i) if it is a systematic activity,

ii) if it is organised by co-operation between employer and employees and

iii) if the underlying purpose is the production and or distribution of goods and
services calculated to satisfy human wants and wishes (not wants or wishes of a
spiritual or religious nature ).

Heeding the Supreme Court’s exhortation in Rajappa, the Indian Parliament amended the
definition of “industry” in 1982. The amended definition reads as under: ‘Industry’ means
any systematic activity carried on by cooperation between any employer and his workmen
(whether such workmen are employed by such employer directly or by or through any
agency, including a contractor) for the production, supply or distribution of goods or
services with a view to satisfy human wants or wishes (not being wants or wishes which
are merely spiritual or religious in nature), whether or not-

(i) any capital has been [invested] for the purpose of carrying on such activity; or
(ii) such activity is carried on with a motive to make any gain or profit, and includes –
(a) any activity of the Dock Labour Board...;
(b) any activity relating to the promotion of sales or business or both carried on by
an establishment, but does not include-

(1) any agricultural operation except, where such agricultural operation is carried on in an
integrated manner with any other activity (being any such activity as is referred to in the
foregoing provisions of this clause) and such other activity is the predominant one.
Explanation - For the purposes of this sub-clause, ‘agricultural operation’ does not include an
activity carried on in a plantation or

(2) hospitals or dispensaries; or

(3) educational, scientific, research or training institutions; or

(4) institutions owned or managed by organisations wholly or substantially engaged in any

(5) Khadi or village industries; or

(7) any domestic service; or

(8) any activity, being a profession practiced by an individual or body of individuals, if the
number of persons employed by the individual or body of individuals in relation to such
profession is less than ten; or

(9) any activity, carried on by a co-operative society or a club or any other like body of
individuals, if the number of persons employed by the co-operative society, club or other like
individuals in relation to such activity is less than ten.

Now coming to the point that, why there should be exemption to few establishments from
falling under the ambit of industry is because for example, Sovereign functions strictly
understood that is maintenance of law and order. Casual activities also cannot come under the
ambit of industry because they are unorganised or not systematic. Small clubs, co-operative,
research labs, gurukuls which have an essentially non employee character. Selfless charitable
activities, carried on by volunteers like for example, free legal or medical services.

Charitable Institutions:

These fall into three categories-

a. Those that yield profit, but the profits are not siphoned off for altruistic purposes.
b. Those that make no profit but hire the service of employees as in any other business,
but the goods/ services which are the output, are made available at a lot or no cost to
the indigent poor, and
c. Those that are oriented on a humane mission fulfilled by men who work, not because
they are paid wages, but because they share the passion for the abuse and derive job
satisfaction.
D. N. Banerji vs P. R. Mukherjee And Others 1953 AIR 58

FACTS: Pratul Chandra Mitra was the Head Clerk, and Phanindra Nath Ghose, the Sanitary
Inspector of the Budge Budge Municipality, and they were also members of the Municipal
Workers' Union. On receipt of complaints against them for negligence, insubordination and
indiscipline, the Chairman of the Municipality suspended them on 13th July, 1949, drew up
separate proceedings, and called for an explanation within a specified date. After the
explanations were received, they were considered at a meeting of the Commissioners held on
6th August, 1949, and by a majority, the Commissioners confirmed the order of suspension
and directed the dismissal of the two employees. At the instance of the Municipal Workers'
Union, who questioned the propriety of the dismissal the matter was referred by the State of
West Bengal on 24th September, 1949, to the Industrial Tribunal for adjudication under
the Industrial Disputes Act. The Tribunal made its award on 13th February, 1950,. that the
suspension and punishment of the two employees were cases of victimisation, and it directed
their reinstatement in their respective offices, The Municipality took the matter to the High
Court at Calcutta by means of a petition for a writ of certiorari under articles 226 and 227 of
the Constitution.
ISSUES:

(a) That there was no industrial dispute, and therefore there could be no reference under
the Industrial Disputes Act to any Tribunal;

(b) That the said Act was not applicable to disputes with Municipalities;

(c) That even if it did, it was ultravires;

(d) That the Tribunal should not have directed reinstatement of the dismissed employees; and
(e) That the award was bad on the merits. These contentions were negatives by the learned
Judges, and the petitions were dismissed. But leave was granted under article 132 (1) of the
Constitution, and that is how the matter has now come up before us.

