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Case Analysis – Bangalore Water-Supply sewerage board Vs R. Rajappa & Others

Author(s)- 1. Gayatri Singh (UPES Dehradun)

2. Hardik Manoj Manwani

ABSTRACT

The Honourable Supreme Court’s historic ruling, which took into account the social and economic ethos of our nation, is noteworthy. The concept of “industry” as stated in Section 2(j)[1] of the Industrial Dispute Act, 1947 was thoroughly researched by the Honorable Supreme Court. The Apex Court took the industry’s extent into account and clarified any ambiguity regarding the assumption made regarding the meaning of “industry” in this case[2].

INTRODUCTION

Through its economic engines, India is advancing extremely quickly toward its objectives and the nation’s economic development. The development of industries is one of the most important economic drivers we have, but what we fail to acknowledge is the work of labourers, without whom the industries could not exist. Since gaining independence, our nation has enacted a number of laws to safeguard the working class.  Bangalore Water Supply & Sewerage Board v. A. Rajappa & others[3] has in fact been a milestone decision in the history of labour and industrial laws in India. The Industrial Dispute Act, 1947’s Section 2(j)[4] definition of the industry and the concept of what constitutes “sovereign functions” have both been greatly assisted by this judgement. This case has also been useful in establishing that sovereign activities constitute an exception to “industry.”[5]

POLITICAL BACKGROUND

The Honourable Supreme Court pointed out that the Industrial Disputes Act, 1947[6] did not provide a trustworthy definition of “industry” when interpreting the term. Due to the stiffness of the definition and the fact that it created a gap that needed careful interpretation to close, the court decided to rectify it on its own. The legal system’s construction as a whole was questioned by the court. In the case, Estates Ltd. v. Asher[7], it was held that when any loophole or defect appears, a judge must not simply blame the drafter of that legislation but must act pro-actively amend the words of the law in such a way that its meaning resembles the intent of Parliament when it was constructed. This was established in a well-established procedure for the court, where the court holds the power to fix such failures of legislation. The judge is responsible for giving the act the “force and life” that the legislature intended. Additionally, it was stated that a judge can and should iron out creases rather than change the fabric of the law when deciding a case. As a result, he must uphold the intent and spirit of the law, approach the problem from the standpoint of the law’s constructive legislators, and come to a resolution just as they would[8].

INTERNATIONAL BACKGROUND

The Apex Court cited the Maxwell Interpretation of Statutes, which explains that “It is necessary, therefore, to take the Act as a whole and examine its salient provisions.” The long title indicates that the Act’s purpose is “to make provision for the investigation and settlement of industrial disputes, and for certain other purposes.”[9]

JUDICIAL BACKGROUND

The Apex Court examined the purposes of the Act to define the term “industry” in the Budge Municipality case[10]. The Court stated, “When our Act came to be passed, labour disputes had already assumed big proportions and there were clashes between workmen and employers in several instances. We can assume that it was to meet such a situation that the Act was enacted, and it is consequently necessary to give the terms employed in the Act referring to such disputes as wide an import as reasonably possible.”[11]

FACTS OF THE CASE

There was a dispute on the respondent’s misconduct between the Appellant (Bangalore Water Supply) and the respondent (A. Rajappa & Others). As the respondent claimed that the appellant had overcharged them for the wrongdoing, which appears to be exceedingly unreasonable, the issue could not be resolved through mutual agreement. The Appellant’s actions in this case, according to the Respondent’s Application (No. 5/72) filed under Section 33 (2)[12] of the Industrial Disputes Act 1947, breached the principles of natural justice. The appellants objected to the claim in the Labor Court and said in their argument that they are a statutory body that offers essential services to the people of the nation, which is also a respectable thing to do. As a result, they are not covered by Section 2(j)[13] of the Industrial Dispute Act as an industry, and therefore the Labor Court has no jurisdiction over the situation. The Court rejected the objection. The Appellant submitted two Writ Petitions to the Bangalore-based Karnataka High Court. The petitions were denied, according to the High Court’s Division Bench, since the Bangalore Water Supply Board is an “industry” as defined by Section 2(j)[14] of the Industrial Disputes Act, 1947[15].

