MAHARASHTRA NATIONAL LAW UNIVERSITY, MUMBAI

LABOUR LAW

BANGALORE WATER-SUPPLY VS R. RAJAPPA & OTHERS

CRITICAL CASE ANALYSIS

SUBMITTED TO: PROF RAGHAV PANDEY SUBMITTED BY: VINAYA SAIGAONKAR(2016055)

INTRODUCTION

The definition and interpretation of ‘industry’ in Section 2(j) of the Industrial Disputes Act, 1947, has
been an unsettled issue for decades. The ambiguity with the definition of the word assumes great
importance as it has grave and wide implications with respect to the settlement of industrial disputes,
as the process of settlement can be set in motion only after deciding whether the institution would
fall within the meaning of the word ‘industry’ and there by the remedies that would entail with the
same.

According to section 2(j) of the Act1

“Industry means any business, trade, undertaking, manufacture or calling of employees and
includes any calling, service, employment, handicraft or industrial occupation or avocation
of aworkman.”
The seven-judge bench in the case of in the Bangalore Water Supply v. A. Rajjapa and Ors2
case, scrutinized the definition of “industry” and lay down the law on the subject. The Bench
headed over by Justice V. R. Krishna Iyer drafted a new definition of the term “industry”.
The verdict of the case was an outcome of the various disputes arising in institutions that are
not manufacturing industries but belong to categories of educational, hospitals, Governmental
departments, clubs, research institutions, public utility services and professionals. Thus, an
expanded definition was given to the class institutions in order to include all the above and ay
other institution that involved an employer- employee relationship, irrespective of the
objectives of the organization in question.

Serious hesitations were raised about the correctness of the view taken in the Bangalore Water
Supply’s case as the view of the bench gave a wider interpretation to the term which attracted
a much larger ambit than necessary, a five-judge bench in May 2005 3, had referred the matter
to a larger bench which was supposed to review the decision of the seven judge and settle the
issue regarding the definition clause of ‘industry’ while also keeping in mind the amendment
of 1982.

The paper attempts to study the Bangalore water supply case and the standards lead down by
the case to determine any establishment is an industry or not and how good does the
interpretation of the term industry stand good today.

1
Section 2(j) of the Industrial Disputes Act, 1947
2
1978 AIR 548
33
State of U.P vs Jai Bir Singh Appeal civil 897 of 2002
RESEARCH QUESTION

Whether the practicable standards for determining an establishment as an industry given by the
judgment of Bangalore Water Supply v. A. Rajjapa and Ors case stand reliable in law today?

CASE ANALYSIS

FACTS OF THE CASE

The respondent employees were penalized by the Appellant Board for misconduct and various
sums were recovered from them. Therefore, they filed a Claims Application contending that
the said punishment was imposed in violation of the principles of natural justice.

The appellant Board raised a preliminary objection before the Labour Court that the Board, a
statutory body performing a regal function by providing the basic amenities to the citizens, is
not an industry within the meaning of the expression under section 2(j) of the Industrial
Disputes 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 over-ruled, the appellant Board filed two Petitions before the Karnataka
High Court at Bangalore. The Division Bench of that High Court dismissed the petitions and
held that the appellant Board is “industry” within the meaning of the expression under section
2(i) of the Industrial, Disputes Act, 1947.

The appeals by Special Leave, were placed for consideration by a larger Bench to apply the
law comprehensively, and conclusively as to what is an industry under the Industrial Disputes
Act.

ISSUE.

1. what is an ‘Industry’ under Section 2(j) of the Industrial Dispute Act ?

ANALYSIS

The majority of the seven-judge bench re-stated4 ‘sovereign functions’ as an exception to what
amounts to an ‘industry’. According to the judgment, the yardstick for determining the core-

4
Corporation of City of Nagpur v. Its Employees, (1960) 1 LLJ 523 had incorporated the doctrine of sovereign
function while interpreting the concept of industry, prior to the Bangalore case.
functions is the “primary and inalienable functions of the Constitutional Government”.5 It is
limited in scope than the tortuous-defence of sovereign-immunity and is subject to modification
by the legislature.6 The concurring opinion7 explained that this standard can be referred to as
the governmental function in the limited sense. It is neither the regal function nor the sovereign
function.

