1. The only question which requires determination in this reference to the Full Bench is whether the relief undertakings carried out by the State Government to provide sustenance to the persons affected by famine, flood, earthquake or scarcity is an 'industry Common parlance reply would be : it is not an 'industry'. Still, the question is a vexed one as it is required to be dealt with after considering the definition of the work 'industry' under Section 2(j) of the Industrial Disputes Act, 1947, as interpreted by various Courts.
2. The Division Bench consisting of A. H. Ahmadi, J. (as he then was) and R. J. Shah, J., in the case of J. J. Shrimali v. District Development Officer : (1989)1GLR396 , held that when a State Government during famine and drought undertakes relief works intended to provide the much needed relief to scarcity affected people living in the affected areas, it is not embarking upon any industrial or commercial enterprise but is merely trying to fulfill its obligation towards its people who are hit by nature's wrath. There is no desire or intention to launch a durable industrial of commercial enterprise but the paramount idea or consideration is to provide relief to the scarcity affected people who have been deprived of livelihood because of the failure of the monsoon. In such cases the State Government is merely fulfilling its governmental duty towards the scarcity affected people and is not operating in the field of commerce or industry for the production or distribution of goods or services. The Court, therefore, held that such activity is not an industry within the meaning of Section 2(j) of the Industrial Disputes Act, 1947 as the State was merely performing its sovereign function as distinguished from a commercial adventure.
3. The Division Bench consisting of S. B. Majmudar, J. (as he than was) and I. C. Bhatt, J., for the elaborate reasons stated in the referring judgment and order dated 29th September, 1988 arrived at the conclusion that prima facie the aforesaid decision in the case of Shrimali requires reconsideration. Hence, referred the following question to a Larger Bench :
' (1) Whether the employment offered to persons on the scarcity relief works as undertaken by the State can be said to be employment in 'industry' as defined by Section 2(j) of the Industrial disputes Act, 1947?
(2) Whether the decision of the Division Bench of this Court in special Civil Application No. 341 of 1988 and group, decided on 8th August, 1988 to the effect that the scarcity relief work undertaken by the State by way of drought relief is not an industry within the meaning of Section 2(j) of the Industrial Disputes Act, 1947, is well sustained?'
4. Therefore, in this judgment, the short question which would require consideration is -
Whether the relief works undertaken by the State Government to provide relief to the persons who are affected by the natural calamities such as famine, earthquake, epidemic, flood, scarcity, etc., would be considered as 'industry' as defined by Section 2(j) of the Industrial Disputes Act, 1947?
For determining this question, following three aspects would be required to be considered, namely -
(i) While giving such type of relief to the affected people, whether the State is discharging its sovereign or regal functions or is discharging primarily its inalienable duty;
(ii) even assuming that granting or relief to the person affected by natural calamities (such as famine, earthquake, epidemic, flood, scarcity, etc.) is not discharge of a sovereign function or inalienable duty of the State, yet, whether relief undertakings would be covered by the word 'industry', as interpreted by the Supreme Court in the case of Bangalore Water Supply v. A. Rajappa : (1978)ILLJ349SC ; and
(iii) as noted by the Division bench whether the interpretation given by the court in the case of J. J. Shrimali (supra) requires reconsideration because of the decisions rendered by the Supreme Court in the case of Sanjit Roy v. State of Rajasthan : (1983)ILLJ220SC , and in the case of Das Raj v. State of Punjab, 1988 I CLR 620, or the decision rendered by the Patna High Court in the case of Bihar Relief Committee v. State of Bihar, 54 FJR 385, and of the Kerala High Court in the case of Umayammal v. State of Kerala, 1983 I LLJ 267.
5. Meaning of the word 'industry' as interpreted by the majority judgment in the case of Bangalore Water Supply :
For appreciating the contentions, we could first refer to the definition of the word 'industry' and its interpretation given by the Supreme Court in the case of the Bangalore Water Supply (majority judgment of Krishna Iyer, J.) (supra). Section 2(j) of the Industrial Disputes Act, 1947 defines 'industry' to mean 'any business, trade, undertaking, manufacture or calling, service, employment, handicraft, or industrial occupation or avocation of workmen'. This definition is interpreted by the Supreme Court on numerous occasions. It is accepted that the words used in the definition clause are of wide import and, to some extent, vague. Therefore, to find out its true scope, various Courts have considered it from time to time. On occasions it is contended that the definition is limited to those activities systematically or habitually undertaken on commercial lines by private entrepreneurs with the co-operation of employees for the production or distribution of goods of for the rendering of material services to the community at large or a party of such community. As against this, by a majority view in the case of Bangalore Water Supply, it is held that even the activities which are charitable activities or activities which are philanthropic would also be covered by the definition of the word 'industry' in certain set of circumstances. After considering the various decisions in the case of Bangalore Water Supply, Krishna Iyer, J. who delivered the majority judgment, arrived at the conclusion in paragraph 161 as under :
161. 'industry' as defined in 2(j) and explained in Banerji : [1953]4SCR302 has a wide import.
1. (a) Where (i) systematic activity, (ii) organized by co-operation between employer and employee (the direct and substantial element is chimerical, (iii) for the production and/or distribution of goods and services calculated to satisfy human wants and wishes (not spiritual or religious but inclusive of material things or services geared to celestial bliss,) i.e. making, on a large scale prasad or food prima facie, there is an 'industry' in that enterprise.
(b) Absence of profit notice or gainful objective is irrelevant, be the venture in the public, joint, private or other sector.
(c) The true focus is functional and the decisive test is the nature of the activity with special emphasis on the employer-employee relations.
(d) If the organization is a trade or business it does not cease to be one because of philanthrophy animating the undertaking.
