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PETITIONER: WORKMEN OF INDIAN STANDARDS INSTITUTION

       Vs.

RESPONDENT: MANAGEMENT OF INDIAN STANDARDS INSTITUTION

DATE OF JUDGMENT06/10/1975

BENCH: BHAGWATI, P.N. BENCH: BHAGWATI, P.N. ALAGIRISWAMI, A. GOSWAMI, P.K.

CITATION:  1976 AIR  145            1976 SCR  (2) 138  1975 SCC  (2) 847  CITATOR INFO :  R          1978 SC 548  (158,159)  R          1984 SC1462  (5)

ACT:      Industrial Disputes Act, 1947-Sections 2(k), 2(g), 2(j) and 2(s)- "Industrial Dispute"-Concept of "Industry"-Meaning of -Tests  to be  satisfied for creating an "activity" as an "Industry" within the meaning of Section 2(j).      Words  and   Phrases-Term  "undertaking"  used  in  the definition in  Section 2(g)  of the  Industrial Disputes Act 1947-Meaning and scope of      Indian  Standards   Institution   is   an   undertaking analogous to  trade or  business and is an "Industry" within the meaning of Section 2(j).

HEADNOTE:      The workmen  of the  Indian  Standards  Institution,  a registered society,  under the  Societies Registration  Act, 1860 made  certain demands  which were  not accepted  by the management and  the dispute  arising therefrom  was taken in conciliation. Unable  to settle it, the Conciliation Officer made a  "Failure report"  to the  Lt. Governor, who referred the dispute  for adjudication  to  the  Industrial  Tribunal u/ss. 10(1)  (d) and 12(5) of the Act. Opposing the claim of the workmen  on merits,  the management  raised  before  the Tribunal, a  preliminary objection  that the Institution was not an  "Industry" within the meaning of Section 2(j) of the Act and,  therefore, the  dispute between the management and its workmen was not an "Industrial dispute" as defined in s. 2 (k)  and the  Lt. Governor had no jurisdiction to refer it for adjudication under the provisions of the Act.      The Tribunal  applying the  five tests laid down by the Supreme Court  in "Gymkhana  Club’s case"  and "The  Cricket Club’s case"  found that  though capital was employed in the Institution, it  was not run with a profit motive and so the fifth test  was not satisfied. So viewing, the Tribunal held that (a) the Institution was not an "industry", (b) that the reference was  outside the power of the Lt. Governor and (e) that  its   jurisdiction  to  entertain  the  reference  and adjudicate upon it was ousted.      Allowing the  appeal by special leave against the order

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of the Industrial Tribunal.      (Alagiriswami, J. dissenting), the Court ^      HELD: (Per Bhagwati and P. K. Goswami, JJ.)      (i) The  definition of  an "industrial  dispute" in  s. 2(k) does  not in  so many words refer to "industry". But on the grammar of the expression itself an "industrial dispute" must necessarily  be a  dispute in  an industry and moreover the  expressions   "employer"  and  "workman"  used  in  the definition of  "industrial dispute" carry the requirement of industry  in   that  definition   by  virtue  of  their  own definitions in sections 2(g) and 2(s). [143A-B]      (ii)   According   to   the   dictionary   meaning   an "undertaking" means  "anything undertaken;  any business  or work or  project  which  one  engages  in  or  attempts:  an enterprise". It  is a  term of very wide connotation. But an "undertaking" to  be within the definition in s. 2(j) of the Act must  be read subject to a limitation viz., that it must be  analogous  to  trade  or  business.  In  order  that  an undertaking should be analogous to trade or business, profit motive and  capital investment are not essential requisites. There can  be such  an under  taking without the presence of both or either of these attributes or features. No rigid and doctrinaire approach  can  be  adopted  in  considering  the question 139 as to  what are  the attribute  or features  which  make  an undertaking analogous to trade or business. Such an approach would fail to measure up to the needs of the growing welfare State which  is constantly  engaged in  undertaking new  and varied activities  as part of its social welfare policy. The concept of industry which is intended to be a convenient and effective tool  in the  hands of industrial adjudication for bringing about  industrial peace and harmony. would lose its capacity for  adjustment and  change. It  would be petrified and robbed of its dynamic content. [145-B, D, 146A, C, D]      (iii) An  activity can  be regarded  as  an  "industry" within the  meaning of s. 2(j) only if there is relationship of employer  and employees  and the  former  is  engaged  in "business, trade  undertaking,  manufacture  or  calling  of employers"  and   the  latter   "in  any   calling,  service employment,   handicraft   or   industrial   occupation   or avocation", Though  "undertaking" is  a word of large import and  it   means  anything   undertaken  or  any  project  or enterprise, in  the Context  in which  it occurs, it must be read  as  meaning  an  undertaking  analogous  to  trade  or business. In  order that  an activity  may be regarded as an undertaking analogous  to trade  or  business,  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. And it must rest on co operation with a view to production, sale or distribution of  material goods  or material services. It is entirely irrelevant whether or not there is profit motive or investment of  capital in  such activity. Even without these two features, an activity can be an undertaking analogous to trade or  business. It  is also immaterial "that its objects are charitable  or it  does not  make profits  or even where profits are  made, they  are  not  distributed  amongst  its members",  or   that  its  activity  is  subsidised  by  the Government. Again  it is  not necessary  that "the  employer must always  be a  private individual.  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.  It also  makes no difference that the

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material services  rendered by the undertaking are in public interest. The concept of public interest in a modern welfare State, where  new social  values are  fast emerging  and old dying out, is indeed so wide and so broad and comprehensive- in  its  spectrum  and  range  that  many  activities  which admittedly  fall  within  the  category  of  "industry"  are clearly designed  to  subserve  public  interest.  In  fact, whenever any  industry is  carried on  by the Government, it would be in public interest, for the Government can act only in public  interest. Whether  an activity  is carried  on in public interest  or not can, therefore, never be a criterion for determining  its character as an industry. [149D-H,150A- B]      State of  Bombay v.  Hospital Mazdoor  Sabha, [1960]  2 S.C.R. 866; Management of Safdarjung Hospital v. K. S. Sethi [1971] 1 S.C.R. 177, followed.      Federated Municipal  and  Shire  Council  Employees  of Australia v. Melbourne Corporation 26 C.L.R. 508. Secretary, Madras Gymkhana  Club Employees  Union v.  The Management of the Madras Gymkhana Club [1968] 1 S.C.R. 742; National Union of Commercial Employees v. M. R. Meher [1962] Supp. 3 S.C.R. 157; University  of Delhi & Anr. v. Ramnath, [1964] 2 S.C.R. 703; Cricket Club of India Ltd. v. The Bombay Labour Union & Anr. [1969] 1 S.C.R. 600, discussed.      HELD (Per Alagiriswami, J. contra):      Even when  a trade,  business, undertaking, manufacture or calling  of employers  results in  production of material goods or rendering of material services, such an undertaking engaged  in  trade.  business,  manufacture  or  calling  of employers will  not  be  an  "industry,  if  it  is  run  on charitable principles  or is run by Government or local body as part of its duty. In other words, whenever an undertaking is engaged  in activity  which is  not done  with a  view to exploit it  in a trading or commercial sense, but for public interest and  without any  profit motive  or in  the form of social service  or in  the  form  of  activity  intended  to benefit the general public, it will not be an industry. [161 G-H. 162A] 140      HELD FURTHER (Per Bhagwati and Goswami, JJ )      (iv) The activities of the Indian Standards Institution fall within  the category  of undertaking analogous to trade or business and constitute an  "industry" within the meaning of s. 2(j) of the Industrial Disputes Act, 1947. [157-E]      Ahmadabad Textile  Industry Research Association v. The State of  Bombay and others, [1961] 2 S.C.R. 480. Management of Safdarjung  Hospital v. K. S. Sethi, [1971] 1 S.C.R. 177, Management of  F.I.C.C.I. v. Its Workmen, [1972] S.C.R. 353, followed.      Per contra (Alagiriswami, J )      The Institution  has no capital, it does not distribute profits and  even when  it is wound up, the assets would not go to  any private  individual. It  is not run with a profit motive. It  is thus  not an enterprise analogous to business or trade.  In fact,  its activity is only a manifestation of Government activity.  Instead  of  itself  performing  these duties, which the Government itself has to do in the service of the  general public.  What the  Institution  does  is  to render material  services. The  material service  which  the Institution renders  is really  a subsidised service and  it is  rendered  in  public  interest.  It  is  an  institution interested  and  engaged  in  service  to  the  public.  Its activities do  not go  to swell  the coffers  of  any  body. Applying the  tests evolved  and applied  in  the.  Gymkhana