Primarily, the standards vary and are not uniform. They are always in relation to the changing
role of the government with time. This is pertinent because the government is shifting its focus
from socialist economy to industrial domain and also outsourcing its functions to private
entities such as the metro, monorail. 8

The Court did not clarify the standard for practical application. It did not give framework of
the functions which would be included in the definition and the factors which be considered to
fall in the exemption. Therefore, in the course of time the court again had to step in to do away
with the ambiguity by listing the functions. 9 It also had to be later clarified that the test to
determine primary and inalienable functions is to check whether any private person can
perform the same activity. 10

The bench laid down the Any activity will be industry if it fulfils the ‘triple test’11, which had
ingredients such as:

• Systematic and organized activity

• cooperation between Employers and employees
• production and distribution of good and services whether capital has been invested for this
activity.
The outcome of the judgments was that a large number of activities which did not fall under
the definition of industry came under the purview of the definition of industry.

The bench also enunciated down the Dominant nature test12 according to which a limited the
definition to a certain category of co-operatives, professions, little research labs, clubs, may

5
Supra note 2, ¶ 50, 143 clause (b).
6
Id., ¶ 50
7
Id., ¶ 163
8
Ramana Dayaram Shetty v. International Airports Authority of India, AIR 1979 SC 1628, ¶ 13 where the court
observes that the nature of function performed by the state has changed over time.
9
Agricultural Produce Market Committee v. Shri Ashok Harikuni & Anr. Etc, (2000) 8 SCC 61.
10
Supra note 2, ¶ 50.
11
Supra note 2
12
Supra 2.
meet the requirements for exemption if practically no employees are hired but only a small
number of employees are hired for nominal matters without distrupting the non-employee
character of the establishment.

The judgement expanded the ambit of the definition to a large extent and over-ruled case
precedents which were a part of narrow interpretation, that is to say, before the case solicitor
firms 13, hospitals14, universities15, clubs16, government departments were excluded from the
definition of industry but after the Bangalore water supply judgement there were included in
the ambit of the definition of an industry. The triple test of the Bangalore case forms the
indispensable part of the amended definition of industry in 1982.

While dealing with the Act the court was of the view that the Industrial disputes Act is a
beneficial legislation and hence must be interpreted liberally. This was presumed to be a
legislation that furthers the goals of social justice by bridging the gap between the rich
employer and the poor employee. As the case was in a time where the country had large number
of industries, the legislation intended to give the most benefit to the workers as they were in
large number and a growing economy.

CONCLUSION

In the recent judgement in Jai Bir Singh case17 the Supreme Court expressed its concern
regarding the excessive pro-workmen interpretation given in the Bangalore water supply
case as it unconsciously overlooked the interests of the employer and ignored the main object
of the Act, 1947 which was regulation of employer-employee relationship and not just the
employees, by bearing in mind the stakes of the employers, who has invested his capital and
expertise into the industry and the workers who by their labour equally contribute to the growth
of the industry. Therefore, the Court observed that there was dire need to re-examine such a
sweeping definition of industry and allow legislature to draft a more elaborate definition that
also observes the demands of employers and employees in the public and private sectors. . In
Jai Bir Singh the court agreed that Industrial Disputes Act was a beneficial legislation and is
has to benefit society as a whole not a section of society. For that it was proposed that both the
sides of the scale have to be in balance, an interpretation should not overstrain the employers

13
Osmania University v Industrial Tribunal Hyderabad (AIR 1960 AP 388)
14
Management of Safdarjung Hospital v. Kuldip Singh (AIR 1970 SC 1406); Dhanrajgiri Hospital v. Workmen
(AIR 1975 SC 2032)
15
University of Delhi Vs. Ram Nath (1963 AIR 1873)
16
Cricket club of India v Bombay Labour Union (1969 AIR 276)
17
State of U.P vs Jai Bir Singh Appeal civil 897 of 2002 decided on 05/05/2005
or the employees. The ultimate objective being, industrial peace and harmony, and hence,
development of the nation. In Jai Bir Singh the court viewed that definition of industry should
be restricted so that the overall benefit is given to greater number of people which holds that
the judgment Bangalore Water Supply case does not stand good today.