11. Although Section 2(j) uses words of widest amplitude in its two limbs, their meaning cannot be magnified to overreach itself.
(a) 'Undertaking 'must suffer a contextual and associational shrinkage as explained in Banerji and in this judgment : so also, service calling and the like. This yields the inference that all organized activity possessing the triple elements in I (supra), although not trade or business, may still be 'industry' provided the nature of the activity, viz, the employer-employee basis, bear resemblance to what we find in trade or business. This takes into fold 'industry' undertakings, callings and services adventures 'analogous to the carrying on the trade or business'. All features, other than the methodology of carrying on the activity, viz., in organizing the co-operation between employer and employee, may be dissimilar. It does not matter, if on the employment terms there is analogy.
III. Application of these guidelines should not stop short of their logical reach by invocation of creeds, cults or inner sense of incongruity or outer sense of notification for or resultant of the economic operations. The ideology of the Act being Industrial peace, regulations and resolution of Industrial dispute between employer and workmen, range of this statutory ideology must inform the reach of the statutory definition. Nothing less nothing more.
(a) The consequences are (i) professions, (ii) clubs, (iii) educational institutions, (iv) co-operatives, (v) research institutes, (vi) charitable projects, and (vii) other kindred adventures, if they fulfill the triple tests listed in I (supra), cannot be exempted from the scope of Section 2(j).
(b) a restricted category of professions, clubs, co-operatives and even gurukulas and little research labs, may qualify for exemption if, in simple ventures, substantially and, going by the dominant nature criterion, substantially and, going by the dominant nature criterion, substantively, no employees are entertained but in minimal matters, marginal employees are hired without destroying the non-employee character of the unit.
(c) If, in a pious or altruistic mission may employ themselves, free or for small honoraria or like return, mainly drawn by sharing in the purpose or cause, such as lawyers volunteering to run a free legal services, clinic or doctors serving in their spare hours in a free Medical centre or ashramites working at the bidding of the holiness, divinity or like central personality, and the services are supplied free or at nominal cost and those who serve are not engaged for remuneration or on the basis of master and servant relationship, them the institution is not an Industry even if stray servants, mandal or technical are hired. Such eleemosynary or like undertakings alone are exempt not other generosity, compassion, developmental passion or project.
IV. The dominant nature test :
(a) Where a complex of activities, some of which qualify for exemption, others not, involves employees on the total undertaking, some of whom are not 'workmen' as in the University of Delhi case : (1963)IILLJ335SC or some departments are not productive or goods and services if isolated, even then, the predominant nature of the services and the integrated nature of the department as explained in the Corporation of Nagpur : (1960)ILLJ523SC will be the true test. The whole undertaking will be 'industry', although those who one not 'workman' by definition may not benefit by the status.
(b) Notwithstanding the previous clauses, sovereign functions, strictly understood, (alone) qualify for exemption, not the welfare activities or economic adventures undertaken by Government or statutory bodies.
(c) Even in departments discharging sovereign functions, if there are units which are Industries and they are substantially severable then they can be considered to come with Section 2(j).
(d) Constitutional and competently enacted legislative provisions may well remove from the scope of the Act categories which otherwise may be covered thereby.
V. We overrule Safdarjung : (1970)IILLJ266SC , Solicitors' case : (1962)ILLJ241SC Gymkhana : (1967)IILLJ720SC , Delhi University : (1963)IILLJ335SC Dhanrajgiri Hospital : (1975)IILLJ409SC and other rulings whose ratio runs counter to the principles enunciated above, and Hospital Mazdoor Sabha : (1960)ILLJ251SC is, hereby rehabilitated'.
6. However, we emphasise that before laying down the aforesaid principles or deciding whether a particular activity is an industry of not, the Court has cautioned as under :
'We speak, not exhaustively, but to the extend covered by the debate at the bar and to that extend authoritatively, until overruled by larger bench or superseded by the legislative branch.'
Further, in the beginning before considering the various decisions, the Court has cautioned as under :
'In a world of relativity where law and life interlace, a search for absolutes is a self-condemned exercise, Legal concept, ergo, are relativist, and to miss this rule of change and developmental stage is to interpret oneself into error.'
At this stage, we may further note that with regard to the concept of sovereign or regal functions of the State, different opinion was expressed by the learned Chief Justice Beg in his concurring judgment. The learned Chief Justice observed :
'18. I would also like to make a few observations about the so-called 'sovereign' functions which have been placed outside the field of industry placed outside the field of industry..... I think that the term 'sovereign' should be reserved, technically and more correctly, for the sphere of ultimate decisions. Sovereignty operates on a sovereign plane of its own as I suggested in Keshavananda Bharati's case, : AIR1973SC1461 , supported by a quotation from Ernest Barker's Social and Political Theory.'
The learned Chief Justice further observed as under :
'What is meant by the use of the term 'sovereign', in relation to the activities of the State, is more accurately brought out by using the term 'Governmental' functions although there are difficulties here also in as much as the Government has entered largely new fields of Industry. Therefore, only those services which are governed by separate rules and constitutional provisions, such as arts. 310 and 311 should, strictly speaking be excluded from the speaking be excluded from the sphere of Industry by necessary implication.'
This observation specifically means that, while discharging Governmental functions, if services are rendered which are governed by separates rules and constitutional provisions, those services, strictly speaking, require to be excluded from the sphere of industry by necessary implication. Finally, the Court observed that the question was one which can only by solved by more satisfactory legislation on it. Otherwise, the Judges could only speculate and formulate tests of 'industry' which cannot satisfy all.
