01 April 1970
Supreme Court


Case number: Appeal (civil) 1705 of 1969






DATE OF JUDGMENT: 01/04/1970


CITATION:  1970 AIR 1407            1971 SCR  (1) 177  1970 SCC  (1) 735  CITATOR INFO :  F          1971 SC1259  (2,3,4)  RF         1971 SC2422  (18,19,20,21)  R          1972 SC 763  (16,17,20,24)  F          1974 SC1527  (20)  F          1975 SC2032  (3,4,8)  F          1976 SC 145  (5,6,7,9,10,24,29)  O          1978 SC 548  (15,25,37,134,136,150,151,154,  R          1988 SC1182  (6)  RF         1990 SC2047  (7)

ACT: Industrial Disputes Act (14 of 1947), s. 2(j), (k), n(s) and First  Schedule--Hospital  when  an  industry--Inclusion  of hospitals in the Schedule--Effect of.

HEADNOTE: (1) The definition of industry in s. 2(j) of the  Industrial Disputes Act, 1947 is in two parts.  But it must be read  as a  whole.   So read it denotes a  collective  enterprise  in which  employers and employees are associated.  It does  not exist either by employers alone or by employees, alone.   It exists  only when there is a relationship between  employers and  employees,  the  former  engaged  in  business,  trade, undertaking,  manufacture  or calling of employers  and  the latter   engaged   in  any  calling,   service,   employment handicraft  or  industrial- occupation  or  avocation.   But every case of employment is not necessarily productive of an industry.  A workman is to be regarded as one employed in an industry  only  if  he is following  one  of  the  vocations mentioned  in conjunction with his employers engaged in  the vocations  mentioned in relation to the  employers,  namely, any  business, trade, undertaking manufacture or calling  of employers.   In  the  collocation of  the  terms  and  their definitions these terms have a definite economic content  of a particular type and on the authorities of this Court  have been  uniformly  accepted as excluding professions  and  are only   concerned  with  the  production,  distribution   and consumption of wealth and the production and availability of



material services.  Industry has thus been accepted to  mean only   trade  and  business,  manufacture,  or   undertaking analogous  to  trade  or  business  for  the  production  of material  goods or wealth and material  services.   Material services involve an activity carried on through co-operation between  employers  and employees to provide  the  community with  the  use of something such as electric  power,  water, transportation, mail delivery, telephones and the like.   In providing these services there may be employment of  trained men  and even professional men, but the emphasis is  not  on what  they  do  but  upon  the  productivity  of  a  service organised  as  an  industry and  commercially  valuable,  in which, something is brought into existence quite apart  from the  benefit  to  particular  individuals;  and  it  is  the production  of  this  something which is  described  as  the production  of  material services.  Thus,  the  services  of professional men involving benefit to individuals  according to   their  needs,  such  as  doctors,  teachers,   lawyers, solicitors, etc. are easily distinguishable from an activity such as transport service.  They are not engaged in an occu- pation  in  which employers and employees cooperate  in  the production  or  sale of commodities or arrangement  for  the production or sale or distribution and their services cannot be described as material services and are outside the  ambit of   industry.   It,  therefore,  follows  that  before   an industrial  dispute  can  be raised  between  employers  and employers  or  between employers and  employees  or  between employees  and  employees in relation to the  employment  or non-employment  or  the  terms of  employment  or  with  the conditions of labour of any person, there must first 178 be  established  a relationship of employers  and  employees associating   together,  the  former  following   a   trade, business,  manufacture, undertaking or calling of  employers in  the production of material goods and  material  services and  the attack following any calling, service,  employment, handicraft or industrial occupation or avocation of  workmen in  aid  of the employers enterprise.  It is  not  necessary that there must be profit motive, but the enterprise must be analogous  to trade or business in a commercial sense.  [183 H; 184 G-H; 185 C, H; 186 H; 187 A-B, E-G; 188 F-H] (2)  The  decision in State of Bombay  v.  Hospital  Mazdoor Sabha,  [1960]  2  S.C.R.  866  holding  that  a  Government hospital was an industry took an extreme view of the  matter and  cannot be justified, because : (a) it  was  erroneously held  that the second part of the definition  of  ’industry’ was  an extension of the first part, whereas, they are  only the two aspects of the occupation of employers and employees in an industry; (b) it was assumed that economic activity is always  related  to capital or profit-making  and  since  an enterprise  could be an industry without capital or  profit- making  it  was  held that even economic  activity  was  not necessary;  and (c) it was held that since a hospital  could be  run as a business proposition and for profit by  private individuals  or  groups  of individuals a  hospital  run  by Government without profit must also bear the same character. This  test  was  wrongly evolved from  the  observations  in Federated Municipal and Shire Council Employees of Australia v. Melbourne Corporation, 26 C.L.R. 508, which only indicate that  in  those  activities  in  which  Government  take  to industrial ventures the motive of profit-making and  absence of  capital  are  irrelevant.   The  observations,  on   the contrary,  show  that  industrial  disputes  occur  only  in operations  in  which employers and employees  associate  to provide  what  people  want  and desire,  that  is,  in  the



