State of Bombay and Others vs The Hospital Mazdoor Sabha and Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 712 of 1957

Decision Date: 29 January, 1960

Coram: P.B. Gajendragadkar, K.C. Das Gupta

In this case the Supreme Court of India delivered its judgment on 29 January 1960 in the matter titled State of Bombay and others versus The Hospital Mazdoor Sabha and others. The judgment was authored by Justice P.B. Gajendragadkar, and the bench was composed of Justices K.C. Das Gupta, Subbarao, K. Gupta and K.C. Das. The petitioner was the State of Bombay and others, while the respondents were The Hospital Mazdoor Sabha and others. The decision is reported as 1960 AIR 610 and 1960 SCR (2) 866 and has been cited in many subsequent law reports including E&R 1960 SC 675, F 1960 SC1261, R 1961 SC 484, E 1962 SC1080, R 1963 SC1681, E 1963 SC1873, R 1964 SC 903, R 1964 SC1617, E 1968 SC 554, RF 1969 SC 63, O 1970 SC1407, R 1971 SC1259, RF 1971 SC2422, R 1972 SC 763, RF 1975 SC2032, F 1976 SC 145, R 1976 SC1111, APL 1978 SC548, R 1979 SC 170, RF 1981 SC1253, D 1981 SC2101, D 1988 SC1182, RF 1990 SC2047, RF 1991 SC754, R 1992 SC129 and many others. The dispute concerned the retrenchment of two respondents who were employed as ward servants in the J.J. Group of Hospital, Bombay, an institution under State control and management. Their services were terminated without the payment of compensation required by Section 25F(b) of the Industrial Disputes Act, 1947. The respondents consequently filed a writ petition under Article 226 of the Constitution seeking a mandamus directing the State to pay the statutory compensation. The single judge hearing the writ held that the failure to pay the compensation did not render the retrenchment orders invalid because Section 25I of the Act provided a separate remedy for recovery of such amounts, and therefore dismissed the petition. On appeal, a division bench reversed that decision, holding that the hospitals fell within the definition of “industry” in Section 2(j) of the Act and that non‑payment of the mandatory compensation made the retrenchment unlawful. The State of Bombay appealed that judgment. The Supreme Court affirmed the division bench’s decision, observing that the mandatory language of Section 25F(b) is plain and unequivocal, making the payment of compensation a condition precedent to any retrenchment. Section 25I, by contrast, was intended only to provide for recovery of other monies due to employees under Chapter V of the Act. The Court further noted that the object and scope of the legislation, as evident from its various provisions, show that the legislature deliberately gave the term “industry” in Section 2(j) a wide import, thereby encompassing entities such as hospitals.

The Court observed that the expression “in the second” must be interpreted in an inclusive way, plainly indicating an extension of the term. In construing the definition, the Court held that it would be inappropriate to invoke the maxim noscitur a sociis in order to narrow its meaning. The Court explained that the maxim is a rule of construction applicable only where the legislature’s intention in linking terms of broader import with those of narrower import, or the meaning of the broader terms, is doubtful. The Court referred to the decision in The Corporation of Glasgow v. Glasgow Tramway and Omnibus Co. Ltd., 1898 A.C. 631, for this principle. It further warned that excessive reliance on the conventional meaning of “trade” or “business” when interpreting the wide words of the definition is misplaced, because those conventional meanings have lost some force and can no longer be fully valid for industrial adjudication in a modern welfare state.

The Court stated that the presence of a profit motive or the investment of capital, traditionally associated with the notion of trade and business, is not an indispensable requirement for an activity to qualify as an industry under section 2(j) of the Act. Activities of the Government that may properly be described as regal or sovereign fall outside the scope of the definition, but the Court rejected extending that exclusion to other activities undertaken by the State in implementing the Directive Principles of State Policy and the ideal of a welfare State. The Court cited Coomber v. Justices of Berks, 9 A.C. 61, in support of this view.