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Club’s case  and the  Safdarjung’s case,  it is obvious that the  institution   is  not  engaged  in  any  industry.  The activities of  the  Indian  Standards  Institution  are  not intended to  benefit any  class of  businessmen or to enable them to  increase their  income.  It  is  a  public  service institution and,  therefore, is  not an  industry.  [162D-F, 163-A]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1297 of 1970.      Appeal by  special leave  from the Award dated the 10th October 1969 of the Additional Industrial Tribunal, Delhi in I.D. No.174 of 1968.      M. K.  Ramamurthi, K.  R. Nagaraja,  S. K. Mehta, A. K. Jain and C. K. Srivastava, for the Appellant.      A. K.  Sen, M.  C. Bhandare.  Dr. Anand  Prakash, P. P. Rao, P.  H. Parekh and Mrs. Sunanda Bhandare, for Respondent No. 1.      The Judgment  of P.  N. Bhagwati and P. K. Goswami, JJ. was delivered  by Bhagwati,  J. A.  Alagiriswami, J.  gave a dissenting opinion.      BHAGWATI J.  Here, in  this case, once again arises the question as  to what  is an ’industry’ within the meaning of the  Industrial   Disputes  Act   1947.  This  question  has continually baffled and perplexed the Courts in our country. There have  been various  judicial ventures  in this  rather volatile area  of the  law. The  Act gives  a definition  of ’industry’ in  section 2(j)  but this definition is not very vocal and  it has  defined analysis, so that judicial effort has been  ultimately reduced  merely to  evolving  tests  by reference  to  characteristics  regarded  as  essential  for constituting an activity as an ’industry’. The decided cases show that  these tests have not been uniform; they have been guided  more   by  an   empirical  rather  than  a  strictly analytical  approach.   Sometimes  these   tests  have  been liberally  conceived,   sometimes   narrowly.   The   latest exposition is  to be found in the judgment of a Bench of six Judges of this Court 141 in Safdarjung Hospital v. K. S. Sethi.(1) But while applying the tests  indicated in  this decision,  it is  necessary to remember  that  the  Industrial  Disputes  Act,  1947  is  a legislation  intended  to  bring  about  peace  and  harmony between management  and labour  in  an  ’industry’  so  that production does  not suffer  and at the same time, labour is not exploited  and discontented  and, therefore,  the  tests must  be   so  applied   as  to  give  the  widest  possible connotation to  the term  ’industry’.  Whenever  a  question arises whether  a particular  concern is  an ’industry’, the approach  must  be  broad  and  liberal  and  not  rigid  or doctrinaire. We  cannot forget  that it  is a social welfare legislation we  are interpreting  and we  must place such an interpretation as  would advance  the subject and purpose of the legislation  and give  full meaning  and effect to it in the achievement  of its  avowed social objective. With these prefatory observations, we proceed to state the facts giving rise to the appeal.      The Indian  Standards Institution (hereinafter referred to as  ’the Institution’)  is a Society registered under the Societies  Registration   Act,  1860.  The  workmen  of  the Institution represented  by the Indian Standards Institution Employees’ Union  (hereinafter referred  to as  ’the Union’)

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made  certain   demands  which  were  not  accepted  by  the management and  a  dispute  accordingly  arose  between  the management  and  the  workmen.  The  dispute  was  taken  in conciliation but  the Conciliation  officer  was  unable  to bring about  settlement and  he made, what is commonly known as "failure  report" to  the Lt.  Governor of Delhi. The Lt. Governor thereupon by an order dated 28-9-1968, referred the dispute for  adjudication to  the Industrial  Tribunal under sections 10(1)  (d) and  12(5) of  the Act. The order of the Lt. Governor  set out  the demands  which were  to form  the subject-matter of  adjudication by  the Industrial Tribunal. The Union  representing the  workmen filed  a  statement  of claim in  support of  these demands.  The management opposed the demands  on merits  but in  addition to  the defence  on merits, they  raised a  preliminary objection which, if well founded, would  strike at  the very root of the jurisdiction of the  Industrial Tribunal  to entertain the reference. The preliminary objection  was that  the institution  was not  a industry within  the meaning  of s.  2(j) of  the  Act  and, therefore,  the   dispute  between  the  management  of  the Institution and  its workmen was not an ’industrial dispute’ as defined  in  sec.  2(k)  and  the  Lt.  Governor  had  no jurisdiction  to   refer  it   for  adjudication  under  the provisions of  the Act.  Issue No.  1 arising  out  of  this preliminary objection was in the following terms: "Is Indian Standards Institute  an industry or not", and this issue was directed to be tried as a preliminary issue.      The Industrial  Tribunal proceeded to examine the legal position for  the purpose  of determining  when a particular activity can  be regarded  as an industry within the meaning of s.  2(j) of  the Act.  It observed  that there  were five tests laid  down by  the decisions  of this  Court in Madras Gymkhana Club  Employees Union   v.  The Management  of  the Madras Gymkhana  Club(2) and  Cricket Club  of India Ltd. v. The (1) [1971] 1 S. C. R. 177.       (2) [1968] 1. S. C. R. 742. 142 Bombay Labour  Union &  Anr.(1) which  were required  to  be satisfied  before  an  activity  could  be  held  to  be  an "industry" and they were as follows:           "1.  When  the  operation  undertaken  rests  upon                cooperation between  employers and  employees                with a view to production and distribution of                material goods or material services;           2.   It must  bear the definite character of trade                or business or manufacture or calling or must                be  capable   of  being   described   as   an                Undertaking analogous  to business  or  trade                resulting  in   material  goods  or  material                services;           3.   The  activity   to  be   considered   as   an                ’industry’ must  not be  casual but  must  be                distinctly systematic;           4.   The work  for  which  labour  of  workmen  is                required, must be productive and workmen must                be  following   an  employment   calling,  or                industrial avocation; and           5.   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 Local Authority                enters upon  business, trade,  manufacture or                an undertaking analogous to trade)." On an  application of  these tests,  the Industrial Tribunal found that  the Institution  satisfied the  first four tests