production  of  material  goods or  services,  and  not  the ’satisfaction  of  material  human  needs’.  If  however   a hospital,  nursing home or dispensary is run as a  business, in  a  commercial  way there may be  found  elements  of  an industry  there.   Then the hospital is more  than  a  place where  persons  can get treated for their  ailments  and  it becomes a business. [189 D-H; 190 E-F] Hospital Case [1960] 2 S.C.R. 866 over-ruled. (3)  Under s. 2(n)(vi) any industry specified in  the  First Schedule  to  the Act could be notified by  the  appropriate Government  as a public utility service.  But what could  be declared  had  to be an industry in the  first  place.   The original  entries  in the Schedule were five  and  obviously only general headings were given.  For example ’coal’ is not an  industry but certain aspects of dealing with coal  would be  ’industry’  and that is what is intended.   The  dealing must  be  an  industry in which.  there  arc  employers  and employees  cooperating in the production of  material  goods for material services.  Similarly, cotton, textiles or  food stuffs  or  iron and steel, as the entries  stand,  are  not industries.   Therefore, the heading of the  First  Schedule and  the  words of cl. (vi) presuppose the existence  of  an industry which may be notified as a public utility  service, for special protection under the Act. [191 F-H] When the list was expanded in the First Schedule and certain services  were mentioned, the intention could not have  been otherwise.   It could not have been intended  by  Parliament that  the entire concept of ’industry’ in the Act  could  be ignored and anything could be brought in as industry.   Most of  the  new entries are items in which an  industry  proper involving   trade,   business.  manufacture   or   something analogous to business can be found% Therefore, to apply  the notification. the condition precedent of the existence of an industry has to be satisfied.  If there is an industry 179 which  falls  within the item named in the  first  Schedule, then  alone  can it be notified to be classed  as  a  public utility  service.   To hold otherwise would  largely  render useless  all the definitions in the Act regarding  industry, industrial  disputes  etc.,  in relation  to  the  scheduled items..  It is hardly to be thought that  notifications  can issue in respect of enterprises which are not ’industry’  to start with.  Parliament could not have attempted to  declare that   notwithstanding   the  definitions   of   ’industry’, ’industrial dispute’, workman’ and ’employer’ every hospital is  to be regarded as an industry, by including ’service  in hospitals and dispensaries’ in the First Schedule. [192 B-C, F-H] (4)  The  activities  in  the  cases  of  Secretary   Madras Gytmkhana Club Employees Union v. Management of the Gymkhana Club  [1968] 1 S.C.R. 742, University of Delhi  v.  Ramnath, [1964] 2 S.C.R. 703 and National Union of Commercial Employees v. M. R. Meher, [1962] Supp. 3 S.C.R. 157 were rightly held not be industries, because,  in the  first the management was a non-profit  making  members’ club  not employed in trade or industry, and the  other  two were  cases in which the services rendered by the  employees were  in  aid  of professional men  and  not  productive  of material wealth or services. [188 C-F] Hotel  and Catering Industry Training Board  and  Automobile Proprietary  Ltd. (1969) 1 W.L.R. 697 H.L.; S.C.;  (1968)  1 W.L.R. 1526 and [1968]3 All.  E.R. 399 C.A., referred to. Therefore,  the  Safdarjung  Hospital  which  is  run  as  a department  of  the Government,  the  Tuberculosis  Hospital which is a charitable and research institute. and the  Kurji



Holi  Family Hospital which is entirely charitable, are  not industries  within  the meaning of the  Industrial  Disputes Act. 1947. [193 C; 194 B-E]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1705 of1969. Appeal  by special leave from the order dated  February  21, 1959,  of  the  Central Government Labour  Court,  Delhi  in I.C.A. No. 2 of 1968 and Civil Appeal No. 1781 of 1969. Appeal  by special leave from the order dated  February  24, 1969  of the Additional Industrial Tribunal, Delhi  in  I.D. No. 73 of 1968 and Appeal from the judgment and order  dated February  21,  1969 of the Patna High Court  in  Civil  Writ Jurisdiction Case No. 730 of 1968. Niren  De,  Attorney-General  and  S.  P.  Nayar,  for   the appellant (in C. A. No. 1705 of 1969). M.  K. Ramamurthi, E. C. Agarwala, R. P. Agarwala and M.  V. Goswami, for the respondent (in C. A. No. 1705 of 1969). H. R. Gokhale, Jitendra Mahajan, for the appellant (in  C.A. No. 1781 of 1969). M.  K.  Ramamurthi, J. Ramamurthy and Madan Mohan,  for  the respondents (in C. A. No. 1781 of 1969). H. R. Gokhale, M. C. Bhandare, for the intervener. 180 A. K. Sen, Ranen Roy and A. K. Nag, for theappellant (in C. A. No. 1777 of, 1969). D.  Goburdhun,  for respondent No. 1 (in C. A. No.  1777  of 1969). P. N. Tiwari and Shiva Pujan Singh, for respondent No. 3 (in C. A. No. 1777 of 1969). The Judgment of the Court was delivered by Hidayatullah,  C.J.  This  judgment will  dispose  of  Civil Appeals  Nos. 1705 of 1969, 1781 of 1969 and 1777  of  1969. The  first  is  an appeal by the  Management  of  Safdarjung Hospital, New Delhi.  The second by the Management of Tuber- culosis Hospital, New Delhi and the third by the Kurji  Holy Family Hospital, Patna.  The first two are filed by  special leave  and the third by certificate.  They call in  question respectively  the  order of the  Central  Government  Labour Court,  Delhi  dated 21st February, 1969 on  an  application under  s. 33C(2) of the Industrial Disputes Act,  1949,  the order  of  the  Presiding  Officer,  Additional   Industrial Tribunal,  Delhi dated 24th February, 1969 and the  judgment and order dated 21st February, 1969 of the Patna High Court. They  raise a common question of law whether  these  several hospitals  can be regarded as industries within the  meaning of the term in the Industrial Disputes Act.  They also raise different  questions  on  merits which  will  be  considered separately.   The  facts of the three cases may  be  noticed briefly  before we begin to examine the common  question  of law mentioned above. C.A. Nc.. 1705 of 1969. The  Management  of Safdarjung Hospital, New Delhi  was  the respondent  in a petition under s. 33C(2) of the  Industrial Disputes  Act, 1947 in a petition by the present  respondent Kuldip Singh Sethi, a Lower Division Clerk in the  Hospital, for  computation of the amount of salary etc. due to him  in the  pay  scale of store keepers.  Kuldip  Singh  Sethi  was appointed  as a Store-keeper on October 26, 1956 in the  pay scale of Rs. 60-5-75.  This scale was revised to Rs. 110-180 on  July 1, 1959 in accordance with the ,recommendations  of the  Second Pay Commission.  Two or three months  later  the pay  was re-fixed and the time scale was Rs.   110-131  with



