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PETITIONER: THE NATIONAL, UNION OF COMMERCIAL EMPLOYEES AND ANOTHER

       Vs.

RESPONDENT: M.   R. MEHER, INDUSTRIAL TRIBUNAL, BOMBAY AND OTHERS

DATE OF JUDGMENT: 13/02/1962

BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. SARKAR, A.K. WANCHOO, K.N.

CITATION:  1962 AIR 1080            1962 SCR  Supl. (3) 157  CITATOR INFO :  R          1964 SC 903  (13)  RF         1968 SC 554  (14)  R          1969 SC   9  (8)  R          1969 SC  63  (7)  R          1970 SC1407  (17)  R          1970 SC1453  (8)  R          1972 SC 763  (12)  F          1976 SC 145  (9)  O          1978 SC 548  (96,100,101,106,111,159,161)  R          1988 SC1182  (7)

ACT: Industrial Dispute-Solicitor’s profession-Work of solicitor, if  an  industry Dispute with employee-Reference  to  Tribu- nal--Competence-Industrial Disputes Act, 1947 (14 of  1947), s. 2 (j).

HEADNOTE: The  respondents  were  a  firm  carrying  on  the  work  of solicitors  in Bombay.  For the years 1956 and 1957 a  claim for bonus was made against them by their employees.  Before. the Industrial Tribunal to which the dispute was referred by the  State Government for adjudication under the  provisions of  the  Industrial  Disputes  Act,  1947,  the  respondents contended  that the profession followed by them was  not  an industry within the meaning of s. 2(j) of the Act, that  the dispute  raised against them was not an  industrial  dispute under  the Act, and that, therefore, the reference  made  by the Government was incompetent. Held, that the work of solicitors is not an industry  within the meaning of s. 2(j) of the Industrial Disputes Act, 1947, and that, therefore, any dispute raised by the employees of 158 the  solicitors against them cannot be made the  subject  of reference to the Industrial Tribunal. The  distinguishing feature of an industry is that  for  the production  of goods or for the rendering  of service,  co- operation between capital and labour or between the employer and  his  employee  must be direct.  A  person  following  a liberal  profession does not carry on his profession in  any intelligible  sense  with  the active  co-operation  of  his

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employees, and the principal, if not the sole, capital which he  brings  into his profession is his special  or  peculiar intellectual  and  educational equipment.   Consequently,  a liberal  profession like that of a solicitor is outside  the definition of "industry" under s. 2(j) of the Act. State  of  Bombay v. The Hospital Mazdoor  Sabha,  (1960)  2 S.C.R. 866, explained and distinguished. Brij Mohan Bagaria v. N.(,. Chatterjee, A.I.R.  1958  Cal. 460  and D. P. Dunderdele v. G. P. Mukherjee, A. 1. R.  1958 Cal. 465, approved.. Observations  in  Federated  Municipal  and  Shire   Council Employees’  Union  of Australia  v.  Melbourne  Corporation, (1919) 26 C.L.R. 508, relied on.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 24 of 1961. APPeal from the judgment and order dated November 20,  1958, of  the Bombay High Court in Special Civil  Application  No. 2789 of 1958. A.S. R. Chari and K. R. Choudhuri, for the appellants. S.T.  Desai, and V. J. Merchant, for respondents  Nos.  2 and  4  and  the Intervener  (The  Bombay  Incorporated  Law Society). 1962.  February 13, The Judgment of the Court was  delivered by GAJENDRAGADKAR,  J.-This  appeal  arises out  of  a  dispute between  the  appellants, the National Union  of  Commercial Employees & Anr, and the respondents Pereira, Fazalbhoy  and Desai  who  constitute  an  Attorneys’  firm  by  name  M/s. Pereira Fazalbhoy & Co. It appears that in August, 1957 159 the  appellant  wrote to the respondent firm  setting  forth certain  demands on behalf of its employees.  These  demands related  to  bonus for the years 195556 and 1956-57  and  to certain other matters.  As the parties could not agree,  the dispute  was  taken before the  Conciliation  Officer.   The Conciliation Officer also failed to bring about a settlement and so he submitted his failure report to the Government  of Bombay.   Thereafter,  the  State  Government  referred  the dispute  in regard to the bonus for the two years  1956  and 1957  for adjudication before an Industrial  tribunal  under section  12(5)  of the Industrial Disputes Act  (No.  14  of 1947)  (hereinafter called the Act).  Before  the  Tribunal, the respondents raised a preliminary objection.  They  urged that  the  profession followed by them was not  an  industry within  the  meaning of the Act, and so the  dispute  raised against them by the appellants was not an industrial dispute within  the meaning of the Act; the contention was that  the dispute  not being an industrial dispute under the Act,  the reference made by the Government was incompetent and so, the Tribunal  had  no  jurisdiction  to  adjudicate  upon   this dispute.  The Tribunal upheld the preliminary objection  and recorded  its  conclusion  that it had  no  jurisdiction  to adjudicate  upon  the dispute as it was  not  an  industrial dispute. The order thus passed by the Tribunal was challenged by  the appellants before the High Court at Bombay by special  Civil Application  No. 2789 of 1958 filed under Articles  226  and 227  of  the Constitution.  The High  Court  considered  the rival contentions raised before it by the appellants and the respondents and came to the conclusion that the respondent’s firm  did  not  constitute an industry and  so  the  dispute between  the  said  firm  and  its  employees  was  nut  ail

