A CASE REVIEW OF

BANGALORE WATER SUPPLY CASE & SEWAGE BOARD, ETC

R. RAJAPPA & OTHERS

- Abhijeet Singh Rathore

III Year B.A.LLB Section A

ABSTRACT

During the Twentieth Century and that to mainly in the post independent period a new branch of
jurisprudence known as Industrial jurisprudence has developed in India. This branch of law, i.e.,
labour and industrial law, has modified the traditional law relating to master and servant and had
cut down the old theory of laissez-faire based upon the freedom of contract to protect
workmen against victimization and unfair labour practices by the employer and to put an end to
industrial disputes by peaceful methods. The Industrial Dispute Act which is one of the important
Industrial legislation was passed in 1947 with an object to make provision for investigation and
settlement of industrial disputes and for certain other purposes. Section 2(j) of Industrial
Dispute Act 1947 defined industry as 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. The definition of Industry had received
conflicting interpretation by the Supreme Court at different times. A seven judge bench of
Supreme Court in 1978 exhaustively considered the scope of industry and the widest
interpretation was given to the definition.

The researcher will deal with the following issues in his project

1. To understand the definition of Industry and critically analyze it.

2. To understand whether government department is an industry through decided case laws.

Basically research means investigation of new things and new things means firsthand experience.
The research methodology used in this project by the researcher is doctrinal. Doctrinal research

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in law field indicates arranging, ordering and analysis of the legal structure, legal framework and
case law to search out the new things by extensive surveying of legal literature but without any
field work. The researcher at the end of the project will try to throw light on what was the impact
on Industrial sector after this case.

Keywords: Laissez faire, Industry, Statutory body, Regal function.

REVIEW OF LITERATURE

ARTICLES

Article on What does not come under the definition of industry by V. Chandra Sekhar

URL:lexwarrier.in/2014/06/come-defination-industry/

In this article the author tries to throw light on the importance of industry in current scenario as it
has become one of the most vital parts of the societys smooth run, when there are no
harmonious relation between workmen and employee it leads to dysfunction. When the law itself
is not clear regarding the term Industry it will definitely affect the industry on a large scale. The
law in force presently is the interpretation of the original Section 2(j). Focusing solely on the
merit of the case it is judgment which is taken into consideration. The decision is distinctly pro-
labour as it seeks to bring more activities within the fold of Industrial dispute act, 1947. In
practical terms, the labour force of the country are much better position now, than they would
have been had the amended S.2(j) been notified. This is because the amended S.2(j) excludes
some category of employment which squarely comes within the fold of Rajappas case. But at
the same time, a glance at the judgment would suggest that it is actually a different law
altogether as compared to the original section 2(j). The question is really whether the judiciary is
entitled to embark on such an expedition. Even in a democracy, following the theory of
separation of powers, the judiciary has implied authority to fill in the gaps left by the legislature.

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Article on Revising the Supreme Courts attempt to revise the triple test definition of industry
in Indian labour law by Sayak Chaudhuri

URL: paper.ssrn.com/sol3/papers.cfm?abstract-id=953225

In this article the author tries to explain the concept of triple test which is evolved in Bangalore
Water Supply case by Krishna Iyer, to determine exactly what actives fell within the definition of
Industry in section 2(j) of the industrial dispute act 1947. It was held by the referring bench
that judicial interpretation of the term was vague and uncertain as both parties in the dispute
before that bench used different parts of the judgment to emphasis their point. The author tries to
throw light on what was the position before Bangalore water supply case and what was the
position after the case. Author further explained the composition of triple test and in the end
made a conclusion by discussing some of the key points.

Revisiting Interpretation of Industry as has been done in Bangalore Water Case from an
interpretation of Statue Perspective by Abhilash Bhatnagar (Aug 17, 2010)

URL: papers.ssrn.com/sol3/papers.cfm?abstract_id=1681528

The Bangalore water supply case explained the scope of industry considerably which was not in
tune with the post 1960 trend that by and large tried to confine the scope of Industry. Justice
Krishna Iyer who delivered the majority judgment seemed to be influenced by a lot of factors
while deterring the confines of industry. The author tries to analyze the interpretational approach
adopted by justice Krishna Iyer in the Bangalore water case to resolve the issue as to what
activities can be industry. The author although attempts to discuss as to how judges substitute
their own intentions in the garb of interpreting the intention of the legislature. The author opines
that the act of interpretation of industry as has been done by Justice Krishna Iyer in the case of
Bangalore Water Supply is nothing but an act of judicial legislation which is unacceptable.

