Full Judgment Text
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PETITIONER:
SECRETARY, MADRAS GYMKHANA CLUB EMPLOYEES’UNION
Vs.
RESPONDENT:
MANAGEMENT OF THE GYMKHANA CLUB
DATE OF JUDGMENT:
03/10/1967
BENCH:
HIDAYATULLAH, M.
BENCH:
HIDAYATULLAH, M.
BHARGAVA, VISHISHTHA
VAIDYIALINGAM, C.A.
CITATION:
1968 AIR 554 1968 SCR (1) 742
CITATOR INFO :
F 1969 SC 276 (8,6)
F 1970 SC1407 (5,6,7,8,10,13,18,20)
F 1970 SC1626 (29)
RF 1971 SC1259 (2)
RF 1971 SC2422 (19,25)
R 1972 SC 763 (10,11,12,14,16,TO,20)
R 1975 SC1639 (8)
RF 1975 SC2032 (2,4)
RF 1975 SC2260 (22)
F 1976 SC 145 (3,5,9,26,29,31)
O 1978 SC 548 (100,101,141,142,143,146,156,1
R 1988 SC1182 (6,13)
ACT:
Industrial Disputes Act (14 of 1947), s. 2(j)-’Industry’,
what is Meaning of the word ’undertaking’ in the definition
of ’industry--’Members’ Club, if industry.
HEADNOTE:
The respondent is a non-proprietary members’ 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 194 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%
In appeal to this Court.
Held: (1) The definitions of industrial dispute
’employer’ and ’workman’ show that an industrial dispute can
only arise in relation to an ’industry’. The definition of
’industry’ is in two parts, the first, from the point of
view of employers and the second, from the angle of
employees. In its first part it means any ’trade, business,
undertaking, manufacture or calling of employers’. This
part determines an industry by reference to occupation of
employers in respect of those activities specified by the
five words and they determine what an ’industry’ is, and
what the cognate expression ’industrial’ is intended to
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convey. But the second part standing alone cannot define
’industry’. If the existence of an industry viewed from the
angle of what the employer is doing is established, all who
render service and fall within the definition of ’workman’
come within the fold of industry’ irrespective of what they
do. Thus, the cardinal test is to find out whether there is
an industry according to the denotation of the word in the
first part. [753 A-754 H].
Taking the words in the definition of ’industry’ the word
’trade’ means exchange of goods for goods or goods for
money, or, any business carried on with a view to profit,
whether manual or mercantile as distinguished from the
liberal arts or learned professions and from agriculture.
The word ’business’ means an enterprise which is an
occupation as distinguished from pleasure. and ’manufacture’
is a kind of productive industry in which the making of
articles or material, often on a large scale, is by physical
labour or mechanical power. The word ’calling’ denotes the
following of a profession or trade. [756 F-H].
The word ’undertaking’ has figured in the cases of this
Court. In D. N. Banerjee v. P. R. Mukherjee, [1953] S.C.R.
302 it was observed that the word is not to be interpreted
by association with the words that precede or follow it in
the definition of ’industry’. But the settled view of this
Court is: that primarily industrial disputes occur, when the
operation undertaken rests upon cooperation between
employers and employees with a view to production and dis-
tribution of material goods, in other words, wealth, but
they may
743
arise also in cages where the cooperation is to produce
material services. For an ’undertaking’ to be an industry,
it is not necessary that it must be carried on with capital
by private enterprise or that it must be commercial or
result in profit but there must be systematic activity and
it must be analogous to the carrying on of a trade or
business involving co-operation between employers and em-
ployees. But every human activity in which the relationship
of employers and employees enters, is not necessarily
creative of an industry. Personal services rendered by
domestic and other servants, administrative services of
public officials-. services in aid of occupations of
professional men such as doctors and lawyers etc., employ-
ment of teachers and so on, may result in relationships in
which there are employers on the one side and employees on
the other, but they have been excluded because they do not
come within the connotation of the term ’industry’ as the
service rendered is not a material service. Therefore, the
word ’undertaking’, though elastic, must take its colour
from other expressions used in the definition of ’industry’,
and must be defined as any business or any work or project
resulting in material goods or material services and which
one engages in or attempts as an enterprise analogous to
business or trade. L740 D; 756 D-F; 758 D-E; 757 B-C; 758
B-C].
In the present case, the activity of the club is conducted
with the aid of employees who follow callings or avocations.
But taking the first part of the definition and the
essential character of the club, the activity of the club
cannot be described as a ’trade’ business or manufacture’
and the running of clubs is not the ’calling’ of the respon-
dent club or its managing committee. Also, the club has no
existence apart from its members. It exists for its members
though occasionally strangers also take benefit from its
services. Even with the admission of guests, the club
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remains a members’ self-serving institution. Though the
material needs or wants of a section of the community is
catered for it is not done as part of trade or business or
as an undertaking analogous to trade or business.
Therefore, the Tribunal was right in holding that the
respondent club was not an industry. [760 A-H].
Baroda Borough Municipality v. Workmen (1957) 1 L.L.J. 8,
referred to
Observations contra in Bengal Club Ltd. v. Shantiranjan Som-
maddar & Anr. A.I.R. 1956 Cal. 545 and Royal Calcutta Golf
Mazdoor Union v. State of West Bengal, A.I.R. 1956 Cal. 550,
disapproved.