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industrial  dispute  which could validly form  the  subject- matter  of a reference under the Act.  In that view  of  the matters the High Court hold that the Industrial Tribunal was 160 right  in refusing to make an order on the reference and  so the appellants’ writ petition was dismissed.  The appellants then  applied for and obtained a certificate from  the  High Court  and it is with the said certificate that the  present appeal has come to this Court; and the short question  which it raises for our decision is whether the respondents’  firm which carries on the work of Solicitors in Bombay can be aid to constitute an industry under s. 2(j) of the Act. In  dealing  with this question, it would  be  necessary  to refer  to the decision of this Court in the State of  Bombay v. The Hospital Mazdoor Sabha (1).  Both parties agreed that the present dispute would have to be determined in the light of  the  decision  of  this Court in  that  case.   Let  us, therefore, indicate the effect of the said decision.  In the Hospital  case  (1),  this Court had  occasion  to  consider whether the services of workmen engaged as ward servants  in the  J.J.  Group of Hospitals, Bombay, under  State  control were   workmen  and  whether  the  Hospital   Group   itself constituted.  an  industry under the Act or not.   Both  the questions were answered in the affirmative and in  rendering those answers, the scope and effect of the definition of the word  industry’ used in s. 2(j) of the Act  was  considered. This Court held that the words used by s. 2 (j) in  defining industry’  in an inclusive manner were of’ wide  import  and had  to  be read in their wide denotation.   Even  so,  this Court  stated "that though s. 2(j) uses words of  very  wide denotation, a line would have to be drawn in a fair and just manner   so  as  to  exclude  some  callings,  services or undertakings  from its purview.  If all the words  used  are given  their  widest meaning all services and  all  callings would  come  within  the purview  of  the  definition;  even service  rendered  by  a servant purely  in  a  personal  or domestic matter (1)[1960] 2 S. C.; R.866. 161 or  even in a casual way would fall within  the  definition. It is not and cannot be suggested that in its wide sweep the word  "service’  is intended to  include  service  howsoever rendered in whatsoever capacity and for whatsoever  reason." (p.  876).   That is why this Court  proceeded  to  consider where the line should be drawn and what limitations can  and should be reasonably implied in interpreting the wide  words used in s. 2(j). In dealing with the somewhat difficult question of drawing a line, this Court observed. ,"as a working principle, it  may be  stated  that an activity  systematically  or  habitually undertaken  for the production or distribution of  goods  or for  the rendering of material services to the community  at large or a part of such community with the help of employees is an undertaking.  Such an activity generally involves  the co-operation  of  the employer and the  employees;  and  its object  is the satisfaction of material human needs It  must be  organised  or  arranged in a manner in  which  trade  or business is generally organised or arranged.  It must not be casual nor must it be for oneself’ nor for pleasure.   Thus, the manner in which the activity in question is organised or arranged,   the  condition  of  the  (co-operation   between employer and the, employee necessary for its success and its object  to render material service to the community  can  be regarded  as some of the features which are  distinctive  of activities to which  s. 2 (1) applies." (P. 879).

