Bangalore Water-Supply & Sewerage Board, Etc. v. R.   Rajappa & Others

Published On: 28th January, 2025

Authored By: Atif Pathan
Galgotias University

Introduction/Background of the case

  1. There was no way for the parties to agree with the respondent’s argument that the Appellant had charged them for the misconduct and imposed irrelevant fines, which seemed completely irrational. The Appellant violated natural justice, as stated in the Respondent’s Application (No. 5/72) submitted under Section 33 (2) of the Industrial Disputes Act 1947. It is commendable that the appellants took their position as a statutory organization providing vital services to the country’s citizens and argued against the claim before the Labour Court.
  2. Consequently, the Labour Court lacks jurisdiction over the matter as they are not an industry protected by Section 2(j) of the Industrial Dispute Act. The Court denied the challenge. The Appellant filed two Writ Petitions with the Karnataka High Court, which is located in Bangalore. Since the Bangalore Water Supply Board is considered an “industry” under Section 2(j) of the Industrial Disputes Act, 1947, the petitions were dismissed by the High Court’s Division Bench.
  3. Lastly, the Appellant used the Special Leave Appeal provision under Article 136 of the Indian Constitution to petition the Honourable Supreme Court of India.[1]
  4. The seven-judge panel of the Honourable Supreme Court considered this matter, and many others like it, but they came to the same conclusion: “industry” has not changed or been defined clearly. According to the Bench, the Legislature should step in and define the word “industry” in a way that is both explicit and comprehensive so that there is no more room for ambiguity.
  5. Everyone involved in the field and the courts presiding over these instances must have a firm grasp of the same. The Court concluded that “industry” clearly has a broader meaning and should not be interpreted narrowly. The rejection of the appeal expands the term’s definition.

Analysis

Legislators and executives should take note of the five-judge Supreme Court bench’s decision to ask for a bigger bench to examine the legal interpretation of “industry” since 1978. In the case of “State of Uttar Pradesh v. Jasbir Singh”[2], which was heard alongside nine other civil appeals, the central question that the Court had to decide was whether the industry-defining Bangalore Water Supply case should still be considered as national law to apply the Industrial Disputes Act 1947.

Many government agencies and service businesses’ employers demanded that the IDA not apply to them after being wrongly ruled against in the Bangalore Water Supply case. Following this, in 1982, Parliament amended the IDA to clarify the term and exclude several types of enterprises from it. Unfortunately, people have yet to hear about the change.

The executive’s failure to inform and implement the more restricted definition of industry necessitates reconsidering the Iyer Bench judgement, according to the most recent ruling of the Bench presided over by Justice N. Santosh Hegde. The government had previously stated in Court that the 1982 revision was not publicized because there was no other system for workers of businesses who were left out of the loop to resolve their complaints.

Given India’s scarcity of public sector jobs, an overly broad definition of “industry” can discourage private sector investment. However, according to economic theory or the decades-long expansion of the market economy in industrialized nations, safeguarding workers’ fundamental rights has not impeded development. Therefore, the comments on the most recent ruling’s macroeconomic pattern are based on assumptions.

This case’s expansive interpretation by the Court widened the industry concept to include any activity involving an employer-employee relationship. A broad interpretation of the meaning of “industry” under Section 2(j) was elucidated. The Court elaborated on each consideration for applying the section’s definition of “industry” in practice. The first definition is that it occurs when an employer and an employee engage in a planned activity to create and disperse commodities and services to meet human needs and wants, which might include tangible goods and services and more abstract concepts like spiritual fulfilment. Second, whether an organization is public, private, or a hybrid, the existence or absence of profit-making goals is irrelevant. Thirdly, even if an organization is charitable, it will still be considered part of the “industry” category. The Court said that functional and decisive criteria should primarily concentrate on the nature of the activity, with employer-employee interactions being a significant emphasis. The Bangalore Water Supply and Sewerage Board was deemed an “industry” according to Section 2(j).

Furthermore, the Court determined that it must be manageable regardless of how liberally Section 2(j) is construed. The meaning of the term “undertaking” depends on the surrounding circumstances. This is to clarify that any organization that satisfies all three requirements—a lack of trade or commerce, a specific structure, and an employment relationship—may be deemed part of an industry. Everything about the job, including the working environment, is up for grabs, except for the method of execution.

The structure of the relationship between employers and workers is the main factor determining the collaboration that occurs. The Act fosters industrial peace by resolving and regulating conflicts between employers and workers. The goal is to match the legal interpretation. The development of cults, creeds, or any other kind of internal disturbance must not impede the reasonable implementation of the laws.[3]

Redefining Sovereign Functions by Bangalore Case

According to the Bangalore case, the sovereign function includes actions protected by Articles 309, 310, and 311. However, the criteria for identifying whether such actions qualify as exceptions are unclear. Such actions “may” be regarded as a sovereign function “subject to the interpretation of the rules governing them,” according to the dissenting opinion. Essential parts of public administration will be exempt from statutes that do not address them. The dissenting view, however, maintained that “should strictly speaking” be regarded as a sovereign function of any activity subject to several statutes and constitutional requirements.