(2) The case of State of Bombay v. Hospital Mazdoor Sabha,
[1960] 2 S.C.R. 866--in so far as it relied on the test,
namely; could the activity be carried on by a private
individual or group of individuals for the purpose of
holding that running a Government hospital was an industry-
must be held. to have taken an extreme view of what is an
industry. This test is not enlightening because, there is
hardly any activity which private enterprise cannot carry
on. [751 D-E; 761 A; 750 E-F].
(3) In Corporation of City of Nagpur v. Employees. [1960],
2 S.C.R. 942 this Court relied upon the same test with an
unfortunate result. The Court held that the municipal
functions of the Corporation, including running a primary
school, were covered by the words ’trade and business’ in
C.P. & Berar Industrial Disputer. Settlement Act, 1947,
since those functions were not regal, the activity was
organised, service was rendered, and the functions could not
be performed by an individual or firm for remuneration,
while, in University of Delhi v. Ramnath [1964] 2 S.C.R.
703, this Court held that educational institutions were not
’industry’. [750 B-G; 758 A-B].
744
(4) The fresh test laid down in Ahmedabad Textile Industry
Research Association v. State of Bombay, [1961] 2 S.C.R. 480
that, to be an ’industry’, the employees therein must not
share in the product of their labour cannot be regarded as
universal, because, there are occasions when the workmen
receive a share of the produce as part of their wages or as
bonus or as a benefit. [759 C].
(5) The additional test laid down in National Union of
Commercial Employees v. Meher (The Solicitor case) [1962]
Supp. 3 S.C.R. 157, that, to be an ’industry’ the
association of capital and labour must be direct and
essential cannot also be regarded as universal because, what
partnership can exist between the Board of Directors of a
Company on the one hand and the menial staff employed to
sweep floors on the other? [753 A].
(6) In Harinagar Cane Farm v. State of Bihar, [1964] 2
S.C.R 458 and in the University case this Court observed
that it must refrain from laying down unduly broad or
categorical propositions. But the attempt to avoid
generalizations his one disadvantage, because, taking each
operation by itself and determining on the basis of facts
whether it is an industry without attempting to pin point
whether it is a ’business, or a trade, or an undertaking or
manufacture, or calling of employers’ is to ignore the
guidance afforded by the sta tute through its dictionary and
to rely upon decisions dealing with the problem without a
definition. [755 H; 756 A-C].
JUDGMENT:
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 572 of 1966.
Appeal by special leave from the Award dated September
2, 1964 of the Industrial Tribunal, Madras in industrial
Dispute No. 19 of 1964.
B. R. Dolai, E. C. Agarwala, Champat Rai, Kartar Singh
Suri, Ambrish Kumar and P.C. Agrawala, for the appellant.
H. R. Gokhale, M.R. Narayanaswamy Iyer and R. Ganapathy
Iyer, for the respondent.
The Judgment of the Court was delivered by
Hidayatullah, J.-The Industrial Tribunal, Madras by its
award, September 2, 1964, has held that the management of
the Gymkhana Club, Madras is not liable to pay bonus to its
workmen for the year 1962 as the Club is not ’an industry’.
The Madras Gymkhana Club Employees Union now appeals to this
Court by special leave.
The Madras Gymkhana Club is admittedly a members’ club and
not a proprietary club, On December 31, 1962 its membership
was about 1200 with 800 active members. The object of the
club is to provide a venue for sports and games and
facilities for recreation and entertainment. For the
former, it maintains a golf course, tennis courts, rugby and
football grounds and has made arrangement for billiards,
pingpong and other indoor games. As part of the latter
activities it arranges dance, dinner and other parties and
runs a catering department, which provides and refreshments
not
745
only generally but also for dinners and parties on special
occasions. The club employs six officers (a Secretary, a
Superintendent and four Accountants and Cashiers), twenty
clerks and a large number of peons, stewards, butlers, gate-
attendants, etc. Its catering department has a separate
managerial, clerical and other staff. Altogether there are
194 employees. The affairs of the club are managed by a
Committee,elected annually. Two of the members of the
Committee work as Hony. Secretary and Hony. Treasurer res-
pectively.
The membership of the club is varied. There are resident
members, non-resident members, temporary members, garrison
members, independent lady members, etc. The resident
members pay an entrance fee of Rs. 300 and Rs. 20 per month
as subscription. Garrison members and independent lady
members do not pay any entrance fee and their subscription
is Rs. 10 per month. Guests, both local and from outside,
are admitted ’subject to certain restrictions as to the
number of days on which they can, be invited to the club.
The club runs tournaments for the benefit of members and for
exhibition to non-members. The income and expenditure of
the club are of the order of four and a quarter lakh rupees,
its movable and immovable properties are worth several lakh
rupees and its wage bill is between one and two lakh rupees.
The question in this appeal is whether the respondent club
can be said to be an industry for the application of the
Industrial Disputes Act, 1947. The Tribunal, after
considering many decisions rendered by this Court and also
by the High Courts in India, came to the conclusion that the
club was not an industry and the claim for bonus on behalf
of its employees was therefore unsustainable. The appellant
union contends that the decision of the Tribunal is not
correct and that the club must be treated as an industry for
the application of the Act.