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and this  indeed was  not disputed,  but so far as the fifth test was  concerned, it  was not satisfied since capital was undoubtedly employed  in the institution but the institution was not  run with  a view  to profit.  The profit motive was ruled out  by the  objectives of  the Institution and as the profit motive was lacking, the Institution could not be held to be an ’industry’. The Industrial Tribunal accordingly, by an order  dated 10th  October, 1969, held that the reference of the dispute between the management of the Institution and its workmen  was outside  the power  of the Lt. Governor and the Industrial Tribunal had no jurisdiction to entertain the reference  or  to  adjudicate  upon  it.  The  workmen  were obviously aggrieved  by this  older made  by the  Industrial Tribunal  since   it  closed   the   doors   of   industrial adjudication and  left the  workmen without  any  remedy  to redress  their  grievances  and  hence  they  preferred  the present appeal  against the order of the Industrial Tribunal with special leave obtained from this Court.      The Industrial  Disputes Act,  1947, as  its long title and preamble  show, has  been enacted  to make provision for investigation and  settlement of  industrial disputes. It is only an  ’industrial dispute’  which  can  be  referred  for adjudication under  ss. 10(1) (d) and 12(5) of the Act. That is a  ’industrial dispute’  is to  be found  in s 2(k) which defines an  industrial  dispute  to  mean  "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      (1) [1969] 1 S. C. R. 600. 143 Of labour,  of any person." This definition, of course, does not in  so many  terms, refer  to ’industry’.  But,  on  the grammar of  the expression itself an industrial dispute must necessarily be  a dispute  in an  industry and  moreover the expressions ’employer’  and ’workman’ used in the definition of ’industrial  dispute’ carry the requirement of ’industry’ in that definition by virtue of their own definitions in ss. 2(g) and 2(s). It is therefore, necessary to examine what is the concept of an ’industry’ within the meaning of the Act.      Now, the word ’industry’ is defined in s. 2(j) and that section reads:      "’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;" This definition is in two parts. The first part says that it means  any  business,  trade,  undertaking,  manufacture  or calling of  employers and  then it  goes on  to say  in  the second  part   that  it   includes  ally  calling,  service, employment handicraft, or industrial occupation or avocation of  workmen.  This  Court  had  occasion  to  consider  this definition in  r the case of State of Bombay v. The Hospital Mazdoor Sabha(1)  where this  Court  sought  to  expand  the concept,  of   ’industry’   by   a   process   of   judicial interpretation to  meet the  changing requirements of modern currents of  socio-economic thought.  It was  pointed out by this Court  that "section 2(j) does not define ’industry’ in the usual  manner by  prescribing what  it means:  the first clause of  the definition  gives the  statutory  meaning  of ’industry’ and  the second  clause  deliberately  refers  to several other  items of  industry and  brings  them  in  the definition in  an inclusive way." But this interpretation of the definition  was disapproved  by a  larger bench  of this Court in  Management of  Safdarjung Hospital  v. K. S. Sethi

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(supra).  We  shall  immediately  proceed  to  examine  that decision, as  that is the decision which presently holds the field and  must ultimately  govern the  determination of the present case.  But before we do so, we must refer to another decision of this Court which came a little before Safdarjung Hospital case  (supra). That  is the  decision in Secretary, Madras Gymkhana  Club Employee.  Union v.  Management of the Gymkhana (supra).  While  dealing  with  the  definition  of ’industry’ in  this case,  it was  pointed out by this Court that "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"  and it  was 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 purpose  of  industrial  disputes although industry is (1) [1960] 2 S. C. R. 866. 144 ordinarily something  which employers  create or undertake." We may point out that the concept underlying the observation that  "industry  is  ordinarily  something  which  employers create or  undertake" is  gradually yielding  place  to  the modern concept  which regards  industry as  a joint  venture undertaken by  employers  and  workmen-an  enterprise  which belongs equally  to both.  But we need not dwell on this any longer, as  it is  not of  immediate concern  to us  in this case. It  is sufficient to point out that the interpretation of the  definition of  ’industry’ given  in Madras  Gymkhana case (supra)  struck a  slightly different note from what it was understood  to mean  in the  State of Bombay v. Hospital Mazdoor Sabha case (supra). But again in Safdarjung Hospital case (supra)  this Court  found it necessary to qualify what it had said in the Madras Gymkhana case (supra) in regard to the  meaning  of  ’industry’  and  after  referring  to  the definition  of  industry  in  s.  4  of  the  Common  wealth Conciliation  and  Arbitration  Act,  1909-1970  this  Court observed:           "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, 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. The  definition no  doubt seeks to      define  ’industry’   with   reference   to   employers’      occupation but  include 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. This Court  then  proceeded  to  add  that  "every  case  of

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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". A workman can  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".  Thus,  a  basic requirement of  ’industry’ is  that the  employers  must  be "carrying on  any business,  trade, undertaking, manufacture or calling  of employers.  If they  are  not,  there  is  no industry as such." Now, what these expressions mean has been discussed in  a large number of cases decided by this Court. These cases  have all  been reviewed  in the Madras Gymkhana case. We  are, however,  not directly  concerned with any of these expressions  except ’undertaking’, for the case of the workmen is not that the management of the Institution is 145 carrying on  any business, trade, manufacture or calling but It  rests  on  a  very  limited  ground,  namely,  that  the management of the Institution is carrying on an undertaking. It, therefore,  becomes necessary  to inquire  what  is  the meaning and  scope of  the term ’undertaking’ as used in the definition in s. 2(j).      Now, according  to its  dictionary meaning  as given by Webster,  "undertaking"   means  "anything  undertaken;  any business, work  or  B.  project  which  one  engages  in  or attempts.  an  enterprise".  It  is  a  term  of  very  wide denotation. But  all decisions of this Court are agreed that an under-taking  to be within the definition in s. 2(j) must be read  subject to  a limitation,  namely, that  it must be analogous to  trade or business. That was the view expressed in the  Hospital Mazdoor Sabha case (supra)-vide page 879 of the  Report-and   the  same   view  was  reiterated  in  the Safdarjung  Hospital  case  (supra)-vide  page  187  of  the Report. But the question is: when can an undertaking be said to  be   analogous  to  trade  or  business:  what  are  the attributes or  characteristics  which  it  must  possess  in common with  trade or  business in  order to  be regarded as analogous to trade or business ? That is a question which is not very  easy to  decide, but  there are  decisions of this Court which afford guidance in dealing with this question.      This Court  pointed out  in the  Hospital Mazdoor Sabha case (supra)  that in  order that  an undertaking  should be analogous to  trade or business, it is not necessary that it should possess  the two  essential features  associated with the conventional  notion of trade or business namely, profit motive and investment of capital. Gajendragadkar, J., (as he then was),  speaking on behalf of the Court observed: "It is not disputed  that under s. 2(j) an activity can and must be regarded   as an  industry even  though in  carrying it  out profit motive  may be  absent. It is also common ground that the absence  of investment  of any  capital would not make a material difference  to the  applicability of s. 2(j). Thus, two of  the important  attributes conventionally  associated with trade  or business  are not  necessarily predicated  in interpreting s.  2(j)". This  view was neither overruled nor departed from  in the  Safdarjung Hospital  case (supra). On the contrary,  the decision  1 in  Safdarjung Hospital  case reaffirmed this  view and  gave it the seal of approval of a bench of  six judges  of this  Court.  This  Court  speaking through Hidayatullah, C.J., pointed out in that case. "It is not necessary  that there  must be  a profit motive, but the enterprise must  be analogous  to trade  or  business  in  a