Article on Interpretation of Statues: the doctrine or Ejusdem Generis/ Noscitur a Sociis

URL:googleweblight.com

Ejusdem Generis is a Latin term which means of the same kind. Where a law lists specific
classes of persons or things and then refer to them in general, the general statement only apply to

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same kind of persons or things specifically listed. For example if a law refers to automobiles,
trucks, tractors, motorcycle and other motor powered vehicles, vehicles would not include
airplanes, since the list was of land-based transportation. The term Ejusdem Generis in other
words means words of a similar class. The rule is that where particular words have common
characteristics any general words that follow should be constructed as referring generally to that
class, no wider construction should be afforded.

In Bangalore Water Supply Case while examining the meaning of the term Industry we must
have the clear idea of the term what is industry. It seems that the second part relating to the
workmen, must necessarily indicate something which may exclude employers and include an
Industry. At any rate, the meaning of Industrial dispute includes dispute between workmen and
workmen also. Therefore it is difficult to cut down the wide ambit of last part of the definition by
searching for the predominant meaning in the first part unless it is determined at the outset, to
curtail the scope of the second part somehow. If it is done it is deliberately cutting down the real
sweep on the last part. Neither Noscitur a sociis not the ejusdem generis rule are adequate
for such a case.

Article on Changing Concept of Industry under Industrial Dispute Ac By K.K. Chaudhari

URL: http://www.jstor.org/stable/4372151?seq=1#page_scan_tab_contents

In this article the author tires to throw light on problems which were faced by the court in
defining Industry from the beginning of the enactment of the act and shows that currently also
the concept is not clear. As it is continuously baffled the courts ever since the enactment of the
Industrial Dispute Act, 1947. Though the Act provides a definition of Industry in Section 2 (j),
the definition is not very precise and has defined consistent interpretation. As a result, judicial
efforts have been directed at evolving tests by reference to characteristics regarded as essentials
for regarding an activity as an Industry. The cases decided by the court, however, show that
these tests have not been uniform. The courts have been guided by an empirical rather than a
strictly analytical approach: sometimes the tests have been liberally conceived, at other times
narrowly. The Industrial Disputes (Amendment) Bill, 1982 seeks to put an end to the floating
state of the definition of Industry. In the process it has narrowed the concept of Industry and

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opened up debate on the curtailment of the benefits and protection available to employees under
the earlier definition.

BOOKS

Labour and Industrial laws by Dr. V.G. Goswami

The definition of Industry as contained in section 2(j) has widely interpreted by the supreme
court in Bangalore water supply case laying down triple test in accordance with which all the
institutions, undertakings or organizations where a systematic activity organized by co-operation
between employer and employees for the production of goods and services calculated to satisfy
human wants and wishes but inclusive of material things or services making on a large scale
Prasad or food, prima facie there is an industry in that enterprises. The Supreme Court in this
case observed that government might restructure this definition by suitable legislative measures.

Labour and industrial law by S.N. Mishra (27th Edition)

In this book the author explains the dominant nature test by stating where a complex of activities,
some of which qualify for exemption, others not, involve employees on the total undertaking
some of whom are not workmen 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 will be true test, the whole undertaking will be industry although those who are
not workmen by definition may not be benefit by status.

The exception of this is a restricted category of professions, clubs, cooperatives and even
gurukuls 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.

