1960 (1) TMI 32 - SC - Indian Laws

Government hospitals qualify as 'undertaking' under Section 2(j) Industrial Disputes Act, must follow Section 25F termination requirements

STATE OF BOMBAY & OTHERS Versus THE HOSPITAL MAZDOOR SABHA & OTHERS

The SC held that government-run hospitals constitute an 'undertaking' under Section 2(j) of the Industrial Disputes Act, 1947, making them subject to the ... Validity of the termination orders under Section 25F of the Industrial Disputes Act, 1947 - Failure to comply with the mandatory provisions - whether the group of Hospitals constitutes an industry - meaning of 'industry' - rule of construction noscuntur a sociis - maxim Ejusdem Generis - HELD THAT:- In considering the question as to whether the group of Hospitals run by the appellant undoubtedly for the purpose of giving medical relief to the citizens and for helping to impart medical education are an undertaking or not, it would be pertinent to enquire whether an activity of a like nature would be an undertaking if it is carried on by a private citizen or a group of private citizens. There is no doubt that if a hospital is run by private citizens for profit it would be an undertaking very much like the trade or business in their conventional sense. We have already stated that the presence of profit motive is not essential for bringing an undertaking within s. 2 (j). If that be so, if a private citizen runs a hospital without charging any fees from the patients treated in it would nevertheless be an undertaking under s. 2(j). Thus the character of the activity involved in running a hospital brings the institution of the hospital within s. 2(j). Does it make any difference that the hospital is run by the Government in the interpretation of the word 'undertaking' in s. 2(j). In our opinion, the answer to this question must be in the negative. 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 our opinion, 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. Therefore, we are satisfied that the High Court was right in coming to the conclusion that the conduct and running of the group of Hospitals by the appellant amounted to an undertaking under s. 2 (j) and the relevant provisions of the Act were applicable. In this connection it would be relevant to refer to the fact that in the First Schedule to the Act which enumerates industries which may be declared as public utility service under s. 2(n)(vi), three entries have been added by Act 36 of 1956. In the present appeal we have to decide the question as to, that attributes or features can be said to make an activity in question analogous to trade or business. Incidentally we may add that quite apart from the relevant considerations which we have already discussed it would be difficult to suggest that though the sanitary department of a local body is an undertaking under s. 2(j) a hospital run by a Government is not. We ought to make it clear that in the present appeal we are not expressing any opinion on the question as to whether running an educational institution would be an industry under the Act; that question does not arise in the present proceedings. We have, however, referred to this decision because, in the course of discussion, the learned judge has expressed his dissent from the view taken by the Bombay High Court in regard to hospitals, and we wish to make it clear that, in our opinion, the criticism made by the learned judge against the inclusion of hospitals within s. 2(j) is not well-founded. We would accordingly hold that the High Court was right in holding that the dispute between the appellant and the respondents was an industrial dispute to which s. 25 of the Act applied. The order passed by the High Court on the writ petition filed by the respondents is confirmed and the appeal is dismissed with costs. Appeal dismissed. Issues Involved:1. Validity of the termination orders under Section 25F of the Industrial Disputes Act, 1947.2. Applicability of the Industrial Disputes Act, 1947 to the group of Hospitals run by the appellant.3. Interpretation of the term 'industry' under Section 2(j) of the Industrial Disputes Act, 1947.Detailed Analysis:1. Validity of the Termination Orders under Section 25F of the Industrial Disputes Act, 1947:The respondents, who were employed as Ward servants, contested their termination on the grounds that it did not comply with the mandatory provisions of Section 25F of the Industrial Disputes Act, 1947. Section 25F(b) stipulates that no workman employed in any industry who has been in continuous service for not less than one year shall be retrenched until he has been paid compensation at the time of retrenchment. The Court of Appeal upheld the respondents' plea, stating that non-compliance with Section 25F(b) rendered the termination orders invalid and inoperative. The court emphasized that the requirement prescribed by Section 25F(b) is a condition precedent for retrenchment and non-compliance with this mandatory provision invalidates the retrenchment orders.2. Applicability of the Industrial Disputes Act, 1947 to the Group of Hospitals:The appellant argued that the J.J. group of Hospitals did not constitute an industry and therefore, the provisions of the Industrial Disputes Act were inapplicable. The Court of Appeal, however, found that the group of Hospitals run by the appellant indeed fell within the definition of 'industry' under Section 2(j) of the Act. The court noted that the hospitals were systematically organized, involved cooperation between employer and employees, and aimed at providing material services to the community. The court held that the character of the activity, rather than the entity conducting it, determined its classification as an industry.3. Interpretation of the Term 'Industry' under Section 2(j) of the Industrial Disputes Act, 1947:The Supreme Court examined the definition of 'industry' as provided in Section 2(j) of the Act, which includes any business, trade, undertaking, manufacture, or calling of employers and extends to any calling, service, employment, handicraft, or industrial occupation or avocation of workmen. The court emphasized that the words used in the definition are of wide import and should be interpreted broadly. The court rejected the appellant's argument that the rule of construction 'noscuntur a sociis' should be applied to restrict the meaning of 'industry.' The court observed that the inclusive definition in Section 2(j) was deliberately broad to cover a wide range of activities, including those undertaken by the government. The court concluded that the group of Hospitals run by the appellant constituted an 'undertaking' under Section 2(j) and thus fell within the purview of the Industrial Disputes Act, 1947.Conclusion:The Supreme Court upheld the decision of the Court of Appeal, confirming that the termination orders were invalid due to non-compliance with Section 25F(b) and that the group of Hospitals run by the appellant constituted an industry under Section 2(j) of the Industrial Disputes Act, 1947. The appeal was dismissed with costs.