As we are concerned primarily with the question whether the
club comes within the definition of ’industry’ as given in
the Industrial Disputes Act, we may begin by reading that
definition and other provisions which have a bearing upon
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the question. The Industrial Disputes Act was passed to
make provision for the investigation and settlement of
industrial disputes and for certain other purposes appearing
in the Act.The emphasis in the Act is primarily upon the
investigation and settlement of industrial disputes. The
expression "industrial despute" is defined by s. 2(k) as
follows:
"industrial dispute" means any dispute or
difference between employers and employers or,
between employers and workmen, or between
workmen and workmen, which is connected with
the employment or non-employment or the terms
of employment or with the conditions of
labour, of any person".
746
A "Industry" is defined in cl. (j) as
follows:-
"industry" means any business, trade,
undertaking, manufacture or calling of
employers and includes any calling,
service, employment, handicraft, or industrial
occupation or avocation of workmen".
The word "employer" is defined by cl. (g) of
the section as:
"employer means-
(i) in relation to an industry carried on by
or under the authority of any department of
the Central Government or a State Government,
the authority prescribed in this behalf, or
where no authority is prescribed, the head of
the department-,
(ii) in relation to any industry carried on
by or on behalf of a local authority, the
chief executive officer ’of that authority;"
"Workman" is defined by cl. (s) of the section
and
" means any person (including an apprentice)
employed in any industry to do any skilled or
unskilled manual supervisory, technical or
clerical, work for hire Cr reward. whether the
terms of employment be expressed or implied,
and for the purpose of any proceeding under
this Act in relation to an industrial dispute,
includes any person who has been dismissed,
discharged Or retrenched in connection with,
or as a consequence of, that dispute, or whose
dismissal, discharge or retrenchment has led
to that dispute, but does not include any such
person-
(i) who is subject to the Army Act 1950, or
the Air Force Act, 1950, or the Navy
(Discipline) Act, 1934: or
(ii) who is employed in the police service or
as an officer or other employee of a prison;
or
(iii) who is employed mainly in a managerial
or administrative capacity; or
(iv) who, being employed in a supervisor--
capacity, draws wages exceeding five hundred
rupees per mensem or exercises, either by the
nature of the duties attached to the office or
by reason of the powers vested in him,
functions mainly of a managerial nature."
These definitions have been before this Court on many occa-
sions and we have reached a point when one can say that at
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least some attributes of "industry" and "industrial
disputes" may be taken as well-established. These cases
concerned such diverse institutions and establishments as
municipalities, hospitals, solicitor’s
747
firm and university. Any enquiry to determine the
application of the definitions to new establishments cannot
overlook the settled view. We find it convenient to say a
few words about the earlier decisions of this Court, before
embarking upon an analysis of the definitions in relation to
a members’ club.
The earliest case in this Court involved a dispute between a
Municipality and its employees (D.N. Banerjee v. P.R.
Mukherjee & Ors.)(1). The Municipality wag held to be an
industry and the dispute was held to be an industrial
dispute. This Court observes that the non-technical or
ordinary meaning of ’industry’ is "an undertaking where
capital and labour co-operate with each other for the
purpose of producing wealth in the shape of goods, machines,
tools, etc." and for making profits, and an industry in this
sense includes agriculture, horticulture etc. The Court
points out that this is too wide and that every aspect of
employer-employee connection does not result in an industry.
Holding, however, that municipal activity cannot be truly
regarded as business or trade, this Court considers whether
it can be an ’undertaking’. The suggestion that the word
’undertaking’ takes its colour from the other four words in
the first part of the definition is not accepted. It is
said that this interpretation renders the word superfluous
and the latter part of the definition unnecessary.
Therefore, this Court includes non-profit undertakings in
the concept of industry even if there is no private
enterprise. Referring to the inclusion of public utility
services in the scheme of the Act it is held that a dispute
in a public utility service is an industrial dispute, and
the fact that the enterprise is financed by taxation and not
by capital is considered irrelevant. In formulating these
dicta the Court is obviously influenced by the analysis of
an industrial dispute by Isaacs and Rich. JJ. in Federated
Municipal & Shire Council Employees of Australia v.
Melbourne Corporation(2).
"Industrial disputes occur when, in relation
to operations in which capital and labour ate
contributed in co-operation for the
satisfaction of human wants and desires, those
engaged in cooperation dispute as to the basis
to be observed, by the parties engaged,
respecting either a share of the produce or
any other terms and conditions of their
cooperation. The question of profit making may
be important from an income-tax point of view,
as in many municipal cases in England; but.
from an industrial dispute point of view, it
cannot matter whether the expenditure is met
by fares from passengers or from rates."
In the second case (Baroda Borough Municipality v. Work-
men(3) a claim for bonus by municipal employees was rejected
on
(1) [1953] S.C R. 302.
(2) 26 C.L.R. 508.
(3) [1957] 1 L.L.J. 8.
748
the ground that the bonus formula was inapplicable. The
Court, however, went on to observe:
"It is now finally settled by the decision of
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this Court in 1953 S.C.R. 302, that a
municipal undertaking of the nature we have
under consideration is an "industry" within
the meaning of the word in S. 2(j) of the
Industrial Disputes Act and that the
expression "industrial dispute" in that Act
includes disputes between the municipality and
their employees in branches of work that can
be regarded as analogous’to the carrying on of
a trade or business."
(emphasis added).
