The landmark judgment in this case delivered by the Supreme Court of India considered the definition of the term ‘industry’ under Section 2(j) of the Industrial Disputes Act, 1947. The Supreme Court of India has conducted an in-depth investigation of global definition. The axiom laid down by the Supreme Court erased the wave of presumptions of consensus regarding the definition of “industry.” The introduction of a definition of great importance is difficult to predict because the settlement and compensation mechanism related to labor disputes can only be resolved by a proposal when differences arise. industry related. Through the principles laid down in the judgment, it overturned many previous decisions of the Supreme Court, but reduced the burden on the legislature by putting the issues in the right perspective. The two authorities, i.e. “employers” and “employees” are at the core of every industry in such a configuration that the slightest conflict between them can destroy the foundation of an industry. The Supreme Court has experimented through various aphorisms to determine what should be included and excluded within the scope of the definition.

Background of the study: 

Constitution and Statutory Provisions: 

  • Section 2(j) of the Industrial Dispute Act 1947 

Facts and Procedural History:

  • The respondents in this leave application are employees of the Bangalore Water Supply and Sewerage Board.
  • For certain lapses, the appeals committee fined the employees and recovered some money from them.
  • In consideration of the matter, the respondent employees filed Complaint No. 5/72 under Section 33C (2) of the Industrial Disputes Act, 1947 before the Industrial Tribunal, alleging that imposition of penalty This is against natural justice.
  • The appeals board appealed to the employment tribunal on the grounds that the board is a statutory body and that its primary function is to provide services to citizens and not to carry out a for-profit activity and thereby excluding them from the definition of “industry.”
  • The Industrial Court dismissed the objections and held that the board fell within the ambit of section 2(j), i.e. “industry”. 
  • The Appellate Commission filed two petitions Nos. 868 and 2439 of 1973 before the Karnataka High Court, where again, the Division Bench of the Karnataka High Court held that the Appellate Commission was within the purview of the “industry”.
  • Finally, the aggrieved appellate committee knocked on the doors of the Supreme Court through a special leave petition.


  • Whether Bangalore water-water works and Sewerage Board comes in the parameter of section 2(j) of the Industrial Dispute Act, 1947
  • Whether the following activities/services are Industry?
    • Sovereign functions
    • Municipalities
    • Hospitals
    • Charitable institutions
    • Clubs
    • Universities and research Institutions
    • Professional Firms
    • Voluntary services 


Ratio Decidendi:

The definition describes the meaning under 2 (j) “industry” means any business, trade, business, manufacturer or occupation of an employer and includes any service called electricity, employment, craft or industry or the occupation of the worker.

To bring it into conformity and justify the definition, the Apex Court has conducted a test to determine whether an activity falls within the definition of ‘industry’ or not and can also be referred to as the method of test. check three times. Apex is divided into three parts:

Part 1 “industry”:

Includes systematic activity, organized cooperation between employer and employee, production, procurement and distribution of goods and services for fulfilling human wants and needs,

Where the activity is para-trade or Quasi-business undertaken by the public, joint, private, philanthropic or labor sector which may include profit and gainful objective.

It is in the human sector, the way the relations between an employee-employer is set up which initiates to give rise to claims, demands, settlements and peace in industry. That is the Raison d’etre of industrial law itself. 

Part 2:

Provided some non-trade or business may still be “industry” depends upon the nature of the activity,

The definition of industry is quite comprehensive, two standpoints are from the view of employers and the view of employees, any trade or activity falls in either of the two standpoints will construe Industry.

Part 3:

These guiding principles shall also be applied when considering economic activities and the statutory ideology should be incorporated into the statutory definition even if the term implies industrial disputes between workers. workers and employers.

Now, the Supreme Court, based on the mentioned three-fold test theory, has summarized whether the following activities fall under the industry or not:

Sovereign function:

The Supreme Court ruled that only sovereign functions in the strict sense can benefit from the exemption, not social activities or economic ventures conducted by governments or agencies under law to implement. Even within agencies exercising sovereign functions, if there are sectoral units and they are essentially separable, they can be considered to fall under section 2(j).

