Introduction: Excessive Degree of Worker-Oriented Approach and Lack of Unanimity
The Bangalore Water Supply case (BWS), to interpret what an ‘industry' was, used the legal presumption that the ID Act was a worker-oriented legislation. The law in question, albeit, cannot be viewed solely from the perspective of workers. As observed in the JBS case, the main object of the legislation is to control and harmonise ties among employees and their employers in order to maintain industrial peace and social harmony, as is clear from its preamble and multiple provisions.
When the definition clause is read in conjunction with other parts of the Act, it necessitates an interpretation whilst also keeping in mind the interests of the employer, who has invested its expertise coupled with capital in the industry, as well as the workers, who also further the industry's development through their labour. The ID Act is a piece of social legislation. Consequently, when an industrial law is interpreted which seeks to promote social justice, it becomes crucial to take into account the interests of employees, employers, and, in a democratic society, the people who will ultimately benefit from industrial activities.
Moreover, the fact that the judgement in BWS was not reached by a unanimous vote is one of the impediments that are put in the way of the courts and parties. Three of the five judges who comprised the majority have provided a consolidated opinion. Two other judges, on the other hand, provided their own opinions and projected viewpoints that were somewhat at odds with those of the other three judges. Beg, C.J., who had retired, was unable to view the decisions made by the other judges, upon his departure. The Judges therein delivered conflicting opinions at various points in time, and in some instances without having read or had the chance to read the opinions of their brother Judges.
In such a circumstance, the Apex Court in JBS observed that it is challenging to determine whether the judgement of Krishna Iyer, J., presented on his own behalf and behalf of Desai and Bhagwati, JJ., can be maintained to be an authoritative precedent that would require no reconsideration, despite the Judges' own statements to the effect that each of their interpretations was tentative and only a temporary exercise until the legislature intervened and settled the law regarding the definition.
The Impugned Tests of BWS through the Lens of Coir Board v. Indira Devai
The Coir Board v. Indira Devai P.S case was one of the cardinal cases to illustrate the impediments of the tests envisaged under the BWS judgment. The Coir Board's role, in this case, was to support the Coir industry, create markets for it, and provide facilities to increase the marketability of its products. It was certainly not created to manage an industry on its own. Hence, it assuredly cannot be said to be a part of an industry in light of the predominant object for which it was set up.
Nevertheless, if one were to use the standards established by the BWS judgment, it would be an organisation where there was the presence of both employees and employers. Further, the organisation performed some systematic activities for the welfare of other people. As a result, the ID Act would have to classify it as an industry. The Court stated that such a broad criterion or sweeping test was not intended by the ID Act and that it did not believe that every business that provides a meaningful service and employs people could be classified as an industry.
It was observed that although the definition in Section 2(j) is broad, it was not intended by the legislature to include hospitals run on a charitable basis or by government bodies, as well as education and research institutions run by private or public entities, as was done in BWS. The definition is limited to commercial activities systematically undertaken by private entrepreneurs with the help of employees for the production or distribution of goods or material services to the community. The court believed the definition did not apply to liberal and learned professions such as doctors and lawyers, as these professions depend on an individual's education, expertise, and intellectual abilities.
The legislative scope was believed to be limited to activities conducted systematically or habitually by private entrepreneurs with the assistance of employees, for the production or distribution of goods or the provision of material services to the larger community or a section of it. Prior decisions of the Apex Court also recognised the need to exclude certain occupations, services, and undertakings from the definition. Even the majority in BWS agreed that to settle the position, further legislative action was necessary.
Enforcement-related Legislative Inaction is Constructing Muddles
The BWS judgement said, at multiple junctures, that the Court's attempt at giving the words in the broad definition of ‘industry' a specific meaning was merely a temporary fix until the legislature produced a more precise definition. Hence, the definition of ‘industry' was altered by the legislature through the Amendment Act, 1982.
In the Statement of Objects and Reasons of the Amendment Act, 1982, clause 2 expressly says that sincerely taking into account the BWS decision, this amendment proposes to redefine ‘industry.' However, contrary to the BWS approach, the definition created exceptions for certain institutions such as hospitals and dispensaries, educational, scientific, research or training institutes, institutions engaged in charitable, social and philanthropic services, etc., “in view of the need to maintain in such institutions an atmosphere different from that in industrial and commercial undertakings and to meet the special needs of such organisations.” It also exempted sovereign functions. Nonetheless, the definition, despite being mandated by the legislature, has not been notified by the executive to come into force for the last four decades.
On top of a change in the definition of ‘industry', the Amendment Act, 1982, also transformed many other provisions of the ID Act. The other provisions of the amendment were brought into force by the issuance of a Notification, but the Amendment Act to the extent of its substituted definition of ‘industry' with specified categories of industries taken out of its purview, has not been brought into force yet. Sub-section (2) of Section 1 of the Amendment Act stipulates that the Act “shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint”. Therefore, either the entire Act should have been notified for enforcement, or it should not have been notified at all, as such a piecemeal implementation to the Amendment Act is not contemplated by sub-section (2) of Section 1 of the Amendment Act.