These two cases lay down that for an activity to be an in-
dustry it is not necessary that it must be carried on by
private enterprise or must be commercial or result in
profit. It is sufficient if the activity is analogous to
the carrying on of a trade or business and involves
cooperation between employers and employees. This result is
reached by extending the meaning of ’undertaking’ to cover
adventures, not strictly trade or business but objects very
similar.
The definition of ’employer’ in our Act clearly shows that a
local authority may become an employer if it carries on an
industry. This means that a municipality, ’if it indulges
in an activity which may be properly described as industry,
may be involved in an industrial dispute. Local bodies are
primarily subordinate branches of governmental activity.
They function for public purposes but some of their
activities may come within the calling of employers although
the municipalities may not be trading corporations. Local
authorities take away part of the affairs of Government in
local areas and they exercise the powers of regulation and
subordinate taxation. They are’ political sub-divisions and
agencies for the exercise of governmental functions. But if
they indulge in municipal trading or business or have to
assume the calling of employers they are employers whether
they carry on or not business commercially for purposes of
gain or profit.
The activity of the municipality in the first two cases was
not attempted to be brought within the expressions business
and trade. The term ’undertaking’ was held to cover it. In
the third case (Corporation of City of Nagpur v. Employees
(1) the need to consider ’trade and, business’ arose
directly. The question then was whether and to what extent
the Corporation of Nagpur was an industry under the C.P. &
Berar Industrial Disputes Settlement Act, 1947 That Act
included a definition of industry which was different. It
included
"(a) any business, trade manufacturing or mining undertaking
or calling of employers
(1) [1960] 2 S.C.R. 942.
749
(b) any calling, service, employment, handicraft or indus-
trial occupation or avocation of employees and
(c) any branch of an industry or a group of industries."
In this definition the qualifying words ’manufacturing or
mining’ limited the word ’undertaking’ and it could not be
given the wide meaning given earlier. This Court did not
attempt to bring municipal activity within the word
’undertaking’ but brought it within the expression ’trade
and business’. The Court observed that there was nothing in
the earlier cases to show that a municipal activity was held
excluded, from those words. As a matter of fact it did (see
p. 308). Of course, there was nothing to show that this
Court on the earlier two occasions thought it even remotely
possible. In the Nagpur Corporation’s(1) case the Court
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proceeded to consider whether a corporation could be
legitimately said to be carrying on business or trade or
calling. It found the definition to be "very clear" and
"not susceptible of any ambiguity", and observed that all
the words were very wide and that even if the meaning could
be cut down by the aims and objects of the C.P. & Berar Act
as disclosed in the preamble, the main object, namely,
social justice demanded a wide meaning. The Court
distinguished between (a) regal and (b) municipal functions
of the corporation and found the latter analogous to
business or trade because they were not regal and the
activity was organised and service was rendered. To
distinguish between a regal function and a, municipal
function the test applied was: Can the service be performed
by an individual or firm for remuneration? This test was
not applied in one later case but is not enlightening
because there is hardly any activity which private
enterprise cannot carry on. As Mr. Gomme in his Principles
of Local Government (1897) observes: "Any municipal service
can be made to pay dividends on private capital if only the
means of levying a revenue are granted to private owners."
Even war can be financed and waged by commercial houses.
They manufacture ammunition and war equipment and can carry
on war with mercenaries. Even the infra-structures of Adam
Smith can be provided by private enterprise. The East India
Company did both. It is not a little surprising that except
in one case in which there is a passing reference to it, the
Corporation of City of Nagpur case(1) has not been referred
to in the later cases of this Court.
The later cases of this Court view the matter a little
differently and formulate further tests. Of the tests, the
first is that the activity must be organised as business or
trade is ordinarily organised. This is to be taken with the
earlier test that ’undertaking’ must be analogous to
business, trade or calling. It will be seen that these do
not widen the meaning of ’undertaking’ but tend to narrow
it. The second is that the activity need not necessarily be
preceded by procurement of capital in the business sense nor
must
(1) [1960] 2 S.C.R. 942.
750
profit be a motive. So long as relationship of employer and
workmen is established with a view to production of material
goods or material services, the activity must be regarded as
an undertaking analogous to trade or business. We shall now
review the cases in which these tests are established’.
In the State of Bombay v. Hospital Mazdoor Sabha(1) it is
held that a hospital run by government is included in the
definition of ’industry’. It is recognised that the first
part of the definition contains the statutory meaning and
the second part means "an enlargement of it by including
other items of industry". As a matter of fact these are not
other items of industry but aspects of occupation of
employees which are intended to be an integral part of an
industry for purposes of industrial disputes. It is,
however, recognised in the case that a line must be drawn to
exclude some callings, services and undertakings. It is
hold that domestic, personal or casual services are not
included and examples are given of such services. The
meaning of industry a,,, ‘ an economic activity’ involving
investment of capital and systematically carried on for
profit for the production or sale of goods by the employment
of labour is again discarded because profit motive and
investment of capital are considered unessential. Another
test reaffirmed is to enquire ’can such activity be carried
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on by private individual or group of individuals? Answering
that a hospital can be run by a private party for profit, it
is held that a hospital is an industry even if it is run by
Government without profit. Who conducts the activity or
whether it is for profit, are considered irrelevant
questions. It is, however, again emphasised that an under-
taking to be an industry must be analogous to trade or
business. It is, therefore, laid down that an activity
systematically or habitually undertaken for the production
or distribution of goods or for rendering material services
to the community at large or a part of such community with
the-help of employees is an undertaking. In this way, the
connection between trade and business on the one hand and
undertaking on the other is established which seems to
indicate that the expression ’undertaking’ must take its
colour from the other expressions. An industry is thus said
to involve cooperation between employer and employees for
the object of satisfying material human needs but not for
oneself nor for pleasure nor necessarily for profit. These
dicta are based on the observations of Isaacs, J. quoted
earlier and in a later case (The Federated State School
Teachers’ Association of Australia v. The State of Victoria
and Others(2).
