PRAGYA’S & KARTIKEYA’S CASE ANALYSIS
State of Bombay V. The Hospital Mazdoor
Sabha
Citation:- 1960 AIR 610, 1960 SCR (2) 866
PRAGYA’S & KARTIKEYA’S CASE ANALYSIS
Factual Matrix of the case
1. The defendants; Ms. Vatsala Narayan and Mrs. Ruth Isaac were employed in the services of JJ. Hospitals as ward servants,
one of the five hospitals owned and looked after by the Appellant; State of Bombay.
2. Their services were terminated in 1954. A notice was served to both the petitioners regarding their termination. The reason
for the termination, as stated, was the fact that several employees were being retrenched from the Civil Supplies Department,
and in order to accommodate them, the defendants had to be let go.
3. The positions of the defendants were replaced by the two employees retrenched from the Department of Civil Supplies.
Therefore, in the year 1956, the defendants filed a writ of mandamus before the Bombay High Court contending that the
termination notice was improper, and therefore their termination would stand invalid.
4. After examination and interpretation of all the terms, the High Court of Bombay presided by Tendolkar J., held that the
administration of a hospital didn’t fall under the meaning of ‘Industry’ as provided under the Act, and therefore the notice
would be held valid. Hence, this case was appealed to the Supreme Court of India.
PRAGYA’S & KARTIKEYA’S CASE ANALYSIS
Section Interpreted & Examined
Industrial Disputes Act, 1947
1. Section 2(g): “employer” means-
i. In relation to an industry carried on by or under the authority of any department of the Central Government Government or a
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State Government the authority prescribed in this behalf, or where no authority is prescribed, the head of the department;
ii. In relation to an industry carried on by or on behalf of a local authority, the chief executive officer of that authority;
2. 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;
3. Section 25F (b): Conditions precedent to retrenchment of workmen.--No workman employed in any industry who has been in
continuous service for not less than one year under an employer shall be retrenched by that employer until the workman has been
paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay for every completed year of
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continuous service or any part thereof in excess of six months.
PRAGYA’S & KARTIKEYA’S CASE ANALYSIS
Issues
1. Whether the provisions of the Industrial Disputes Act are applicable to Hospitals? Does this
mean that Hospitals come within the ambit of definition of an ‘Industry’?
2. Whether the retrenchment orders concerning the two employees is invalid due to non-
compliance of Section 25F of the Act?
PRAGYA’S & KARTIKEYA’S CASE ANALYSIS
Contentions of the Appellant
1. That the Appellants contended that since they are not within the ambit of definition of Section 2(j)
therefore the provisions of the Act will not apply to them. Their contention rests upon the argument
that there are certain essential features which are associated with terms ‘business and trade’, and
therefore must be understood in the light of popular and conventional sense even though they may
be denoting use of wide import.
2. That the Appellate court passed an impugned judgment holding the appellants liable for non-
compliance of Section 25F of the Act.
3. That the appellant further contended that since there is not ‘quid pro quo’ in the business of
hospitals, the principle of ‘noscitur a sociis’ will not be applicable in the present case.
PRAGYA’S & KARTIKEYA’S CASE ANALYSIS
Contentions of the Defendants
1. That the contentions furthered by the Defendants were that there was no payment at the time
of retrenchment compensation thereby a complete violation of Section 25F (b).
2. That the non-compliance of the conditions laid down under Section 25F makes the
retrenchment order of their termination invalid and improper.
PRAGYA’S & KARTIKEYA’S CASE ANALYSIS
Judgment
The Court, after careful examination and usage of principles of interpretation such as ‘noscitur a sociis’ and ‘looking at the object
and intent of legislature’ and, external aids to ascertain the wide meanings of certain terms, held that:
1. The State is said to be carrying an ‘undertaking’ within the scope of Section 2(j) in cases where it runs a group of hospitals for the
purpose of giving medical relief to the citizens and for helping impart medical education.
2. The Court further held that wherein an activity is undertaken with the help of employees for the purpose of production or
distribution of goods for the entire public at large, then such an activity will be considered an ‘undertaking’.
3. The presence of profit motive isn’t a material factor for bringing an activity/undertaking within the ambit of Section 2(j). It is in
fact, the character and the nature of the concerned activity which ascertains its character as an industry.
4. The mere fact that the activity in question is administered by the government is immaterial. Certain activities which are
undertaken for charitable motives will be considered as ‘undertaking’.
PRAGYA’S & KARTIKEYA’S CASE ANALYSIS
Interpretational Principles
With the use of external aids i.e., dictionary, the phrase ‘industry’ was interpreted as stated in Section 2(j) of the Industrial Disputes Act, 1947:
1. The words used in the definition of the term are very wide in their import. The Court opined that if there is such deliberate usage of words
of such wide import, then prima facie, it is necessary to abide by interpretation of such wide demotion.