usual  allowances.  On July 1, 1962 his basic pay was  fixed at Rs. 131.  On November 26, 1962 the Government of India in the  Ministry of Health re-revised the pay scales of  Store- keepers  to  Rs.  130-5-160-8-200-EB-8-280-10-300  with  the usual  allowances.   The order was to lake effect  from  the date  of  issue.   Kuldip  Singh  Sethi  complained  by  his petition  that the Management of the Hospital had failed  to give  him  pay  in this scale and claimed Rs.  914  for  the period November 26, 1,962 to May 31, 1968. 181 In rely to his petition the Management contended that Kuldip p  Singh  Sethi was not a workman but a  Government  servant governed  by  the  Conditions  of  Service  for   Government Servants  and  hence  he could  not  invoke  the  Industrial Disputes  Act  since  the Safdarjung  Hospital  was  not  an industry.  The Tribunal following the decision of this Court in  State  of Bombay v. Hospital Mazdoor Sabha(1)  has  held that the Hospital is an ’industry’, that Kuldip Singh  Sethi is a ’workman’ and hence he is entitled to take recourse  to s.  3 3C (2) of the Industrial Disputes Act.  On merits  his claim is found sustainable and he is given an award for  Rs. 914.  We need not mention at this stage the grounds on which the merits of his claim are resisted.  The point of law that arises in the case is whether the Safdarjung Hospital can be properly  described  as  an ’industry’  as  defined  in  the Industrial Disputes Act. C.A. No. 1781 of 1969. In  this case there is a dispute between the  Management  of the  Tuberculosis  Hospital,  New  Delhi  and  its   workmen represented  by the Aspatal Karamchari  Panchayat  regarding pay  scales, and other facilities demanded by  the  workmen. The Management has taken the preliminary objection that  the Industrial Disputes Act does not apply since the Hospital is not  an industry and is not run as such.   The  Management., therefore, questions the reference to the Tribunal under  s. 10(1)  (d)  of the Industrial Disputes Act.   A  preliminary issue is raised :          "Is T.B. Hospital an industry or not?" In support of the case that the Hospital is not an industry, the Management emphasises the functions of the Hospital.  It is pointed out that the Hospital is run by the  Tuberculosis Association of India as a research institute where  training is given to Medical ,,graduates of the Delhi University  for the  D.T.C.D.  and  D.C.H. Courses,  and  postgraduates  and undergraduates  of  the  All  India  Institute  of   Medical Sciences  are  also provided training and  nurses  from  the Delhi-  College of Nursing, Safdarjung, Lady  Hardinge,  and Holy Family Hospitals receive training.  The Hospital, it is admitted, has paid and unpaid beds but it is submitted  that treatment of tuberculosis is a part of research and training and education, and, therefore, the Hospital has affinity  to a  University  and,  not  to  a  Hospital  proper.   It  is, therefore, contended that this ,Hospital is not an industry. The Tribunal holds that neither the research carried on, nor the   training   imparted,  nor  the   existence   .of   the Tuberculosis Association of India with which the Hospital is affiliated  makes any difference and the case  falls  within the  ruling of this Court in the Hospital  Mazdoor  Sabha(1) case.  The (1)  [1960] 2 S.C.R. 866. 182 Tribunal holds the Tuberculosis Hospital, New Delhi to be an industry. C.A. No. 1777 of 1969. The  appeal  arises from a writ petition filed in  the  High



