Harinagar Cane Farm And Others vs State Of Bihar And Others

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

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 21 March, 1963

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

In the matter titled Harinagar Cane Farm and Others versus State of Bihar and Others, the Supreme Court rendered its judgment on 21 March 1963. The opinion was delivered by a bench consisting of P.B. Gajendragadkar, K.N. Wanchoo and K.C. Das Gupta. The petitioners were identified as Harinagar Cane Farm and others, while the respondents were the State of Bihar and others. The case was cited as 1964 AIR 903 and 1964 SCR (2) 458, with later citations including 1968 SC 554, 1971 SC 2422 and 1972 SC 763. The dispute concerned the applicability of the definition of “industry” under section 2(j) of the Industrial Disputes Act, 1947, to agricultural operations carried out by the petitioners.

The petitioner in appeal C.A. No. 31 of 1961 was a private limited company incorporated under the Companies Act, primarily engaged in the production of sugarcane. The company also cultivated wheat and paddy for market sale and performed contract work such as the maintenance of tram lines and weigh‑bridges. A second petitioner, having been acquired by Harinagar Sugar Mills Ltd., was thereafter operating as a departmental unit of that mill. An industrial dispute raised by the workmen of both petitioners was referred by Respondent 1, the State of Bihar, to an industrial tribunal for adjudication. The petitioners challenged this referral by filing a petition under Article 226 of the Constitution in the Patna High Court, arguing that the agricultural activities they conducted did not fall within the meaning of “industry” and therefore the State lacked jurisdiction to refer the dispute. The High Court dismissed the petition, holding that the agricultural operations did constitute an industry. The petitioners subsequently obtained special leave to appeal before this Court.

The petitioners contended that a review of the legislative history of the past fifty years, including Article 43 of the Constitution and relevant constitutional entries, demonstrated a clear distinction drawn between industry and agriculture. They argued that when the legislature intended to bring agriculture within the ambit of industrial legislation, it did so by explicit provision. The respondents, relying on section 2(g) of the Minimum Wages Act, 1948, maintained that the statute expressly covered agricultural workmen and therefore supported the inclusion of agriculture within industrial law. The petitioners further asserted that the term “industry” in section 2(j) was intended to be interpreted broadly, encompassing agriculture, and that had the legislature wished to exclude agriculture, it would have done so expressly.

The Court held that matters of industrial adjudication should not be decided by formulating sweeping general principles or by adhering to doctrinaire positions. Consequently, the broad question of whether all agricultural operations fall within the definition of “industry” under section 2(j) was not resolved in this decision. Upon examination of the factual material presented, the Court observed that the petitioners were limited companies established, among other purposes, for the explicit purpose of carrying on trade or business; they had invested substantial capital in agricultural operations aimed at generating profit, and the workmen employed by them contributed to the production of agricultural commodities that yielded profitability. In view of these facts, even a narrow interpretation of “trade or business” was satisfied, leading the Court to conclude that the agricultural operations carried out by the petitioners were encompassed within the definition of “industry” provided in section 2(j). The judgment cited several authorities, including D.N. Banerji v. P.R. Mukherjee, State of Bombay v. Hospital Mazdoor Sabha, Ahmedabad Textile Industry Research Association v. State of Bombay, and National Union of Commercial Employees v. M.R. Meher, to support its analysis. The appeals, numbered 349 of 1962 and 31 of 1961, were heard by special leave from the orders of the lower courts.

The appellants were organized as limited companies that had been created, among other purposes, expressly to carry on trade or business. They had poured a substantial amount of capital into agricultural activities with the objective of earning profit. The employees engaged by the appellants performed work that directly contributed to the production of agricultural commodities, and those commodities generated revenue for the companies. Accordingly, even when the narrow meaning of “trade or business” was applied, the activities of the appellants satisfied that definition, and the agricultural operations they conducted therefore fell within the meaning of “industry” as defined in section 2(j) of the Industrial Dispute Act. The Court reviewed a number of authorities on this point, including D.N. Banerji v. P. R. Mukherjee, reported in 1953 S.C.R. 302; The State of Bombay v. The Hospital Mazdoor Sabha, 1960 2 S.C.R. 866; The Ahmedabad Textile Industry Research Association v. The State of Bombay, 1961 2 S.C.R. 480; and National Union of Commercial Employees v. M. R. Meher, Industrial Tribunal, Bombay, 1962 Supp. 3 S.C.R. 157.