2. The Court used the external aid of Interpretation, ‘Webster dictionary’ to define certain terms under Section 2(j). The term ‘undertaking’
was meant to be any business or any enterprise in which one engages or works in. Further, to define the term ‘trade’, the Court quotes the
definition as provided by Halsbury. The primary meaning is exchange of goods for money or goods for goods, and the secondary meaning
states that any business carried on with the purpose to profit from the money.
3. The definition of the term ‘business’ was taken to be of wider import, and an activity which is an occupation and not a pleasure.
4. In the present appeal, the Court relied upon an inclusive interpretation of Section 2(j) to mean that the words are used in an inclusive
definitive way denoting an extension; therefore the meaning of the words cannot be restricted in any sense.
PRAGYA’S & KARTIKEYA’S CASE ANALYSIS
Interpretational Principles
The Court further used the principle of ‘noscitur a sociis’ to determine whether Hospitals would form part of Industry or not.
1. The Court referred to Maxwell’s definition of the principle, which states that the meaning of an unclear or ambiguous word in a statute
should be determined by considering the words with which it is associated in the context. This principle aims to define the more general
words of a statute within the ambit of the meanings of more narrow and specific words.
2. The Court was of the opinion that noscitur a sociis is merely a rule of construction which can be applied where the meaning of words of
wider import has to be ascertained or the intention of the Legislature is doubtful.
3. The Court relied upon observations in the case of Corporation of Glasgow v. Glasgow Tramway and Omnibus Co. Ltd, wherein the
learned judge held that meanings of such words wide in their import, shouldn’t be qualified or cut down by their being associated with
other words.
4.The Court opined that philosophy behind the principle of noscitur a sociis is that the meaning of doubtful words may be ascertained by
reference to the meaning of words it associates itself with.
PRAGYA’S & KARTIKEYA’S CASE ANALYSIS
Interpretational Principles
The Court further went on to interpret whether or not ‘Governmental Activities’ be within the ambit of ‘undertaking’ under Section 2(j) by looking at the
intention and object of the Legislature.
1. To ascertain the above doubt, the Court went on to examine the definition of ‘employer’ under Section 2(g). After careful examination, the Court was of the
opinion that the wordings of the Section indicate that there was clear intention of the Legislature to make the provisions of the Act applicable to activities of the
Government which fall within the ambit of Section 2(j).
2. The Court relied heavily upon the judgment delivered in Sri Vishuddhananda Saraswati Marwari Hospital v. Workmen, in which the Labor Appellate
Tribunal held that the ambit of Section 2(j) was of wide amplitude and there would be no good reason for cutting down its natural meaning to limit its operation
to profit-making enterprises only. The ratio of the case was that it held hospitals to be part of industry.
3. The Court referred to the precedent set by the Supreme Court in D.N. Banerjee v. P.R. Mukherjee and Ors, in which the learned bench was of the opinion
that while determining the meaning of word ‘industry’, absence of profit motive doesn’t make any difference in determining the character of the activity. The real
test lies in the determination of other relevant factors such as the real nature of the Activity.
4. While deciding the scope and character of the concept of the term ‘Industry’, the Court has referred to the dissent given by Isaac J. in the ‘The Federated State
School Teachers’ Association of Australia v. The State of Victoria and Ors.The learned Judge stated that while dealing with such questions concerning
‘industries’, the adjudicators must be aware of the constant currents of life and should be well versed in the subject.
PRAGYA’S & KARTIKEYA’S CASE ANALYSIS
Analysis of the Case & Conclusion
1. That the Court in the above case had made a lot of significant changes in the interpretation of the term ‘industry’. Moreover, it has
also established that the mere presence of profit motive will not be a material factor to widen the scope of the term ‘industry’.
2. Furthermore to ascertain such a wide scope which was established, in Bangalore Water Supply v. A. Rajappa, the Court held
that any government department undertaking the welfare activities cannot be termed as part of sovereign functions. Therefore, any
hospital is surely a service and hence, within the ambit of Section 2(j) of the Act.
3. Justice Gajendragadhkar may have established a groundbreaking interpretation of the term ‘industry’, but he was also careful
while doing so. The judge stated that while the words used in Section 2(j) were of very wide denotion, a line will have to be drawn
in a fair manner to exclude some services and undertakings.
4. In more recent developments after the precedent set by the judgment, the Court has clarified that the duties and function falling in
Part IV of Indian constitution such as ‘law and order’, ‘defense’ and so on; such functions of the government are sovereign and will
not fall within the ambit of Section 2(j). This would make undue expansion of the definition of the term ‘industry’
PRAGYA’S & KARTIKEYA’S CASE ANALYSIS
Thank You