Finally, the appellant filed a petition with the Honorable Supreme Court of India, relying on the Special Leave Appeal under Article 136[16] of the Indian Constitution. A large Supreme Court bench was now entrusted with determining the likelihood of ambiguity and “cases in an area where the common man has to understand and apply the law and the desirability that there should be, comprehensive, clear and conclusive declaration as to what is an industry under the Industrial Disputes Act as it stands.” The Honourable Supreme Court’s seven-judge bench heard this case, along with numerous others on the same subject, but they concluded that the term “industry” still lacked a clear definition or change. The Bench stated that there is a clear difference of opinion and debate that needs to be resolved once and for all and that it is time for the Legislature to step in and create a clear and comprehensive definition of the term “industry.” It is vital for all of the workers out there and the courts handling these cases to have a clear understanding of the same. The court ultimately ruled that the term “industry” should not be read narrowly and obviously has a larger sense. The dismissal of the appeal broadens the meaning of the term[17].

LAWS APPLICABLE

Section 2 of The Industrial Disputes Act, 1947[18]

 Section 2(g) of The Industrial Disputes Act, 1947[19]

 Section 33 (c) of The Industrial Disputes Act, of 1947[20]

ISSUES RAISED

1. When it comes to the Industrial Dispute Act, does the Bangalore water supply and sewerage board fall under the purview of section 2(j)[21]?

2. Will the charitable institutions of the cooperative society be regarded as industries for the purposes of Section 2(j)[22] of the Industrial Dispute Act?

3. Will hospitals, municipal corporations, community colleges, universities, and other institutions be considered “industries” for the purposes of Section 2(j)[23] of the Industrial Dispute Act?

4. Should a doctor’s office, a chartered accountant’s office, a legal firm, or any other liberal profession be classified as an industry[24]?

5. What precisely should and shouldn’t be included in the definition of “industry”?

6. Are governmental duties, strictly speaking, considered industrial or not[25]?

PARTIES CONTENTION

PETITIONER – The Petitioner contended in his argument that any organization working toward the generation of profit should fall under the term “industry,” extending the term’s reach in order to resolve the dispute arising out of the term “industry” established under Section 2(j)[26] of the Industrial Dispute Act, 1947. Additionally, such an entity must adhere to all rules and regulations established by the system for the sector. It was also suggested, building on the same rationale, that the term “industry” should include the agricultural sector, notably in India, where the agricultural sector plays a significant role in the expansion of the nation’s GDP with a share of the economy of more than 70%[27].

DEFENDANT – The defence refuted all of the claims. They made it very evident that the Industrial Disputes Act, 1947[28] lacks any provisions that specifically define the term “industry” and the sectors that fall within it, let alone the statutory board. By citing Section 33 C[29] of the Industrial Dispute Act, 1947, the defendant argued that the Act’s laws governed labour laws. This clause ensured that workers received any unpaid wages and benefits from the employer, making the Act appropriate, sufficient, and in line with standards[30].

JUDGMENT OF THE CASE

It was decided that the definition of “industry” under Section 2(j)[31] should be given a broad interpretation. The Court explained every factor that must be taken into account while defining the term “industry” in accordance with the section. First of all, it is when an employer and employee work together in a systematic activity that produces or distributes goods or services with the goal of fulfilling human needs and desires (which need not be spiritual satisfaction but inclusive of material things and services generated). Second, for any public, private, or combination organization, the presence or lack of gainful objectives and gainful objectives is clearly unimportant. Thirdly, if a certain entity falls under the definition of “industry” and engages in philanthropy, it will still be included. The court concluded by saying that the nature of the activity should be the primary subject of functional and conclusive tests, with employer-employee relations being a crucial focus. Thus, it was determined that the Bangalore Water Supply and Sewerage Board satisfied Section 2(j)[32] definition of “industry.”

The court additionally ruled that even if Section 2(j)[33] is taken broadly, it must not be interpreted so broadly that it oversteps its bounds. It is important to consider the context when interpreting the word “undertaking.” This is to clarify that, despite the absence of trade or commerce, all organizations that meet all three criteria may still be considered to be part of an industry depending on their structure and the nature of their employee-employer relationship. With the exception of the activity’s technique, all other qualities, including the work conditions, are flexible. The primary determinant of the type of cooperation between employers and employees is how it is structured. By addressing and regulating disputes between employers and employees, the Act aims to promote industrial harmony. The intent is to conform to the legal meaning. The rational application of the rules must not be constrained by the emergence of cults, creeds, or any other sense of motivation or internal disturbance[34].