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It  was  in the light of this working  principle  that  this Court came to the conclusion that the State was carrying  on an undertaking in running the Group of Hospitals in question In  dealing with the question of hospitals, this Court  also referred  to  a material circumstance  which  supported  the conclusion  that running of hospitals is an  industry  under the Act.  Section 2 (n) of third Act defines "public utility service and under it five separate categories 162 of public utility service are enumerated.  Clause (VI) of s. 2  (n) provides that any industry specified in the  Schedule as therein indicated would also be a public utility service. In  1956, Entry No. 9 among others, was added in  the  First Schedule  specifying another public utility  service.   This Entry  refers  to  service in  hospitals  and  dispensaries. Therefore,  it  was clear that since the  validity  of  this entry  was  not  disputed, after service  in  hospitals  and dispensaries  was  included in the First  Schedule.  it  was inarguable that the hospital would not be an industry  under the  Act ; unless a hospital was an industry under the  Act, service  in  the hospitals could not be regarded  as  public utility  service.   That  is how this  Court  held  that  in running  the  J.J.  Hospital Group in Bombay,  the  State  , Government  was  carrying  on an undertaking  which  was  an industry  under s. 2(j).  The question which calls  for  our decision in  the  present appeal is : what  would  be  the result  of the application of the working test laid down  by this  Court  in  the  Hospital case 1  in  relation  to  the controversy between the parties in the present appeal ? Mr.  Chari for the appellants contends that in dealing  with the  question  as to whether the respondents carried  on  an industry  under  a. 2 (j), it is  necessary  to  distinguish between  professional  service  rendered  by  an  individual acting  by  himself and similar service rendered by  a  firm consisting  of  several partners, because he  suggests  that professional  service  individually  rendered  stands  on  a different   footing  from  professional  service  which   is rendered in an organised and institutionalised manner.   The Organisation  of  professional service which  leads  to  its institutionalisation  attracts  ’the provisions of  s.  2(j) inasmuch  as in such organised service there is bound to  be co-operation between the employers and the employees engaged by the firm for doing different categories of work According to Mr Chari, the employment of (1)  [1960] 2S.C.R. 86,  163 differentcategories of staff facilitates the work of  the solicitors and it enables them to dispose    of  more   work more  quickly and more efficiently and he suggests that  the presence  of  such co-operation between  the  employees  and their employers in the Organisation of the solicitors’  firm satisfies  the working test laid down by this Court  in  the Hospital case(1). Tn  our opinion, the distinction sought to be drawn  by  Mr. Chari between professional service rendered by an individual acting by himself and that rendered by a firm is not logical for the purPose of the application of the test in  question. What  is  true about a firm of solicitors would  be  equally true about an individual Solicitor working by himself.   As. the firm engages different categories of employees a  single solicitor also engages different categories of employees  to carry out different types of work and so the presence of co- operation  between  the employees working in  a  solicitor’s office   and  their  employers  the  solicitor,   could   be attributed to ’the work of a single solicitor as much as  to