Consequently, it needs to be apparent from the ruling whether the exclusion of statutory-rules-governed activity is obligatory or optional. Because of this lack of clarity, there is room for many interpretations, all of which will ultimately contradict each other. According to the broad interpretation, any action subject to legislative restrictions is nevertheless considered part of an “industry” under Section 2 (j) of the Act. A broad interpretation was adopted in a subsequent instance, enabling the Act and the statutory regulations to operate simultaneously.

Consequently, the Court had to intervene again to make it clear that the interpretation given above does not apply to the Bangalore case. This constant circling of the Court shows that the standards could be more manageable. All parties agreed that the state’s actions to implement Part IV did not constitute a sovereign function in the Bangalore case. The ruling holds that businesses cannot claim “welfare activities of economic adventure” as a sovereign role. To expand the scope of benefits accessible via the implementation of the Act, the Court has adopted this policy decision. Even though the Court made its position plain, a later decision (per in curium) sought to include welfare operations as a sovereign competence. That reading holds that the state’s responsibilities under Article IV of the Constitution give rise to welfare functions.[4]

Consequently, they are also constitutional duties. Sovereign duties, which include constitutional tasks, are not within the purview of an industry. A growing body of evidence lends credence to the idea that the Doctrine of Sovereign Function should also include welfare duties. The ruling in the Bangalore case, which established the Doctrine’s applicability to the concept of “industry” as a binding precedent, runs counter to the current tendency. The argument’s rationale is that constitutional democracies have different conceptions of sovereignty.

Part IV’s mission requires the constitutional government to carry out welfare tasks, in contrast to the Crown’s mandate. To remove them from sovereign duties, the Court must provide sufficient reasons. More is needed to focus on more than just maximizing the Act’s benefits. The decision-making power ought to be with the legislative, not the courts, even if it were to be true. Therefore, although the criteria for removing welfare functions from the Doctrine of Sovereignty is evident, it could be unworkable in the long run.

Triple test

The following requirements in the Triple Test:

  • Systematic Activity
  • Co-operation between the employer and employee
  • Activity is concerned with producing goods and services to satisfy human wants.

No religious activities or other pursuits motivated by spiritual joy will be embodied by this enterprise. Any endeavour may be pursued without regard to the profit motivation. Using the triple test, the functional aspect, which emphasizes the ties between employers and employees, is brought into sharp relief. A business also involved in charitable giving might still be considered an industry. Therefore, the enterprise may be called an “industry” under section 2(j) of the Industrial Disputes Act, 1947, provided all the above conditions are fulfilled.

Whether an endeavour is in the public, joint, private, or any other sector, the lack of a profit motivation or profitable purpose is of no consequence. The functional aspect is the main emphasis, and the activity’s nature, particularly regarding employer-employee interactions, is the deciding factor. Charitable motivations should not be seen as disguising the organization’s status as a commerce or company.[5]

While not technically commerce or business, any organized activity meeting basic requirements may be considered “industry” if the nature of the activity, namely the employer-employee basis, is similar to that of trade or business. When we include this into our definition of “industry,” we include endeavours, professions, and services similar to running a company. All other aspects can be different except for the approach to carrying it out, i.e., in arranging the collaboration between employer and employee. As long as there is a comparison in terms of employment, it is irrelevant.

Invoking creeds, cults, an inner feeling of contradiction, or an exterior sense of reason for or consequence of economic activities should not impede the application of these recommendations from reaching their logical conclusion. The scope of the legislative definition must be informed by the philosophy of the Act, which is industrial conflicts between employers and workers. Nothing less than this will do. Accordingly, the Supreme Court noted that Section 2(j) does not exclude from its purview any professions, clubs, educational institutions, co-ops, research institutes, charity enterprises, or other similar endeavours that meet the abovementioned conditions.

All organized activities with the three characteristics, even if they aren’t trades or businesses, may still be considered industries as long as the employer-employee relationship is similar to what we see in a company. Consequently, under section 2(j) of the Act, no form of organization—including a club, an educational institution, a co-op, a research institution, a charity initiative, or any other kindred adventure—will be allowed to claim exemption from the definition of industry if they meet all three criteria.

Where workers are involved in a complex of activities, some of which are exempt, and others are not, as a whole. Isolating some departments or individuals who do not meet the definition of “workmen” will reveal their actual character. It will be considered “industry,” even if those who don’t match the “workmen” description may not get anything out of it. Regardless of the preceding sentence, the government’s welfare efforts and economic endeavours are not excluded, but the sovereign functions in their strictest sense are. Departments performing sovereign tasks may still be deemed to fall within Section 2(j) if they include industry units that are substantially severable.