RULE OF LAW

The fundamental rule of law was applied in this instance, which provides that industries should be covered by the act, in order to make the situation easier for the layperson to grasp the law[35].

TRIPLE TEST

After the Bangalore water supply case, the Honourable Supreme Court developed the triple test as a guiding concept[36].

The following points were highlighted in the triple test:

1. The industry excludes all types of spiritual, religious, and blissful-after-death services.

2. Whether it is a public enterprise, a joint-private sector endeavour, or any other sector, the absence of a profit motivation or gainful purpose is irrelevant.

3. The function and character of the activity are indeed the main points of attention, with a special focus on the employer-employee connection.

4. An organisation that is a trade or business is not prevented from remaining one by the presence of philanthropy[37].

WHAT DOES NOT COME UNDER THE DEFINITION OF ‘INDUSTRY?’ – It was determined in the case of the State of Rajasthan v. Ganeshi Lal[38] that the government’s law department is not an industry and that the idea of industrial regulations cannot be used in this situation[39]. The census division of the Government of India would not fall under the scope of the industry as specified under the Industrial Disputes Act, as was decided in the case of Md. Raj Mohammad v. Industrial Tribunal[40]. A temple is not an industry, as was decided in the case of Indravadan N. Adhvaryu v. Laxmidevnaryan Dev Trust[41]. It was decided that the Diocese of the Church is not an industry in the case of the Diocese of Amritsar of the Church of North India and others v. Buta Anayat Masih and others[42]. It was determined that the District Literary Samiti, established by the government for the purpose of eradicating literacy, would not be considered an industry in the case of Project Director, District Literacy Samiti v. Ms Mamta Srivastava and another[43].

RECENT DEVELOPMENTS – Since the Bangalore water supply case excluded sovereign activities from the definition, the situation regarding sovereign functions is still unstable. The forest department of the state of Maharashtra was deemed to be an industry in the case of Chief Conservator of Forest v. Jagannath Maruti Kondare[44], while it was deemed not to be an industry in the case of State of Gujarat v. Pratamsingh Narsingh Parmar[45]. In the Bangalore water supply case, the knowledgeable judges have retained such sovereign functions, which are purely the legislative, executive, and judicial powers granted by the constitution, beyond the concept of “industry.” In a constitutional democracy, sovereignty has a fundamentally different meaning than it does in a traditional democracy, where it mainly refers to matters of lawmaking, law and order, defence, and justice. With constitutional sovereignty, the people hold the power of sovereignty and the state is required to uphold its duties, which are outlined in the Directive Principles of State Policy, Part IV of the Indian Constitution. As a result, whenever the government fulfils its duties, these actions should be regarded as sovereign functions and are not included in the concept of industry. Additionally, by excessively broadening and expanding the concept of “industry,” the workers employed in fulfilling such constitutional requirements cannot be placed under the jurisdiction of industrial law[46].

CONCLUSION  

In this decision, the court dismissed the appellant’s appeal and established guidelines for how to interpret the broad meaning of section 2(j)[47] of the Industrial Dispute Act, 1947. The court also resolved the unnecessary turmoil that the statute’s interpretation had caused. The Honourable Supreme Court’s seven-judge panel provided a precise explanation and interpretation of the law and advised the legislature to remove any ambiguity and maintain the act’s core meaning. The adoption of the newly enhanced definition, which was now guided by the guidelines developed in this case, assisted in resolving the difficulties that had not yet been noticed[48].

CRITICAL ANALYSIS

To encourage industrial cooperation, coordination, and improved employer-employee relations, this particular case gave the term “industry” a broader and more extensive definition. Additionally, to meet the demands of a rapidly industrializing society. Industries have grown to be one of the most crucial components of society’s efficient operation, and it is crucial that there be peace and harmony between employers and employees because of how negatively this can affect the industries and lead to poor functioning[49].

SUGGESTIONS AND RECOMMENDATIONS

We believe that the court’s decision to require that some industries be covered by the act was entirely acceptable in order to make it simpler for them to be governed by the same rules and regulations and to make things clearer for the general public so that they may more easily access the law. Our sense is that the legislators spent more time on this amendment than was truly required. Although we believe it could have been done sooner, it took Parliament four years to modify this definition. As a result, the lawmakers ought to have taken more initiative to put an end to the uproar about how to define “industry.”