As against this, Chandrachud, C.J. expressed a contrary opinion on the aforesaid aspect as under :
'172. One of the exceptions carved out by the Court is in favour of the activities undertaken by the Government in the exercise of its inalienable functions under the Constitution, call it regal, sovereign or by any other name. I see no justification for excepting these categories of public utility activities from the definition of 'industry'. If it be true that one must have regard to the nature of the activity and not to who engages in it, it seems to be beside the point to enquire whether the activity is undertaken by the State, and further, if so whether it is undertaken in fulfillment of the State's constitutional obligations or in discharge of its constitutional functions. In fact, to concede the benefit of an exception to the State's activities which are in the nature of sovereign functions is really to have regard not so much to the nature of the activity as to the consideration who engages in that activity, for, sovereign functions can only be discharged by the State and not by a private person.'
As against this, Jaswanat Singh, J. and Tulzapurkar J. have observed as under :
'.... We are of the view that despite the width of the definition it could not be the intention of the legislature that categories 2 and 3 of the charities alluded to by our learned brother Krishna Iyer in his judgment, hospitals run on charitable basis or as a part of the functions of the Government or local bodies like Municipalities and educational and research institution whether run by private entities or by government and liberal and learned professions like that of doctors, lawyers and teachers, the pursuit of which is dependent upon an individual's own education, intellectual attainments and special expertise should fall within the pale of the definition. We are inclined to think that the definition is limited to those activities systematically or habitually undertaken on commercial lines by private entrepreneurs with the co-operation of employees for the production or distribution of goods or for the rendering of material services to the community at large or a part of such community.'
The learned Judge further stated that it was high time that the Legislature steps in with a comprehensive bill to clear up the fog and remove the doubts and St. are rest once for all the controversy which crops up from time to time in relation to the meaning of the aforesaid term rendering it necessary for larger benches to be constituted which are larger benches to be constituted which are driven to the necessity of evolving a working formula to cover particular case.
In this view of the matter and in view of a working formula adopted by the majority judgment rendered by Krishna Iyer, J. and the caution expressed by him in his judgment as indicated above, it would not be proper to pick up one sentence or a word from the judgment as if the statutory definition is given of the word 'Industry' and interpret that the famine relief work undertaken by the State of Central Government is 'industry. As indicated above, the learned Judge himself has stated that in a world of relativity where law and life interlace, a search for absolutes is a self-condemned exercise. further, the learned Judge himself has stated that the word 'industry' was explained not exhaustively but to the extend covered by the debate at the bar.
7. Relevant discussion by the Supreme Court in the case of Delhi Development Horticulture Employees' Union :
In this context, before discussing the reasons recorded for referring the matter to the Larger Bench, we would refer to the subsequent judgment rendered by the Supreme Court in the case of Delhi Development Horticulture Employees' Union v. Delhi Administration, Delhi & Ors., 1992 I CLR 537 wherein a view similar to the view taken in the case of J. J. Shrimali (supra), is expressed. In that case, it was contended by the workmen who were employed on daily wages for a period of 240 days or more that they should be absorbed as regular employees in the development Department of the Delhi Administration and for an injunction prohibiting the termination of their services and also for the difference in wages paid to them and those paid to the regular employees. The workmen were employed as daily wages workers under 'Jawahar Rozgar Yojna' by the District rural Development Agency ('DRDA' for short) under various schemes. One such scheme was 'Food for Work'. Under this scheme, employment was given to other poorer sections of the population in the rural areas partly for food and partly for cash payment. Subsequent scheme was called 'Rural Landless Employment Guarantee Programme' with the objective of generating additional employment in the rural areas particularly for the landless workers. Under these programme, works in the rural areas resulting in durable community assets, social forestry, village roads, etc., were taken up. The entire work was done by providing daily wage employment to rural workers and the labourers were employed at these sites depending upon their availability in rural areas and without reference to any Employment Exchange. In the background of the aforesaid facts and after considering various contentions, the Court observed that there is not doubt that broadly interpreted and a necessary logical corollary, right to life would include the right to livelihood and, therefore, right to work. The Court observed that this country has so for not found it feasible to incorporate the right to livelihood as a fundamental right in the Constitution. This is because the country has so far not attained the capacity to guarantee it and not because it considers its any the less fundamental to life. Advisedly, therefore, it has been placed in the chapter on Directive Principles. Art. 41 of which enjoins upon the State to make effective provision for securing the same 'within the limits of is economic capacity and development. Thus even while giving the direction to the State to ensure the right to work, the Constitution makers thought it prudent not to do so without qualifying it.
The Court further observed :
'21. Viewed in the context of the facts of the present case it is apparent that the schemes under which the petitioner were given employment have been evolved to provide income for those who are below the poverty line and particularly during the periods when they are without any source of livelihood and, therefore, without any income whatsoever. The schemes were further meant for the rural poor, for the object of the schemes was to start tackling the problem of poverty form that end. The object was not to provide the right to work as such even to the rural poor-much less to the unemployed in general. As has been pointed out by the Union of India in this additional affidavit, in 1987-88. 33 per cent of the total rural population was below the poverty line, This meant about 35 million families. To eliminate poverty and to generate full employment 2500-3000 million man-days of work in a year, was necessary. As against that, the Jawaher Rozgar Yojna could provide only 870 million man-days of employment on intermittent basis in neighbourhood projects. Within the available resources of Rs. 2600 crores, in all 3.10 million people alone could be provided with permanent employment, if they were to be provided work for 273 days in a year on minimum wages. However, under the scheme meant for providing work only 80-90 days work could be provided to 9-30 million people.