Court  of  Patna.   The  Kurji  Holy  Family  Hospital  took disciplinary  action  against two of its employees  and  the matter  was  taken  up by the  Kurji  Holy  Family  Hospital Employees  Association  and  the  State  of  Bihar  made   a reference  to  the Labour Court, Patna under S.  10  of  the Industrial   Disputes   Act.   Before  the   Tribunal,   the Management  of  the Hospital took the objection  inter  alia that  a hospital was neither a trade nor a business, nor  an industry  as defined in the Industrial Disputes Act  and  as such the provisions of the Industrial Disputes Act were  not applicable  and  the reference was  incompetent.   The  High Court holds this point against the Management, following the Hospital  Mazdoor  Sabha(1) case.  The later  case  of  this Court reported in Secretary, Madras Gymkhana Club  Employees Union  v. Management of the Gymkhana Club(2) is held not  to have weakened the effect of the decision in the case  relied upon. It  is  thus that the three cases came before  us  and  were heard  together.  Counsel  in these cases  submit  that  the ruling in the HospitalMazdoor Sabha(1) case has now  been considerably  shaken  by  the pronouncement  in  the  Madras Gymkhana  Club  (2) case where it was I  observed  that  the Hospital  Mazdoor Sabha(’) case was one which might be  said to be on the verge and that there were reasons to think that it  took  an extreme view of an industry.  Relying  on  this observation,  counsel  in  the three  appeals  asked  for  a reconsideration  of  the  Hospital  Mazdoor  Sabha(1)   case although  they conceded that it was not yet  overruled.   We accordingly heard arguments on the general question  whether a hospital can be said to be an industry falling within  the Industrial  Disputes Act and under what  circumstances.   We also  heard  arguments  on  the merits  of  the  appeals  to determine  whether the decisions rendered therein  could  be upheld  even if the Hospital Mazdoor Sabha(1) case was  held applicable.  We shall follow the same course here.  We shall first  consider the general proposition whether  a  hospital can be considered to fall within the concept of industry  in the  Industrial  Disputes Act and whether all  hospitals  of whatever  description can be covered by the concept or  only some  hospitals  under special conditions.   We  shall  then consider the merits of the individual cases in so far as may be necessary. The  Industrial  Disputes Act was construed in the  past  on more   than   one  occasion  by  this   Court.    A   fairly comprehensive summary of the various cases with the rationes decidendi of those (1) [1960] 2 S.C.R. 866. (2) [1968] 1 S.C.R. 742. 183 cases  is  to be found in the Gymkhana  Club(1)  case.,  The tests applied to find out whether a particular establishment falls  within the definition of ’industry’ or not  were  not found  to be uniform and disclosed a pragmatic  approach  to the  problem.  This Court, ,therefore, in  Gymkhana  Club(1) case  fell back upon the statute for guidance  pointing  out that  they were not concerned with a popular phrase but  one which  the  statute, had with ’great  particularity  defined itself.  Examining the content of the definitions this Court came  to certain conclusions and held in their light that  a non-proprietary members’ club was not an industry. The reasoning in the Gymkhana Club(1) case formed the  basis of  an attack on the former ruling in the, Hospital  Mazdoor Sabha(2)  case  by the Managements of  the  three  Hospitals which are appellants here.  The other side relied. upon  the ruling  and the amendment of the Industrial Disputes Act  by



which  ’Service in hospitals and dispensaries’ has now  been added  as  item No. 9 in the First Schedule, as one  of  the industries  which  may  be declared  to  be  public  utility services under sub-cl . (vi) of cl. (n) of s. 2 of the  Act. It  is claimed that this is a legislative  determination  of the  question  whether hospital is an industry or  not.   It has, therefore, become necessary to cover some of the ground covered,in the Gymkhana Club(1) case.  To begin with we  may once  again refer to the relevant definitions  contained  in the Act for they must necessarily control our discussion. The  Industrial  Disputes Act, as its title and  indeed  its whole  tenor disclose, was passed to make provision for  the investigation and settlement of industrial disputes and  for certain  other  purposes  appearing in the  Act.   The  term ’industrial dispute’ is defined by S. 2(k) in the  following words               "  ’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." The  definition discloses that disputes of particular  kinds alone  are  regarded  as industrial  disputes.   It  may  be noticed that this definition does not refer to an  industry. But  the dispute, on the grammar of the  expression  itself, means a dispute in an industry and we must, therefore,  turn to  the  definition of ’industry’ in the Act.  The  word  is defined in cl. (j) and reads :               "   ’industry’  means  any  business,   trade,               undertaking,   manufacture   or   calling   of               employers and includes any (1) [1968] 1 S.C.R. 742. (2) [1960] 2 S.C.R. 866. 184 calling,  services,  employment, handicraft,  or  industrial occupation or avocation of workman." This  definition is in two parts.  The first part says  that it  means any business, trade, undertaking,  manufacture  or calling  of  ,employers  and then goes on  to  say  that  it includes  any  calling, service,  employment  handicraft  or industrial occupation or avocation of workmen. In  dealing with this definition this Court in the  Gymkhana ,Club  case(1) attempted to keep the two notions  concerning employers and employees apart and gave the opinion that  the denotation  of  the term ’industry’ is to be  found  in  the first  part relating to ,employers and the full  connotation of the term is intended to include the second part  relating to workmen.  It was, therefore, concluded:               "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.........  By the inclusive  part  of               the definition the 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." These observations need to be somewhat qualified.  It is  to be  noticed  that  this  definition  modifies  somewhat  the