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commercial sense  It is  an  erroneous  assumption  that  an economic activity  must be  related to  capital  and  profit making alone.  An economic  activity can  exist with out the presence  of   both".  The   learned  Chief  Justice,  after referring to  the observations  of Isaacs  and Rich,  JJ. in Federated     Municipal  and   Shire  Council  Employees  of Australia v.  Melbourne  Corporation(1)  stated  that  these observations "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". It is, therefore, clear that, according to  the decisions  of this Court and on this point the decision in Safdarjung Hospital case (supra) does      (1) 26 C.L.R. 508. 146 not make  any departure  from that  in the  Hospital Mazdoor Sabha case  (supra)-profit motive and capital investment are not essential  requisites  for  an  undertaking  within  the meaning of  the definition  in s. 2(j). There can be such an undertaking without  the presence of both or either of those attributes or features.      What then  are the attributes or features which make an under   taking analogous  to trade  or  business  so  as  to attract the  applicability of  s.2(j). It  is  difficult  to enumerate these  possible attributes  or features definitely or exhaustively.  Indeed, it  would not be prudent to do so. So infinitely  varied and  many-sided is  human activity and with the  incredible growth  and progress in all branches of knowledge and  ever widening  areas  of  experience  at  all levels, it  is becoming  so diversified  and expanding in so many directions  hitherto unthought  of, that  no  rigid and doctrinaire approach  can be  adopted  in  considering  this question. Such  an approach  would fail to measure up to the needs of  the growing  welfare  state  which  is  constantly engaged in  undertaking new and varied activities as part of its social welfare policy. The concept of industry, which is intended to  be a convenient and effective tool in the hands of industrial  adjudication for  bringing  about  industrial peace and  harmony, would  lose its  capacity for adjustment and change.  It would be petrified and robbed of its dynamic content. The  Court should,  therefore, as  far as  possible avoid formulating  or adopting  generalisations and hesitate to cast  the concept  of industry  in a  narrow rigid  mould which would  not permit  of expansion  as and when necessity arises. Only  some working  principles may  be evolved which would  furnish   guidance  in   determining  what   are  the attributes  or   characteristics  which   would   ordinarily indicate that  an  undertaking  is  analogous  to  trade  or business.      What can  fairly be  regarded as a sufficiently elastic or flexible  working principle  for this  purpose  has  been discussed in  a number  of decisions of this Court, of which we may  refer only  to three,  namely, the  Hospital Mazdoor Sabha case (supra), The Madras Gymkhana case (supra) and the Safdarjung Hospital  case (supra).  Though the language used in these  decisions to  state the  working principle  is not uniform and  there are  minor variations  in the formulation according as  one aspect  is more emphasised than the other, the working  principle laid  down  is  basically  the  same. Gajendragadkar, J.,  (as he  then was) speaking on behalf of the Court  in the Hospital Mazdoor Sabha case (supra) stated the working principle in these terms:           " .  . .  as a  working principle it may be stated      that   an   activity   systematically   or   habitually      undertaken for  the production or distribution of goods

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    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 147      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(j) applies." It was the same working principle which was pithly expressed by this  Court through Hidayatullah, J., (as he then was) in the Madras  Gymkhana case  (supra) where  it was  stated:  " 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".  This last  proposition taken  from  the judgment in  the Madras Gymkhana case (supra) was in so many terms accepted  as valid  in the  Safdarjung  Hospital  case (supra): vide  page 189  of the  Report. This Court speaking through Hidayatullah,  C.J., pointed  out in  the Safdarjung Hospital case (supra) at pages 186 and 187 of the Report:           "But 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." What is  meant by  ’material’ services  in this  context was explained by the learned Chief Justice in these words.           "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  manly  such      operate cannot  be said  to convert  their professional      services  into   material  services  Material  services      involve an  activity  carried  on  through  cooperation      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

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    brought into existence quite apart from 148      the  benefit  to  particular  individuals.  It  is  the      production of  this something which is described as the      production of material services." The learned  Chief Justice  then proceeded  to  explain  why professions  must  be  held  to  be  outside  the  ambit  of industry. This is what he said:           "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  ill.  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." It was  for this reason, observed the learned Chief Justice, that the  establishment of a solicitor was held not to be an industry  "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(1)  The learned Chief  Justice pointed out that in the University of Delhi & Anr. v Ramnath(2) the University was also held to be outside the  ambit of  industry for  the  same  reason.  The learned Chief  Justice then summarised the working principle the broad  test or  criterion for  determining  what  is  an undertaking analogous to trade or business-in these terms:           "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     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.", and after  referring to the observations of Isaacs and Rich, JJ in  Federated Municipal  and Shire  Council Employees  of Australia v  Melbourne Corporation  (supra) pointed out that these observations showed that "industrial disputes occur in operations 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." (emphasis added). (1) National  Union of  Commercial Employers v. M. R. Meher, [1962] Supp. 3 S. C. R 157. (2) [1964] 2 S. C. R. 703. 149      It  would   thus  be  seen  that  the  broad  test  for determining when  an undertaking can be said to be analogous to trade  or business  laid down  in the Safdarjung Hospital case (supra)  was the  same as in the Hospital Mazdoor Sabha case (supra).  The Safdarjung Hospital case did not make any real departure  the enunciation  of this  test It is only in the application  of this  test to the case of hospitals that the Safdarjung  Hospital case  took  a  different  view  and observed that  the judgment  in the  Hospital Mazdoor  Sabha

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case (supra)  had taken "an extreme view of the matter which was not justified". There was also one other ground on which the decision  in the Safdarjung Hospital case disapproved of the view  taken in  the Hospital Mazdoor Sabha case and that ground was  that the  decision in the Hospital Mazdoor Sabha case proceeded  on an  erroneous basis  that an activity, in order to  be an  undertaking analogous to trade or business, need not  be an  economic activity and applied a wrong test, namely,  ’can   such  activity  be  carried  on  by  private individuals or  group of  individuals?’ It would, therefore, seem that,  in view  of the  decision in Safdarjung Hospital case, this  last test  applied in the Hospital Mazdoor Sabha case must be rejected as irrelevant and it must be held that an activity,  in order  to be  recognised as  an undertaking analogous to trade or business, must be an economic activity in the  sense that  it is  productive of  material goods  or material services.      To  summarize,  an  activity  can  be  regarded  as  an ’industry’ within  the meaning  of s.  2(j) only if there is relationship of  employer and  employees and  the former  is engaged in  ’business, trade,  undertaking,  manufacture  or calling of  employers’  and  the  latter,  ’in  any  calling service, employment,  handicraft or industrial occupation or avocation’ Though  ’undertaking’ is  a word  of large import and  it   means  anything   undertaken  or  any  project  or enterprise, in  the context  in which  it occurs, it must be read  as  meaning  in  undertaking  analogous  to  trade  or business. In  order that  an activity  may be regarded as an undertaking analogous  to trade  or  business,  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. And it must rest on co-operation between employer and employees who associate together  with  a  view  to  production,  sale  or distribution of  material goods  or material services. It is entirely irrelevant whether or not there is profit motive or investment of  capital in  such activity. Even without these two features  an activity can be an undertaking analogous to trade or  business. It  is also immaterial "that its objects are charitable  or that  it does  not make  profits or  even where profits are made, they are not distributed amongst the members",(1) or  that its  activity  is  subsidised  by  the Government. Again  it is  not necessary  that "the  employer must always  be a  private individual...  The Act, in terms, contemplates  cases   of  industrial   disputes  where   the Government or  a local authority or a public utility service may be   employer  ..."(2) It  also makes no difference that the material  services rendered  by the  undertaking are  in public interest (1) Management of FICCI v. Workmen, [1972] 2 S. C. R. 353 at 376. (2) Madras Gymkhana case, p. 756 of the Report. 150 The concept  of public  interest in  a modern welfare State, where new social values are fast emerging and old dying out, is indeed  so wide  and so  broad and  comprehensive is  its spectrum and  range that  many activities  which  admittedly fall within  the category of ’industry’ are clearly designed to subserve  public interest. In fact, whenever any industry is carried  on by  the Government,  it would  be  in  public interest, for the Government can act only in public interest Whether an  activity is carried on in public interest or not can, therefore,  never be  a criterion  for determining  its character as  an industry.  Having thus  examined the  legal concept, of  industry as  expounded in the decisions of this

