Rolling Series


The Case-comment is authored by,  Chhavi Sardana and Shreyansh Rathi, 2nd year LLB Honours student of a 5-year integrated law degree program at Rajiv Gandhi National University of Law, Punjab

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There’s still vagueness prevalent in Indian courts in interpreting ‘what’s an industry?’ even after the Industrial Disputes Act, 1947 explicitly mentions the definition of ‘industry’ in section 2(J).The very reason behind this ambiguity is that the definition provided is quite precise and its scope is yet to be determined. The determination of judicial content of definition has been the main motive in several cases of the Supreme Court but ironically, it opened up a debate on its extent and scope. In any country industry plays a pertinent role in developing the economy of that nation. Consequently, labour rights and industrial laws cannot be taken for granted. Also, Laws are equally essential for any development in technological field because without protection, without laws, there would be violation of human rights which a democratic country can’t afford. That’s why it becomes pertinent to know which undertaking can be classified as industry and which undertaking can’t and this particular case helps in clearing some doubts by providing a definition of industry.


This case was an appeal filed before the 5 judge constitutional bench constituting of N. Santosh Hegde, K.G. Balakrishnan, D.M. Dharmadhikari, Arun Kumar and B.N.Srikrishna, JJ. to interpret the meaning of word ‘industry’ as there was already an existing conflict between the two Supreme Court judgments Chief Conservator of Forests v. Jagannath Maruti Kondhareofthree judges and State of Gujarat v. Pratam singh Nar singh Parmartwo judges.


In order to understand the rationale and ideology behind the conflicting interpretations of various judgments, it becomes desirable to cast some light on its historical context that is the background and talking about evolution of various opinions which helped in shaping this industrial disputes act and more precisely, the definition of word ‘industry’. In 1978, the word ‘industry’ was interpreted widely by a larger bench of 7 judges under the industrial dispute act, 1978 in the case of Bangalore water supply. Many state bodies felt the need to reconsider the interpretation of word ‘industry’ given in Bangalore water supple case[1] due to the following reasons:

  • It was proposed that the decision in Bangalore water supply case was not decided unanimously and 2 judges out of 7 were against the proposed definition and even out of 5 judges, they had different rationales and there was no unanimity. This is evidently clear from the paragraph 170 of the main judgment stated below:

“We are in respectful agreement with the view expressed by Krishna Iyer, J.In his critical judgment that the Bangalore Water Supply and Sewerage Boardappeal should be dismissed. We will give our reasons later indicatingthe area of concurrence and divergence, if any, on the various pointsin controversy on which our learned Brother has dwelt.”

  • Also, it was clarified that opinions expressed by majority were temporary in nature and require constant interpretation time to time. The proposed definition of word ‘industry’ was one sided and more of worker oriented approach as it gave many rights to workers which ultimately benefitted them in rising claims from their employers. But many workers claimed without any rationales which ultimately lead the destruction of particular industries, this in turn further harmed general public as industries were shutting down and going in losses.Krishna Iyer J. speaking for himself and onbehalf of the other two Hon’ble judges stated that:

‘A worker-oriented statute must receive a construction where conceptual 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.’

  • Even other professionals like lawyers, architects were facing difficulties in their normal working due to this definition and there was much confusion among employers and employees regarding this definition. That’s why there was a need to reconsider the definition.

The main issue that was raised in Bangalore supply case was ‘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?’ and the court ruled that it is covered under section 2(j) and is an industry but two judge bench decision in State of Gujarat v. Pratam singh Nar singh Parmar had contrary views.

Our judgment here has no pontifical flavour but seeks to serve the future hour till changes in the law or in industrial culture occur” says the Krishna Iyer J. himself, who delivered the main judgment in the Bangalore Watercase,

Amended definition of industry:

Under section 2(j) of industrial dispute act, ‘industry’ means any systematic activity carried on by co-operation between an employer and his workmen (whether such workmen are 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 of spiritual or religious nature).

The judgments of Dhanrajgiri Hospital vs. Workmen, Safdarjung Hospital, Delhi vs. Kuldip Singh,Madras Gymkhana Club Employees Union vs. Management,N.U.C. Employees vs. Industrial Tribunal,University of Delhi vs. Ram Nath and similar other cases were overruled due to conflicting judgments with Bangalore Water Supply vs. A. Rajappa case.