Textbook on Labour and Industrial Law (6th Edition) by Dr. H.K. Saharay

So far as the Trade Unions Act is concerned, the word Industry should be used in the same
sense as used in Industrial Dispute Act. Tests have been laid down by the Supreme Court in
Bangalore Water Supply Case. A. Rajappa, to construe the word Industry for the purpose of

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Industrial Dispute Act. Applying these tests for the purpose of the Trade Union Act, the true
focus is functional and the decisive test is the nature of the activity with special emphasis on the
employer-employee relations. The fact that such services are rendered by a statutory corporation
makes no difference. The expression employment and non employment involves the question of
dismissal or refusal to employ. The word term of employment includes all matters covered by
the contract of employment either expressly or by implication, such as wages bonus etc. the
expression condition of labour includes physical conditions and anything incidental thereto,
such as canteen or welfare facilities. The occupation of primary school teacher cannot be said to
be employment in any trade or industry.

The law of Industrial disputes by Dr. E.M. Rao 7th Edition Volume 1

In Bangalore Water Supply two judges categorically discarded the principle of noscitur a sociis
and ejusdem generis while interpreting the expression used in definition of an industry, in the
leading judgment, while holding that domestic employment cannot fall within the scope of an
industry, Krishna Iyer J admitted that the meaning of the words of the widest amplitude, used in
the two limbs of the definition cannot be magnified to over-reach itself and emphasized:

The literal latitude of the words in the definition cannot be allowed a grotesquely inflationary
play, but must be read down to accord with the broad industrial sense of the nations economic
community, of which labour is an integral part. To bend beyond credible limits is to break with
the facts, unless language leaves no option.

Industrial Relation and Labour laws by S.C. Srivastava (6th Edition)

Justice Krishna Iyer has excluded a single lawyer, a rural medical petitioner, urban doctor and a
rural engineer with a little assistance or menial servant from the purview of the word industry
on the ground that:

There is nothing like organized labour in such employment. The image of industry or even quasi
industry is one of a plurality of workmen, not an isolated or single little assistance or attendant.
The latter category is more or less like personal avocation for livelihood taking some paid or
part time work from another. The whole purpose of the Industrial dispute act is to focus on
resolution of industrial disputes and regulation of industrial relations and not to meddle with

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every little carpenter in village or blacksmith in a town who sits with his son or assistant to work
for the customers who trek in. the ordinary spectacle of a cobbler and his assistant or a cycle
repair with a helper, we come across with the pavements of cities and towns, repeals the idea of
industry and industrial disputes.

FIRST ROUGH DRAFT

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 INTRODUCTION

In the Bangalore Water Supply Case, a seven judge bench was constituted especially to examine
the definition of Industry and lay down the law on the subject. The bench was presided over by
Justice V.R. Krishna Iyer who assumed the role of a crusader-legislator and drafted a new
definition of the term Industry. There was a result of the various disputes arising in
establishments that are not manufacturing industries but belong to categories of hospitals,
educational and research institutions, governmental departments, public utility services,
professionals and clubs. The definition was accordingly expanded to cover those establishments
which involved an employer-employee relationship, irrespective of the objective of the
organization in question.1

The meaning of industry is an important question of law and fact to be decided by the industrial
tribunal before exercising jurisdiction on a reference made to it by an appropriate government.
This is because under the industrial dispute act the government is empowered to make a
reference to the industrial tribunal when an industrial dispute exists between an employer and the
workmen employed in an industry.

HISTORY

The origin of Industrial Disputes Act 1947 can be traced back to the existence of the monopolist
traders in India, i.e. The East India Company. Due to cheap labour and raw material, India
became the hub for the production of a variety of products which was later sold to international
markets at higher prices. This helped East India Company to make huge profits. Indians at that
time produced and exported some of the most desirable fabrics which posed a threat to British
Crown. Hence, the British decided to cut off this competition by imposing duties and tariffs on
Indian clothes. This was the huge setback to the Indian economy. Not only did the British impose
excise duties but they also flooded the Indian markets with cheaper fabrics produced in Britain.
Since then the legislation enforced on Indians were more severe than the ones followed in

1 Article on The Critical Analysis Of Bangalore Water Supply Case By

GadhreURL:www.legalservicesindia.com/article/bangalore-water-supply-case-533-1.html

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Britain. This led the Indian weavers to face complete isolation from international markets.
Hence, instead of exporters of finished products, India became importer of British goods.

