clause, a “agricultural operation” does not include any activity carried out on a plantation, as defined in clause (f) of Section 2 of the Plantations Labour Act, 1951 (69 of 1951); or,

(2) hospitals or dispensaries; or

(3) educational, scientific, research, or training establishments; or

(4) institutions owned or administered by charity, social, or philanthropic organisations; or

(5) khadi, or village industries; or

(6) any government activity related to the sovereign functions of the government, including all activities carried out by Central Government departments dealing with defence research, atomic energy, and space; or

(7) any household service; or

(8) any activity, constituting a profession, practised by an individual or body of individuals if the number of people employed by the individual or body of individuals in regard to such profession is fewer than ten; or

(9) any activity carried out by a co-operative society, a club, or any other similar group of people, if the number of people employed by the co-operative society, club, or other such group of people in regard to such activity is fewer than ten;

Section 33C of the 1947 Industrial Disputes Act

Where any workman is entitled to receive from the employer any money or any benefit that can be computed in terms of money, and if any question arises as to the amount of money due or the amount at which such benefit should be computed, the question may be decided by such Labour Court as the appropriate Government may specify in this regard; 1 within a period not exceeding three months.

Provided, however, that if the presiding officer of a Labour Court deems it essential or expedient to do so, he may, for reasons to be stated in writing, extend such term by such additional period as he deems necessary.

JUDGEMENT:

The Bangalore Water Supply and Sewerage Board was chosen to be included in the definition of industry, and this decision was supported by offering a more thorough description of industry.

‘Industry,’ as defined in Section 2(j), (a) Where (i) systematic activity, (ii) organized by collaboration between employer and employee, (the direct and significant part is chimerical) (iii) calculated for the production and/or distribution of products and services to meet human desires and wishes (not spiritual or religious, but include tangible objects or services targeted to celestial joy, such as manufacturing Prasad or food on a huge scale), there appears to be a ‘business’ in that enterprise:

• The absence of a financial incentive or a lucrative objective is irrelevant whether the endeavour is in the public, joint private, or other sector.
• The real focus is functional, and the nature of the activity, with a particular emphasis on the employer-employee connection, determines the outcome.
• If the organization is a trade or corporation, the existence of charity does not make it any less such.

Despite the fact that Section 2(j) employs the terms with the greatest amplitude in its two arms, their meaning cannot be exaggerated to the point of overreach.

As stated in this decision, undertaking, as well as service, vocation, and the like, must suffer from contextual and associational shrinkage. This leads to the conclusion that any organized activity with the three criteria, even if not commerce or business, may be defined as industry (if the nature of the activity, i.e. the employer-employee relationship, is comparable to what we find in industry).