definition,  of  "industry’  in s.  4  of  the  Commonwealth Conciliation and Arbitration Act 1909-1970) (Acts Nos. 13 of 1904 and 7 of 1910) of Australia where the definition reads               "’industry’     means     business,     trade,               manufacture, undertaking, calling, service  or               employment, on land or water, in which persons               are  employed  for  pay,  hire,  advantage  or               reward,  excepting  only  persons  engaged  in               agricultural, viticultural, horticultural,  or               dairying pursuits." Although  the  two definitions are  worded  differently  the purport  of both is the same.  It is not necessary  to  view our definition in two parts.  The definition read as a whole denotes  a  collective  enterprise in  which  employers  and employees  are  associated.   It does not  exist  either  by employers alone or by employees alone.  It exists only when- there is a relationship between employers and employees, the former engaged in business, trade, undertaking,  manufacture or  calling  of  employers and the  latter  engaged  in  any calling, service, (1) [1968] 1 S.C.R. 742.  185 employment,   handicraft   or   industrial   occupation   or avocation.  There must, therefore, be an enterprise in which the  employers  follow their avocations as detailed  in  the definition  and  employ  workmen  who  follow  one  of  ’the avocations  detailed for workmen.  The definition  no  doubt seeks  to  define ’industry’ with  reference  to  employers’ occupation  but includes the employees, for without the  two there  can be no industry.  An industry is only to be  found when  there are employers and employees, the former  relying upon  the  services  of  the  latter  to  fulfil  their  own occupations. But  every case of employment is not necessarily  productive of   an  industry.   Domestic   employment,   administrative services of public officials, service in aid of  occupations of professional men, also disclose relationship of employers and  employees but they cannot be regarded as in the  course of industry.  This follows from the definition of  ’workman’ in the Act defined in cl.(s) which reads               "workman’  means any person (including an  ap-               prentice)  employed in any industry to do  any               skilled  or  unskilled  manual,   supervisory,               technical or clerical work for hire or reward,               whether the terms of employment be express  or               implied, and for the purposes of any  proceed-               ing   under  this  Act  in  relation   to   an               industrial  dispute, includes any such  person               who   has   been  dismissed,   discharged   or               retrenched in connection with, or as a  conse-               quence  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  supervisory               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." The word ’industry’ in this definition must take its  colour from  the definition and discloses that a workman is  to  be regarded  as one employed in an industry if he is  following one  of  the  vocations mentioned in  conjunction  with  his employers engaged in the vocations mentioned in relation  to the employers. Sup.Cl/70-13 186  Therefore an industry is to be found when the employers are carrying on any business, trade, undertaking, manufacture or calling of employers.  If they are not, there is no industry as  such.  What is meant by these expressions was  discussed in  a  large  number of cases  which  have  been  considered elaborately in the Gymkhana Club(1) case.  The conclusion in that case may be stated :               "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  co-               operation  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  words ’trade’, ’business’, ’manufacture’ and  ’calling’ were next explained thus :               "The  word ’trade’ in this context  bears  the         X       X 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." It  may be added here that in National Association of  Local Government Officers v. Bolton Corporations(2) at page 183 et seq  Lord  Wright  observes that ’trade’ is a  term  of  the widest scope.  This is true.  We speak of the occupation  of men in buying and selling, barter or commerce as trade.   We even  speak of work, especially of skilled work  as,  trade, e.g.  the trade of goldsmiths.  But the word as used in  the statute must be distinguished from professions although even professions have ’trade unions’.  The word ’trade’  includes persons in a line of business in which persons are  employed as workmen.  Business too is a word of wide import.  In  one sense  it includes all occupations and professions.  But  in the  collocation of the terms. and their  definitions  these terms have a definite economic content of a particular  type and on the (1) [1968] 1 S.C.R. 742. (2) [1943] A.C. 166, 183. 187