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Court, we  may now  proceed to consider whether the activity of the  Institution can  be characterised  as an industry in the light of the broad test discussed by us.      The Institution  owes its  genesis to the Government of India Resolution  No. 1  STD(4)/45 dated 3rd September 1916. Prior to  this Resolution,  British and  American  standards were generally adopted for our country. But due to diversity of raw-materials  available in our country and the processes employed for  manufacture, it was increasingly felt that the British and  other standards  were not  always suitable  for adoption in  our country and it was necessary to establish a central standards  organisation for fixing Indian standards. The Government  of India,  therefore, passed this Resolution for setting  up an   organisation  to be  called the  Indian Standards Institution  with its  headquarters at  New Delhi. Pursuant to  this Resolution, the Institution was registered and establish  under the  Societies Registration  Act  1860. Clause (3) of the Memorandum of Association sets out objects of the  Institution and,  so far  as material,  they are  as follows:                "(a)  To  prepare  and  promote  the  general      adoption of  standards on  national  and  international      basis relating  to structures,  commodities, materials,      practices, operations,  matters and  things, and,  from      time to time, to revise, alter and amend the same.                (b)  To   promote  standardization,   quality      control and simplification in industry and commerce.                (c ) ... ... ...                (d)To co-ordinate  the efforts  of  producers      and users  for the  improvement of materials, products,      appliances, processes and methods.                (e)  To   provide  for  the  registration  of      standardization   marks    applicable   to    products,      commodities, etc.,  for which it issues standards to be      branded on  or applied  to those products, commodities,      etc., which conform to standards set.                (f) To  provide or arrange facilities for the      examination and  testing of  commodities, processes and      practices,, and for any investigations or research that      may be necessary.           (g)..         ..         ..                ..           (h)..         ..         ..                ..           (i)..         ..         ..                 .. 151           (j) To  communicate, information to members on all      A matters  connected with standardization and to print,      publish, issue  and circulate  such periodicals, books,      circulars, leaflets  and other publications as may seem      conducive to any of the objects of the Institution". The income and property of the Institution, however derived, are directed  by cls.  (6) and  (7)  of  the  Memorandum  of Association to  be applied  towards  the  promotion  of  the objects as set forth in the Memorandum of Association and no portion  of   the  income   or  property   is  divisible  or distributable amongst  the members, either during the active life of the Institution or on its winding up or dissolution.      The Rules  and  Regulations  of  the  Institution  make various  provisions  in  regard  to  the  mechanics  of  the functioning of  the Institution. Rule 2 lays down that there shall be  two categories  of  members,  namely,  subscribing members  and   committee  members   and  their   rights  and privileges are  enumerated in  Rule 5.  Rule  7  vests  the. management of  the affairs  of the  Institution in a general Council and  its composition  is laid down in Rule 8 and its functions, in Rule 11. Rule 15 provides for the constitution

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of the  Executive  Committee  and  it  lays  down  that  the Executive Committee shall have the powers to manage the day- to-day affairs  of the Institution, including administration of ISI  (Certification Marks))  Act, 1952 in conformity with policies laid  down by  the General Council. The Institution can have  different branches  as may  be decided upon by the General Council  under Rule 18. Rule 19 says that a division shall  constitute   the  main   section  of   the  technical activities of  the Institution and Rule 20 declares that the work of  a  division  shall  be  controlled  by  a  Division Council. What  shall  be  the  constitution  of  a  Division Council is  laid down in Rule 22 and that Rule provides that a  Division   Council  shall   be   constituted   from   the representatives  of   the  respective  interests  of  users, manufacturers and  other persons  or bodies  concerned in or associated with  the industries  included in  the  Division. Rule 26 deals with Sectional Committees and it says that the Sectional Committee shall be appointed by a Division Council or if  necessary, by Executive Committee for the preparation of a  particular standard  or group  of  standards  and  the Sectional Committee  shall be composed of representatives of such interests as, in the opinion of the Division Council or Executive  Committee,   are  concerned  with  the  standards referred  to  the  Committee.  It  emphasises  that  on  the Sectional  Committee   all  interests  shall  be  adequately represented  including   scientists  and   technicians,  but consumer interest shall, as far as possible, predominate. G      Now, at  this stage  it would  be convenient to explain what  are  standards  and  why  they  are  necessary  to  be established. Standards  are technical  documents  describing constructional, operational  and technological  requirements of a  material, a  product or a process for a given purpose. They furnish such details as materials to be used dimensions and sizes  to be  adopted, performance  to be  expected, and quality to  be achieved; they also give methods of tests for comparing and  judging quality  of  goods  produced  by  the manufacturer. Standards  may be  of any  one or  more of the following five categories: (a) 11-1276SCI/75 152 Dimensional Standards  which secure  interchangeability  and eliminate unnecessary  variety of  types  for  the  same  or similar purposes;  (b)  Performance  and  quality  Standards which ensure  that the final article will be fit for the job it is  designed to  do; (c)  Standard Methods of Tests which enable materials  or products  intended for the same purpose to be  compared uniformly;  (d) Standard Technical Terms and Symbols which  provide a common, easily understood technical language  for  the  industry,  and  (e)  Standard  Codes  of Practice  which  set  out  the  most  efficient  methods  of installation, use and maintenance of equipment and recommend methods of  technical operations.  These are  necessary  ill order to  meet the  challenges posed  by the fast developing industry economy  of the  country  and  mass  production  of economic goods and services. The manufacturer should be able to produce goods of specified quality so that he can win the confidence and  good-will  of  the  consumer  and  build  up internal and  external markets  for high products. He should also be  able to increase his productivity, produce goods at minimum cost and achieve overall economy by best utilisation of human  and material  resources at its disposal. Standards which are  based on  the consolidated  results  of  science, technology  and   experience,  furnish   guidance   to   the manufacturer in this behalf and confer economic benefits for the development of industry and smooth flow of commerce.

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    The procedure  for preparing  standards is laid down in Rule 29 of the Rules and Regulations of the Institution. The underlying principles  for the  preparation of standards are that they  shall be  in accordance  with the  needs  of  the industry and  fulfil a  generally recognised  want, that the interests  of   both  producers   and  consumers   shall  be considered and that periodic review shall be undertaken. The work   of standardisation  on any  specific subject  can  be undertaken only  when  the  Division  Council  concerned  is satisfied, as  a result  of its  own deliberations  or of an investigation  and   consultation  with   the  producer  and consumer interests,  that the  necessity for standardisation has  been   established.  When   the  subject  has  been  so investigated and  the need  established the Division Council concerned would  refer the  work to an appropriate Sectional Committee and the Sectional Committee would then explore and study the  subject and  prepare  a  draft  of  the  proposed standard. The  draft standard  would then be issued in draft form  for  a  period  to  be  determined  by  the  Sectional Committee  but   not  less  than  three  months  and  widely circulated amongst  those likely  to be  interested for  the purpose of  securing critical  review  and  suggestions  for improvement which, is found desirable, would be incorporated in the  draft. This  procedure for  circulation can,  in  an appropriate case,  be curtailed  or dispensed  with  by  the Division Council. The consideration of the comments received as a  result of  the circulation of the draft standard would be undertaken by the Sectional Committee and the final draft prepared after  verification in the appropriate laboratories where necessary.  The standard so finalised by the Sectional Committee would  then be  referred to  the Division  Council concerned for  adoption and on such adoption by the Division Council, it would be published as an Indian Standard.      The Institution  thus  prepares  and  publishes  Indian Standards on  different subjects  and some  of these  Indian Standards are also revised 153 so as  to keep  abreast  with  the  latest  developments  in manufacturing   and testing  techniques and  to improve  the quality of  goods. The  Annual Report of the Institution for 1967-68 shows  that the  number of Indian standards in force on 31st  March, 1968  was 4564  and  during  that  year  159 existing Indian  standards were revised. The activity of the Institution in  regard to  preparation  and  publication  of Indian standards  has continued  to increase  over the years and, according  to the  Annual Report of the Institution for 1973-74, the  number of  Indian standards  in force  on 31st March, 1974  was 7760  and during  that year, as many as 243 existing Indian standards were subjected to revision.      Indian  standards   thus  published,   whether  new  or revised, are sold by the sales service of the Institution at its headquarters  and at  the various  branch offices and as the Annual  Report for  1973-74 shows, the proceeds from the sales of  Indian standards have steadily increased from year to year and reached the figure of Rs. 16,24,170/- during the year 1973-74.  The Institution  also acts  as a sole selling agent for sale of overseas standards on commission basis and from this  activity, the Institution derives a large income, which during  the year  1973-74 amounted  to as  much as Rs. 3,20,700/-.      The Institution  also carries on another activity which is the  direct outcome  of preparation  and  publication  of Indian  standards   and  that  activity  is  the  result  of implementation   of   the   Indian   Standards   Institution (Certification Marks)  Act, 1952 (hereinafter referred to as