Although the Court acknowledged that it may not be possible to list every attribute that could make an activity an “undertaking” under section 2(j) analogous to trade or business, it articulated a working principle: any activity that is systematically and habitually undertaken for the production or distribution of goods, or for the rendering of material services to the community or a part of it, with the help of employees organized or arranged in a manner similar to a trade or business, falls within the definition. The Court noted that the doctrine of quid pro quo does not arise in this context, as it would merely re‑introduce the question of profit motive in another form. Consequently, the Court concluded there could be no doubt that the State, in operating the hospitals in question, was carrying on an industry within the meaning of the Act. The Court referred to several authorities supporting this conclusion, including D.N. Banerji v. P.R. Mukherjee (1953) S.C.R. 302, Baroda Borough Municipality v. Its Workmen (1957) S.C.R. 33, Sri Vishuddhananda Saraswathi Marwari Hospital v. Their Workmen (1952) II L.L.J. 327, and The Federated State School Teachers' Association of Australia v. The State of Victoria & Ors. (1929) 41 C.L.R. 569. The Court disapproved the earlier view expressed in Brij Mohan Bagaria v. Chatterjee (N.C.) (1958) L.L.J. 190. The judgment then proceeded to address the civil appellate jurisdiction, noting that this was Civil Appeal No. 712 of 1957, an appeal from the Bombay High Court judgment and order dated 18 April 1956 in Appeal No. 65 of 1955, which arose out of the judgment and order dated 28 July 1955.

The order of the High Court dated 28 May 1955 is recorded as Miscellaneous Petition No. 113 of 1955. Counsel C. K. Daphtary, Solicitor‑General of India, and R. H. Dhebar appeared for the appellant, while K. R. Chaudhuri, T. S. Venkataraman and K. R. Sharma represented the respondents. The judgment was delivered on 29 January 1960 by Justice Gajendragadkar.

This appeal was filed by the State of Bombay, referred to as the appellant, together with two additional parties. The appeal arose from a writ petition that had been filed against the State by the Hospital Mazdoor Sabha, a trade union registered under the Industrial Trade Unions Act of 1926, and by two of its members, Mrs Vatsala Narayan and Mrs Ruth Isaac, who are designated as respondents one to three. Respondents two and three had been employed as ward servants in the J. J. group of Hospitals.

The superintendent of the J. J. group of Hospitals served notices on each of the two respondents, informing them that their services would be terminated effective from the dates specified in the respective notices. In compliance with those notices, the respondents’ services were indeed terminated, and the vacant positions were subsequently filled by two State servants who had been discharged from the Civil Supplies Department.

The writ petition submitted by the respondents alleged that the retrenchment of respondents two and three was void because the termination did not comply with the mandatory provisions of sections 25F and 25 H of the Industrial Disputes Act, 1947 (Act 14 of 1947). The petition sought a writ of mandamus directing the appellant to reinstate the two respondents in their former posts.

The appellant opposed the petition on several grounds. It contended that the termination orders were not void, and therefore the respondents’ claim for a writ was untenable on the merits. The appellant further argued that the writ application was fundamentally flawed because the J. J. group of Hospitals did not constitute an “industry,” and consequently the relevant provisions of the Act were inapplicable to the respondents’ case.

The writ petition was heard by Justice Tendolkar. He held that it was unnecessary to decide the “somewhat ticklish” question of whether the group of hospitals qualified as an industry. He reasoned that even if the provisions of the Act were applicable and could be invoked by the respondents, it had not been demonstrated that the impugned termination orders were void. In his opinion, a failure to comply with the provisions of section 251′ did not invalidate the termination orders, and the respondents remained free to seek an appropriate remedy under section 251 of the Act. Justice Tendolkar also concluded that the issue of the application of section 25 H did not arise. On these findings, he dismissed the writ petition filed by the respondents.

The matter was then taken to the Court of Appeal. The appellate court held that the termination orders had failed to comply with the mandatory provisions of section 25F and were therefore invalid and inoperative.