authorities  of this Court have been uniformly  accepted  as excluding  professions  and  are  only  concerned  with  the production,  distribution and consumption of wealth and  the production and availability of material services.   Industry has  thus  been accepted to mean only  trade  and  business, manufacture,  or undertaking analogous to trade or  business for the production of material goods or wealth and  material services. Why  professions must be held outside the ambit of  industry may be explained.  A profession ordinarily is an  occupation requiring  intellectual  skill, often  coupled  with  manual skill.  Thus a teacher uses purely intellectual skill  while a painter uses both.  In any event, they are not engaged  in an occupation in which employers and employees co-operate in the  production  or sale of commodities or  arrangement  for their production or sale or distribution and their  services cannot be described as material services. What is meant by ’material services’ needs some  explanation too.  Material services are not services which depend wholly or largely upon the contribution of professional  knowledge, skill  or  dexterity for the production of a  result.   Such services  being  given individually and by  individuals  are services  no  doubt  but not  material  services.   Even  an establishment  where  many such operate cannot  be  said  to convert their professional services into material  services. Material services involve an activity carried on through co- operation  between  employers and employees to  provide  the community with the use of something such as electric  power, water,  transportation,  mail delivery, telephones  and  the like.   In providing these services there may be  employment of  trained men and even professional men, but the  emphasis is  not on what these men do but upon the productivity of  a service organised as an industry and commercially  valuable. Thus  the services of professional men involving benefit  to individuals  according  to  their needs,  such  as  doctors, teachers,    lawyers,    solicitors    etc.    are    easily distinguishable from an activity such as transport  service. The  latter is of a commercial character in which  something is  brought into existence quite apart from the  benefit  to particular  individuals.   It  is  the  production  of  this something  which is described as the production of  material services. Mr. Ramamurti arguing against the Hospitals drew our  atten- tion  to Citrine’s book ’Trade Union Law’ (3rd edn. p.  609) where the author observes :               "However,   whilst  the  words   ’trade’   and               ’industry’  are separately capable of  a  wide               interpretation, when they occur in conjunction               the  tendency of the courts is to give them  a               narrow one." 188 He  cites the House of Lords case to which we have  referred and  criticises  the  tendency of the court  to  narrow  the meaning  of  the expressions ’industry’ and  ’workman’.   He says that this narrow interpretation unnecessarily  excludes from  workmen  ’teachers  employed  by  local   authorities, university  employees, nurses and others employed under  the National Health Service, the domestic staff of the Houses of Parliament  and  Civil  Servants who  are  not  employed  in ’trading’  or  ’industrial undertaking’.   He  includes  all these  in  the definitions because a person doing  the  same type  of  work for a commercial undertaking  is  within  the definition.  According to him any person gainfully  employed must  be  within the definition.  On the  strength  of  this definition  Mr.  Ramamurthi  also  contends  that  not   the



Hospital  Mazdoor  Sabha(1) case but the earlier  cases  off this  Court  such  as  University  of  Delhi  and  Anr.   v. Ramnath(2) and National Union of Commercial Employees v. M.   R. Meher(3) must be reconsidered and overruled. The  reason  for these cases, as also the  Gymkhana  Club(4) case  lies  in the kind of establishment with which  we  are concerned.    The  Gymkhana  Club(4)  case  of  this   Court (followed and applied in Cricket Club v. Labour Union(5) has held that non-profit making members’ clubs are not  employed in trade or industry and their employees are not entitled to engage  in trade disputes with the clubs.  This  view  finds support from Hotel and Catering Industry ’Training Board and Automobile  Proprietary Ltd (6).  The Solicitors case  cited by  Mr. Ramamurti was so decided because there the  services rendered  by the employees were in aid of  professional  men and  not productive of material goods or wealth or  material services.  The other case of University was also decided, as it was, for the same reason. It, therefore, follows that before an industrial dispute can be  raised between employers and their employees or  between employers  and employers or between employees and  employees in relation to the employment or non-employment or the terms of  employment  or  with the conditions  of  labour  of  any person,  there must be first established a  relationship  of employers  and  employees associating together,  the  former following  a  trade, business, manufacture,  undertaking  or calling of employers in the production of material goods and material  services  and the latter  following  any  calling, service, employment, handicraft, or industrial occupation or avocation  of workmen in aid of the  employers’  enterprise. It  is not necessary that there must be a profit motive  but the  enterprise must be analogous to trade or business in  a commercial sense. (1) [1960] 2 S.C.R. 866.        (2) [1964] 2 S.C.R. 703. (3) [1962] Supp. 3 S.C.R. 157.  (4) [1968] 1 S.C.R. 742. (5) A.I.R. 1969 S.C.R. 276. (6) (1969) 1 W.L.R. 697 H.L.  S.C.; (1968) 1 W.L.R. 1526 and [1968] 3 All. E.R 399 C.A. 189 We do not find it necessary to refer to the earlier cases of this  Court from which these propositions have been  deduced because  they  are  all  considered  in  the  Gymkhana  Club case(1).  We accept the conclusion in that case that :               "........  before the work engaged in  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." We  may now consider closely the Hospital  Mazdoor  Sabha(2) case and the reasons for which it was held that the  workmen employed in a hospital were entitled to raise an  industrial dispute.   We  may say at once that if a  hospital,  nursing home or dispensary is run as a business in a commercial  way there may be found elements of an industry there.  Then  the hospital is more than a place where persons can get  treated for their ailment.  It becomes a business. In the Hospital Mazdoor Sabha(2) case, hospitals run by Gov- ernment and even by a private association, not on commercial lines but on charitable lines or as part of the functions of Government  Department of Health were held included  in  the definition  of  industry.   The reason given  was  that  the second  part  of  the definition of  industry  contained  an extension  of  the first part by including  other  items  of