Present scenario

Sovereign functions remain precarious due to the Bangalore water supply case’s exclusion of sovereign activities from the definition. In “Chief Conservator of Forest v. Jagannath Maruti Kondare”[6], the Maharashtra forest department was found to be an industry; but, in “State of Gujarat v. Pratamsingh Narsingh Parmar[7], it was found not to be an industry. Beyond the idea of “industry,” the competent courts in the Bangalore water supply case have preserved such sovereign duties as the legislative, executive, and judicial authorities conferred by the constitution.

Sovereignty in a constitutional democracy pertains to issues of justice, defence, law and order, and lawmaking, while in a conventional democracy, it primarily pertains to these topics. As stated in Part IV of the Indian Constitution, the Directive Principles of State Policy, the people own the power of sovereignty, and the state is obligated to fulfil its obligations under constitutional sovereignty. Consequently, the government’s operations should be considered sovereign activities and not part of the industry definition whenever they carry out their tasks. The employees hired to carry out these constitutional mandates cannot be subject to industrial law since the definition of “industry” has been too expanded.

Even after more than 30 years have passed, the Bangalore case is still legally enforceable. Since then, several jurists have taken sides in the decision. However, the recent trend in cases suggests that the judgement has to be reviewed more often, notably to include the welfare function in the sovereign function. This is a question of policy that requires action by the government.

Regarding the theory of sovereignty’s applicability, it has been argued that the Bangalore case does not definitively state what constitutes a sovereign function, even when we ignore the under-inclusion problem. Multiple decisions are made in an attempt to decipher the criteria. Sovereign functions remain precarious due to the Bangalore water supply case’s exclusion of sovereign activities from the definition.

Even after more than 30 years have passed, the Bangalore case is still legally enforceable. Since then, several jurists have taken sides in the decision. However, the recent trend in cases suggests that the judgement has to be reviewed more often, notably to include the welfare function in the sovereign function. This is a question of policy that requires action by the government.

Regarding the theory of sovereignty’s applicability, it has been argued that the Bangalore case does not definitively state what constitutes a sovereign function, even when we ignore the under-inclusion problem. Multiple decisions are made to decipher the criteria since they are unclear. The decision did not provide workable criteria for a theory of sovereign function; hence, whether it concerns inalienable functions or constitutional activities remains unresolved. Since they are unclear. The decision did not provide workable criteria for a theory of sovereign function; hence, the question remains to be solved, and concerns about inalienable functions or constitutional activities still need to be solved.[8]

Conclusion

Finally, the most consequential changes in employment law occurred due to this case. Additionally, this case’s ruling expanded the definition of “industry”. The Supreme Court in the Bangalore Water Supply case unwittingly provided an extensive definition of “industry” and, by extension, included all liberal professions, including nonprofits, schools, and libraries. This is because an organization that did not set out to be an industry was subject to it each time the triple test’s various requirements were satisfied. Significant ramifications result from the ruling above by the Supreme Court. The dominant nature exam and the triple test will encompass almost all of the nation’s workforce. Institutions that serve a charitable or missionary purpose include hospitals, schools, and research centres. Previously excluded from the definition of “industry,” municipal corporations, chartered accountancy firms, legal firms, etc., are now encompassed.

In this situation, “industry” was defined more broadly to promote better employer-employee relations, industrial collaboration, and coordination. Also, to keep up with the needs of a society that is becoming more industrialized quickly. Because of the growing importance of industries to society’s smooth running, employers and workers must be able to work together in harmony. Disagreement between the two groups may have a devastating effect on businesses.

To ensure that all sectors are subject to the same laws and regulations and provide the public with easier access to the law, it was reasonable for the Court to decide that the Act must control some sectors. We get the impression that lawmakers devoted more energy than was necessary to this proposal. It took Parliament four years to change this definition, even though it might have been done sooner. Therefore, legislators could have done more to calm the storm over the definition of “industry.”

REFERENCES

  • Anubhav Khamroi, “A Critical Analysis of Bangalore Water Supply Decision” 8(1) Journal of Global Research and Analysis 73-77 (2019).
  • Kalpakam, “Meaning of Industry” 20(3) JSTOR 471-481 (1978).
  • Indranath Gupta, Recognition of the Rights of Domestic Workers in India 115-118 (Springer, 2019).
  • Bagchi, The Industrial Disputes Act, 1947 211-219 (Eastern Law House, 1977).

[1] Anubhav Khamroi, “A Critical Analysis of Bangalore Water Supply Decision” 8(1) Journal of Global Research and Analysis 73-77 (2019).

[2] (2005) 5 JT 170 (SC).

[3] P. Kalpakam, “Meaning of Industry” 20(3) JSTOR 471-481 (1978).

[4] Indranath Gupta, Recognition of the Rights of Domestic Workers in India 115-118 (Springer, 2019).

[5] K. Bagchi, The Industrial Disputes Act, 1947 211-219 (Eastern Law House, 1977).

[6] AIR 1996 SC 2898.

[7] 2001 (9) SCC 713.

[8] Ibid.

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