In the next case Ahmedabad Textile Industry Research As-
sociation v. State of Bombay(3) the question was whether an
Association for research maintained by the textile industry
and employing technical and other staff was industry. The
case repeated the tests stated in the Hospital(1) case and
applied them. It was held
(1) [1960] 2 S.C.R. 866. (2) 41 C.L.R. 569.
(3) [1961] 2 S.C.R. 480.
751
that the Association was providing material services to a
part of the community, was carried on with the help of
employees, was organised in a manner in which trade or
business is organised and there was co-operation between
employers and employees. For the first time a fresh test
was added that as the employees had no rights in the results
of their labour or in the nature of business and trade the
partnership is only association between the employer and
employee.
However, in the next case of National Union of Commercial
Employees v. M. R. Meher(1) where the employees of a firm of
solicitors demanded bonus and the case satisfied the tests
so far enumerated, a new test was added that the association
of capital and labour must be direct and essential. The
service of a solicitor was regarded as individual depending
upon his personal qualifications and ability, to which the
employees did not contribute directly or essentially. Their
contribution, it was held, bad no direct or essential nexus
with the advice or services. In this way learned profes-
sions were excluded.
In the next two cases the difficulty of laying down tests
from case to case was felt. In Harinagar Cane Farm v. The
Stale of Bihar(2) a cane farm was purchased by a sugar
factory and worked As a department for supply of sugar cane.
The agricultural operations were held to be an industry on
the facts but it was held that agriculture under all
circumstances could not be called an industry. This Court
reversed its method of looking for the tests from other
cases and referred to them only after it had reached its
conclusion observing that the Court must refrain from laying
down unduly broad or categorical propositions.
In the next case (University of Delhi and Anr. v. Ramnath(3)
the question was whether bus drivers employed by the
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University were workmen. The concept of service was
narrowed and it was held that the educational institutions
were not an industry. Their aim was education and the
teachers’ profession was not to be assimilated to industrial
workers. This Court again stated that it must not be
understood as laying down a general proposition.
The changes made in the meaning of the expressions used in
the definition of industry in the Act, disclose a
procrustean approach to the problem. The words must mean
something definite, but some of the tests were found
unsatisfactory to cover new cases as the creation of new
tests clearly shows. For example, the emphasis resulting
from the extension of the definition in its latter part to
include services of employees, received little recognition
in the later cases. Too much insistence upon partnership
between employers and employees is evident in the
Solicitor’s(1) case and
(1) [1962] Supp. 3 S.C.R. 157.
(2) [1964] 2 S.C.R. 458.
(3) [1964] 2 S.C.R. 703.
752
too little in the Association(1) case. And yet it is
impossible to think that this test is universal. What
partnership can exist between the Company and/or Board of
Directors on the one hand and the menial staff employed to
sweep floors on the other? What direct and essential nexus
is there between such employees and production? This proves
that what must be established is the existence of an
industry viewed from the angle of what the employer is doing
and if the definition from the angle of the employer’s
occupation is satisfied, all who render service and fall
within the definition of workman come within the fold of
industry irrespective of what they do. There is then no
need to establish a partnership as such in the production of
material goods or material services. Each person doing his
appointed task in an Organisation will be a part of the
industry whether he, attends to a loom or merely polishes
door handles. The fact of employment as envisaged in the
second part is enough provided there is an industry and the
employee is a workman. The learned professions are not
industry not because there is absence of such partnership
but because viewed from the angle of the employer’s
occupation, they do. not satisfy the test. A solicitor
earns his livelihood by his own efforts. If his work
requires him to take help from menials and other employees
who carry out certain assigned duties, the character of the
solicitor’s work is not altered. What matters is not the
nexus between the employee and the product of the employer’s
efforts but the nature of the employer’s occupation. If his
work cannot be described as an industry his workmen are not
industrial workmen and the disputes arising between them are
not industrial disputes. The cardinal test is thus to find
out whether there is an industry according to the denotation
of the word in the first part. The second part will then
show what will be included from the angle of employees. We
shall now apply this approach to the definition in the light
of the earlier decisions of this Court in so, far as they
are consistent and then determine whether the club in this
case can come within the meaning of ’industry’ as determined
by us.
The definitions have been set out by us earlier in this
judgment. The definitions are inter-related and are
obviously knit together. Stated broadly the definition of
’industrial dispute’ contains two limitations. Firstly, the
adjective Industrial’ relates the dispute to an industry as
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defined in the Act and, secondly, the definition expressly
states that not disputes and differences of an sorts but
only those which bear upon the relationship of employers and
workmen and the terms of employment and conditions of labour
are contemplated. As such dispute may arise between
different parties, the Act equally contemplates disputes
between employers and employers or between employers and
workmen or between workmen and workmen. The definition of
the expression ’industrial dispute’ further shows that
certain disputes can never be considered under the Act. For
example, disputes between Government
(1) [1961] 2 S.C.R. 480.