The matters before the Court were civil appeals numbered 349 of 1962 and 31 of 1961, taken by special leave from the judgment and order dated 18 November 1959 of the Patna High Court in miscellaneous judgment cases numbered 287 and 498 of 1958. Counsel for the appellant in appeal 349 of 1962 included Ganpat Rai and Lalit Kumar, while counsel for the appellant in appeal 31 of 1961 comprised M.C. Setalvad and Naunit Lal. Representing the respondent in appeal 349 of 1962 was D. Goburdhun, and respondents numbered 3 in the same appeal were represented by M.K. Ramamurthi, S.C. Agarwala, D.P. Singh and R.K. Gary. In appeal 31 of 1961, respondents numbered 1 and 3 were respectively represented by S.P. Varma and P.K. Chatterjee. The judgment was delivered on 21 March 1963 by Justice Gajendragadkar. The central issue in the appeals was whether the agricultural operations carried out by each appellant qualified as an “industry” under section 2(j) of the Industrial Dispute Act, 1947. An industrial dispute raised by the workmen of both appellants had been referred by the State of Bihar, identified as respondent 1, to an Industrial Tribunal under section 10(1) of the Act. Both appellants subsequently sought a writ of appropriate remedy from the Patna High Court under Article 226 of the Constitution, arguing that their agricultural activities did not constitute an industry within the meaning of the Act and therefore the state lacked jurisdiction to refer the disputes under section 10. The High Court rejected that argument, holding that the agricultural activities did constitute an industry and that the orders of reference were valid under section 10. The present appeals challenged those orders.

In the present appeals the parties have arrived before the Supreme Court by way of special leave, and the singular issue that the Court is called upon to resolve concerns the application of section 2(j) of the Industrial Dispute Act, 1947 to the business activities of the two appellants. The first appellant, M/s Motipur Zamindari Co. (Pvt.) Ltd., which is the respondent in Civil Appeal No. 31 of 1961, is a private limited company incorporated under the Companies Act. Its principal undertaking consists of the cultivation of sugarcane, which it sells to Motipur Sugar Factory Private Ltd. located at Motipur, Muffarpur, pursuant to an agreement governed by the Bihar Sugar Factories Control Act, 1937 and the rules made thereunder. In addition to sugarcane, the company also cultivates wheat, paddy and several other crops, and markets these produce either directly to consumers or through wholesale dealers. Beyond its agricultural production, the company undertakes a variety of contractual services for the Motipur Sugar Factory, including the maintenance of tramlines, upkeep of the weigh‑bridge at Paharchak, operation of lake‑pumps, loading and unloading of sugarcane, and the letting of buildings on hire. The second appellant, M/s Harinagar Cane Farm, which is the respondent in Civil Appeal No. 349 of 1962, was acquired by Harinagar Sugar Mills Ltd. in March 1956 and has since functioned as a department of that mill. It operates as a subsidiary concern and forms part of the overall organisation of the mill, which uses the cane produced by the farm to manufacture sugar for its own consumption. It is against this factual backdrop of the two appellants’ commercial and ancillary activities that the Court must determine whether the provisions of section 2(j) encompass their operations. Counsel for the appellants, Mr Setalvad, submits that a proper determination of whether section 2(j) includes agricultural operations demands consideration of several general principles. He acknowledges that, if the language of section 2(j) is interpreted broadly and with maximum latitude, it could be construed to embrace agriculture and agricultural activities. Nevertheless, he stresses that the legislative history of more than fifty years in this country demonstrates a clear and persistent distinction drawn by the legislature between industry on one side and agriculture on the other. To support this view, he points to Article 43 of the Constitution, which categorises workers as agricultural, industrial or otherwise, and directs the State to secure a living wage and other amenities for all workers. The argument is that the Constitution itself recognises a substantive difference between agricultural workers and industrial workers. Furthermore, he highlights that the same bifurcation is reflected in the entries of the Seventh Schedule of the Constitution. For example, Entries 14 and 18 in the State List specifically refer to agriculture, including agricultural education and research, protection against pests, prevention of plant diseases, and matters relating to land such as rights in or over land, land tenures, and the

The judgment observed that Entry 14 of the State List deals with matters such as agriculture, agricultural education and research, pest control, prevention of plant diseases, land rights, land tenures, the relationship between landlord and tenant, rent collection, transfer and alienation of agricultural land, land improvement, agricultural loans, and colonisation. In contrast, Entry 24 pertains to industries that fall under the provisions of entries 7 and 52 of List 1. Moreover, Entry 22 in the Concurrent List concerns trade unions and industrial and labour disputes. From these provisions, it was argued that agriculture has primarily been placed within the competence of the State legislatures, thereby creating a clear separation between agriculture and industry. The argument further maintained that when a legislature intends to bring agricultural activities within the ambit of industrial legislation, it does so by expressly stating such an intention. To illustrate this point, reliance was placed on section 3(19) of the Bombay Industrial Relations Act, 1946 (No. XI of 1994), which defines “industry” to include, among other things, agriculture and agricultural operations. On that basis, counsel for the petitioner, Mr. Setalvad, contended that the broad distinction between agriculture and industry should lead to the exclusion of agricultural operations from the scope of section 2(j) of the Act. He also urged the Court to consider that interpreting section 2(j) to cover all agricultural activities could have an incalculable impact on the country’s agricultural economy. The Court recognized that the argument carried considerable weight.