The counsels on the behalf of employers pointed out that there existed no unanimity in opinions among the judges in the Bangalore Water Supply case decision on the ambit of the term ‘Industry’ given in the act. Even though legislature amended the definition but the new provision stands unenforced even after 23 years. It was pointed out on the behalf of employers that while the other provisions of the amended act of 1982 have been enforced, to the extent of new definition of term ‘industry’, it has remained unenforced.

It was thus submitted that such piecemeal implementation was not contemplated by Section 1 (2) of the Industrial Disputes (Amendment) Act, 1982. If the legislature had intervened and came up with a new definition of ‘industry’ with exclusion of certain public service utilities and welfare activities, though not enforced, the unamended definition should be construed and understood with the aid of such amended yet unenforced definition which although not enforced nonetheless form a part of the statute.


The counsel for the employees vehemently argued that the decision in Bangalore Water Supply forming a binding precedent for past 23 years and determining the decision in various subsequent cases, has worked to complete satisfaction of all and the court should follow the principle of stare decisis and refrain from making any reference to larger bench for review and reconsideration of the decision. It was submitted that reconsideration of law settled in Bangalore Water case is neither expedient nor desirable.

The explanation of Union for non-enforcement of the amended definition was also reiterated that employees from the categories of industries excluded in the amended definition would have no alternative Redressal mechanism if the amended definition would be enforced and implemented.


The Supreme Court Five Judge Constitutional Bench after consideration of the rival contentions of counsels on the behalf of employers and employees in its judgment dated 5 May, 2005 held that there was in actuality the need of a reference to a larger bench for reconsideration of the decision in Bangalore Water Supply case for the following, among other reasons:

  1. The opinions and observations by the judges in Bangalore Water Supply case were not delivered at the same time and were delivered at different times such that some judges did not get opportunity to hear the opinions of other judges on the bench. Within the Bench, the opinions and observations deviated a lot from each other and no unanimity was there in the opinions of judges delivered separately at different times. The judges of the bench hearing Bangalore Water Supply case themselves recognized that the definition clause of the act was so wide and vague and that it is not susceptible to a definite and precise meaning and prone to contradictory interpretations. The court was thus much critical of the way in which the judgment of the BWSS was delivered with different judges giving their opinion in a half-hazard way
  2. All of the judges on the bench recognized and opinionated that it would have been better that legislature intervene and clarify the legal ambiguity of the ambit of term industry by defining it through an amendment. Although, the legislature did so by amending the definition of industry, the amended provision was not brought into force on the argument that Alternative Dispute Resolution Mechanism would not be available for employees from specific industrial categories excluded from amended definition. The bench observed that although 23 years have passed, the legislature and executive due to their lack of will have still not have come with such mechanism and bring the amended definition into force and thus larger bench of court has to intervene and clarify on the issue.
  3. The legal position thus continues to be ambiguous and uncovered by decision of Bangalore Water Supply case as the observations in even that case were conflicting and contradictory.

Thus, the 5 judge bench of the apex court in the present case was of the view that there should be a middle way between literal and liberal interpretation of unamended definition of industry and was of opinion that there is a need for a larger bench which would have to necessarily go into all necessary legal questions in all dimensions and depth. The court, thus, held that a larger bench should be referred for review of decision in Bangalore Water Supply case and look at the statutory provisions not only from the angle of workers but also from other stakeholders i.e. employers and society as a whole.

The court also emphasized on the need of reconsidering where the line should be drawn in recognition of an establishment as an industry and  what limitations should be reasonably applied while interpreting the wide words under section 2 (j) of the act. The court thus recognized that although it would be difficult problem to resolve, the pressing demands of competing sectors of employers and employees and the dormant attitude of legislature and executive in bringing into force amended definition with required changes, have compelled this constitutional bench to make present reference for constitution of suitable larger bench for reconsideration of Bangalore Water Supply case decision and clarify on required points.