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the Certification  Marks Act)  . Section  2, cl. (1) defines ’standard mark’  to mean  the Indian  Standards  Institution Certification Mark  F. specified  by  the  Indian  Standards Institution to  represent a particular Indian standard. Sub- section (1)  of s.  5 imposes  a prohibition  that no person shall use, in relation to any article. Or process, or in the title of  any patent,  or in  any trade  mark or design, the Standard Mark  or any  colourable imitation  thereof, except under  a   licence  granted   under  the   Act  and  another prohibition is  imposed by sub-s. (2) of s. 5 that no person shall, notwithstanding  that he  has been granted a licence, use in  relation to any article or process the Standard Mark or any  colourable imitation thereof, unless such article or process conforms  to the Indian Standard. Since the Standard Mark is  intended to represent a particular Indian Standard, obviously no  one can be allowed to use the Standard Mark or any colourable  imitation thereof,  except under  a  licence granted by  the Institution,  for it  is  only  through  the machinery of a licence that the Institution would be able to exercise a check on the person concerned and ensure that the article manufactured  or process employed by him conforms to the Indian  Standards and  that the  Standard  Mark  is  not abused by  him and  it does  not  become  an  instrument  of deception. It is for this purpose that s. 8 confers power on the Institution to appoint inspectors for inspecting whether any article  or process  in relation  to which  the Standard Mark has  been used  conforms  to  the  Indian  Standard  or whether the  Standard  Mark  has  been  improperly  used  in relation to any article or process, with or without licence. 154      The Central  Government has,  in exercise  of the power conferred under  s. 20  of the Certification Marks Act, made the  Indian   standards  Institution  (Certification  Marks) Rules, 1955. Rule 4 requires that the design of the Standard Mark in  relation to  each Indian Standard together with the verbal description  of the  design of  the Standard Mark and the title  of the  Indian Standard shall be published by the Institution.  Rule   S  provides   for  the   making  of  an application for  grant of  a licence . Rule 7 stipulates for the holding  of a  preliminary inquiry  by  the  Institution before granting  a licence  and Rule  8  lays  down  when  a licence may  be granted  or renewed.  Under Rule 6, the fees and expenses  leviable in  respect of  grant or  renewal  of licence and  in respect  of all  matters in-relation to such licence are  left  to  be  prescribed  in  the  Regulations. Regulation 7  of the  Indian Standards  Institution provides that every  application for  the grant of a licence shall be accompanied by 9a fee of Rs. 100/- and every application for a renewal  of such  licence shall be accompanied by a fee of Rs. 50/-  and in  addition to  this application  fee,  there shall be paid by every licensee an annual licence fee of Rs. 200/- and  a marking fee proportionate to the quantum of the annual production  of the  article or  process in respect of which the  licence has  been granted.  Regulation 9 requires every licensee to institute and maintain to the satisfaction of   the Institution  a system  of control  to keep  up  the quality of his production or process by means of a scheme of inspection and  testing attached  to the licence and Rule 10 confers power  on an Inspector to enter upon the premises of a licensee  with a  view to  ascertaining that  the Standard Mark is  used in  accordance with  the terms  and conditions imposed by  the Institution  and that  the scheme of routine inspection and testing specified by the Institution is being correctly followed.      It will,  therefore, be  seen that the Standard Mark is

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the most  authentic representation  to the consumer that the article or  process in  respect of which it is used conforms to the  relevant Indian  Standard and  Indian Standard  thus becomes meaningful  and advantageous by reason of the use of the Standard  Mark. But  no one  can use  the Standard  Mark without a  licence from the Institution and even if there is a licence,  the Standard  Mark cannot be used in relation to an  article  or  process  unless  such  article  or  process conforms to  the relevant  Indian  Standard.  The  issue  of licences for  use of  Standard Marks under the Certification Marks scheme is, therefore, a very important activity of the Institution  complementary   as  well  as  supplementary  to preparation  and   publication  of   Indian  Standards.  The Certification Marks  scheme  has  been  making  considerable progress from  year to  year and  while,  according  to  the Annual Report  of the  Institution for  1967-68,  the  total number of  licences issued since the inception of the scheme upto 31st March, 1968 was 1665 and the annual value of goods covered under the scheme was approximately Rs. 3800 million. the total  number of  licences granted upto 31st March, 1974 increased to  3784 and  the annual  value of  goods  covered under the  scheme rose  to approximately  Rs.  5000  million during the  year 1973-74 as per the figures contained in the Annual  Report   for  that   year,  the  total  income  from certification marking  does not  appear to  have been  shown separately in  the Annual  Report of the Institution for the year 155 1967-68, but  according to the Annual Report for 1973-74, it was  Rs. 5.2 million during that year. The Annual Reports of the institution  clearly reveal  that from  year to year the total number  of licences  granted  by  the  Institution  is steadily  increasing   and  so  is  the  total  income  from certification marking.      The Institution  has also  several laboratories for the purpose of  carrying out  testing operations.  It has a well equipped library  at the  Headquarters and  there  are  also laboratories  at   the  branch   offices  where  testing  of different articles  is carried out. The testing work carried out in  these laboratories  has shown a consistent rise over the years  and while  during the  year 1967-68 the number of samples received  for testing  was 3853  and  the  value  of testing work  done was  Rs. 3,96,468,  the number of samples received during  1973-74 was  12726 and the value of testing working done  during that  year  was  Rs.  8,76,847.58.  The samples tested  at  the  laboratories  are  not  only  those submitted by  the manufacturers, distributors and consumers, but also  those taken  by the  Inspectors for the purpose of ascertaining whether  any article  or process in relation to which the  Standard Mark  is used  conforms  to  the  Indian Standard or  whether the  Standard Mark  has been improperly used in relation to any article or process. The laboratories are also  used in  connection with the preparation of Indian Standards as contemplated in cl. (f) of Rule 29 of the Rules and Regulations of the Institution.      Then,  the   Institution  maintains  libraries  at  the Headquarters and  at the  branch offices which render useful services to  the subscribing members, the Committee members, the  Staff   members  and   others.  The   library  at   the Headquarters, which  is open  to visitors, has complete sets of  overseas   standards  and   specifications  and  related indices. It  has  also  classified  subject  catalogues  for consultation    and     retrieval    of    information    on standardization. It  also prepares  and circulates  for  the benefit of  its users  a monthly  list of  current published

