D.N. Banerji v P.R. Mukherjee (1952)

This is the first case in the line on the meaning of "industry", and it sets the direction the line takes for the next quarter-century. The question it answers is whether a municipality — a statutory body discharging the normal duties of local self-government, with no capital invested and no profit to earn — can be an industry at all.

The Court held that it can. In doing so it made two moves that everything afterwards is built on: it refused to treat capital and profit as necessary elements of the statutory concept of industry, and it gave the word "undertaking" in s. 2(j) an independent meaning wider than trade or business. It also supplied the limiting words that later benches fastened on: branches of work "analogous to the carrying out of a trade or business".

Pratul Chandra Mitra was the Head Clerk and Phanindra Nath Ghose the Sanitary Inspector of the Budge Budge Municipality. Both were members of the Municipal Workers' Union.

On receipt of complaints against them for negligence, insubordination and indiscipline, the Chairman of the Municipality suspended them on 13 July 1949, drew up separate proceedings and called for explanations by a specified date. The explanations were considered at a meeting of the Commissioners on 6 August 1949, and by a majority the Commissioners confirmed the suspension and directed the dismissal of the two employees.

At the instance of the Municipal Workers' Union, which questioned the propriety of the dismissals, the State of West Bengal referred the matter on 24 September 1949 to the Industrial Tribunal. The Tribunal made its award on 13 February 1950, holding that the suspension and punishment of the two employees were cases of victimisation, and directing their reinstatement.

The Municipality moved the High Court at Calcutta under Articles 226 and 227 for certiorari to quash the proceedings and cancel the award. Both petitions were heard by Harries CJ and Sambhu Nath Banerjee J, who negatived all five contentions and dismissed the petitions, granting leave under Article 132(1).

Before the High Court the Municipality had argued: (a) there was no industrial dispute, so no reference could be made; (b) the Act did not apply to disputes with municipalities; (c) if it did, it was ultra vires; (d) the Tribunal should not have directed reinstatement; and (e) the award was bad on the merits.

The Supreme Court disposed of (c), (d) and (e) briefly.

On (c), the power of a Tribunal to reinstate dismissed employees — held to be within its competence in Western India Automobile Association v Industrial Tribunal, Bombay — undoubtedly trenches on the power to appoint and dismiss conferred on the Chairman and Commissioners by ss. 66 and 67 of the Bengal Municipal Act. But that invasion of the provincial field does not invalidate the central Act, because regard must be paid primarily to the pith and substance of the challenged legislation. Industrial and labour disputes are within the competence of the central legislature; the Act deals with that subject and not with local government. The point was covered by Profulla Kumar Mookerjee v Bank of Commerce Ltd., Khulna.

On (d) and (e), whether a dismissal was wrongful or justified is "a question primarily for the Tribunal to decide". The Tribunal having found victimisation, the High Court was right not to interfere under Articles 226 and 227 in the absence of grave miscarriage of justice or flagrant violation of law.

Points (a) and (b), the Court said, are "interlaced", and it is on these that the case is remembered.

Section 2(j): "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.

Section 2(k): "industrial dispute" means any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person.

Section 2(s): "workman" means any person employed (including an apprentice) in any industry to do any skilled or unskilled manual or clerical work for hire or reward, and includes, for the purposes of proceedings in relation to an industrial dispute, a workman discharged during that dispute, but does not include any person employed in the naval, military or air service of the Government.

The Court compared these with the definitions of "trade dispute" and "workman" in s. 8 of the (English) Industrial Courts Act 1919, and concluded that "trade dispute" in the English Act and "industrial dispute" in ours "mean the same thing practically".

It had to be conceded at the outset that an industry can be carried on by or under the authority of the Central or a State Government, or by or on behalf of a local authority. That is clear not only from s. 2(a)(i) but from the definition of "employer" in s. 2(g), which speaks of an industry carried on by or under the authority of a department of Government, and of an industry carried on by or on behalf of a local authority, whose chief executive officer is the employer.

The appellant's argument was therefore narrower: where a dispute arises in connection with the discharge of the normal activities of Government or of a local body, it cannot be an industrial dispute. It was the soundness of that contention the Court had to examine.