The Court of Appeal did not examine whether section 25H of the Act applied because it had already concluded that the orders under review were invalid for breaching the mandatory provisions of section 25F. That finding required the Court to decide the broader question of whether the Act applied to the hospitals in question. The appellate bench initially expressed an inclination to refer the matter back to Tendolkar J, but counsel for both parties requested that the Court resolve the legal question itself, arguing that a decision by the Court of Appeal would avoid a remand and any further appeal. Accordingly, the Court of Appeal considered the issue and ruled in favour of the respondents. As a result, the earlier decision of Tendolkar J was set aside, the writ petition was allowed, and a writ of mandamus was issued against the appellant. Following that order, the appellant obtained a certificate of fitness from the Bombay High Court and, relying on that certificate, filed the present appeal before this Court. Two questions were framed for determination: first, whether the Appellate Court was correct in holding that a breach of the substantive provisions of section 25F rendered the impugned orders invalid; second, whether the relevant provisions of the Act applied to the group of hospitals operated by the appellant, that is, whether the hospitals constituted an industry within the meaning of the Act. Before addressing those points, the Court set out the material facts concerning the group of hospitals, which were not in dispute. The group comprises five hospitals. Its origins trace back to 1835 when Sir Robert Grant, then Governor of Bombay, proposed establishing an institution for medical education in the Presidency of Bombay. The proposal received the approval of the Board of Directors of the East India Company, which raised funds of Rs 44,000 for the purpose, and the Directors contributed an equal sum to cover the cost of constructing the college building. The foundation stone of the Medical College building was laid in 1843 and the structure was completed in 1845. Around that time, the idea of building a hospital for patients of all classes and castes was advanced; Sir Jamsetjee Jeejiboy offered a donation, and the government made a modest contribution, leading to the construction of the J. J. Hospital, which was formally opened on 15 May 1845. The remaining four hospitals in the group were subsequently established over time, each financed through donations. Apart from a modest amount of Rs 10,000, the total expenditure, amounting to approximately Rs 27 lakhs, was wholly met by the appellant from a grant sanctioned in the budget under the relevant provision.

The group of hospitals is placed under the administrative authority of the Surgeon‑General of the appellant. Its ordinary operations are managed by a Superintendent who is a full‑time employee of the appellant. All residential staff—including Resident Medical Officers, Assistant Medical Officers, Housemen, nurses and other personnel—are also full‑time employees of the appellant. Their salaries are drawn from the establishment pay‑roll each month and are paid entirely out of the appellant’s budget. The hospitals function as a clinical training ground for students of Grant Medical College, which is a government medical college that the appellant runs and manages for the purpose of imparting medical education. The college awards the degrees of Bachelor of Medicine and Bachelor of Surgery of Bombay University as well as various postgraduate qualifications of the same university and of the College of Physicians and Surgeons, Bombay. Accordingly, the appellant operates the hospital group both to provide medical relief and to promote the health of the people of Bombay.

Turning to the first point, the Court observed that the factual basis of the respondents’ plea is not contested. It is conceded that the services of respondents 2 and 3 were terminated, although the termination was allegedly made to accommodate other government servants with longer service records who had to be let go because the appellant’s Civil Supplies Department was being closed. It is also undisputed that the respondents had not received, at the time of termination, the compensation prescribed by section 25F(b). The respondents argue that the failure to comply with that statutory requirement makes the termination order invalid, a contention that was upheld by the Court of Appeal. Section 25F(b) provides that no workman employed in any industry who has been in continuous service for not less than one year shall be retrenched by the employer until he has been paid, at the time of retrenchment, compensation equivalent to fifteen days’ average pay for every completed year of service or any part thereof in excess of six months. Although clauses (a) and (c) of the same section set similar conditions, they are not relevant here. A plain reading of section 25F(b) shows that the payment requirement is a condition precedent to the lawful retrenchment of a workman; the section expressly states that no workman shall be retrenched until that condition is satisfied. It is therefore difficult to accept the argument that non‑compliance with a mandatory condition precedent would not render the retrenchment invalid. Tendolkar J. had argued that the consequence of non‑compliance with section 25F(b) should not be the invalidity of the order because section 251, which provides for recovery of monies due from employers under Chapter V, would cover the compensation amount. The Court, however, found this view untenable, noting that the mandatory language of section 25F(b) leaves no ambiguity and that section 251 was enacted to facilitate recovery of monies owed under Chapter V, not to defeat the condition precedent in section 25F(b). Consequently, the Court held that failure to comply with the provision of section 25F(b) renders the impugned orders invalid and inoperative.