Thereafter, the Court pertinently held that to get an employment under such scheme and to claim on the basis of the said employment, a right to regularisation, is to frustrate the scheme itself and no Court can be a party to such exercise. It is wrong to approach the problems of those employed under such schemes with a view to providing them with full employment and guaranteeing equal pay for the equal work. The relevant observations are as under :
22. The above figures show that if the resources used for the Jawahar Rozgar Yojna were in there entirety to be used for providing full employment throughout the year, they would have given employment only to a small percentage of the population in need of income, the remaining vast majority being left with no income whatsoever. No fault could, therefore, be found with the limited object of the scheme given the limited resources at the disposal of the State. Those employed under the scheme therefore, could not ask for more than what the scheme intended to give them. To get an employment under such scheme and to claim on the basis of the said employment, a right to regularisation, is to frustrate the scheme itself. No Court can be a party to such exercise. It is wrong to approach the problems of those employed under such schemes with a view to providing them with full employment and guaranteeing equal pay for equal work. These concepts, in the context of such schemes are both unwarranted and misplaced. They will do more harm than good by depriving the many of the little income that they may get to keep them from starvation. They would benefit a few at the cost of the may starving poor for whom the schemes are meant. That would also force the State to wind up the existing schemes and forbid them from introducing the new ones, for want of resources. This it not to say that the problems of the employed deserve no consideration or sympathy. This is only to emphasise that even among the unemployed a distinction exits between those who live below and above the poverty line, those in need of partial and those in need of full employment the educated and uneducated, the rural and urban unemployed, etc.'
Thereafter, the Court finally rejected the prayer of the workmen for regularisation on the ground that they have put work in for 240 days or more and dismissed the petition.
8. In our view, same would be the position for the persons employed by the State Government under the schemes framed for providing reliefs to the persons affected by famine, flood, earthquake, scarcity, etc. It would be wrong to approach the problems of those employed under such schemes with a view to providing them with some livelihood with full employment and guaranteeing equal pay for equal work. As observed by the Supreme Court, to get an employment under such a scheme and to claim on the basis of the said employment a right to regularisation, is to frustrate the scheme itself. In the present case, in our view, providing for some work under the scheme for providing sustenance would not amount to providing employment as such. As observed in the case of J. J. Shrimali (supra), one reason for taking work is 'not to hurt the dignity by distributing the doles, the State Government starts relief work or projects in such gesture.' If can be stated that the work on schemes for relief undertaking is taken not to produce something but to provide income or sustenance as would help in improving the capability of the affected arms and the people to withstand drought conditions better in future. Mainly, as observed by the Supreme Court in the case of Delhi Development Horticulture Employees' Union (supra), it is to provide income for those who are below the poverty line and particularly during the periods when they are without any source of livelihood. The object in such case was not to provide right to work as such even to rural poor much less to the unemployed in general. This would be clear from the fact that the period of work in such case is not related to completion of work but is connected with the case of the monsoon, that is to say, when the vigour of adverse effect of the drought or scarcity is substantially reduced.
9. Programmes of Relief Undertakings as per guidelines provided in the Gujarat Relief Manual :
It would be appropriate to refer to the relevant part of the Gujarat Relief Manual, which provides exhaustively what type of programme is required to be carried out during the relief works and when it is required to be carried out and other details with regard to payment of wages. The introductory part of the Gujarat Relief Manual provides that during famine, scarcity, floods, fire, riots, earthquakes, accidents, etc., the Government provides relief and assistance for rehabilitation; such relief assistance is given in the form of foodgrains, clothing, temporary shelter free of charge, cash doles, construction and repair of houses and hutments for rehabilitation, by providing loans, financial assistance, etc., for commencing agricultural operations and normal avocations in life. The Manual, inter alia, further provides that :
' (i) As far as possible, only such relief works need to be selected for assistance as would help in improving the capability of the effected areas and the people to withstand drought conditions better in future. The State Government should also endeavour to have lists of relief works which could be taken on short notice in the drought prone districts and completed within the period envisaged. Works which cannot possibly be completed within the period of relief operations should not normally be selected for relief assistance;
(ii) It is specifically stated that in the preparation of the programmes the works included therein shall be such as can suitably offer employment to large numbers of unskilled labourers. In selecting works, preference shall be given, as far as possible to such of the works as are productive and likely to serve as anti-scarcity measures;
(iii) The programme of relief works shall make provision for the employment normally of about 10 per cent of the population of the regions liable to scarcity within each district. The periods for which they will need employment will depend on the intensity of distress and the onset of monsoon and will vary from districts to districts. Generally the programme of relief works should take into account the necessity to provide employment to the scarcity affected population till at least the onset of the next monsoon.
(iv) It also provides as to what should be considered as scarcity. Scarcity to a marked deterioration of the agricultural season due to the failure of rains or floods or damage to crops from insects resulting in severe unemployment and consequent distress among agricultural labour and small cultivators. It also provides as to when the relief works can be sanctioned and that relief work should be productive as far as possible and that relief work should be spread over the effected tract, each serving a group of villages on the basis that every person who may be in need of work in provided work within a distance of 5 kms. of his village as far as practicable.
(v) For payment of wages, the principle of the relief wage scale is that the wage should be the lowest amount sufficient to maintain healthy persons in health. Persons not in health not arriving for a work shall be specially treated and the grain wages-scale is provided. Even when the work in suspended, the allowances for dependents shall be given to workers as provided therein. It also provides that in cases where the earnings of the workers in a family are not sufficient to maintain themselves, additional amount is required to be paid.
(vi) In addition, it provides for relief in certain villages to the aged and infirm, the blind, crippled and insane, pregnant women and young children whose relatives will not or cannot support them and the like, those whose attendance on incapable adults or young children in their own homes is absolutely necessary, women of respectable birth, who by custom are unable to appear in public and are in danger of starvation and men of respectable birth who are in danger of starvation and for whom no suitable employment can be found on relief works. It further there provides that in such circumstances gratuitous relief will ordinarily be given in the form of a monthly cash dole and for special reasons the Collector may grant relief party in cash and partly in kind.'