REASONING:

The definition was apparently intended to include within its scope what might not strictly be
called a trade or business venture. Another provision in the Act defining "public utility
service" and contained in sub-clause (n) of section 2 is very relevant and important in the
interpretation of "industry" and "industrial dispute" and it is to the following effect :

'public utility service' means-

(i) Any railway service

(ii)Any section of an industrial establishment, on the working of which the safety of the
establishment or the workmen employed therein depends;

(iii)Any postal, telegraph or telephone service;

(iv)Any industry which supplies power, light, or water to the public;

(v)Any system of public conservancy or sanitation;

COMMENT:

It is unnecessary to decide whether disputes arising in relation to purely administrative work

There was no ground urged before us or before the High Court that the Sanitary Inspector and
the Head Clerk of the Municipality were officers and not "workmen" within the meaning of
the Act. The dispute raised on their behalf by the Workers' Union of which they were
members is, in our view, an "industrial dispute" within the meaning of the Act.

Corporation of City of Nagpur vs. N.H. Mujumdar and Ors. (11.09.1957 - BOMHC) :
MANU/MH/0067/1958

Facts: Where a reference to the State Industrial Court, made under Section 39 of the Central
Provinces and Berar Industrial Disputes Settlement Act, 1947, deals with "employees" of a
Corporation, it does not include persons who have ceased to be employees having been
superannuated or having ceased to serve the Corporation for any reason other than dismissal,
discharge or removal.

Issue: Whether municipal corporation would be an industry?

Reasoning: The Supreme Court held that Corporation comes under the definition of industry
provided in Industrial Disputes Act. The court has distinguished regal and non-regal
functions and that the regal functions described as ‘primary’ and inalienable functions of the
state, though delegated to the corporation, are necessarily excluded from the purview of the
definition of industry and that corporation is an industry while engaged in non-regal
functions.

Comment: Corporation only with regard to the Non-sovereign functions comes under the
definition of Industry.

Secretary, Madras Gymkhana Club Employees union vs. Management Of The

Brief Facts:
The respondent is a non-proprietary member’s club. It is organised on a vast scale with
multifarious activities providing a venue for sports and games, and facilities for recreation,
entertainment and for catering of food and refreshment. Guests are admitted but on the
invitation of members. It has 195 employees with a wage bill between one lakh and two lakh
rupees. For the year 1962, the employees claimed bonus but the Industrial tribunal held that
the club was not an ‘Industry’ within the meaning of the Industrial Disputes Act, 1947, and
rejected the claim of the employees.
Issues:
Whether the Madras Gymkhana Club was an industry since it was a members’ club offering
recreational and food facilities for its members with the help of a large retinue of employees?
Reasoning:

In order to decide whether it is an industry or not, or to remove from the scope of industry,
there are two reasons given, Firstly, the activity of the club may be falling in the second part
of the definition i.e., the work of the club is conducted with the aid of the employees who
follow a ‘calling’ or ‘avocation’ but it cannot be described as a calling of the members of the
club or of the managing committee of the club within the first part of the definition which is
the actual denotation of an “industry”. The second reason given was that the club was self-
serving institution and the element of ‘undertaking’ analogous to trade or business is
completely missing here.

Comment:

This was again criticized by Justice Iyer who says that it is the employees who work for
wages and hence, produce the goods and services, not the club members. When all the
services are rendered by hired employees, how can the nature of the activity be describes as
self-service. There is however, confusion here as Justice Hidayatullah is using “self service”
to signify service to the club members only and not to non-members who are considered as
outsiders but Justice Iyer is taking the word to mean service by the members themselves
without assistance of employees. The Gymkhana case was held to be wrongly decided in the
Bangalore Water Supply case.