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the work of the firm ; and, therefore, if Mr. Chari is right and  if  the firm of solicitors is ’held to be  an  industry under the Act, the office of an individual solicitor  cannot escape  the application of the definition of s. 2(j).   That is why we think it would not be reasonable to deal with  the matter  on  the  narrow ground suggested  by  Mr.  Chari  by confining   our   attention   to   the   organisational   or institutionalised aspect of a solicitors firm. When  in  the Hospital case (1) this Court referred  to  the Organisation  of the undertaking involving the  co-operation of capital and labour or the employer and his employees,  it obviously meant the, cooperation essential and necessary for the purpose of rendering material service or for the Purpose of  production.   It  would realised  that  the  concept  of industry postulates partnership (1)  [1960] 2. S.C.R. 866 164 between  capital and labour or between the employer and  his employees.   It is under this partnership that the  employer contributes  his capital and the employees their labour  and the joint contribution of capital and labour leads  directly to  the production which the industry has in view. In  other words,  the  co-operation  between  capital  and  labour  or between the employer and his employees which is treated as a working test in determining- whether any activity amounts to an industry, is the co. operation which is directly involved in  the production of goods or in the rendering of  service. It  cannot be suggested that every form or aspect  of  human activity  in which capital and labour cooperate or  employer and  employees  assist  each  other  is  an  industry.   The distinguishing  feature  of  an industry  is  that  for  the production  of  goods or for the rendering of  service,  co- operation between capital and labour or between the employer and his employees must be direct and must be essential. Take,   for   instance,  a  textile  mill.    The   employer contributes capital and installs the machinery requisite for the  mills and the employees contribute their labour and  by their  cooperation  assist  the employer  in  producing  the textile goods.  When we refer to textile labour in  relation to  industrial disputes under the Act, we refer  to  workmen who are engaged in the work of producing textile goods.   It is  obvious  that  in  regard to  textile-  mills,  a  large majority of workmen concerned in carrying out the activities of  most of the departments of the textile mills  contribute directly in one form or another to the production of textile goods.   It may be that even in a textile mill a very  small minority  of workmen may not be directly concerned with  the production of textile goods ; but even so, their work is  so integrally  connected  with  the  work  carried  on  by  the majority  of  workmen  employed that  they  are  treated  as forming  part of the same labour force.  Thus, there can  be no doubt that  165 when  a  textile  mill is regarded as an  industry,  it  is, because  capital  and  labour  jointly  contribute  to  the’ production of goods which is the object of the mill. Let  us  consider  the  case  of  the  hospitals.   In’  the hospitals,  the service to the patients begins  with  proper diagnosis followed by treatment, either medical or surgical, according  to the requirements of the case.  In the case  of medical  treatment, the patients receive  medical  treatment according  to the prescription and are kept in the  hospital for  further  treatment.   In surgical  cases  the  patients receive surgical treatment by way of operation and then  are kept  in the hospital for further treatment until  they  are

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discharged.  During the period of such treatment, all  their needs  have  to be attended to, food has to be  supplied  to them,  nursing assistance has to be given to  them,  medical help from time to time has to be rendered and ail incidental services  required.  for  their recovery  have  also  to  be rendered.   Now,  in  the  case  of  the  activities  of  an organised  Hospital,  the co-operation of the  employees  is thus  directly involved in rendering one kind of service  or another which it is the duty of the hospital to render.   It is  true  that  the  patients are  drawn  to  the  hospitals primarily because of the doctors or surgeons associated with them.   But  there  can be no doubt that  the  work  of  the hospital  and  its purpose are not achieved  merely  when  a surgical  operation  is performed  or  medical  prescription provided.   After  medical  treatment  is  determined  or  a surgical  operation  is performed, the patient coming  to  a hospital  as  an indoor patient needs all kinds  of  medical assistance until he is discharged and the services  rendered to him both initially and thereafter until his discharge are all  services  which the hospital has  been  established  to render and it is in the rendering of the said services  that the  employees  of the hospital co-operate  and  play  their part.  That is how the test of cooperation between 166 the  employer  and his employees is satisfied in  regard  to hospitals  which are properly organised and maintained.   It is, of course, true that the quality, the importance and the nature  of the service rendered by different  categories  of employees  in  a  hospital  would  not  be  the  same,   but nevertheless,  all  the categories of  service  rendered  by respective classes of employees in a hospital are  essential for  the purpose of giving service to the patients which  is the  objective of the hospital.  That is how  the  hospitals satisfy  the test of co-operation between the  employer  and his employees. Does  a solicitors’ firm satisfy that test ?   Superficially considered,  the solicitors’ firm is no doubt organised  at; an  industrial  concern  would  be  organised.   There   are different  categories of servants employed by a  firm,  each category, being assigned separate duties and functions.  But it  must  be  remembered that the  service  rendered  by  it solicitor   functioning  either  individually   or   working together  with  partners  is service  which  is  essentially individual  ;  it depends upon the  professional  equipment, knowledge  and  efficiency  of  the,-  solicitor  concerned. Subsidiary  work which is purely of an incidental  type  and which in intended to assist, the solicitor in doing his  job has   no  direct  relation  to  the   professional   service ultimately   rendered  by  the  solicitor.   For   his   own convenience, a solicitor may employ a clerk because a. clerk would  type his opinion ; for his convenience., a  solicitor may employ menial servant to keep his chamber clean and  in order  ; and it is likely that the number of clerks  may  be large  if  the  concern is prosperous and so  would  be  the number of menial servants.  But the work done either by  the typist or the stenographer or by the menial servant or other employees  in a solicitor’s firm is not  directly  concerned with  the service which the solicitor renders to his  client and cannot, therefore, be said to 167 satisfy  the test of co-operation between the  employer  and the  employees which is relevant to the purpose.  There  can be  no  doubt that for carrying on the work of  a  solicitor efficiently,  accounts  have to be kept  and  correspondence carried on and this work would need the employment of clerks