10. The question is : Whether such undertaking carried out by the State Government is in discharge of its primary or inalienable duty.
This question would be required to be considered in the background of the aforesaid purposes of relief undertaking. The dominant purpose of these relief schemes is to see that there is no starvation death because of drought or scarcity and the affected persons should as far as possible be rehabilitated.
In our view, it would be difficult to accept the contention that in a situation of natural calamity, etc., it is not the inalienable and/or primary duty of the State to provide such reliefs to the affected persons. It has been rightly pointed out by learned Advocate Mr. Shah appearing for the respondents that since ages, this is considered to be an inalienable duty of the State. For this purpose, he relied upon the following passage from the Book 'The Laws of Manu', by Wendy Doniger with Brain K. Smith, at page 139, wherein it is stated that :
'If a king is so deluded and unthinking as to starve his own kingdom, he, together with his relatives, will soon lose his kingdom and his life.'
Apart from this ancient principle, a combined reading of Arts. 21, 39(a) and 41 of the Constitution would certainly mean that it is inalienable duty of the State to provide adequate means of livelihood to the persons affected by natural calamities. Articles 39(a) and 41 are as under :
39(a) The State shall, in particular, direct its policy towards securing that the citizen, men and women equally, have the right to an adequate means of livelihood.
41. Right to work, to education and to public assistance in certain cases -
The State shall, within the limits of its economic capacity and development, make effective provision of securing the right to work, to education and to public assistance in cases of unemployment, old age sickness and disablement, old age, sickness and disablement, and in other cases of undeserved want. ' In this context, we would refer to paragraph 33 of the judgment rendered by the Supreme Court in the case of Olga Tellis v. Bombay Municipal Corporation : AIR1986SC180 , which is as under : 33. Article 39(a) of the Constitution, which is a Directive Principle of State Policy, provides that the State shall, in particular, direct its policy, towards securing that the citizens, men and women equally, have the right to an adequate means of livelihood. Article 41, which is another Directive Principle, provides, inter alia that the State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work in cases of unemployment and of undeserved want. Article 37 provides that the Directive Principles, though not enforceable by any Court, are nevertheless fundamental in the governance of the country. The Principle contained in Arts. 39(a) and 41 must be regarded as equally fundamental in the understanding and interpretation of the meaning and content of fundamental rights. If there is an obligation upon the State to secure to the citizens an adequate means of livelihood and the right to work, it would be sheer pedantry to exclude the right to livelihood from the content of the right to life. The State may not, by affirmative action, be compellable to provide adequate means of livelihood or work to the citizens. But, any person, who is deprived of his right to livelihood except according to just and fair procedure established by law, can challenge the deprivation as offending the right to life conferred by Art, 21.'
Considering the aforesaid aspect, the Supreme Court in the case of Delhi Development Horticulture Employees' Union (supra) has observed that there is no doubt that broadly interpreted and as a necessary logical corollary, the right to life would include the right to livelihood and, therefore, a right to work. But this country has so far not attained the capacity to guarantee it, and not because it considers it any the less fundamental to life. It is therefore, held that the Directive Principles (Art. 41) provide that, within the limits of its economic capacity and development the State shall make effective provision for securing the right to work and for other things. It is, therefore, apparent that in situation arising because of natural calamities such as flood, famine and earthquake, it is the primary and inalienable function of the State to provide means of livelihood to the persons affected.
In the referring judgment, the Court has observed that the finding given by the Division Bench in the case of J. J. Shrimali (supra) is contra-indicated by the observation in paragraph 23 of the judgment rendered by Beg, C.J. in the case of Bangalore Water Supply (supra), wherein it is stated that it was not correct to exclude State run industries from the sphere of the Act unless statutory provisions, expressly or by a necessary implication have that effect. This observation would have no bearing because it implies that if the State is running an industry, in such as case it should be included in the sphere of the Act unless it is excluded by the statute. In the present case, there is no question of running an industry by the State, and the question is whether the relief undertakings would be deemed to be an industry as defined under Section 2(j) of the Industrial Disputes Act. Apart from this, in the case of Bangalore Water Supply (supra), divergent views are expressed by M. H. Beg. C.J. and Y. V. Chandrachud, C.J. As stated earlier, Chandrachud, C.J. arrived at the conclusion that there was no justification for expecting these categories of public utility activities from the definition of 'industry'. That is to say, there was no justification for carving out an exception if favour of the activities undertaken by the Government in exercise of inalienable functions under the Constitution -call it regal, sovereign or by any other name. As against this, Jaswant Singh, J. and Tulzapurkar, J. have expressed the view that the definition of the word 'industry' is limited to those activities systematically or habitually undertaken on commercial lines by private entrepreneurs with the co-operation of employees with the production or distribution of goods or for rendering the material services to the community at large or a part of such community.
In this set of circumstances in our view, at present we are bound by the majority view expressed by Krishan Iyer, J. in the aforesaid case wherein after discussing various authorities and considering the contentions, it is held in item IV(b) of paragraph 161 that notwithstanding the previous clauses, the sovereign functions as strictly understood alone qualify for exemption, and not the welfare activities or economic adventures undertaken by Government or statutory bodies; and even in departments discharging sovereign functions, if there are units which are industries and they are substantially severable, then they can be considered to come within Section 2(j).