The judgment and the decision taken by the constitutional bench in the case of State of UP v. Jai Bir Singh was one of the most required steps to be taken by the judiciary in order to clear the haziness and ambiguity surrounding the ambit and interpretation of the definition of term ‘industry’ as per Industrial Disputes Act which had been leading to a large amount of difficulty for the court to decide on what kind of establishments came within the ambit of industry as a result of which either the employers and industrialists or the employees had to suffer. While on one hand this ambiguity discouraged the entrepreneurship as the entrepreneur had to be continuously in fear of whether their establishment come within the definition of industry or not as per the act and whether they would be regulated by the concerned act, on the other, the employees were also unsure whether they could get relief under this act in case the uncertainty in the definition lands the case against them.

At the stage when, even after 23 years, the legislature and the executive, due to their lack of will to clarify the ambiguity surrounding the meaning and ambit of the term industry, are not fulfilling their duty to do so, it was of great importance and necessity on the part of judiciary to intervene and do justice to all the parties be it employers or the employees. The decision in the case of Bangalore Water Supply necessarily needed a reconsideration by a larger bench because of the following reasons:

  • Justice Iyer in Bangalore Water Supply Case had incorrectly assumed that in line with Article 38, 39 and 43 of the Indian Constitution which demonstrate concerns for workers and labourers, the Industrial Disputes Act also needed to interpreted in a ‘Worker Oriented’manner. He believed that the provisions of that act must be construed only in favour of workers rights. However, it is clear from the Preamble of the act that the main purpose of the act was regulation and harmonization of relationships between employers and employees and thereby maintaining industrial peace and social harmony. Before any interpretation of the provisions of the act, the interests of both the parties i.e. employers and employees need to be taken in account.
  • The labour laws do not only need to maintain check on exploitation of workers by employers but also the exploitation of employers by the employees. The judiciary should interpret the provisions of the laws in such a manner that neither the workers nor the employers are in the position to dominate and coerce one one another due to existing judicial bias in favour of some party. A worker-oriented interpretation as in case of Bangalore Water Supply, in interpretation of definition of ‘industry’ while benefitting workers and employees often leads to difficulties for and is unmindful of the interests of employers and pose threat to free enterprise.
  • Justice Iyer himself mentioned in his judgement in the case of Bangalore Water Supply that the judiciary must refrain from and should be cautious of falling in the trap of ‘definitional expansionism’.
  • The Supreme Court has also criticized the interpretation of ‘sovereign functions’as laid down in Bangalore Water Supply case which interpreted sovereign functions to be only limited to ‘inalienable’ constitutional functions of legislature, executive and judiciary and no more. Such interpretation might have been suited to traditional non-democratic sovereignty but not to a modern constitutional democracy where state has to engage in a variety of welfare activities in discharge of its constitutional obligations. Such activities ought to be treated as activities in discharge of sovereign functions, thereby falling out of purview of definition of ‘industry’ as laid down in the act.

Since the landmark decision of Bangalore Water Supply case had been pronounced by a Seven Judge Bench, it was necessary on the part of this constitutional bench to refer the issue to a larger bench preferably Nine Judge bench which could take up all the necessary issues and bring about clarity on those questions and help in ensuring that complete justice is done to the aggrieved and the public should not suffer due to laxity and carelessness of the legislature and executive. The decision to refer the case to a larger bench was thus the need of the hour and would help to restore the faith of public in judiciary as due to the ambiguity surrounding the definition of the term industry and interpretation in Bangalore Water Supply case decision, a lot of subsequent contradictory judgement have been pronounced and thus no clear position was there.

The Larger bench, by throwing light on such important issues, would thus surely lead to ensuring justice and convenience of the public by removing the ambiguity and confusion surrounding the issue.It would be expectant from the nine judge bench that would be be constituted pursuant to such reference made in the present case to bring an equitable and unambiguous definition of ‘industry’ which would properly delineate what industries does not come in ambit of industry and what are its reason along with the redressal mechanism available in cases of dispute. Only those establishments and utilities should be classified and maintained within the purview of definition of the term ‘industry’ in which there exist an employer-employee relation with regards to a commercial activity. Only those establishment shall be regarded industry which involve systematic activity organised by the cooperation of employers and employees for the production and distribution of goods and services calculated to satisfy requirements and needs of consumers and not which are for the welfare motive involving no such trading or commercial motive.

[1] Bangalore Water Supply vs. A. Rajappa, AIR 1978 SC 548

Views expressed are personal.

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