Fresh Row Over Definition Of Industry

The differences between the Supreme Court judges over the application of the Industrial Disputes Act to undertakings has taken a new turn with one bench again holding the view of another bench wrong. According to one set of recent judgements of the court, the Act will apply to public sector undertakings, certain government departments, and even All India Radio and Doordarshan as they are indulging in profit-making activities. However, another set of judgements hold that only those establishments which are set up with profit as the objective are covered by the industrial law.

Last year, a two-judge bench consisting of Justice Sujata Manohar and Justice D P Wadhwa referred a case raising the question of the definition of `industry' to a larger Constitution bench. It felt that the judgement of the seven-judge bench of the Supreme Court, in the Banagalore Water Supply case in 1978, was wrong and required reconsideration by a larger bench. The seven-judge bench had held that if there was systematic activity employing people for production and distribution of goods and services, that establishment would be an industry and the labour law would apply to it.

Now a three-judge bench has held that the two-judge bench could not have questioned the Constitution bench's judgement as they were bound by the larger bench's decision. The bench consisting of Chief Justice A S Anand, Justice S P Bharucha and Justice M K Mukherjee held in the Coir Board case that the Bangalore Water Supply judgement should be followed by smaller benches. In its opinion, the Bangalore Water Supply decision "does not require reconsideration on reference being made by a two-judge bench of this court, which is bound by the larger bench's decision." The court also noted that the Act has since been amended in line with the Bangalore Water Supply judgement, though it has not been notified for enforcement.

The final result is that the Bangalore Water Supply judgement holds the field. Therefore, most of the establishments which indulge in commercial activities will be covered by the labour law regarding lay-offs, termination and service benefits. Only strictly government departments, exercising sovereign functions, will be exempt from the law. Even non-government organisations which make profit by selling products made by orphans or widows will be covered by the labour law, according to strict interpretation of the law and the Supreme Court judgement.