Discussing this aspect, in paragraph 73 (Krishna Iyer. J) it is observed that notwithstanding the literal width of the language of the definition, it must, for other compelling reasons, be kept out of the scope of industry. The Court pertinently observed that, for instance, sovereign functions of the State cannot be included although what such functions are been aptly termed 'the primary and inalienable functions of a constitutional Government'. The Court finally held that in a limited way, this need of exclusion has been recognised throughout. The Court thereafter referred to the Corporation of the City of Nagpur v. Its Employees : (1960)ILLJ523SC and held that the nature of actual function and of the pattern of organised activity is decisive. The relevant observations are as under :
'75. The Court proceeded in the Corporation of Nagpur case : (1960)ILLJ523SC to pose for itself the import of the words 'analogous to the carrying out of a trade or business' and took the view that the emphasis was more on the nature of the organised activity implicit in trade or business that to equate the other activities with trade or business'. Obviously, non-trade operations were in many cases 'industry. Relying on the Fabricated Engine Drivers, 1913 (160 CLR 245 (Aus) Subba Rao, J. observed (at pp. 682 of AIR) :
'It is manifest from this decision that even activities of a Municipality which cannot be described as trading activities can be the subject matter of an industrial dispute.' 76. The true test, according to the learned judge, was concisely expressed by Issace, J., in his dissenting judgment in the Federated State School Teachers' Association of Australia v. State of Victoria 1929 (41) CLR 569 (Aus) (at p. 683 of (AIR) :
'The material question is : What is the nature of the actual function assumed is it a service that the State could have left to private enterprise, and if so fulfilled, could such a dispute be 'industrial'? '
Thus the nature of actual function, and of the pattern of organised activity is decisive.'
These observations would meet the contentions raised by the learned Advocates for the petitioners that during scarcity, the relief works would be a welfare activity of the State and that apart from the State, some voluntary organisation can also render such services. In our view, no responsible Government can say that even though there is scarcity or a large number of people are affected by the natural calamities, the State would not undertake the relief works for assisting and rehabilitating the affected people and transfer its constitutional obligations to a voluntary organisation. No voluntary organisation would have resources, the funds or the personnel for such type of programme as on number of occasions relief undertakings are required to be carried out in various parts of the State. It would be unthinkable that the State would leave such activities entirely to the voluntary organisation. Further, it would be difficult to hold that the voluntary organisation can be forced to render such services, as it depends entirely on their volition.
Hence, the undertakings carried out by the State for relief works because of the natural calamities such a famine, flood, earthquake, scarcity, etc., would be the primary and inalienable functions of the State, as held by the Supreme Court in the case of Bangalore Water Supply (supra). We therefore, entirely agree with the reasons given in the case of J. J. Shrimali (supra) that such relief undertakings would not be covered by the definition of the word 'industry' as interpreted by the Supreme Court in the case of Bangalore Water Supply (supra).
11. Whether such relief undertakings would be covered by the word 'industry' as defined by Section 2(j) of the Industrial Disputes Act, 1947 and as interpreted by the Supreme Court in the case of Bangalore Water Supply :
In the referring judgment, the Division Bench found prima facie considerable force in the contention of the learned Advocate for the petitioners that the purpose of the project was absolutely irrelevant and the parity of work is to be found in the modus operandi in the working and it was organisation of the venture, including the relations between the two limbs that was material; that analysis must be activity oriented and not motive based; motive is irrelevant as held by the Supreme Court in paragraph 61 in the case of Bangalore Water Supply. The Court further observed that in the case of Sanjit Roy : (1983)ILLJ220SC , while dealing with the famine relief work, it was accepted by the Supreme Court that the said activity undertaken by the State was an industrial activity and the workmen employed therein were entitled to minimum wages because the work undertaken is useful to the society and is creation of assets or goods and material service beneficial to the society.
The aforesaid question is required to be considered firstly by considering the scope and object of the Industrial Disputes Act. The scope and object of the industrial Disputes Act is, as held by V. R. Krishna Iyer, in the case of L. I. C. of Indian v. D. J. Bahadur : (1981)ILLJ1SC , as under :
'The soul of the statute, is not contract of employment, uniformity of service conditions negotiations, conciliation and adjudications of disputes and differences animated by Industrial justice, to avoid a collision which may spell chaos and imperil national effort at increasing the tempo of production.'
The question of industrial peace or question of avoiding a collision which may spell chaos and imperil national effort at increasing the tempo of production, would not arise in such type of relief undertakings where there is no question of increasing production. The question in such schemes is only how to provide sustenance to the affected persons. Further there is no question of avoiding collision because the employment is offered to all, who are seriously affected by the natural calamities. In such a situation, no question of relation or industrial dispute would arise.
Now we would refer to relevant paragraphs 37 and 38 of the judgment in the case of Bangalore Water Supply (supra). They read as under :
'37. A look at the definition, dictionary in hand decisions, in head and Constitution, at heart, leads to some sure characteristics of an 'industry', narrowing down the twilit zone of turbid controversy. An industry is a continuity, is an organized activity, is a purposeful pursuit not any isolated adventure, desultory excursion or causal, fleeting engagement motivelessly undertaken. Such is the common feature of a trade, business, calling, manufacture - mechanical or handicraft - based - service, employment, industrial occupation or avocation. For those who know English and are to not given to the luxury of splitting semantic hairs; this conclusion argues itself. The expression 'undertaking' cannot be torn off the works whose company it keeps. If birds of a teacher flock together and noscitur a sociis is a commonsense guide to construction 'undertaking' must be read down to conform to the restrictive characteristics shared by the society of words before and after. Nobody will torture 'undertaking' in Section 2(j) to mean meditation or musheira which are spiritual and aesthetic undertakings. Wide meanings must fall in line and discordance must be excluded from a sound system. From Banerjee : [1953]4SCR302 to Safdar Jung : (1970)IILLJ266SC and beyond, this limited criterion has passed muster and we see no reason, after all the marathon of argument to shift from this position.
