The Supreme Court of India, in a leading case, determined the triple test for determining any establishment as an 'industry' and the criteria for its dominant nature. Keeping in view of this, define the meaning of 'indus
CS Professional · Labour Laws & Practice · PYQS · June 2022
The Supreme Court of India, in a leading case, determined the triple test for determining any establishment as an 'industry' and the criteria for its dominant nature. Keeping in view of this, define the meaning of 'industry' as provided under the relevant law.
Answer & Explanation:
In terms of Section 2(j) of the Industrial Disputes Act, 1947, "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. This Section 2(j) has been amended by the Amendment Act of 1982, but has not been notified yet. The Supreme Court carried out an in-depth study of the definition of the term industry in a comprehensive manner in the case of Bangalore Water Supply and Sewerage Board v. A Rajiappa, (Bangalore Water Supply case) , after considering various previous judicial decisions on the subject and in the process, it rejected some of them, while evolving a new concept of the term "industry". Tests for determination of "industry" The Supreme Court, has laid down the following tests to determine whether an activity is covered by the definition of "industry" or not. It is also referred to as the triple test. Where there is: systematic activity, organised by co-operation between employer and employee, 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. Absence of profit motive or gainful objective is whether the undertaking is operating 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. If the organisation is a trade or business, it does not cease to be one because of philanthropy animating the triple test, cannot be exempted from scope of definition of industry. Hence, the Supreme Court observed that professions, clubs, educational institutions, co-operatives, research institutes, charitable projects and other kindred adventures, if they fulfil the triple tests listed above cannot be exempted from the scope of Section 2(j). A restricted category of professions, clubs, co-operatives and gurukulas and little research labs, may qualify for exemption if, in simple ventures, substantially and going by the dominant nature criterion, substantively, no employees are entertained but in minimal matters, marginal employees are hired without destroying the non-employee character of the unit.
Topics: Industrial Disputes Act, 1947
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