The Court observed that section 251 of the Act provides for the recovery of monies due from employers under Chapter V, and that Justice Tendolkar had held that this provision also covered the amount owed to a workman as compensation under section 25F(b). The Court found this view untenable. It noted that the language of section 25F(b) is mandatory, plain and unambiguous, and therefore the Court of Appeal was correctly persuaded that section 251 was intended to cover recoveries of monies other than those specifically mentioned in section 25F(b). The Court further pointed out that Chapter V contains several other categories in which employers owe money to employees, and that section 251 was enacted precisely for the recovery of such monies. Consequently, the Court saw no merit in the argument that the Court of Appeal had misread section 25F(b). The Court therefore concluded that failure to comply with the requirement of section 25F(b) makes the impugned orders invalid and inoperative. Turning to the next question, the Court asked whether the provision of the Act applies to the group of hospitals that are the subject of the present proceedings. In other words, the Court needed to decide whether the Act itself is applicable to those hospitals. This broader issue was vigorously argued before the Court by the learned Solicitor‑General on behalf of the appellant. The resolution of this issue depended on the interpretation of the definition of “industry” prescribed in section 2(j) of the Act. Section 2(j) defines “industry” as any business, trade, undertaking, manufacture, calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen. The Court noted that the words used in this definition are extremely wide in their import and that the latter part of the definition purports to be inclusive. It examined the meaning of “undertaking”, which Webster defines as anything undertaken, any business, work or project that one engages in or attempts, an enterprise. “Trade”, according to Halsbury, in its primary sense means exchange of goods for goods or goods for money, and in its secondary sense denotes any business carried on with a view to profit, whether manual or mercantile, as distinguished from the liberal arts, learned professions or agriculture. “Business” is an even broader term, not synonymous with trade, and essentially means anything that is an occupation as distinguished from a pleasure. The word “calling” also has a very wide meaning, denoting one’s usual occupation, vocation, business or trade, and “service” is similarly broad. The Court held that because the definition deliberately uses words of such wide scope, they must be read in their broad sense, and under that reading hospitals cannot be excluded from the definition of “industry”.

The Court observed that the petitioners argued the definition should be interpreted by applying the rule of construction known as noscuntur a sociis. According to the authority cited from Maxwell, this rule holds that when two or more words capable of having analogous meanings are placed together, they are intended to be understood in a mutually cognate sense, each borrowing its colour from the others so that the broader term is limited to a meaning analogous to that of the narrower term. The same principle is explained in the treatise Words and Phrases (volume XIV, page 207), which states that associated words derive their meaning from one another under the doctrine of noscuntur a sociis, and that this doctrine is broader than the maxim ejusdem generis. The petitioners further suggested that the maxim ejusdem generis is merely a specific illustration of the wider noscuntur a sociis rule. They contended that certain essential features or attributes are invariably linked with the words “business” and “trade” in their popular and conventional sense, and that those attributes colour the other words used in the definition, even though those other words might normally have a much wider import. The Court said it was not persuaded by this line of reasoning. It emphasized that noscuntur a sociis is only a rule of construction and cannot prevail where it is clear that the legislature deliberately employed broader words to expand the scope of the term being defined. The rule may be invoked only when the legislature’s intention in pairing broader words with narrower ones is doubtful or unclear, or when the meaning of the broader word itself is uncertain. However, when the legislature’s purpose in using the broader language is explicit and unambiguous, the rule cannot be forced upon the interpretation. The Court referred to the observation of the Earl of Halsbury, L.C., in The Corporation of Glasgow v. Glasgow Tramway and Omnibus Co. Ltd. (1898) AC 63 at p. 634, where the words “free from all expenses whatever in connection with the said tramways” were held to be so wide in application that they could not be narrowed by reference to other associated words under the principle of ejusdem generis. Applying the same approach, the Court concluded that there is no difficulty in holding that the wide‑ranging words in the present statute were deliberately chosen by the legislature to define “industry” in section 2(j), as the object of the enactment was to make provision for the matters later discussed.