In 1979 Clegg defined the meaning of Industrial Relations as the study of rules governing the
employment, together with the way in which the rules are made and changed, interpreted and
administered. So it can be said that employment relationship is central to industrial relations. The
main objective of the industrial relation legislation in India was to provide the economy with a
protected and bonded labour market. There were series of legislations which include following
acts: Merchant Shipping Act (1859), Workmen Breach of Contract Act (1860), Workmens
Dispute Act (1929), Trade Disputes Act (1934), and Trade Dispute Amendment Act (1938).
Failure to the above mentioned acts drew a lot of attention as there was an urgent need to
maintain peace and harmony within the Industry in order to avoid further harm to the Indian
economy. Hence the formation of Industrial Disputes Act, 1947 came up in the priority list of the
government2.

DEFINATION

According to Section 2(j) of Industrial Dispute Act, 1947 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.

MEANING

The definition of industry is in two parts. The first part says that industry means any business,
trade, undertaking, manufacture or calling of employers and the second part of the definition of
industry says that it includes any calling, service, employment, handicraft, or industrial
occupation or avocation of workmen. Justice Krishna Iyer in Bangalore Water Supply Case
interpreted the word undertaking as follows:
The expression undertaking cannot be torn off the words whose company it keeps. If birds of a
feather flock together and nositur a sociis is commonsense guide to construction, undertaking,
must be read down to confirm to the restrictive characteristic shared by the society of words

2 Article on Industrial Dispute Act,1947: An Ambivalent Institution By Shafin ShabirURL:

www.academia.edu/10106018/Industrial_Disputes_Act_1947_An _Ambivalent_Institution

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before and after. Nobody will torture undertaking in Section 2(j) to mean meditation or
Mushaira which are spiritual and aesthetic undertakings. Wide meaning must fall in line and
discordance must be excluded from a sound system. The aforesaid principle was also applied in
interpreting the expression service, calling and the like. Further the word trade, according
to justice Iyer, embraced functions of local authorities and even professions.
The term Manufacture received the attention of Chief Justice Beg who explained it to mean a
process of manufacture in which the employer may be engaged. 3

NATURE

The terminology used in the definition of an industry is not only foggy, but is highly
overlapping. So the researcher will try to give clear cut meaning of the term Industry and will
also find out the current pros and cons of the current definition.
ISSUES

The researcher will deal with the following issues in his project

1) To understand the definition of Industry and critically analyze it.

2) To understand whether government department is an industry through decided case laws

DEFINATION OF INDUSTRY

The development of the definition of industry has developed in many stages, the definition of
industry has been interpreted many times, there was no fixed definition of Industry and its
scope has also not been ascertained. The conflicting opinion of the Supreme Court during the last
25 years left the coverage of the expression Industry more uncertain and vague. The Courts
have given different meaning to this concept at different times, and actually, the interpretation
has always depended on predictions of individual Judges.4

3 Industrial Relation and Labour Law By S.C. Srivastava (6 th) Edition

4 Article on Law Relating To Settlement Of Industrial DisputesURL:

shodhganga.inflibnet.ac.in>bitstream

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The Indian Courts seems to have rejected the traditional meaning of the term Industry. In
giving the new meaning to the Industry court have brought to light the essential characteristics of
Industry. In deciding whether a particular establishment is an industry or not, the court have
normally to decide:

1) How far profit motive is essential

2) The meaning of the term Undertaking and Calling.

There are number of cases in which the court tried to define the term Industry. The first case
which required the interpretation of the term industry as used in the Industrial Disputes Act was
Bombay Province v. W.I. Automobile Association5 it was observed by Chagla C.J.:

There is no indication in the section itself that the Undertaking referred to it in this definition
clause must be undertaking carried on for the purpose of making profit. The expression Calling
is also sufficiently wide to include in its activities no necessary concerned with profit motives.

In V.S. Marwari Hospital v. Its Workmen 6 it was held that Section 2(j) of the Industrial Dispute
Act, 1947, is of wide amplitude and is not ejusdem generis with the word business or trade
used in section. It was held that if judged by the object and scope of the Act and the other
provisions of the Act, the plain meaning of the word could not be cut down to limit it to profit
making enterprises only. Hence charitable institutions like hospitals, universities, free school or
colleges or public bodies like municipalities would come within the concept of Undertaking as
used in Section 2(j) of the Act.