753
and an industrial establishment or between workmen and non-
workmen are not the kind of disputes of which the Act take
notice.
The word ’employer’ is not specifically defined but merely
indicates who is to be considered an employer for purposes
of an industry carried on by or under authority of a
department of Government and by or on behalf of a local
authority. This definition gives little assistance because
it is intended to operate in relation to an activity
properly describable as an industry and this takes one back
to the definition of ’industry’. The definition of
’workman’ is a little better. Although it again refers one
back to an industry, it gives some guidance. Workman means
any person employed to do skilled or unskilled manual,
supervisory, technical or clerical work for hire or reward.
The expression, however, does not include persons employed
in some named services of Government. Even in an industry
those employed mainly: in a managerial or administrative
capacity and supervisors drawing more than live hundred
rupees as wages or exercising functions mainly of a
managerial nature, are also to be left out of the
definition. In this way the general nature of the dispute,
the parties to the dispute and the contents of the dispute
are, therefore, reasonably clear. A dispute must however be
an industrial dispute or, as the several definitions already
noticed say, must arise in relation to an industry. This is
where the difficulty begins because the statutory definition
of ’industry’ has led to some divergence of views in the
Labour Tribunals, the High Courts and even in this Court.
The definition of ’industry’ is in two parts. In its first
part it means any business, trade, undertaking, manufacture
or calling of employers. This part of the definition:
determines an industry by reference to occupation of
employers in respect of certain activities. These
activities are specified by five words and they determine
what an industry is and what the cognate expression ’indus-
trial’ is intended to convey. This is the denotation of the
term or what the word denotes. We shall presently discuss
what the words "business, trade, undertaking manufacture or
calling". comprehend. The second part views the matter from
the angle of employees and is designed to include something
more in what the term primarily denotes. By the second part
of the definition any calling, service, employment,
handicraft or industrial occupation or avocation of workmen
is included in the concept of industry. This part gives the
extended connotation. If the activity can be described as
an industry with reference to the occupation of the
employers, the ambit of the industry, under the force of the
second part, takes in the different kinds of activity of the
employees mentioned in the second part. But the second part
standing alone cannot define ’industry’. An industry is not
to be found in every case of employment or service. An
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individual who employs a cook gets service from his employee
whose avocation is to serve as a cook but as the activity of
the individual is neither business, nor trade, nor an
754
undertaking, nor manufacture, nor calling of an employer,
there is no industry. By the inclusive part of the
definition tile labour force employed in an industry is made
an integral part of the industry for purposes of industrial
disputes although industry is ordinarily something which
employers create or undertake.
The definitions in the Industrial Disputes Act are borrowed
from other statutes. The definition of ’industrial dispute’
is taken from an Act of 1906 (6 Edw. VII c. 47) and
slightly modified. There the definition ran-
" any dispute between employers and workmen,
which is connected with the employment, or
non-employment, or the terms of the employment
or with the conditions of labour, of any
person".
Our definition only adds to the list of
disputes one between employers and employers.
Similarly, the latter part of the definition
of ’industry’ which has caused us some trouble
is taken from s. 4 of the Commonwealth
Conciliation and Arbitration Act which inclu-
des in the concept of industry--
" any calling, service, employment, handicraft
or industrial occupation or avocation of
employers on land and water."
Decisions rendered on these definitions (and
some others very similar) have naurtally
influenced opinion-making in this Court. The
Australian cases in particular have been
subrosa all the time. The difficulty in using
Australian cases with a text-book approach is
perhaps not quite noticed. The term
’industrial dispute’ which the Australian High
Court was defining was from s. 51(XXXV) of the
Constitution Act. There was no definition of
the expression and it was recognised that the
common understanding of that expression was
not what was meant but something different.
In a great body of cases the problem presented
its many facets and the approach was
pragmatic. Higgins, J. in, 26 Com. L. R.
cautioned against giving a crystallised
meaning to the expression. He observed:
"It is not necessary--or, as I think,
desirable-that we should, in answering the
specific question asked of us, commit
ourselves to a final, exhaustive definition of
a popular phrase as that in question." (p.
574).
In the Harinagar Cane Farm(1) and the
University(2) cases this Court also made a
similar observation. In the former it was
observed:
"We have referred to these decisions only to
emphasise the point that this Court has
consistently refrained from laying down unduly
broad or categorical propositions...".
(1) [1964] 2 S.C.R. 458
(2) 2 S.C.R, 703.
755
The attempt to avoid generalisations (however commendable)
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has one disadvantage. In Australia the Courts were dealing
with, the problem without a definition and thought that they
should move cautiously to avoid hardening any particular
view too far. We have all the terms except ’employer’
defined by the statute. Our task is to give meanings to the
words which are intended to lay down the full connotation.
Taking each operation by itself and determining on the basis
of facts whether it is an industry without attempting to
pin-point whether it is a business, or a trade, or an
undertaking, or manufacture. or calling of employers, is to
ignore somewhat the guidance afforded by the statute through
its own dictionary. Therefore, while we accept the views
expressed uniformly we think any view which seems
contradicted by later decisions because it was unrelated to
the words of the definitions should not be allowed to
harden. We also take the opportunity of relying a little
more on the guidance from the Act.
The principles so far settled come to this. Every human
activity in which enters the relationship of employers and
employees, is not necessarily creative of an industry.