38. Likewise, an 'Industry' cannot exist without co-operative endeavour between employer and employee. No employer, no industry; no employee, no industry - no industry; no employee, no industry not as a dogmatic proposition in economics but as an articulate major premise of the definition and the scheme of the Act, and as a necessary postulate of industrial disputes and statutory resolution thereof.'
After discussing various judgments, the Court further observed in paragraph 59 as under :
'59. All the indicia of 'Industry' are packed into the judgment which condenses the conclusion tersely to hold that 'Industries' will cover 'branches of work that can be said to be analogous to the carrying out of trade or business. The case, read as a whole contributes to Industrial jurisprudence, with special reference to the Act, a few positive facets and knocks down a few negative fixations. Governments and Municipal and statutory bodies may run enterprises which do not for that reason ceases to be Industries.
XXX XXX XXX XXX Any operation carried on in manner analogous to trade or business may legitimately be statutory 'Industry'. The popular limitations on the concept of industry do not amputate the ambit of legislative generosity in Section 2(j), industrial peace and the smooth supply to the community are among the aims and objects the legislature had in view, as also the nature, variety, range and areas of disputes between employers and employees. These factors must inform the construction of the provision'
Applying the aforesaid ratio and considering relief undertaking, it is apparent that -
(a) it cannot be said to be continuing activity as it is casual activity arising because of some unforeseeable calamities. Therefore, it cannot be said to be a systematic activity carried out for production or distribution of goods.
(b) it cannot also be considered as an 'industry' because the said phrase is to be understood as analogous to the carrying out of a trade or business. As held by the Supreme Court, the undertaking must be read down the conform to the restrictive characteristic shared by the society of words before and after. Applying the said principles, it cannot be said to be having any characteristic of trade or business; and
(c) even the employer-employee relations would not bear any resemblance to what is found in trade or business. In the relief undertakings, there is not question of appointing employees by following any procedure of recruitment rules. They are not appointed as such. They are called on the site to work so that they could be provided livelihood. Further, even if a person is physically handicapped and is not in a position to do the work, yet he would get the wages prescribed for the relief work while in a trade or business, reverse would be the position. Unless the person is fit and competent, he would not be employed. Further, in relief undertaking, the employees would come for work at their own sheet will. Therefore, it would be difficult to hold that the relief undertakings bear any resemblance to what is found in trade or businesses with regard to employer - employee relations.
Lastly, while laying down triple elements for holding a particular activity as an industry, the Court has emphasised in paragraph 161, item 1(c) that the true focus is functional and the decisive test is the nature of the activity with special emphasis on the employer-employees relations. Applying the aforesaid test also, in our view, the relief undertakings carried on by the State would not be covered by the work 'industry'. The relief work is undertaken not to construct a road or a bridge but is undertaken to see that within a span of 5 kms. of the affected area, the labourers would get something in cash or kind for their survival. Instead of giving them doles, they are provided work and wages. The reason is, as stated by the Division Bench in the case of J. J. Shrimali (supra), not to hurt the dignity, self-respect and sentiments of those receiving the same. This would be clear from the following observations :
'When a State Government during famine and drought undertakes relief works intended to provide the much needed relief to scarcity affected people living in affected area, it is not embarking upon any Industrial or commercial enterprise but is merely trying to fulfil its obligation towards its people who are hit by nature's wrath.
If, instead of distributing doles which may hurt the dignity, self respect and sentiments of those receiving the same, the State Government introduces schemes which would provide temporary work to the affected people and pays for the same.'
Further, in paragraph 161, item II, the Court has clarified that, although Section 2(j) uses words of widest amplitude, their meaning cannot be magnified to overreach itself and that 'undertaking must suffer a contextual shrinkage. Therefore, all organized activity possessing the tripe elements in Item 1 [(i) systematic activity, (ii) organized by co-operations between employer and employees, and (ii) for the production and/or distribution of goods and services], although not trade or business, may still be 'industry', provided the nature of the activity, namely the employer-employee basis, bears resemblance to what we find in trade or business. As discussed above, in relief undertaking employer-employee relations would not bear resemblance to what we find in trade or business. In any set of circumstances the Court in the very judgment, as emphasised above, made it clear that the discussion in the aforesaid judgment was not exhaustive but to the extent covered by the debate at the bar and in a word of relatively where law and life interlace, a search for absolutes is a self-condemned exercise. Hence also the relief undertaking as discussed above would not be covered by the word 'industry' as interpreted by the Supreme Court in the case of Bangalore Water Supply (supra).
12. Whether judgment in the case of J. J. Shrimali requires reconsideration because of the decisions in the case of Sanjit Roy : (1983)ILLJ220SC and in the case of Des Raj 1988 1 CLR 620.
Before considering this contention it would be appropriate to quote observations from the decision of the Supreme Court in the case of C. I. T. v. Sun Engineering Works (P) Ltd. : [1992]198ITR297(SC) , wherein the Court has held that the judgment of the Supreme Court must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before the Court and that is not proper to regard a word, a clause or a sentence occurring in a judgment as containing a full exposition of the law on a question when question did not even fall to be answered in that judgment. The relevant observations are as under :
'It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of the question under consideration and treat it to be the complete 'law' declared by this Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this Court. A decision of this Court takes its colour from the question involved in the case in which it is rendered and while applying the decision to a later case, the Courts must carefully try to ascertain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasonings. In Madhav Rao Scindia v. Union of India : [1971]3SCR9 , this Court cautioned : It is not proper to regard a word, a clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment.'