In support of this argument, it is pertinent that the Amendment Act's enabling provision requires that the Central Government issue a notification outlining when the Act's provisions should take effect, suggesting that the Act's enforcement must be carried out within a reasonable amount of time. However, the State's executive branch engaged in an unconstitutional manoeuvre to thwart the legislature's obvious purpose by failing to implement the complete Act for more than 40 years.
Conclusion
The Supreme Court in the Coir Board case in 1998 reasoned that the uncertainty and negative outcomes in applying the test laid down in the BWS over the last two decades necessitate a re-examination of the decision. The aim of artificially extending the definition of industry was to promote industrial peace and community welfare, however, it may have caused more harm than good by applying the ID Act to organisations not intended to be covered by it. This could have curtailed employment opportunities, damaging both organisations and employees. Subsequently, the Bench in JBS vindicated the aforementioned reasoning of the Coir Board case, stating that their observations did have a valid foundation, as the experience of the Learned judges was not based solely on the case in question, but on numerous cases that were brought to the court through the labour courts.
The excessive focus on protecting workers' rights and the limitations imposed on employers' rights have resulted in a considerable number of labour and industrial disputes. As a consequence, significant sums of back wages have been awarded to workers who were deemed to have been unlawfully terminated or laid off, purportedly as legitimate remuneration owed to them. Such awards can be burdensome and may force employers with moderate assets to shut down their businesses, harming the interests of workers, employers, and the public at large. The practice of treating small undertakings as an industry and granting reinstatement and back wages can be a serious hazard for those engaged in private enterprises. Additionally, employers often have to pay idle wages because they cannot determine whether the worker was gainfully employed while waiting for adjudication of the dispute.
As analysed above, the BWS judgment gave ‘industry' an extensively broad meaning, including in it, hospitals, dispensaries, educational, scientific and research institutions, charitable and philanthropic institutions, domestic services, sovereign functions, and noble professions like doctors, lawyers, etc. However, by excluding these institutions and work from the definition of industry in the Amendment Act, 1982, the legislature made its intent unequivocally clear. Regrettably, the will of the legislature still lies unenforced. Moreover, even the IR Code, 2020, which is considered to become a revolutionary statute in regards to the employer-worker relation when enforced, under its Section 2(p), wherein the definition of industry is stated, has not been able to provide clarity on whether hospitals, dispensaries, educational, scientific and research institutions, cooperative societies, and noble professions would be under the ambit of ‘industry'.
Industrial law should prevent the exploitation of workers and employers alike and ensure cooperation for mutual benefit and public good. An overly broad interpretation of the definition of ‘industry' could be a deterrent for private enterprises in a country where public employment opportunities are already limited. Noble professionals such as lawyers, architects, doctors, and accountants may face hurdles in pursuing their self-employment if their professions are considered as industries. They should be regulated separately from traditional industries, and reasonable restrictions can be imposed for the benefit of those employed by them. Although it is necessary to regulate even liberal professions and impose reasonable restrictions that benefit those employed in these professions through the law, such regulations should be covered by distinct and appropriate legislation. An approach that focuses solely on the interests of the workers when interpreting the definition of industry, disregarding the interests of the employer, the industry owner, and the public who ultimately benefits, would be biased and contrary to the object and provisions of the Act.
BWS case has negatively affected philanthropic and charitable organisations, and organisations run by voluntary social workers, that do not operate for profit, as they are unable to comply with the requirements of the Act. Many of these organisations, run by volunteers, have ceased welfare activities, depriving the employees of their livelihood and general society of their considerable benefits. There are many activities which are undertaken by specific organisations not with a view to secure any monetary returns, and such activities may not have been labelled as industrial activities if it were not of the artificially wide judicial interpretation of the term ‘industry' in BWS. Such organisations, for instance, pickle-making or embroidery-oriented organisations especially made for women's upliftment, are not organised like industries and they do not have the means or manpower to run them as industries. The broad interpretation of the term ‘industry' has resulted in high chances of the abandonment of numerous such voluntary welfare schemes.
There are activities that are done for the betterment of the community, like running charitable hospitals that provide free medical services and medications, which can be sustained through professional volunteers or donations. Some of these activities can use the profits earned in the paid section to provide free services in the free section. Doctors may choose to work for little or no compensation. Despite this, the question remains whether such philanthropic organisations are considered industries. The definition should be re-evaluated to ensure that workers in industries can still benefit from industrial legislation, while the community continues to receive essential philanthropic and noble services. This includes educational services, research institutions, professional and recreational activities, amateur sports, promotion of arts, and other similar activities that should be considered in this context.
However, as neither the Amendment Act, 1982, nor the IR Code, 2020, has come to enforcement, the courts are left with no option other than to follow the BWS ratio, which holds the capacity to create a cavity in the very fabric of industrial relations between the stakeholders with its relatively ‘fragile' interpretation of ‘industry'.
REFERENCES
- Coir Board v. Indira Devai P.S., (1998) 3 SCC 259
- Bangalore Water Supply and Sewerage Board v. A. Rajappa AIR 1978 SC 548
- The Industrial Disputes (Amendment) Act, 1982
- The Industrial Disputes Act, 1947
- B.S. Industries v. Commissioner of Central Excise, (2002) 2 SCC 273
- The Code on Industrial Relations, 2020
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