Industry test under labour law: Telecom Department falls within Section 2(j), and larger Bench precedent prevails.

The controlling test for whether an establishment is an industry under Section 2(j) of the Industrial Disputes Act is the larger Bench ruling in Bangalore Water Supply, which applies the dominant nature test and excludes only strictly sovereign functions. On that basis, the Telecom Department was treated as engaged in commercial activity and not performing sovereign functions, so it fell within the definition of industry. Later two-Judge decisions to the contrary could not override the binding seven-Judge precedent, and judicial discipline required adherence to that larger Bench view. The reference under Section 10A was therefore not incompetent.

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Issues: Whether the Telecom Department of the Union of India is an industry within the meaning of Section 2(j) of the Industrial Disputes Act, 1947, and whether the reference under Section 10A was incompetent.

Analysis: The earlier seven-Judge decision in Bangalore Water Supply laid down the controlling test for determining whether an establishment is an industry, including the dominant nature test and the limited exemption for strictly sovereign functions. On that binding precedent, the Telecom Department was engaged in commercial activity and did not perform sovereign functions so as to fall outside the definition. The later two-Judge decisions taking a contrary view could not displace the larger Bench ruling, and judicial discipline required adherence to the binding law declared by the larger Bench.

Conclusion: The Telecom Department is an industry within Section 2(j), the reference was not incompetent, and the appeal fails.

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