Conversely, the respondents argued that it would be erroneous to assume that the industrial legislation embodied in the Act was intended to omit agriculture and agricultural operations from its beneficial provisions. To support this position, they cited the Minimum Wages Act, No. 11 of 1948. Section 2(g) of that Act defines “scheduled employment” as any employment specified in the Schedule, or any process or branch of work forming part of such employment. Part II of the Schedule expressly includes employment in agriculture, covering all forms of farming, cultivation, tillage, dairy farming, as well as the production, cultivation, growing, and harvesting of agricultural or horticultural commodities. This inclusion demonstrates that a major statutory enactment intended for the welfare of workers expressly incorporates agricultural workers within its scope. The respondents further pointed out that when a legislature seeks to exclude agriculture from industrial legislation, it typically does so by making a specific provision to that effect. They supported this claim by referring to section 4 of the Australian Commonwealth Conciliation and Arbitration Act, 1901, which defines an “industrial dispute” as a dispute concerning industrial matters extending beyond the limits of any one State, but expressly excludes disputes relating to employment in any agricultural, viticultural, horticultural, or dairying pursuit. This reference was used to argue that the word “industry” in its broadest sense, as intended by section 2(j), should include agriculture, and that if the legislature had intended to exclude agriculture, it would have adopted the Australian precedent when enacting section 2(i). The respondents therefore maintained that there is no justification for the Court to limit or narrow the wide meaning of “industry” as defined in section 2(j).

In the matter before the Court, the statutory provision under discussion dealt with disputes relating to employment on State railways or in industries that were conducted by, or under the control of, the Commonwealth, a State, or any public authority created by the Commonwealth or a State. The provision expressly excluded disputes concerning employment in any agricultural, viticultural, horticultural, or dairying pursuit. One side argued that the term “industry,” as given its broadest meaning in section 2(j), should encompass agriculture, and that had the legislature intended to leave agriculture outside the definition, it would have followed the Australian precedent when enacting section 2(i). According to that argument, the language of section 3(19) of the Bombay Act served only to clarify the legislature’s intention to expressly include agriculture so that no uncertainty would remain on the issue. The respondents therefore maintained that there was no justification for the Court to restrict or narrow the wide meaning of “industry” as set out in section 2(j). They further supported their position by pointing to clause (iii) of the explanation to section 25A of the Act, contending that this clause demonstrated that agriculture should be read as part of the meaning of section 2(j). Section 25A, located in Chapter V‑A dealing with lay‑off and retrenchment, specified that the provisions in sections 25C to 25E would not apply to the industrial establishments listed in clauses (a) and (b) of section 25A(1), and the explanation defined “industrial establishment” for the purposes of sections 25A, 25C, 25D and 25E. Clause (iii) of that explanation identified a “plantation” as the meaning of “industrial establishment,” referring to the definition in clause (f) of section 2 of the Plantations Labour Act, 1951 (Act 69 of 1951). Upon examination of that definition, a plantation was described as any plantation to which the Act applied, either wholly or partially, and it included other establishments that need not be separately mentioned. Section 1, sub‑section (4) clarified the scope of plantations to which the Plantations Labour Act applied. Consequently, it was clear that the plantations covered by the 1951 Act were expressly included within the term “industrial establishments” as explained in the explanation to section 25A. The respondents argued that this explanatory clause indicated that agriculture, of which plantations form a part, was not intended to be excluded from the operation of the Act. While addressing the present appeals, the Court stated that it would not resolve the broader question of whether all agriculture and its related operations fell within the definition of section 2(j). The Court reiterated its earlier emphasis that, in industrial matters, adjudication should avoid formulating overarching principles or adopting doctrinaire positions. Instead, industrial adjudication should focus on the specific problems presented and resolve issues as they arise, limiting its decisions to the points strictly raised in the pleadings between the parties.