[1] The Industrial Dispute Act, 1947, S. 2j

[2] Tejas Patel,’ BANGALORE WATER SUPPLY & SEWERAGE BOARD VS R. RAJAPPA & OTHERS’ (LawFoyer, 11 June 2021) <https://lawfoyer.in/bangalore-water-supply-amp-sewerage/> accessed 8 October 2022

[3] Bangalore Water Supply & Sewerage Board v. A. Rajappa & others, 1978 AIR 548

[4] The Industrial Dispute Act, 1947 (n 1)

[5] Ibid

[6] The Industrial Dispute Act, 1947

[7] Estates Ltd. v. Asher, (1949) 2 KB 481

[8] Nirnesh Rajendra Naidu, ‘Bangalore Water-Supply & sewerage board, etc. Vs R. Rajappa & Ors.’ (Law Times Journal, 23 October 2020) <https://lawtimesjournal.in/bangalore-water-supply-sewerage-board-etc-vs-r-rajappa-ors/> accessed 5 October 2022

[9] Ibid

[10] Budge Municipality case, [1953] S.C.R. 302 at 310

[11] Nirnesh Rajendra Naidu (n 8)

[12] The Industrial Dispute Act, 1947, S. 33 (2)

[13] The Industrial Dispute Act, 1947 (n 1)

[14] Ibid

[15] ‘Bangalore Water-Supply Vs R. Rajappa & Others’ (dcac.du.ac.in) <http://dcac.du.ac.in/documents/E-Resource/2020/Metrial/30lalita1.pdf> accessed 8 October 2022

[16] Constitution of India, 1950, art 136

[17] ‘Bangalore Water-Supply Vs R. Rajappa & Others’ (n 14)

[18] The Industrial Dispute Act, 1947, S. 2

[19] The Industrial Dispute Act, 1947 (n 1)

[20] The Industrial Dispute Act, 1947, S. 33(c)

[21] The Industrial Dispute Act, 1947 (n 1)

[22] Ibid

[23] The Industrial Dispute Act, 1947 (n 1)

[24] Parita Goyal, ‘THE BANGALORE WATER SUPPLY: CASE ANALYSIS’ (thelawbrigade.com, March 2018) <https://thelawbrigade.com/wp-content/uploads/2019/05/Parita-Goyal-1.pdf> accessed 8 October 2022

[25] Ibid

[26] The Industrial Dispute Act, 1947 (n 1)

[27] ‘Bangalore Water Supply & Sewerage Board Vs R. Rajappa & Ors.’ (LAW INSIDER, July 28, 2021) <https://www.lawinsider.in/judgment/bangalore-water-supply-sewerage-board-vs-r-rajappa-ors> accessed 8 October 2022

[28] The Industrial Dispute Act, 1947 (n 6)

[29] The Industrial Dispute Act, 1947 (n 19)

[30] ‘Bangalore Water Supply & Sewerage Board Vs R. Rajappa & Ors.’ (n 26)

[31] The Industrial Dispute Act, 1947 (n 1)

[32] Ibid

[33] The Industrial Dispute Act, 1947 (n 1)

[34] Parita Goyal (n 22 )

[35] ‘Bangalore Water Supply & Sewerage Board Vs R. Rajappa & Ors.’ (n 26)

[36] Parita Goyal (n 23)

[37] Ibid

[38] State of Rajasthan v. Ganeshi Lal, AIR 2008 SC 690

[39] Parita Goyal (n 23)

[40] Md. Raj Mohammad v. Industrial Tribunal, 2003 (2) ALT 661

[41] Indravadan N. Adhvaryu v. Laxmidevnaryan Dev Trust, 2011 LLR 261

[42] Diocese of Amritsar of the Church of North India and others v. Buta Anayat Masih and others, 2010 LLR 407

[43] Project Director, District Literacy Samiti v. Ms Mamta Srivastava and another, 2005 (4) MPHT 396

[44] Chief Conservator of Forest v. Jagannath Maruti Kondare, AIR 1996 SC 2898

[45] State of Gujarat v. Pratamsingh Narsingh Parmar, (2001) 9 SCC 713

[46] The Industrial Dispute Act, 1947 (n 1)

[47] Parita Goyal (n 23)

[48] Nirnesh Rajendra Naidu (n 8)

[49] Garima Pahwa, ‘The Bangalore Water Supply v/s R. Rajjapa’ (Legal Service India) <https://www.legalserviceindia.com/legal/article-2943-the-bangalore-water-supply-v-s-r-rajjapa.html> accessed 8 October 2022

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