In State of Bombay v. Hospital Mazdoor Sabha7 the Supreme Court held It is the character of
the activity in question attracts the provision of section 2(j); who conducts the activity and
whether it is conducted for profit or not do not make any material difference. The court laid
down some essential characteristics of an industry

1) There must be co-operation of the employer and the employees

5 AIR 1949 Bom.141

6 4 F.J.R. 295 (S.C.) (1960)

7 [1960] 2 SCR 866

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 2) The object of the activity should be the satisfaction of material human needs.
3) The activity must be organized or arranged in a manner in which the trade or business is
generally organized or arranged.
4) The activity must not be casual nor must it be neither for oneself nor for pleasure.

In D.N. Banerjee v. P.R. Mukherjee8 it was held by Supreme Court that though the word
Undertaking in the definition of Industry is wedged between business and trade on the one
hand and manufacture on the other hand, and though therefore it might mean only a business or
trade undertaking, still it must be remembered that if that were so, there was no neeed to use the
word separately from business or trade. The wider import is attracted even more clearly by the
latter part of the definition which refer to calling, service employment or industrial occupation
or avocation of workmen. It therefore follows that the word Undertaking covers much more
than trade or business.

In case of Osmania University v. Industrial Tribuna9l it was held by the Andra Pradesh High
Court that the co-operation between labour and capital being the significant and distinctive test
it follows that any educational institution where the co-operation does not exist would not be
covered by the definition of an industry.

In Corporation of Nagpur v. It Employees10, Justice Subba Rao J. observed

We do not see any justification for this artificial division of municipal activities. Barring the
regal function of a municipality, if such other activity of it, if undertaken by an individual, would
be industry, then they would be unrealistic to draw a line between a department doing a service
and a department controlling or feeding it. Supervision and actual performance of service are
integral part of the same activity. In other words, whether these three functions are carried out by
one department or divided between three departments, the entire organization activity would be
an industry.

8 [1953] SCR 302

9 18 F.J.R. 440 (H.C. Andra) (1960)

10 AIR 1960 SC 675

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BANGALORE WATER SUPPLY CASE11

FACTS

the appellant board raised a preliminary objection before the labour court that the board, a
statutory body performing what is in essence a regal function by providing the basic amenities to
the citizen, is not an industry within the meaning of the expression under section 2(j) of the
Industrial Dispute Act, and consequently the employees were not workmen and the Labour Court
had no jurisdiction to decide the claim of the workmen. This objection being overruled, the
appellant board filed to writ petition before the Karnataka High Court in Bangalore. The division
bench of that High Court dismissed the petition and held that the appellant board is Industry
within the meaning of the expression under section 2(j) of the Industrial Disputes Act 1947. The
appeal by special leave, considering the chances of confusion from the crop of cases in an area
where the common man has to understand and apply the law and the desirability that there
should be, comprehensive, clear and conclusive declaration as to what is an industry under the
Industrial Dispute Act as it stands were placed for consideration by a larger bench.

ISSUE INVOLVED IN CASE

Whether Bangalore Water Supply and Sewage Board will fall under the definition of Industry
and what is an Industry under section 2(j) of Industrial Dispute Act?

In the present case the court by applying liberal interpretation gave a wider meaning to the
definition of Industry so as to include all kinds of activities wherein there is an employer and
employee relationship. Justice Krishna Iyer, after review of Supreme Court decisions, laid down
the following test for determining the scope of the term Industry.

1) Where 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, eg making on a large scale Prasad or food), prima facie, there is
an industry in that enterprise.

11 1978AIR 548

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 2) Absence of profit motive or gainful objective is irrelevant, be the venture in public, joint,
private or other sector.
3) The true focus is functional and the decisive test is the nature of the activity with special
emphasis on employer-employee relations.
4) If the organization is a trade or business, it does not cease to be one because of
philanthropy animating the undertaking although section 2(j) uses the words of the widest
amplitude in its two limbs, their meaning cannot be magnified to overreach itself.