industry.   As we have pointed out the first and the  second parts  of the definition are not to be read in isolation  as if they were different industries but only as aspects of the occupation of employers and employees in an industry.   They are two counterparts in one industry.  The case proceeds  on the  assumption that there need not be an economic  activity since   employment  of  capital  and  profit   motive   were considered unessential.  It is an erroneous assumption  that an economic activity must be related to capital and  profit- making  alone.  An economic activity can exist  without  the presence of both.  Having rejected the true test applied  in other cases before, the test applied was ’can such  activity be  carried  on by private individuals or group  of  indivi- duals’?  Holding that a hospital could be run as a  business proposition and for profit, it was held that a hospital  run by  Government without profit must bear the same  character. With respect, we do not consider this to be the right  test. That   test   was  employed  to  distinguish   between   the administrative functions of Government and local authorities and  their functions analogous to business but it cannot  be used  in this context.  When it was emphasised in  the  same case  that  the activity must be analogous to  business  and trade  and  that  it must be productive of  goods  or  their distribution  or  for  producing material  services  to  the community at large (1) [1968] 1 S.C.R. 742. (2) [1960] 2 S.C.R. 866. 190 or a part of it, there was no room for the other proposition that privately run hospitals may in certain circumstances be regarded as industries.  The expression ’satisfying material human  needs’  was evolved which bore a  different  meaning. These observations were apparently based on the observations of,  Isaacs  and Rich JJ. in Federated Municipal  and  Shire Council Employees of Australia v.  Melbourne Corporation(1), but they were :               "Industrial  disputes occur when, in  relation               to operations in which capital and labour  are               contributed    in   cooperation    for    the-               satisfaction of human wants and desires, those               engaged  in  co-operation 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  co-               operation. . . . 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." The  observations in the Australian case only indicate  that in those activities in which government takes to  industrial ventures,  the  notion of profit-making and the  absence  of capital  in the true sense of the word are irrelevant.   The passage  itself  shows  that industrial  disputes  occur  in operation  in  which employers and  employees  associate  to provide  what  people want and desire in other  words  where there is production of material goods or material  services. In our judgment the Hospital Mazdoor Sabha (2) case took  an extreme view of the matter which was not justified. It is argued that after the amendment of the Industrial Dis- putes  Act by which ’service in hospitals and  dispensaries’ is  included in public utility services, there is  no  scope for  saying that hospitals are not industries.  It  is  said that  Parliament has accepted that the definition is  suited



to  include  a  hospital.  This  contention  requires  close attention  in  view of the fact that it was noticed  in  the Hospital  Mazdoor Sabha(2) case although that  arose  before the amendment. A  public  utility service is defined in the Act  by  merely naming  certain  services.  It will be  noticed  that  these services are (i)  any  railway service or any transport service  for  the ’Carriage of passengers or goods by air; (1) 26 C.L.R. 508. (2) [1960] 2 S.C.R. 866. 191               (ii)    any   section   of   any    industrial               establishment  on  the working  of  which  the               safety  of  the establishment or  the  workmen               employed therein depends;               (iii)  any  postal,  telegraph  or   telephone               service;               (iv)  any industry which supplies power, light               or water to the public;               (v)  any  system  of  public  conservancy   or               sanitation; After namingthese  services  the               definition adds :               (vi)  any  industry  specified  in  the  First               Schedule which the appropriate Government may,               if  satisfied that public emergency or  public               interest  so requires, by notification in  the               official gazette, declare to be a public  uti-               lity service for the purposes of this Act, for               such  period  as  may  be  specified  in   the               notification.               Provided  that the period so  specified  shall               not, in the first instance, exceed six  months               but  may, by a like notification, be  exceeded               from time to time, by any period not exceeding               six months, at any one time if in the  opinion               of the appropriate Government public emergency               or public interest requires such extension. The intention behind this provision is obviously to  cassify certain  services  as public utility services  with  special protection for the continuance of those services.  The named services  in the definition answer the test of  an  industry run  on  commercial  lines to produce  something  which  the community  can use.  These are brought into existence  in  a commercial  way  and  are analogous  to  business  in  which material goods are produced and distributed for consumption. When  Parliament  added the sixth clause under  which  other services could be brought within the protection afforded  by the  Act to public utility services, it did not intend  that the entire concept of industry in the Act, could be  ignored and anything brought in. Therefore it said that an  industry could be declared to be a public utility service.  But  what could  be  so declared had to be an industry  in  the  first place.   We  are  concerned  with the  addition  of  item  9 ’service in hospitals and dispensaries.  The heading of, the First  Schedule speaks again of industries which may be  de- clared to be public utility services.  The original  entries were five and they read:               1.  Transport  (other than railways)  for  the               carriage  of  passengers or  goods,  by  land,               water or air (now air is omitted).               2. Coal 192 3.   Cotton textiles. 4.   Food stuffs