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information on  standardization. It  has  also  brought  out fortyone bibilographies  at the  request of  technical staff and  Committee  members  and  also  published  an  important bibliography, namely,  ’World List  of  Standards  on  Paper Products’. Quite  often, technical  enquiries  are  received from the  industry and the necessary information is supplied by the  libraries of  the Institution.  The  libraries  also disseminate technical  information on  national and overseas standards, specifications and other allied subjects.      The Institution  is also  bringing  out  regularly  ISI bulletin,  Standards  Monthly  Additions  and  miscellaneous publications  such   as  Annual   Report,  Handbook  of  ISI publications, brochures,  leaflets and  a  large  number  of advertisements. These  publications are  distributed amongst the members  and are  also sold  to non-members and they are intended to  publicise the  activities of  the  Institution, promote  widespread   implementation  of  Indian  Standards, propagate the  Certification Marks  scheme, create awareness about the  importance of standardization and quality control and further the standardization movement in the country. The Institution is  also making concerted efforts for furthering standardization movement among different sectors of economy 156 through out the country through different media of publicity and for  that purpose  it contributes  articles, reviews and write-ups on  different aspects of standardization and other activities  in   newspaper  journals,  souvenire,  reference publications etc.  and holds  inter alia  radio  broadcasts, press conferences,  exhibitions, seminars,  conferences  and conventions.      It is  clear from  the resume  of the activities of the Institution  given   above.  that  the  undertaking  of  the Institution  answers   the  broad  test  laid  down  in  the Safdarjung Hospital  case (supra) and explained by us in the earlier part  of the  judgment and  must be  held to  be  an industry within  the meaning  of s.  2(j). The activities of the Institution  arc carried  on in  a systematic manner and are organised  or arranged  in a  manner in  which trade  or business  is   ordinarily   organised   or   arranged.   The Institution derives  large income from its activities, which was about  Rs. 4.5  million in 1967-68 and rose to about Rs. 10.2  million  in  1973-74,  a  bulk  of  the  income  being accounted for  by sale  proceeds  of  Indian  Standards  and Certification Marking  Fees. The object of the activities of the Institution  is to render material services to a part of the  community,   namely,  manufacturers,  distributors  and consumers.  Standards  set  the  recognised  level  of  good quality, corner  stone  for  building  domestic  and  export markets and  developing  good  will  and  prestige  for  the manufacturer:  they   provide   the   framework   for   mass production,  increase   in  productivity  simplification  in production process  and enhancement in labour efficiency the make for  dimensional interchangeability by setting national and also  international patterns of interrelated sizes: they incorporate results  of the  latest developments in research and  technology:   they  increase  consumer  confidence  and goodwill bringing  wide markets  and quick  turn  over  with savings for  the buyer and they bring more profits and lower costs  by  optimum  utilization  of  scarce  resources.  The brochure on "Standards for Textiles" points out that amongst various advantages  which accrue  from  the  application  of standards in  the day-to-day  manufacturing  programmes  are increased efficiency,  less waste  of manpower and material, higher productivity  through longer  runs  in  the  factory, simplified buying,  costing and  cataloguing and stabilizing

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and promoting  exports- by  sending goods of uniform quality abroad. The  Certification Marking Scheme involving issue of licences  for   use  of   Standard  Marks,   maintenance  of laboratories   and    libraries,   bringing    out   various publications,  such   as  ISI  bulletin,  Standards  Monthly Additions and  other brochures  and leaflets  and  publicity through different kinds of media, which constitute the other activities of  the Institution  apart from  preparation  and publication  of   Standards,   are   intended   to   promote implementation of  Standards, create consciousness about the importance of  standardisation and  quality control  amongst different  sectors   of  the  economy  and  further  inplant standardization  activity,   with  a  view  to  helping  the manufacturer, to  step up production and lower manufacturing cost, increasing labour efficiency by simplifying production processes and  ensure dependable and quality goods, increase consumer  confidence   and  goodwill   and  achieve  greater turnover and  increased profits  by maximum  utilization  of human and material resources, the distributor, to add to his turnover and  to his reputation by marketing uniform quality of goods of high standard 157 assured by  compliance with  the Standards and the consumer, to benefit  from  lower  prices,  higher  quality  and  more safety-in short,  get value  for the money spent by him. The Institution renders  what are termed ‘extension services’ to industries which  opt for  them and these extension services are made  available in  three district phases, namely, Pilot Study, Systematic Development and Evaluation. If this is not rendering  of   material  services   to  a  section  of  the community, we  fail to  see what  other activity  can be  so regarded. There  is also  cooperation between the management of the  Institution and  the employees  who  are  associated together for  rendering these  material services. It is true that the  Standards are  prepared  by  Sectional  Committees which are  composed of  representatives  of  all  concerned, including  scientists     and   technicians,  with  consumer interest  playing   a  dominant   role  and   they  are  not exclusively the  result of  the  work  carried  out  by  the employees, but  the participation  of the  employees is  not altogether  absent.  Not  only  do  the  employees  who  are technicians participate  in the  work  relating  to  various aspects of  preparation of Standards but the draft standards are also  verified in  the laboratories  of the  Institution which  are   operated  by   the  employees.   Moreover,  the distribution and sale of Standards prepared and published by the Institution  is being  made through  the employees.  The certificate Marketing  scheme, maintenance  of  laboratories and libraries, publication of ISI bulletin, Standard Monthly Additions and  other magazines,  journals and  leaflets  and publicity of  the activities  of  the  Institution  are  all carried on with the help of the employees. There are a large number of  employees of  the Institution belonging to Grades II, III  and IV, apart from officers in Grade I. Some of the employees  in   Grade  II   are  technical   people  closely associated with the technical activities of the Institution. There can, therefore, be no doubt that the activities of the Institution  fall   within  the   category  of   undertaking analogous to  trade or  business and  must be regarded as an ‘industry’ within the meaning of s. 2(j).      This view  which we are taking receives support from an earlier decision  or this  Court in  the  Ahmedabad  Textile Industry Research  Association v.  The  State  of  Bombay  & Ors.(1) There  the question  was whether the activity of the appellant-Association,  which   was   a   textile   research

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institute  established   for  the  purpose  of  carrying  on research and  other scientific  work in  connection with the textile trade  or industry  and other  trade and  industries allied there  with or  necessary thereto,  was an ’industry’ for the purpose of the Act. This Court analysed the activity of the  appellant-Association and  pointed out that it is an "activity systematically undertaken; its object is to render material services  to  a  part  of  the  community  (namely, member-mills) the  material services  being the discovery of processes of  manufacture etc. with a view to secure greater efficiency, rationalisation  and reduction  of costs  of the member-mills. it  is being carried on with help of employees (namley, technical  personnel) who  have no  rights  in  the results of  the research  carried on by them as employees of the association;  it is organised or arranged in a manner in which  a  trade  or  business  is  generally  organised:  it postulates cooperation between (1) [1961] 2 S. C. R. 482. 158 employers  (namely,   the  association)  and  the  employees (namely,  the  technical  personnel  and  others)  which  is necessary for  its success, for the employers provide monies for carrying  on the  activities of  the association and its object clearly  is to  render material services to a part of the community  by discovery  of process  of manufacture etc. with a  view to  secure greater  efficiency, rationalisation and reduction  of costs." It was observed by this Court that the undertaking  as a whole is "in the nature of business or trade organised  with the  object of  discovering  ways  and means by which the member-mills may obtain larger profits in connection with  their industries,"  and on  this view,  the Court held that "the appellant-association is carrying on an activity which  clearly comes within the meaning of the word ‘industry’ in     s. 2(j)".  This case  bears a  very  close analogy  to  the  present  case  and  indeed,  some  of  the observations made  by this  Court ill that case particularly those underlined  by us-aptly  describe the  nature  of  the activities of the Institution and the reasoning on which the decision in  this case is based is equally applicable in the decision of the present case.      There is  also one  other decision  of this Court which amply supports  the view  we are  taking  and  that  is  the decision in  the Management of the FICCI v. Workmen (supra). The question  which arose  in  that  case  was  whether  the Federation of  Indian Chambers of Commerce and Industry, for short referred  to as  FICCI  was  an  industry  within  the meaning of  s. 2(j). This Court reviewed most of the earlier decisions on  the subject  and after  summarising the  broad test for  determining what  is  an  industry,  proceeded  to analyse the  activities of  FICCI and  pointed out that "the Federation carries  on systematic  activities to  assist its members and  other businessmen  and industrialists  and even non-members, as  for instance,  in giving  them the right to subscribe to  their bulletin;  in taking  up their cases and solving their  difficulties and in obtaining concessions and facilities for  them from  the Government.  These activities are business activities and material services, which are not necessarily  confined   to  the   illustrations   given   by Hidayatullah,  C.J.,   in  the   Gymkhana  case  by  way  of illustration only,  rendered  to  businessmen,  traders  and industrialists who  are members  of the  constituents of the Federation. There  can in  our view  be no  doubt  that  the Federation is  an industry  within the meaning of s. 2(j) of the Act."  This decision  is also  very apposite and helpful and leaves  no doubt  that the activities of the Institution