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and  accountants.  But has the work of the clerk  who  types correspondence or that of the accountant who keeps  accounts any direct or essential nexus or connection with the  advice which  it  is  the duty of the solicitor  to  give  to  his client?   The answer to this question must, in our  opinion, be  in  the negative.  There is, no doubt, a kind  of  co- operation between the solicitor and his employees, but  that co-operation  has  no direct or immediate  relation  to  the professional  service  which the solicitor  renders  to  his client.  Therefore, in our opinion it is difficult to accept the plea that a solicitor’s firm carrying on the work of an Attorney  is  an  industry within the meaning  of  s.  2(j). There  is no doubt that the words used in s. 2(1)  are  very wide,  but  as  has been held by this Court in  the  can  of Hospital  is  necessary to draw a line in a  fair  and  just manner  putting some limitation upon the width of  the  said words and a working test has been enunciated in that behalf. The application of the said teat to the facts in the present appeal  leads to the conclusion that the work of  solicitors Which  the respondents are carrying on as a firm is  not  an industry  under s. 2(j) of the Act.  That is the view  taken by  the Bombay High Court and we think, that view is  right. It  may  be added that the same view has been taken  by  the Calcutta High Court in the case of Brij Mohan Bagaria v.  N. C. Chaterjee (2) and D.P. Dunderdele v. G. P. Mukherjee(3’). Looking  at this question in a broad and general way, it  is not easy to conceive that a liberal profession like that, of an. attorney could have been (1) [1960] 2 S.C.R. 668. (2) 1958  A.I.R. 1938 Cal. 460. (3) A.I.R.Cal. 465. 168 intended by the Legislature to fall within the definition of "industry"  under s. 2(j).  The very concept of the  liberal professions  has  its own special and  distinctive  features which  do  not readily permit the inclusion of  the  liberal professions  into the four corners of industrial  law.   The essential  basis  of an industrial dispute is that it  is  a dispute  arising between capital and labour  in  enterprises where  capital and labour combine to produce commodities  or to render service.  This essential basis would be absent  in the  case  of  liberal professions.  A  person  following  a liberal  profession does not carry on his profession in  any intelligible  sense  with  the active  co-operation  of  his employees and the principal, if not the sole, capital  which he  brings  into his profession is his special  or  peculiar intellectual  and  educational equipment.  That  is  why  on broad and general considerations which cannot be ignored,  a liberal profession like that of an attorney must, we  think, be  deemed to be outside the definition of "industry"  under section 2(j) In  this  connection,  it would be useful to  refer  to  the observation  made by Isaccs and Rich JJ., in  the  Federated Municipal and Shire Council Employees’ Union of Australia v. Melbourne  Corporation (1).  "The concept of  an  industrial dispute", said the learned Judges.,. may thus be formulated: Industrial disputes occur when, in relation to operations in which capital and labour are contributed in cooperation  for the satisfaction of human wants or desires, those engaged in co-operation dispute as to the basis to be observed, by  the parties engaged, respecting either a share of the product or any other terms and conditions of their co-operation.   This formula excludes the two extreme contentions of the claimant and   the  respondents  respectively.   It   excludes,   for instance,  the  legal and the medical  professions,  because