The Court began by conceding what the ordinary understanding of the word is. In the non-technical sense, "industry or business means an undertaking where capital and labour co-operate with each other for the purpose of producing wealth in the shape of goods, machines, tools etc., and for making profits." Not every relationship of employer and employee makes an industry: one does not think in terms of industry when regarding "the rights and duties of master and servant, or of a Government and its secretariat, or the members of the medical profession working in a hospital."

But, the Court continued, "there is nothing however to prevent a statute from giving the word 'industry' and the words 'industrial dispute' a wider and more comprehensive import" to meet the requirements of rapid industrial progress and to bring about, in the interests of industrial peace and economy, a fair adjustment of relations between employers and workmen "in a variety of fields of activity". "The limited concept of what an industry meant in early times must now yield place to an enormously wider concept." The conflicts between capital and labour "have now to be determined more from the standpoint of status than of contract".

The task is therefore to ascertain what the statute means, and for that the "get-up and context" are relevant as well as the words. The Court applied Lord Atkinson's observation in Keates v Lewis Merthyr Consolidated Collieries that in construing a statute it is permissible to have regard to the state of things existing when it was passed and to the evils it was designed to remedy. It added a warning candidates should reproduce: even where a definition is more or less the same in two statutes, the objects may be widely different, so "decisions on the meaning of particular words or collection of words found in other statutes are scarcely of much value when we have to deal with a specific statute of our own; they may be helpful, but cannot be taken as guides or precedents."

On the second limb, the Court also recognised that an individual grievance may become collective: "a single employee's case might develop into an industrial dispute, when as often happens, it is taken up by the trade union of which he is a member and there is a concerted demand by the employees for redress."

The key passage is short and should be quoted:

"Though the word 'undertaking' in the definition of 'industry' is wedged in between business and trade on the one hand and manufacture on the other, and though therefore it might mean only a business or trade undertaking, still it must be remembered that if that were so, there was no need to use the word separately from business or trade."

The wider import is "attracted even more clearly" by the second limb, which speaks of calling, service, employment or industrial occupation or avocation of workmen. Hence: "'Undertaking' in the first part of the definition and 'industrial occupation or avocation' in the second part obviously mean much more than what is ordinarily understood by trade or business. The definition was apparently intended to include within its scope what might not strictly be called a trade or business venture."

The Court then drew support from s. 2(n), the definition of "public utility service", which it called "very relevant and important" in construing "industry". That definition covers railway service; any section of an industrial establishment on whose working the safety of the establishment or its workmen depends; postal, telegraph or telephone service; any industry which supplies power, light or water to the public; any system of public conservancy or sanitation; and any scheduled industry notified by the appropriate Government on grounds of public emergency or public interest.

The argument from that provision is decisive on the facts. Railways, telephones and the supply of power, light or water may be carried on by private companies; "even conservancy or sanitation may be so carried on, though after the introduction of local self-government this work has in almost every country been assigned as a duty to local bodies like our Municipalities". Does the service cease to be an industry merely because it is carried on by a statutory corporation? The only ground for saying so would be the absence of invested capital and of a profit motive — "But neither the one nor the other seems a sine qua non or necessary element in the modern conception of industry."

Turning to s. 108 of the Bengal Municipal Act 1932, which enumerates under thirty-six heads the purposes to which the municipal fund may be applied — construction and maintenance of streets, lighting, water supply, conservancy, maintenance of dairy farms and milk depots, taking markets on lease — the Court observed that these are the normal functions of the Municipality, and that "some of these functions may appertain to and partake of the nature of an industry, while others may not." There is "a necessary element of distinction between the supply of power and light to the inhabitants of a Municipality and the running of charitable hospitals and dispensaries for the aid of the poor. In ordinary parlance, the former might be regarded as an industry but not the latter." Note that this sentence, in a case decided in 1952, already puts the hospital question in issue.

Finally, on why entrusting such work to local bodies does not remove it from the sphere of industry:

"The very idea underlying the entrustment of such duties or functions to local bodies is not to take them out of the sphere of industry but to secure the substitution of public authorities in the place of private employers and to eliminate the motive of profit-making as far as possible. The levy of taxes for the maintenance of the services of sanitation and conservancy or the supply of light and water is a method adopted and devised to make up for the absence of capital. The undertaking or the service will still remain within the ambit of what we understand by an industry though it is carried on with the aid of taxation, and no immediate material gain by way of profit is envisaged."