  1. Muncipalities: The departments of the municipality are considered to be Industry
  2. Tax
  3. Public transportation
  4. Fire brigade
  5. Lighting
  6. Waterworks
  7. City engineers
  8. Enforcement
  9. Sewerage
  10. Health
  11. Market
  12. Public gardens
  13. Education
  14. Printing press
  15. Building
  16. General Administration

The Department of Municipal Accountability performs many functions, some of which may be included in the definition of industry or some of which are non-industrial, especially secondary, will prevail in the test. Experience of Act 4 (Nagpur Municipal Corporation v. Employees, AIR 1960 SC 675)

Hospitals: Hospitals come under the ambit of industry whether it is State or Private, absence of profit or gains from the business activity doesn’t term down to be an exclusion in the context of this section. The true focus is glancing at the nature of the activity and relations between an employee and employer. For this, the Court concluded that “If that be so, if a private citizen runs a hospital without charging any fees from the patients treated in it, it would nevertheless be an undertaking under Section 2(j) Thus the character of the activity involved in running a hospital brings the institution of the hospital within Section 2(j) further the institutions held to be industry are State Hospital i.e., Ayurvedic Pharmacy and Hospital (State of Bombay v. Hospital Mazdoor Sabha), Activities of Panjrapole (Lalit Hari Ayurvedic College Pharmacy v. Workers Union), ( Bombay Panjrapole v. Workmen).

Charitable Institutions: There are three categories to define charitable Institutions firstly the establishments meant for yielding profit but profits are extracted for humanitarian purpose secondly those who don’t yield profits but who recruit employees for the purpose of business where goods are procured and made available to the indigent people and lastly the persons in the charitable institution work for the humane purpose fulfilled by men who work not for wages or paying but to fulfill the passion The first two criteria fall under industry but the last criteria only there some intersection relation of cooperation of employers and employees.

Clubs: The clubs which are established as a social institution where the relationship between an employee and employer seen for the serving of the community is an Industry. Certain gurukuls, cooperative, clubs may be excluded from the definition where minimal or marginal employees are hired.

Universities/Research Institutions: The Court observed that If the triple tests of ‘systematic activity, co-operation between employer and employee and production of goods and services were alone to be applied, a University, a college, a research institute or teaching institution will be an industry. The following institutions were held “industry”: Ahmedabad Textile Industries Research Association, Tocklai Experimental Station, Indian Standard Institute and universities. 

Professional Firms: For professional firms, in the words of the Apex Court held that a lawyer or a solicitor could not raise a dispute with his litigants in general on the footing that they were his employers. Nor could doctors raise disputes with their patients on such a footing. Again, the personal character of the relationship between a doctor and his assistant and a lawyer and his clerk may be of such a kind that it requires complete confidence and harmony in the productive activity in which they may be cooperating so that, unless the operations of the solicitor or the lawyer or the doctor take an organized and systematized form of a business or trade, employing a number of persons, in which disputes could arise between employers and their employees, they would not enter the field of industry.

Voluntary services: Establishments or institution engaged in altruistic mission or for any free services who employee themselves for such activities like a lawyer volunteering to run free legal service or a doctor serving in their spare hours in a free medical center or any such establishments are exempted from the definition of “industry”.

With this Triple Test Method, the apex court critically examined and advanced the meaning of “industry” where it was held that Bangalore Water Works shall be included in the purview of definition and Act.

The Apex Court even cited certain establishments that are not in the sphere of the industry are Posts and Telegraphs Department ( Union of India v. Labour Court), Central Institute of Fisheries, Construction, And Maintenance of National and State Highways (State of Punjab v. Kuldip Singh and another). 


In this Bangalore water supply case, the Court dismissed the appeal of the Appellant Board and rightly restored judicial discipline, and removed the unnecessary disturbances caused by the chaos involved in the settlement of the matter. The seven supreme judges briefly explained the provisions of the law, and even expressed the view of the legislature in order to remove the fog in the drafting perspective so as not to tarnish the basic understanding of law. With the adoption of a new enhanced definition, more disadvantaged sectors and establishments will be given attention so that potential problems can be addressed in accordance with these established principles.


Advocate Muskan Chauhan


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