In this case the Court observed that the purpose of the legislation was to provide for the investigation and settlement of industrial disputes, and that the reach of its provisions could be understood by referring to the specific definitions contained in the statute. The definition of “industrial dispute” was given in section 2(k), the definition of “wages” in section 2(rr), the definition of “workman” in section 2(s), and the definition of “employer” in section 2(g). In addition, the definition of “public utility service” in section 2(m) was described as especially important. By simply looking at the six categories of public utility service listed in section 2(m), it became apparent that the rule of construction relied upon by the appellant could not be applied to interpret the definition set out in section 2(j). The Court further noted that section 2(j) does not define “industry” in the ordinary way by stating what the term means; rather, the first clause of the definition supplies a statutory meaning of “industry” and the second clause deliberately brings several other items of industry into the definition in an inclusive manner. It was therefore clear that the words used in such an inclusive definition indicate an intention to extend rather than restrict the scope, a principle supported by Stroud’s “Judicial Dictionary”, volume 2, page 1415. When dealing with an inclusive definition, the Court held that it would be inappropriate to impose a restrictive interpretation on terms that have a broader denotation. The Court also warned against placing excessive reliance on the traditional attributes or features of trade or business as they have been commonly understood. The conventional meaning of “trade and business” has lost some of its relevance for the purpose of industrial adjudication, which must be cognizant of contemporary socioeconomic thought. The Court emphasized that in a modern welfare State, healthy industrial relations are of paramount importance and that the essential function of industrial adjudication is to assist the State in resolving industrial disputes, which constitute a distinct and persistent phenomenon in industrialised societies. In attempting to resolve such disputes, industrial adjudication should not adopt a doctrinaire approach, but should instead develop pragmatic working principles and avoid abstract generalisations. Nevertheless, the Court cautioned that the tribunal should not revert to antiquated notions of employer‑employee relations or to the laissez‑faire doctrine that once governed such relations. Consequently, in construing the wide words used in section 2(j), the Court found it erroneous to give undue weight to attributes associated with business or trade as they were perceived in earlier times. While acknowledging that section 2(j) employs language of very broad meaning, the Court stressed that a fair and just line must be drawn to exclude certain callings, services, or undertakings. If every word were given its fullest possible meaning, all services and all callings would fall within the definition, even services rendered by a servant in a purely personal, domestic, or casual capacity. The Court concluded that the legislature did not intend the term “service” to encompass every conceivable form of service, regardless of capacity or reason, and that reasonable limitations must be implied in interpreting the wide words of section 2(j) to avoid an over‑broad reach.

The Court observed that extending the definition of “service” to include a servant who performed purely personal or domestic duties, or even a person who rendered services casually, would inevitably bring every conceivable form of service within the scope of the definition. The Court stressed that it could not be suggested, nor could it be reasonably interpreted, that the term “service” was meant to embrace service rendered in any capacity, for any purpose, and for any reason. Consequently, the Court said it was necessary to determine where the proper line should be drawn and what reasonable limitations could be implied when construing the broad language of section 2(j), noting that this was a difficult problem to resolve. The Court then recalled the traditional understanding of “industry” in a capitalist society, which ordinarily denotes an economic activity that involves the investment of capital, is carried on systematically for profit, and concerns the production or sale of goods through the employment of labour. When the appellant argued that an undertaking should be treated as analogous to trade or business, the substantive point, the Court explained, was that unless the undertaking possessed those essential features traditionally associated with trade or business, it should not fall within section 2(j). The Court identified two serious difficulties with this approach, which the appellant itself conceded. First, it was undisputed that under section 2(j) an activity could be classified as an industry even when the profit motive was absent. Second, it was common ground that the lack of any capital investment would not materially affect the applicability of section 2(j). Thus, two attributes customarily linked with trade or business—profit motive and capital investment—were not decisive factors for interpreting section 2(j). The Court therefore asked what attributes or features ought to be common to trade and business on one hand, and to an undertaking and other entities mentioned in section 2(j) on the other. It noted that it was possible to exclude certain activities from section 2(j) without difficulty. In negative terms, the Court stated that activities of the Government that could properly be described as regal or sovereign were outside the scope of section 2(j). These are functions that a constitutional Government must perform for governance and that no private citizen can perform, a position the Court found undisputed. Nevertheless, the appellant attempted to broaden this exclusion by invoking the Directive Principles in Part IV of the Constitution and the ideal of a welfare State, arguing that the Government—both State and Centre—undertakes many welfare activities and that the category of governmental or regal activities exempt from section 2(j) should be extended to include such welfare measures. The Court rejected this contention, holding that it could not be accepted. The Court concluded that the activities which do not fall within section 2(j) are those properly described as governmental or regal, and that the welfare activities undertaken by the Government do not merit exemption from the operation of the Act.