Personal services rendered by domestic and other servants,
administrative services of public officials, service in aid
of occupations of professional men, such as doctors and
lawyers, etc. employment of teachers and so on may result in
relationships in which there are employers on the one side
and employees on the other but they must be excluded because
they do not come within the denotation of the term ’in-
dustry’. Primarily, therefore, industrial disputes occur
when the operation undertaken rests upon cooperation between
employers and employees with a view to production and
distribution of material goods, in other words, wealth, but
they may arise also in cases where the cooperation is to
produce material services. The normal cases are those in
which the production or distribution is of material goods or
wealth and they will fall within the expressions trade,
business and manufacture. The word ’trade’ in this context
bears the meaning which may be taken from Halsbury’s Laws of
England, Third Edn. Vol. 38 p. 8-
(a) exchange of goods for goods or goods for money;
(b) any business carried on with a view to profit, whether
manual, or mercantile, as distinguished from the liberal
arts or learned professions and from agriculture;
and business means an enterprise which is an occupation as
distinguished from pleasure. Manufacture is a kind of
productive industry in which the making of articles or
material (often on a large scale) is by physical labour or
mechanical power. Calling denotes the following of a
profession or trade.
These words have a clear signification and are intended to
lay down definite tests. Therefore the principal question
(and the only
756
legitimate method) is to see where under the several
categories mentioned, a particular venture can be brought.
Of these categories ’undertaking’ is the most elastic.
According to Webster’s dictionary, ’undertaking’ means
’anything undertaken or ’any business, work or project which
one engages in or attempts, as an enterprise’. It is this
category which has figured in the cases of this Court. It
may be stated that this Court began by stating in Banerji’s
case(2) that the word ’undertaking’ is not to be interpreted
by association with the words that precede or follow it, but
after the Solicitor’s(2) and the University(3) cases, it is
obvious that liberal arts and learned professions,
educational undertakings and professional services dependent
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on the personal qualifications and ability of the donor of
services are not included. Although business may result in
service the service is not regarded as material. That is
how the service of a Solicitor firm is distinguished from
the service of a building corporation. Otherwise what is
the difference between the services of a typist in a factory
and those of another typist in a Solicitor’s office or the
service of a bus driver in a municipality and of a bus
driver in a University? The only visible difference is that
in the one case the operation is a part of a commercial
establishment producing material goods or material services
and in the other there is a non-commercial undertaking. The
distinction of an essential or direct connection does not
appear to be so strong as the distinction that in the one
case the result is the production of material goods or
services and in the other not.
It is, therefore, clear that before the work engaged it can
be described as an industry, it must bear the definite
character of ’trade’ or ’business’ or ’manufacture’ or
’calling’ or must be capable of being described as an
undertaking resulting in material goods or material
services. Now in the application of the Act, the
undertaking may be an enterprise of a private individual or
individuals. On the other hand, it may not. It is not
necessary that the employer must always be a private
individual who carries on the operation with his own capital
and with a view to his own profit. The Act in terms
contemplates cases of industrial disputes where the
Government or a local authority or a public utility service
may be the employer. The expansion of Governmental or
municipal activity in fields of productive industry is a
feature of all developing welfare states. This is
considered necessary because it leads to welfare without
exploitation of workmen and makes the production of material
goods and services cheaper by eliminating profits.
Government and local authorities act as individuals do and
the policy of the Act is to put Government and local
authorities on a par with private individuals. But
Government
(1) [1953] S.C.R. 302.
(2) [1962] Supp. 3 S.C.R. 157.
(3) [1964] 2 S.C.R. 703.
757
cannot be regarded as an employer within the Act if the
operations are governmental or administrative in character.
The local authorities also cannot be regarded as industry
unless they produce material goods or render material
services and do not share by delegation in governmental
functions or functions incidental thereto. There is no
essential difference between educational institutions run by
municipalities and those run by universities. And yet a
distinction is sought to be made on the dichotomy or regal
and municipal functions. Therefore, the word ’undertaking’
must be defined as "any business or any work or project
which one engages in orattempts as an enterprise analogous
to business or trade." This is the test laid down in
Banerji’s case(1) and followed in the Baroda Borough
Municipality case(2). Its extension in the Corporation
case(3) was unfortunate and contradicted the earlier cases.
Next where the activity is to be considered as an industry,
it must not be casual but must be distinctly systematic.
The work for which labour of workmen is required, must be
productive and the workmen must be following an employment,
calling or industrial avocation. The salient fact in this
context is that the workmen are not their own masters but
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render service at the behest of masters. This follows from
the second part of the definition of industry. Then again
when private individuals are the employers, the industry is
run with capital and with a view to profits. These two
circumstances may not exist when Government or a local au-
thority enter upon business, trade. manufacture or an
undertaking analogous to trade.
The labour force includes not only manual or technical work-
men but also those whose services are necessary or
considered ancillary to the productive labour of others but
does not include any one who, in an industrial sense, will
be regarded, by reason of his employment or duties. as
ranged on the side of the employers. Such are persons
working in a managerial capacity or highly paid supervisors.
