Definition of Industry – Landmark Decisions

Section 2(j), Industrial Disputes Act,1947 has defined the term industry. It has been interpreted over the years by the judiciary. This post highlights some of the cases where the term ‘industry’ has been defined , explained and elaborated –
State of Bombay & Others vs The Hospital Mazdoor Sabha & others,  AIR 1960 SC 610
The Apex Court held as follows-
  • The object and the scope of the Act, as apparent from its various provisions, made it amply clear that the Legislature in defining the word ‘industry’ in s. 2(j) of the Act was deliberately using the term of wide import in its first clause and referring to several other industries in the second in an inclusive way obviously denoting extention. In construing the definition, therefore, it is inappropriate to apply the maxim noscitur a sociis so as to restrict its meaning. The maxim is a rule of construction and can apply only where the intention of the Legislature in associating terms of wider import with those or narrower import or the meaning of the wider terms used is in doubt.
  • Nor can undue importance be attached to the conventional meaning attributed to trade or business in construing the wide words of the definition since it has lost some of its force and can no longer be wholly valid for the purpose of industrial adjudication in a modern welfare state. It is clear that the presence of a profit motive or the investment of capital, traditionally associated with the notion of trade and business, can be no indispensable requisite for an industry under S. 2(j) of the Act. Such activities of the Government as can properly be described as regal or sovereign activities easily fall outside the scope of the definition. But the field of such activities cannot be extended to cover other activities which are undertaken by the State in the implementation of the Directive Principles of State Policy and the ideal of a welfare State.
  • We must, therefore, consider where the line should be drawn and what limitations can and should be reasonably implied in interpreting the wide words used in s. 2(j); and that no doubt is a somewhat difficult problem to decide.
  • It is the character of the activity which decides the question as to whether the activity in question attracts the provision of s. 2(j); who conducts the activity and whether it is conducted for profit or not do not make a material difference.
  • In deciding the question as to whether any activity in question is an undertaking under s. 2(j) , the doctrine of quid pro quo can have no application.

Secretary, Madras Gymkhana Club Employee. Union v. Management of the Gymkhana, AIR 1968 SC 554

The Hon’ble Supreme Court laid down as under –

  • 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.
  • 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’.
  • 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.
  • 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.

Management of Safdarjung Hospital v. K. S. Sethi, AIR 1970 SC1407

The interpretation of the definition in State of Bombay case was disapproved by a larger bench as follows-

  • The definition under Section 2(j) 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 who follow one of ‘the avocations detailed for workmen. The definition no doubt seeks to define ‘industry’ with reference to employers’ occupation but includes the employees, for without the two there can be no industry.
  • An industry is only to be found when there are employers and employees, the former relying upon the services of the latter to fulfill their own occupations.

Bangalore Water-Supply & Sewerage Board .vs R. Rajappa & Others, AIR 1978 SC 548

The Court observed that although Section 2(j) uses words of the widest amplitude in its two limbs, their meaning cannot be magnified to overreach itself.

  • Where –

(i) systematic activity,

(ii) organized by cooperation 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 e.g. making, on a large scale prasad or food),

prima facie there is an ‘industry’ in that enterprise.

  • The absence of profit motive or gainful objective is irrelevant, be the venture in the public, joint, private or other sector.
  • The true focus is functional and the decisive test is the nature of the activity with special emphasis on the employer-employee relations.


The cases discussed above show that how the definition of the industry has expanded over the years. The Supreme Court has in different circumstances tried to expand and evolve the concept of ‘industry’.

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Bhumika Sharma

She is currently a Research Scholar, (PhD) at Himachal Pradesh University, Shimla. She finds peace in research and writing on a variety of social issues. She believes in the power of education and awareness to deal with various problems.

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