The Court noted that activities described as governmental, regal, or sovereign had been succinctly defined by Lord Watson as “the primary and inalienable functions of a constitutional Government” (Vide: Coomber v. Justices of Berks (1)); it further observed that only those functions lay outside the operation of section 2(j). The Court found it incongruous and self‑contradictory (1) (1883) App. cas. 61 to argue that measures undertaken by the Government for the socioeconomic progress of the country should be exempted from the Act, when the Act itself represented a very important beneficial measure. In this connection, the Court pointed out that the definition of “employer” contained in section 2(g) was not insignificant: an “employer” meant, under section 2(g)(i), “in relation to an industry carried on by or under the authority of any department of the Central Government or State Government authority prescribed in this behalf, or where no authority is prescribed the head of the department.” This definition, the Court held, clearly indicated that the Legislature intended the provisions of the Act to apply to those governmental activities that fell within the ambit of section 2(j). When assessing whether the group of hospitals operated by the appellant, undeniably intended to provide medical relief to citizens and to promote medical education, constituted an “undertaking,” the Court considered it pertinent to examine whether a similar activity carried out by a private individual or a group of private individuals would be regarded as an undertaking. The Court affirmed that a hospital run by private persons for profit would unquestionably be an undertaking, comparable to a trade or business in the ordinary sense. It had already observed that a profit motive was not essential for bringing an activity within section 2(j). Accordingly, even if a private citizen operated a hospital without charging any fees to patients, such an institution would still fall within the definition of an undertaking under section 2(j). The Court therefore concluded that the nature of the activity involved in running a hospital placed the hospital within the scope of section 2(j). The Court rejected the suggestion that the fact that the hospital was run by the Government made any difference in interpreting the word “undertaking” in section 2(j); it held that the character of the activity, not the identity of the operator or the presence of a profit motive, determined the applicability of section 2(j). While the Court acknowledged that it had not yet precisely identified the attributes that render an activity an undertaking under section 2(j), it recognized that the activity must be analogous to a trade or business. The Court admitted that enumerating these attributes exhaustively was difficult; nevertheless, as a working principle, it suggested that an activity that is carried on systematically or habitually

The Court explained that an activity qualifies as an undertaking within section 2(j) when it is carried on for the purpose of producing or distributing goods, or for providing material services to the community at large or to a part of that community, and when it is performed with the assistance of employees. Such an activity ordinarily requires the cooperation of the employer and the employees, and its purpose is to satisfy material human needs. The Court further stated that the activity must be organized or arranged in a manner similar to the way trade or business is normally organized, and it must not be a casual undertaking, nor pursued for personal enjoyment or private benefit. Accordingly, the manner of organization, the necessary cooperation between employer and employee, and the objective of delivering material services to the community were identified as distinctive features of activities to which section 2(j) applies. Applying this test, the Court found no difficulty in concluding that the State was carrying on an undertaking when it operated the group of hospitals that were the subject of the present dispute.

The Court addressed the argument that a quid pro quo, or the receipt of consideration, was required to bring an activity within section 2(j). It observed that while some counsel suggested that a profit motive, or at least some consideration in return, was essential, such a view essentially rested on the premise that profit motive was necessary for an activity to be analogous to trade or business. The Court rejected this premise, noting that the absence of profit motive was immaterial and that an activity could not be excluded from section 2(j) merely because the person conducting it expected no consideration, sought no quid pro quo, and was driven by philanthropic or charitable motives. Consequently, the doctrine of quid pro quo could not be applied to determine whether an activity was an undertaking under section 2(j). Satisfied that the High Court was correct in holding that the appellant’s conduct and management of the hospitals amounted to an undertaking under section 2(j), the Court affirmed that the relevant provisions of the Act were applicable. In support of this conclusion, the Court referred to the First Schedule of the Act, which, by amendment through Act 36 of 1956, added entries for Defence Establishment, services in hospitals and dispensaries, and Fire Brigade service. This amendment demonstrated the Legislature’s clear intention that services in hospitals and dispensaries could be declared public utility services under section 2(n)(vi), and that such services could not be so declared unless they fell within the ambit of section 2(j) and were treated as an industry.