Further the words are ’industrial dispute’ and not ’trade
dispute’. Trade is only one aspect of industrial activity;
business and manufacture are two others. The word also is
not industry in the abstract which means diligence or
assiduity in any task or effort but a branch of productive
labour. ’This requires cooperation in some form between
employers and workmen and the result is directly the product
of this association but not necessarily commercial. The
expressions ’terms of employment’ and ’Conditions of labour’
indicate the kind of conflict between those engaged in in-
dustry on opposite but cooperating sides. These words take
in dispute as to the share in which the receipts in a
commercial venture
(1) [1953] S.C.R. 302.
(2) [1957] 1 L.L.J. 8.
(3) [1960] 2 S.C.R. 942.
L/P(N)78CI---9(a)
758
shall be divided and generally cover hours of work and rest,
recognition of representative bodies of workmen, payment for
piece work, wage ordinary and overtime, benefits, holidays,
etc. The definition takes in disputes between employees and
employees such as demarcation disputes and disputes between
employers and employers such as wage warfare in an area
where labour is scarce and disputes of a like character.
The whole paraphernalia of settlement, conciliation,
arbitration (voluntary as well as compulsory) agreements,
awards etc. shows that human labour has value beyond what
the wages represent and therefore is entitled to
corresponding ’rights in an industry and employers must give
them their due. Industry is the nexus between employers and
employees and it is this nexus which brings two distinct
bodies together to produce a result. We do not think that
the test that the workmen must not share in the product of
their labours adopted in one case can be regarded as
universal. There may be occasions when the workmen may
receive a share of the produce either as part of their wages
or as bonus or as a benefit.
This ends discussion of what is an industry. We are now in
a position to consider whether the Madras Gymkhana Club
fulfills the tests laid down by this Court and accepted here
by us. in sup. port of the claim on behalf of the Employees
Union, our attention was drawn to two decisions of the
Calcutta High Court relating to the Bengal Club Ltd.(1) and
Royal Calcutta Golf Club(2). Both decisions are by a
learned single Judge. They were cases of incorporated
companies running clubs for profit and as business. There
are, however, observations which are clearly obiter, that
even a non-proprietary members’ club is an industry.
Founding itself on those observations the Union contends
that the club in the present case must also be treated as an
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industry. In fine the claim is based on the following
considerations
(a) that the club is organised as an industry is organised
on a vast scale with multifarious activities, (b) that
facilities of accommodation, catering, sale of alcoholic and
non-alcoholic beverages, games etc. are provided, (c) that
the club runs parties at which guests are freely entertained
and (d) that the club has established reciprocal
arrangements with other clubs for its members. In our
opinion none of these considerations is sufficient to
establish that the club is an industry within the Industrial
Disputes Act
We, cannot go by the size of the club or the largeness of
its membership or the number or extent of there activities.
We have to consider the essential character of the Club
activity in relation to the definition of industry. As we
said before, the definition is in two parts. The first part
which we called the denotation or the meaning of the word
shows what an industry really is and the
(1) A.I.R. 1956. Cal. 545. (2) A.I.R. Cal. 550.
759
second, part contains the extended connotation to indicate
who will be considered an integral part of the industry on
the side of employees. Beginning with the second part, it
may at once be conceded that the activity of the club is
conducted with the aid of employees who follow callings or
avocations. Therefore if the activity of the employers is
within the realm of industry, the answer must be in favour
of the Union. But the first part of the definition it may
also be said that the club does not follow a trade or
business. Its activity cannot be described as manufacture
and the running of clubs is not the calling of the members
or its managing committee. The only question is, is it an
undertaking?
Here the appearances are somewhat against the club. It is
not of any consequence that there is no profit motive
because that is considered immaterial. It is also true that
the affairs of the club are, organised in the way business
is organised. and that there is production of material and
other services and in a limited way production of material
goods mainly in the catering department. But these
circumstances are not truly representative in the case of
the club because the services are to the members themselves
for their own pleasure and amusement and the material goods
are for their consumption. In other words, the club exists
for its members. No doubt occasionally strangers also take
benefit from its services but they can only do so on
invitation of members. No one outside the list of members
has the advantage of these services as of right. Nor can
these privileges be bought. In fact they are available only
to members or through members.
If today the club were to stop entry of outsiders, no
essential change in its character vis-a-vis the members
would take place. In other words, the circumstance that
guests are admitted is irrelevant to determine if the club
is an industry. Even with the admission of guests being
open the club remains the same. that is to say, a member’s
self-serving institution. No doubt the material needs or
wants of a section of the community is catered for but that
is not enough. This must be done as part of trade or
business or as an undertaking anlogous to trade or business.
This element is completely missing in a members’ club.
It is contended that, although there is no incorporation as
such, the club has attained an existence distinct from its
members. It may be said that members come and members go
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but the club goes on for ever. That is true in a sense. We
are not concerned with members who go out. The club belongs
to members for the time being on its list of members and
that is what matters. Those members can deal with the club
as they like. Therefore, the club is identified with its
members at a given point of time. Thus it cannot be said
that the club has an existence apart from the members.
760
It is said that the case of the club is indistinguishable
from the Hospital(1) case. That case is one which may be
said to be on the verge. There are reasons to think that it
took the extreme view of an industry. We need not pause to
consider the Hospital(1) case because the case of a members’
club is beyond even the confines established by that case.
In our judgment the Madras Gymkhana Club being a members’
club is not an industry and the Tribunal was right in so
declaring.
The appeal fails and is dismissed but we make no order about
costs.
G. C. Appeal dismissed.
(1) [1960] 2 S.C.R. 866.
761