Two decisions were relied on, and the Court quoted both at length.

National Association of Local Government Officers v Bolton Corporation — Lord Wright held that to exclude employees of a public or local authority, and in particular those engaged in professional, technical or administrative services, "would unduly narrow and limit the wide connotation which should here be given to 'trade' and to 'workman'." Trade and industry are treated as interchangeable terms in the Industrial Courts Act 1919. "Trade" is "a term of the widest scope", connected originally with the word "tread" and indicating a way of life or an occupation; it may mean the occupation of a small shopkeeper equally with that of a commercial magnate, or a skilled craft. Though usually contrasted with a profession, it is used in the widest application in the appellation "trade unions" — "Professions have their trade unions." Lord Wright saw "no reason to exclude from the operation of the Industrial Courts Act the activities of local authorities".

Federated Municipal and Shire Council Employees' Union of Australia v Melbourne Corporation — the same question, on the making, maintenance, control and lighting of public streets. The corporations contended they were carrying on no industry but only the normal statutory functions assigned to them. The High Court of Australia decided in favour of the Union, four against two. Each side had put an extreme contention: for the claimant, that "industrial" meant simply relating to industry in the abstract, whether in trade, commerce, science or the learned professions; for the corporations, that an industrial dispute meant a trade dispute, and a trade dispute a dispute in trade "carried on by the employer for profit". Isaacs and Rich JJ postulated the formula midway between them, which is the passage to learn:

"Industrial disputes occur when, in relation to operations in which capital and labour are contributed in co-operation for the satisfaction of human wants and desires, those engaged in co-operation dispute as to the basis to be observed, by the parties engaged, respecting either a share of the product or any other terms and conditions of their co-operation."

They concluded that "the question of profit-making may be important from an income tax point of view … but, from an industrial dispute point of view, it cannot matter whether the expenditure is met by fares from passengers or from rates." Powers J answered the profit argument by reductio: a philanthropist who acquired a clothing factory and employed the same workers would not be in an occupation about which an industrial dispute could arise even if he sold at bare cost; a ferry run by a private company would be industrial but the same ferry run by a municipal corporation would not; and the same would follow for baths, bridge-building, quarries, sanitary contracts, gas-making, municipal building and even coal-mining for municipal tramways. "I cannot accept that view."

Having regard to the definitions in the Act, the aim the Legislature had in view, and the nature, variety and range of disputes that occur between employers and employees, the Court was "forced to the conclusion that the definitions in our Act include also disputes that might arise between municipalities and their employees in branches of work that can be said to be analogous to the carrying out of a trade or business."

Two reservations were expressly made, and both matter:

• "It is unnecessary to decide whether disputes arising in relation to purely administrative work fall within their ambit." The Court thus left open the very question that later cases would fight over.
• Whether there is an industrial dispute at all "is for the Government primarily to find out, for it is only then it has jurisdiction to refer"; and it is "not every case of an industrial dispute that the Government is bound to refer … It is a question of expediency."

No ground had been urged that the Sanitary Inspector and the Head Clerk were officers and not workmen. The dispute raised on their behalf by the Union was an industrial dispute within the meaning of the Act. The order of the High Court was affirmed and the appeal dismissed with costs, only one set to be shared between respondents 2 and 3.

This is the first of the definitional cases, and the whole later argument is latent in it.

What it gives the expansive side: capital and profit are not necessary elements; "undertaking" is a separate word doing separate work; a service does not cease to be an industry because a statutory body performs it with money raised by taxation; and the ordinary lay meaning of "industry" is not the statutory meaning.

What it gives the restrictive side: the holding is in terms confined to branches of work analogous to the carrying on of a trade or business; the Court accepted that some municipal functions are industry and some are not; it used the running of charitable hospitals and dispensaries as its example of what "in ordinary parlance" would not be an industry; and it expressly left purely administrative work undecided. Those are the footholds later benches used when they narrowed the definition.