In the present case, the Court emphasized that industrial adjudication should address only the matters specifically raised in the pleadings and should avoid formulating overly broad principles that might affect facts not before it. The Court stated that when a narrow issue required resolution, any principle developed should be carefully limited to the circumstances of the case. Keeping this approach in mind, the Court confined its analysis to the question of whether the agricultural operations conducted by the two appellants fell within the meaning of “industry” under section 2(j). The Court observed that the appellants had invested substantial capital in their agricultural activities and that this investment was unquestionably aimed at earning profit. It was also undisputed that the workers employed by the appellants contributed to the production of agricultural commodities that generated profit for the appellants. Consequently, the Court held that even the traditional requirements for the concept of trade or business were satisfied by the appellants’ agricultural operations. Moreover, the Court noted that the appellants were limited companies formed, among other purposes, for the express purpose of carrying on agricultural trade or business. The Court pointed out that the agricultural activities were expressly included in the objects of the companies, and therefore there was no difficulty in concluding that these activities were organized and carried out in the same manner as any trader or businessman would conduct a trade or business. The Court further observed that a company created to conduct agricultural operations is, by its very nature, engaged in trade or business, and that a plea asserting that such organized trade or business does not fall within section 2(j) merely because it is agricultural could not be sustained. The Court also referred to the statement made by the appellant Motipur Zamindari Co., Ltd. before the Tribunal, in which the appellant acknowledged that the Sugar Mills Association, of which Mr Sinha was an office‑bearer, was connected with the industry in which the Zamindari Company operated, thereby admitting that the appellant was part of that industry. Apart from this admission, the Court expressed no hesitation in holding that

The Court affirmed that the High Court had correctly concluded that the agricultural activities undertaken by the two appellants qualified as “industry” within the meaning of section 2(j) of the Act. Before disposing of the appeals, the Court referred to four earlier decisions of this Court that had examined the same question. In the case of D. N. Baneerji v. P.‑B. Mukherjee, the Court was called upon to consider the full significance of the terms “industry” and “industrial dispute” as defined by sections 2(j) and 2(k). The respondents argued that this decision supported their contention that section 2(j) embraces all forms of agriculture and agricultural operations, relying on a passage from Justice Chandrasekhara Aiyar’s judgment in which he observed that the ordinary, non‑technical meaning of “industry” could extend to agriculture, horticulture, pisciculture, and similar activities. The Court was not persuaded by that argument, noting that the passage was made in the context of explaining the lay‑person’s ordinary understanding of the word “industry” or “business.” Consequently, the observation could not be read as a sweeping statement that every kind of agriculture falls within section 2(j). The decision in Baneerji was principally about disputes that might arise between municipal authorities and their employees in work that is analogous to the carrying on of a trade or business, which are covered by section 2(k). The Court therefore read the respondents’ reliance on that passage in light of this conclusion. The Court then discussed State of Bombay v. The Hospital Mazdoor Sabha, wherein it examined in detail the implications of the concept of “industry” under section 2(j). A material factor in that case was the amendment of the First Schedule by Act 36 of 1956, which added “services in hospitals and dispensaries” to the list of activities that may be declared a public utility service under section 2(a)(vi). The addition made it clear that services provided in hospitals could not be excluded from the definition of “industry” in section 2(j). Finally, the Court considered The Ahmedabad Textile Industry’s Research Association v. State of Bombay, where it held that the Association’s activities constituted an industry because the manner of organization showed that the undertaking as a whole functioned as a department of the textile industry, even though the work was of a research and intellectual character. These authorities were cited to illustrate that the nature of an activity, its organization, and statutory classifications all influence whether it falls within the ambit of section 2(j).

In describing the activity that had been organized, the Court observed that it concerned the nature of business and trade that was arranged with the purpose of discovering methods and means by which the member mills could achieve larger profits in relation to their respective industries. In other words, although the work involved research and could be characterized as intellectual in nature, it had been structured in such a way that it formed an integral part or a distinct department of the textile industry itself. Because of this organization, the Court held that the appellant in the earlier case was to be regarded as an employer and that his undertaking qualified as an industrial activity within the meaning of section 2 (j). Conversely, the Court referred to the decision in the matter of National Union of Commercial Employees versus M. R. Mehar, Industrial Tribunal, Bombay, in which the question arose as to whether the office of a solicitor’s firm could be treated as an employer and whether the work performed in that office amounted to an industry under section 2 (j). The Court ruled that although the solicitor’s work might loosely be described as business, it could not be classified as an industry within the scope of section 2 (j) because the essential characteristic of an industrial dispute was absent. The Court explained that the fundamental basis of an industrial dispute is that it arises between capital and labour in enterprises where the two combine either to produce goods or to render services, and that such a relationship could scarcely be ascribed to a liberal profession such as that of a solicitor. The Court further noted that a person engaged in a liberal profession does not carry out his profession in a rational sense with active cooperation from his employees, since the principal capital contributed by a professional of this sort is his specialized intellectual and educational expertise. On these grounds, the Court held that the Act did not apply to a solicitor’s firm. The Court mentioned these authorities merely to stress the point that it has consistently avoided formulating overly broad or categorical rules when dealing with the complex questions raised by the definition contained in section 2 (j). In the present matter, the dispute was confined to a narrow field, and the Court therefore decided the case on that limited basis. Consequently, the Court concluded that the appeals must fail, ordered the dismissal of the appeals with costs, and recorded that the appeals were dismissed.