Keeping this aforesaid principle in mind, we would consider the decision rendered by the Supreme Court in the case of Sanjit Roy : (1983)ILLJ220SC . In that case, that Court considered whether the Minimum Wages Act, 1948 is applicable to the workmen employed in the famine relief works. For deciding the said question, the Court mainly relied upon Art. 23 of the Constitution of India and held that where a person provides labour or service to another for remuneration which is less than the minimum wages, the labour or service provided by him clearly falls within the meaning of the words 'forced labour' and attracts the condemnation of Art. 23. Every person who provides labour or service to another is entitled at least to the minimum wages and if anything less than the minimum wage is paid to him he can complain of violation of his fundamental right under Art. 23. No doubt, in that case, the Court has observed that the relief work undertaken by the State by way of famine relief is useful to the society and productive in terms of creation of some asset or wealth and when the State exacts labour or service from the affected persons for carrying out such work, for example a bridge or a road which has utility for the society and which is going to augment the wealth of the State, there can be no justification for the State not to pay the minimum wages to the affected persons. As stated earlier, in the aforesaid case, the Court has not at all considered the provisions of Section 2(j) of the Industrial Disputes Act or the definition of the word 'industry. Therefore, in our view, the aforesaid decision would not have any bearing in deciding the question as to whether the relief work undertaken by the State Government would be 'industry' or not.
At this stage, we should not lose sight of the subsequent judgment rendered by the Supreme Court in the case of Delhi Development Horticulture Employees' Union 1992 1 CLR 537. In that case, the Court has specifically observed that in the context of such schemes, it is wrong to approach the problems of those employed under such schemes with a view of providing them with full employment and guaranteeing equal pay for equal work, and if such interpretation is given, it would benefit a few at the cost of the many starving poor for whom the schemes are meant. It may force the State to wind up the existing schemes and forbid them for introducing the new ones, for want of sources. In our view, these observations would aptly apply to such type of relief undertakings during such calamities. Even if the State intends to give fullfledged benefits to a few at the cost of the many starving poor the probable result may be devastating and/or riotous.
Similarly, in the case of Des Raj (supra), in one appeal the appellant before the Supreme Court was working as a foreman in the Mechanical Construction Division under the Irrigation Department and in another appeal, the appellant was working at T. Mate in the P. W. D. Drainage Division. Before the Court, the question was whether the Irrigation Department of the Government is 'industry' or not. The Court observed that, as the amended statutory definition is not yet in force, the present definition and judicial pronouncements have to be referred to for finding the law. The Court thereafter referred to various decisions including the decision in the case of Bangalore Water Supply (supra) and observed that the main functions of the Irrigation Department when subjected to the Dominant Nature test clearly come within the ambit of industry. In our view, in this judgment, the Court was not required to consider the question which is posed in this matter. The question was altogether different and was based upon the projects carried out by the Irrigation Department of the concerned State and the said judgment would have no bearing on the question which is required to be dealt with in this matter.
Similarly in our view, the decisions of the Patna High Court in the case of Bihar Relief Committee (54 FJR 385), would not require much consideration because in that case the petitioner, Bihar Relief Committee, was established as a society under the Societies Registration Act with the sole object of rendering relief to the suffering caused by natural calamities like flood, drought, epidemic etc. to humanity. After considering various facts, the Court observed :
'The petitioner has undertaken minor irrigation schemes in the State for which it opened various centres for constructing open bore wells, tanks and tube wells after obtaining the advice of technical experts. It stores articles for such works and maintain plants and machineries for which depreciation wear and tear and running charges are charged. In supplying pipes to the farmers it charges them the cost incurred in transportation and storage. All these establish that the activities of the petitioner are systematic.'
The Court has finally held that the Bihar Relief Committee is an industry within the meaning of Industrial Disputes Act. In the present case, in our view, the work is not organised by a society but it is organised by the State in discharge of its inalienable duty. Further, the relief undertakings, as stated above, are casual and not continuing one.
Lastly, in the case of Umayammal v. State of Kerala 1983 (1) LLJ 267, the Kerala High Court considered the question whether the provisional or temporary employees working in Government Departments, Government Companies, Statutory Corporations and Local Bodies were governed by the provisions of the Industrial Dispute Act. There also, the Court relied upon the decision of the Supreme Court in the case of Bangalore Water Supply (supra) and it is made clear that the sovereign functions of the State cannot be included in industry but if there are industrial units severable from the essential functions and possess an entity of their own, it may be plausible to hold that the employees of those units are workmen and those undertakings are industries. In our views, the aforesaid decision of the Kerala High Court would not advance the contentions raised by the learned Advocates for the petitioners.
Conclusions :
In the result, we entirely with the decision rendered by this Court in the case of J. J. Shrimali [1989 (2) GLH 12 : (1988 (1) GLR 396)] and it does not call for any reconsideration.
For the reasons recorded above, we answer the question referred to us, as under :
Re question No. 1.
The employment offered to the persons on the scarcity relief works as undertaken by the State cannot be said to be employment in 'industry' as defined by Section 2(j) of the Industrial Disputes Act, 1947 mainly because.
(a) it is the primary and inalienable function of the State to provide livelihood to the persons who are affected by the natural calamities such as famine, earthquake, epidemic, flood, scarcity, etc., and
(b) admittedly, the relief work is not a 'business' or 'trade' and with regard to the 'undertaking', the activity is not analogous to trade or business or that it is not a systematic activity but is carried out casually at different places depending on the calamities in a particular area.
Re question No. 2.
The decisions of the Division Bench of this Court in the case of J. J. Shrimali [1989 (2) GLH 12 : (1989 (1) GLR 396)] that scarcity relief work undertaken by the State is not 'industry' as defined by Section 2(j) of the Industrial Dispute Act, 1947, is well sustained.
13. Questions answered.