It was observed that if the service provided in hospitals is to be classified under section 2(j) and consequently treated as an industry, it cannot simultaneously be declared a public utility service. Although the relevant entry was not present in the First Schedule at the time this reference was made, the later amendment that inserted the entry is taken as clear evidence of the legislature’s intention. Accordingly, once the court independently determines that hospital services constitute an industry or that the conduct of hospitals amounts to an undertaking within the meaning of section 2(j), that later legislative addition may be used to support the conclusion. After the amendment, no party may persuasively argue that hospital services fall outside section 2(j), because the statutory schedule now expressly includes them. The court therefore turned to examine several decisions that had been highlighted for their relevance to this point.

In the case of D. N. Banerji v. P. R. Mukherjee & Ors. (1953) S.C.R. 302, the Supreme Court dealt with an industrial dispute raised by the Municipal Workers’ Union of the Budge Budge Municipality on behalf of a sanitary inspector and a head clerk. The union claimed that the dismissal of those two municipal employees was unlawful and that they were entitled to reinstatement. The dispute was referred to an Industrial Tribunal, which ruled in favor of the union and ordered the municipality to reinstate the employees. The municipality challenged this award by filing a petition for a writ of certiorari in the Calcutta High Court under Articles 226 and 227 of the Constitution, alleging that the Act did not apply to the dispute and that no genuine industrial dispute existed that could be rightly referred to the Tribunal. The High Court rejected all of the municipality’s contentions and dismissed the writ petition. The municipality then appealed to this Court under Article 132(1) of the Constitution. The Supreme Court dismissed the appeal and upheld the High Court’s decision. In its judgment, the Court set out principles that are pertinent to the present appeal. It held that in interpreting the terms “industry” and “industrial dispute,” it is necessary to move beyond the original, simpler meanings of those words. The Court observed that the municipality’s argument that its activities did not constitute an industry could not rely on the notion that work carried out by a private person ceases to be an industry when performed by a local authority. The Court emphasized that the absence of capital investment or a profit‑making motive, which might be typical of a private business, is not a decisive factor in the modern definition of an industry.

It was observed that an activity carried out by a local body such as a Municipality could not be described as an industry merely because the Municipality does not typically invest capital or operate for profit in the way a private business does. However, the Court held that neither the presence of capital investment nor a profit motive is an essential or indispensable element in the modern understanding of what constitutes an industry. Consequently, the appellant, during the arguments before the Court, openly admitted that the lack of a profit motive or capital investment would not materially affect the determination of the character of the activity in question. The Court also examined other relevant factors that are pertinent to interpreting the terms “industry” and “industrial dispute.” In doing so, it concluded that, taking into account the definitions contained in the relevant Act, the legislative purpose, and the broad range of disputes that arise between employers and employees, the definitions within the Act must be understood to include disputes that arise between municipalities and their employees in work areas that can be likened to the conduct of a trade or business. The matter before this Court required a decision on which attributes or features make an activity comparable to a trade or business. The Court added that, aside from the considerations already discussed, it would be difficult to argue that, although a sanitary department of a local body is an undertaking under section 2(j), a hospital operated by the Government would not be treated similarly. This position had previously been cited by this Court in Baroda Borough Municipality v. Its Workmen (1), where it was noted that it is now settled law that a municipal undertaking of the type involved in that case qualifies as an industry under the definition in section 2(j) of the Act, and that the expression “industrial dispute” in the Act encompasses disputes between municipalities and their employees in work branches analogous to the carrying on of a trade or business. The Baroda case concerned a claim for bonus by the workmen of the Baroda Borough Municipality, which the Court rejected; counsel’s comments on certain grounds supporting the final decision were noted, but they are not relevant to the present appeal and therefore are not addressed. Regarding decisions of the Industrial Tribunals, it appears that the Labour Appellate Tribunal, as early as 1952, held that a hospital is an undertaking within the meaning of section 2(j). The reference to this holding is found in the 1957 Supreme Court Reporter (1) S.C.R.