5.   Iron and steel. It is obvious that general headings are given here.  Coal is not an industry but certain aspects of dealing with coal  is an industry and that is what is intended.  That dealing must be in an industry in which there are employers and employees cooperating in the production of material goods or  material services.   Similarly,  cotton, textiles or food  stuffs  or iron  and steel, as the entries stand, are  not  industries. Therefore the heading of the First Schedule and the words of clause  (vi) presuppose the existence of an  industry  which may  be  notified as a public utility service,  for  special protection under the Act. Therefore  when the list was expanded in the First  Schedule and certain services were mentioned, the intention could not be  otherwise.   The  list  was  extended  to  10  items  by amendment  of  the Act by Act 36 of 1956  with  effect  from March 10, 1957.  The new items are (a) Banking, (b)  Cement, (c)  Defence  Establishments, (d) Service in  hospitals  and dispensaries,  and,  (e)  Fire Brigade  Service.   Later  by notifications issued under s. 40 of the Act nine more  items were  added.  Section 40 gives to governments the  power  to add to the Schedule.  They are (a) Indian Government  Mints, (b)  India  Security  Press, (c)  Copper  Mining,  (d)  Lead Mining, (e) Zinc Mining, (f) Iron ore mining, (g) Service in any  oil field, (h) Any service in, or in  connection  with, the working of any major port or dock and (i) Service in the Uranium  Industry.  It is easy to see that most of them  are items in which an industry proper involving trade, business, manufacture or something analogous to business can be found. It  is hardly to be thought that notifications can issue  in respect  of  enterprises which are not industries  to  start with.   It  is only industries which may be declared  to  be public utility services. Therefore to apply the notification, the condition precedent of  the  existence of an industry has to be  satisfied.   If there  is an industry which falls within the items named  in the  First  Schedule, then alone can it be  notified  to  be classed as a public utility service.  The law does not  work the other way round that every activity connected with  coal becomes  an  industry  and therefore  on  notification  that activity becomes a public utility service.  The same is true of  all  items including all the services  mentioned.   They must  first  be demonstrated to be industries and  then  the notification  will apply, to them.  To hold otherwise  would largely  render  useless  all the  definitions  in  the  Act regarding industry, industrial disputes etc., in relation to the  scheduled  items.   Parliament  has  not  attempted  to declare that notwithstanding the definitions of 193 ’industry’, ’industrial disputes, ’workman’ and  ’employer’, every  hospital is to be regarded as an industry.  All  that has been provided is that an ’industry’ may be notified as a public  utility  service.  That is insufficient  to  convert non-industries under the Act to industries. We now take up the individual cases. C.A. No. 1705 of 1969. It is obvious that Safdarjung Hospital is not embarked on an economic activity which can be said to be analogous to trade or  business.  There is no evidence that it is more  than  a place  were persons can get treated.  This is a part of  the functions  of  Government  and  the Hospital  is  run  as  a Department of Government.  It cannot, therefore, be said  to be an industry. In  this  case the petitioner chose to be a  Lower  Division Clerk.   The amount of security which he had to  furnish  in



the job of a Store-keeper was also refunded to him.  He  had applied  for the post on May 31, 1962.  On July 14, 1962  he again  drew attention to his application.   His  application was  recommended  on  August 9, 1962.   It  was  only  after November 26, 1962 when the scale of Store-keepers was raised to  Rs. 130-300 that he changed his views.  On December  12, 1962  he  made  a representation but in  forwarding  it  the Medical Superintendent said that the incumbents of the posts of  Store-keepers could not be given the upgraded  scale  of Rs. 130-300.  In addition there were certain matters pending against  him which precluded his appointment in that  scale. On August 11, 1966 the Director General wrote:               "With  reference to your letter  No.  1-20/62-               Estt., dated the 4th Jan, 1966 and  subsequent               reminder  of even number dated the  24th  May,               1966 on the subject noted above, I am directed               to  say  that  a reference  was  made  to  the               Government of India in the Ministry of  Health               and Family Planning, New Delhi who have stated               that  it  was not intended  that  the  revised               scale  of Rs. 110-131 (previous scale  of  Rs.               60-75)  should be further revised to Rs.  130-               300  as all incumbents of the  posts  carrying               the  pay  scale of Rs. 110-131  were  promoted               from   Class  IV  and  did  not  possess   the               requisite qualifications prescribed for posts,               carrying pay scale of Rs. 130-300.               In  view of the position stated above  further               action  in the matter may kindly be  taken  in               the   light   of   the   above   remarks   and               storekeepers concerned informed accordingly. In  view of these facts it is hardly necessary to  refer  to the  reports about the work of Kuldip Singh Sethi and  other matters which 194 came  in his way of promotion.  Both on the question of  law decided  by us and on the merits of his case,  Kuldip  Singh Sethi was not entitled to the pay scale of store-keepers and the award of Rs. 914/- in his favour was wrong.  The  appeal is  allowed.   The order is set aside but there will  be  no order about costs. C.A. No. 1781 of 1969. The Tuberculosis Hospital is not an independent institution. It is a part of the Tuberculosis Association of India.   The hospital  is wholly charitable and is a research  institute. The  dominant  purpose  of  the  Hospital  is  research  and training,  but  as  research and training  cannot  be  given without beds. in a hospital, the hospital is run.  Treatment is  thus  a  part  of  research  and  training.   In   these circumstances, the Tuberculosis Hospital cannot be described as  an  industry.  The order of  the  Additional  Industrial Tribunal,  Delhi on the preliminary point must be  reversed. The  reference  to  the Tribunal under S.  10(1)(d)  of  the Industrial  Disputes  Act was incompetent.   The  appeal  is allowed but we make no order about costs. C.A  .  No. 1777 of 1969. The  objects of the Kurji Holy Family Hospital are  entirely charitable.   It carries on work of training,  research  and treatment.    Its  income  is  mostly  from  donations   and distribution  of  surplus as profit is prohibited.   It  is, therefore, clear that it is not an industry as-laid down  in the Act.  The reference made by the State Government,  Bihar was  thus incompetent.  The appeal will be  allowed.   There will be no order about costs, except in the first case (C.A. 1705 of 1967) in which the earlier order of this Court shall



be given effect to. V.P.S.                Appeals allowed. 195