APPLICATION OF THE BANGALORE WATER SUPPLY CASE

The net effect of the decision of the Bangalore Water Supply Case was that several
activities/establishments such as research and development organizations, public utility services
such as post and telegraph, telephones, charitable and social organizations, public service
commissions, southern railways, doordarshan, irrigational department, societies promoting health
and training of women in family planning program of the state government, schools hostels,
services like supply of electricity, water, railways, professional activities of architects, central
research institute for yoga were held to be industry under section 2(j).

On the other hand, activities/establishment such as Central Institute of Fisheries, Works

Department of Government, trust of a temple, firm or trademarks agents were held not to be
Industry under section 2(j).12

RE-EXAMINATION OF THE DECESION IN BANGALORE CASE

In Coir Board Ernakulam v. Indira Devi13 the two judge bench of Supreme Court observed:

Looking to the uncertainty prevailing in this area and in the light of the experience of the last
two decades in applying the test laid down in Bangalore Water Supply Case, it is necessary that
the decision in that case be re-examined. The experience of the last two decades does not appear
to be entirely happy. Instead of leading to industrial peace and welfare of the community (which

12 Industrial Relation and Labour Law By S.C. Srivastava (6 th) Edition

13 (1998) 78 FLR 845 (SC)

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was avowed purpose of artificially extending the definition of industry), the application of the
Industrial Disputes Act to organizations which were, quite possibly, not intended to be so
covered by the machinery set up under the Industrial Disputes Act, might have done more
damage than good, not merely to the organizations but also to employees by the curtailment of
employment opportunities.

In fact in 1982, the legislature itself decided to amend the definition of industry under the
Industrial Dispute Act, 1947 by enacting the Amending Act 46 of 1982 and curtailing the
coverage of Industry. Unfortunately, despite the legislature mandate, the definition has not been
notified by the executive as having come into force.

The cases were, therefore, placed before the Chief Justice of India for constituting a suitable
larger bench for reconsideration of the judgment of Bangalore Water Supply & Sewage Boards.14

WHETHER GOVERNMENT DEPARTMENT IS AN INDUSTRY

There is certain public utility services which are carried out by governmental agencies or
corporations treated by the act itself as within the sphere of Industry. If express rules other than
enactments govern the relationship between the state as an employer and its service as
employees, it may be contended on the strength of such provision that a particular set of
employees are outside the scope of the Industrial Dispute Act. The state today increasingly
undertakes commercial functions and economic activities and services as part of its duties in a
welfare state. Hence to artificially exclude state-run industry from the sphere of the Act, unless
the statutory provisions expressly or by necessary implication have that effect, would not be
correct. The term Sovereign should be reserved technically and more correctly for the sphere of
ultimate decision. Sovereignty operates on a sovereign plane, of its own. Only those services
which are governed by separate rules and constitutional provisions such as Article 310 and 311
should, strictly be excluded from the sphere of industry by necessary implications.15

.CONCLUSION

14 Ibid

15 1978AIR 548

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In the current scenario industries have become one of the most vital parts of the societys
smooth run, when there is no harmonious relation between workmen and employee it leads to
dysfunction. When the law itself is not clear regarding the term industry it will definitely affect
the industry on a large scale. The law in force presently is the interpretation of the original
Section 2(j). Focusing solely on the merits of the case it is judgment which has taken into
consideration. The decision is distinctly pro-labour as it seeks to bring more activities within the
fold of Industrial Dispute Act 1947. In practical term, the labour forces of the country are much
better position now, than they would have been had the amendment S.2 (j) been notified. This is
because the amended S.2 (j) excludes some category of the employment which squarely comes
within the fold of Rajappas case. But at the same time, a glance at the judgment would suggest
that it is actually a different law altogether as compared to the original S.2 (j). The question
really is whether the judiciary is entitled to embark on such expedition. Even in a democracy,
following the separation of power, the judiciary has implied authority to fill its gaps left by the
legislature. A crucial step should be taken to clear the gap.

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