In the case of Sri Vishuddhananda Saraswathi Marwari Hospital v. Their Workmen, the Labour Appellate Tribunal examined extensively the purpose and policy of the Industrial Disputes Act, considered a number of earlier judgments, and concluded that the definition of “industry” in section 2(j) was broad in scope. The Tribunal held that there was no valid reason to restrict the natural meaning of the term to enterprises that were solely profit‑making, and it observed that no subsequent industrial adjudication had ever questioned or disagreed with this expansive interpretation. In discussions concerning the reach and nature of the concept of industry as it has evolved in a modern democratic state, the decision of the High Court of Australia in The Federated State School Teachers’ Association of Australia and The State of Victoria & Ors. is frequently cited. In that Australian case, the majority ruled that the educational activities carried out by the State under the relevant statutes and regulations did not constitute an industry within the meaning of section 4 of the Commonwealth Conciliation and Arbitration Act, 1904‑1928; that teachers employed by the State were not engaged in an industrial occupation; and that the dispute between the State and its teachers therefore did not fall within the definition of an industrial dispute in section 51 (xxxv) of the Constitution. Justice Isaacs, however, issued a strong dissenting opinion, and the principles he set out in that dissent have been endorsed by industrial tribunals in this country and have been accepted by the Bombay High Court as providing useful guidance in resolving the present matter. Justice Isaacs warned that adjudicators dealing with industrial disputes must stay informed about current knowledge in the field and must not ignore the constantly changing conditions of everyday life, lest their approach become seriously flawed. Regarding the general characteristics of industrial enterprises, the learned judge noted that such enterprises contribute, to varying degrees, to the overall welfare of the community, and reiterated earlier remarks that industrial disputes arise when, in activities where capital and labour cooperate to satisfy human wants or desires, the participants dispute the basis on which the cooperation should operate, whether concerning a share of the product or any other terms and conditions of their collaboration. The judge emphasized that the proper method for deciding such questions is to determine the true nature of the activity in dispute. The High Court applied these tests in adjudicating the present dispute, and this Court concurs in general with the High Court’s decision. It should be made clear that, in the present appeal, no opinion is being expressed on whether the operation of an educational institution falls within the meaning of “industry” under the Act, as that issue does not arise in these proceedings.

The Court declined to give any opinion on whether operating an educational institution would constitute an industry within the meaning of the Act, because that issue was not raised in the present proceedings. It then indicated that two further decisions could be cited before the matter was concluded. The first decision referred to was Brij Mohan Bagaria and Chatterjee (N.C.) & Ors. (1), wherein the Calcutta High Court adjudicated a dispute between a court attorney and several of his employees who had been dismissed. The Calcutta High Court held that the dispute fell outside the scope of the Act. Justice Sinha, who heard the attorney’s petition, observed that “however extended the meaning be given to the word industry or to industrial dispute or to undertaking or calling we cannot include within their concept the case of an individual who carries on a profession dependent upon its own intellectual skill.” He further added that “every case must be decided upon its own facts.” The Court noted that, according to Justice Sinha, when a professional such as an attorney, doctor or lawyer engages employees in a liberal profession that depends on his own education, intellectual attainments and specialised equipment, this does not automatically render the employer an “industry” under section 2(j). The Court clarified that the specific question concerning the status of an attorney or doctor under the Act was not directly relevant to the present appeal.

The Court explained that it cited the Bagaria decision because, during its discussion, Justice Sinha expressed dissent from the view previously taken by the Bombay High Court regarding the inclusion of hospitals within section 2(j). The Court stated that, in its opinion, the criticism of the Bombay High Court’s inclusion of hospitals was not well‑founded. The Court then referred to a similar matter involving an attorney, decided by the Bombay High Court in National Union of Commercial Employees & Anr. and Meher (M.R.) & Ors. (Pereira Fazalbhoy & Co.) (1). The Court affirmed that the Bombay High Court was correct in holding that the dispute between the appellant and the respondents qualified as an industrial dispute to which section 251' of the Act applied. Accordingly, the order passed by the Bombay High Court on the writ petition filed by the respondents was confirmed, and the appeal was dismissed with costs. The appeal was thereby dismissed.