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they  are  not carried on in any intelligible sense  by  the Cooperation of (1)  (1919)26C.L.R.508,554. 169 capital  and  labour and do not come within  the  sphere  of industrialism.    It  includes,  where  the  necessary   co- operation exists, disputes between employers and  employees, employees  and employees, and employers and  employers.   It implies that "industry" to lead to an industrial dispute, is not,  as  the  claimant contends,  merely  industry  in  the abstract  sense, as if it alone effected the result, but  it must be acting and be considered.in association with its co- operator "capital" in some form so that the result is, in  a sense,  the  outcome  of  their  combined  efforts".   Those observations support the view which we hive taken about  the character of co-operation between the employer and employees which  affords  a relevant test in determining  whether  the enterprise in question is an industry or not.   Co-operation to  which the test refers must be co-operation  between  the employer  and his employees which is essential for  carrying out  the  purpose of the enterprise and the  service  to  be rendered  by the enterprise should be the direct outcome  of the combined efforts of the employer and the employees. There  is  one more minor point which still  remains  to  be considered.  Mr. Chari argued that it would be idle for  the respondents  to contend. that the work of their firm is  not an  industry  under  a. (2j)  because  they  have-themselves described their work as the work of carrying on business  of solicitors.   It appears that the document  of  partnership executed   between  the  different  partners  of  the   firm provided,  inter alia, that all expenses of the business  of the  partnership  or  losses incurred  in  carrying  on  the business  of  the  partnership shall be. borne  out  of  the profits or capital of the partnership.  It is on the use  of the  word "business" in this clause that Mr.  Chari  relies. In support of his argument,he referred  us to a decision  of Farwell, J., in Dickson v.    Jones (1).  In that case,  the Court was concerned to   examine   the   validity   of    an agreement between the, plaintiff, solicitor, and his  junior clerk, who (1)  [1939] 3 All.  E. R. 182. 170 was  subsequently articled to him.  This agreement  provided that the latter would not ,,at, any time hereafter  practice as  a solicitor within a radious of 15 miles from  the  Town Hall,  Hanley,  aforesaid,  or solicit  any  client  of  the solicitor".   Farwell  J., held that "the combination  of  a restriction over an area so great as a radious 15 miles  and one  extending to the whole life of the defendant,  articled clerk,  was, in the circumstances, wider than was  necessary for  the  protection of the plaintiff  and  was,  therefore, unenforceable  as being in Undue restraint of  trade".   The argument  is  that the validity of an  agreement  between  a solicitor  and his articled clerk was tested on  the  ground that  it was an agreement in restraint of trade, and so  the solicitor’s  work  must be held to be a "’trade,"  under  s. 2(j).  There is obviously no force in this argument.  If  in their deed of partnership the respondents described the work of  partnership  as  the business of  solicitors,  that  can hardly  assist  the appellants in contending that  the  work carried on by the firm is industry under s. 2(j).  The  work of a solicitor is, in a loose sense, of course, of business, and  so  if  the solicitors entered  into  an  agreement  in restraint of trade, its validity would have to be judged  on the basis that their work in the nature of business.   That,

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however,  is hardly relevant in determining the question  as to whether the said work is an industry under section  2(j); as we have already made it clear, the definition of the word ,’industry"  is  couched in words of very  wide  denotation. But that precisely is the reason ,why a line has to be drawn in  a just and fair manner to demarcate the  limitations  of their  scope and that necessarily leads to the  adoption  of some working test.  Therefore, in our opinion, the  argument that  the respondents themselves have called their  work  as "business" is of no assistance. The result is, the appeal fails; there would be no order  as to costs. Appeal dismissed. 171