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in the  present case  are an ’industry’ so as to attract the beneficent provisions of the Act.      We, therefore,  allow the  appeal, set  aside the order passed by  the Industrial Tribunal and direct the Industrial Tribunal to  proceed with  the Reference before it on merits on  the   basis  that  the  activities  of  the  Institution constitute an  ’industry’ within  the meaning  of s. 2(j) of the Act. The respondents will pay to the appellants costs of the  appeal   as  also  costs  of  the  hearing  before  the Industrial Tribunal.      ALAGIRISWAMI, J.  I am  sorry I  find myself  unable to agree with  my learned  brother Bhagwati J. The facts of the case have been 159 elaborately set out in his judgment and it is unnecessary to repeat them. It would be necessary, however, to refer to one or two  other facts  which have  not been mentioned in their proper place.      After the  very clear  decision by  this Court  in  its judgment in  Gymkhana Club  Union v.  Management(l) and  its endorsement in  its judgment in Safdarjung Hospital v. K. S. Sethi(2) the  decision in  State of  Bombay  v.The  Hospital Mazdoor Sabha(3)  has become  irrelevant. The  Gymkhana Club case has  laid down  that any  trade, business, undertaking, manufacture or  calling of employers is an industry and once 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. It was also pointed out  that 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.  It  also pointed out  that the  test adopted in Hospital Mazdoor case (supra) namely,  could the  activities 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 and that this test is not enlightening. With regard to  local bodies  it was  pointed out  that 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. It was finally  held  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 and the  word ’undertaking’  was defined as "any business or any work  or project  which one engages in or attempts as an enterprise analogous  to business  or trade.  ’ These  ideas were crystallised  in the  judgment in  Safdarjang  Hospital case and  for facility  of reference  I may  quote the first conclusion in the headnote.           "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  to 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

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    former  engaged   in  business,  trade,  under  taking,      manufacture or  calling of  employers  and  the  latter      engaged in any calling, service, employment, handicraft      or industrial  occupation or  avocation. But every case      of em (1) [1968]1 S. C. R. 742.         (2) [1971] I S. C. R. 177.                  (3) [1960] 2 S. C. R. 866. 160      ployment 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  relation to  the employers,  namely,  any      business, trade,  under taking,  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  knot 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      occupation 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  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 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 profit  motive, but  the      enterprise must  be analogous to trade or business in a      commercial sense." It criticised the decision in Hospital Mazdoor case in words which have been summarised in headnote 2 as follows: . 161

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         "The decision  in  State  of  Bombay  v.  Hospital      Mazdoor Sabha 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  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’." and also  pointed out  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. Applying these tests it  was held  that the  Safdarjung  Hospital  was  not embarked on  an economic  activity which could be said to be analogous to  trade or  business, that there was no evidence that it  was more  than a  place  where  persons  could  get treated, that  it was  a part of the functions of Government and the  Hospital was  run as a Department of Government and that it could not, therefore, be said to be an industry. The Tuberculosis Hospital was held to be not an industry because it was  wholly charitable  and  a  research  institute,  the dominant purpose of the Hospital being research and training and as research and training could not be given without beds in a  hospital, the  hospital was run. The Kurji Holy Family Hospital was  held not  to be an industry on the ground that it objects were entirely charitable, that it carried on work of training,  research and treatment and that its income was mostly from  donations and distribution of surplus as profit was prohibited.      The idea  behind these  decisions could be crystallised thus: Even where a trade, business, undertaking, manufacture or calling  of employers  results in  production of material goods or rendering of material services, such an undertaking engaged  in  trade,  business,  manufacture  or  calling  of employers will not be an industry if it is run on charitable principles or  is run by Government or local body as part of its duty.  In other words whenever an undertaking is engaged in activity which is not done with a view to exploit it in a trading or 162 commercial sense  but for  public interest  and without  any profit motive  or in  the form  of social  service or in the form of  activity intended  to benefit the general public it will not be an industry.      The Indian  Standards  Institution  was  set  up  by  a Resolution of  the Government  of India and registered under

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the Societies  Registration Act,  1860. My  learned  brother Bhagwati J.  has set  out the Memorandum of Association, the rules and  regulations of the Institution and explained what the standards established by the Institution are as also its role in  the implementation  of Indian Standards Institution (Certification Marks)  Act, 1952.  It is  unnecessary to set out all of them at length. A bare scrutiny of the objects of the Institution  would show  that they  are  concerned  with broad public  interest of the country as a whole and no part of the  objects of  the Institution  has anything to do with serving any  private interest. The standards are prepared by committees   in   which   all   interests   are   adequately represented,  including   scientists  and   technicians  but consumer interest  has, as  far as possible, to predominate. As pointed  out by  my learned brother, the Standard Mark is the most  authentic representation  to the consumer that the article or  process in  respect of which it is used conforms to the  relevant   Indian Standard  and Indian Standard thus becomes meaningful  and advantageous by reason of the use of the  Standard   Mark.  The  existence  of  laboratories  and libraries  are   incidental  and   in  furtherance   of  the specifications of  standards  and  the  application  of  the Standard Marks.  The Institution has no capital, it does not distribute profits  and even  when it is wound up the assets would not go to any private individual. It is not run with a profit motive.  It is  thus not  an enterprise  analogous to business or  trade. In  fact one can go further and say that its  activity   is  only  a  manifestation  of  governmental activity. Instead  of itself  performing  these  duties  the Government have  set up  the Institution  in effect  for the purpose of  discharging duties  which the  Government itself has to  do in  the service  of the  general public. What the Institution does  it thus to render material services. It is in recognition of the role which the Institution plays as an instrument of  Government that it had made a contribution of 40 lakhs  and odd  out of  the income  of 73  lakhs  of  the Institution in  the year  1973-74. Thus the material service which the Institution renders is really a subsidised service and it  is rendered in public interest. It is an Institution interested  and  engaged  in  service  to  the  public.  Its activities do  not go  to swell coffers of anybody. Applying therefore the  tests which  have been evolved and applied in the Gymkhana  Club case  and the Safdarjung Hospital case it is obvious  that  the  Institution  is  not  engaged  in  an industry.      The judgments  of this  Court in Management of FICCI v. Workmen and  Ahmedabad Textile Industry Research Association v. The  State of  Bombay &  Ors. are not relevant because in the case  of the  Federation it  was intended to benefit the members of  the commercial  community and  not the public in general. The Ahmedabad Textile Industry Research Association activities were in the nature of business or trade organised with the object of discovering ways and means by 163 which  the   member-mills  may   obtain  larger  profits  in connection with  their industries.  The  activities  of  the Indian Standards Institution are not intended to benefit any class of  businessmen or  to enable  them to  increase their income. It  is a  public service  institution and  therefore must be held not an industry.      I would, therefore, dismiss the appeal                            ORDER      In view  of the decision of the majority, the appeal is allowed and  the Industrial Tribunal should proceed with the Reference before  it on the merits. The respondents will pay

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to the  appellants costs  of the appeal as also costs of the hearing before the Industrial Tribunal. S.R. 164