State Of Bombay V. The Hospital Mazdoor Sabha: Case Analysis

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Conflicts between the management of any industry and the workers unions have been taking place for a very long time now. To combat such disputes, the Industrial Disputes Act, 1947, was enacted. Through implementation of this Act, several tribunals were set up to resolve issues such as wages, improper termination, etc. This was a special law which could only be applied to disputes arising out of the industrial sector. The present paper is an attempt to analyze the case ‘State of Bombay v. The Hospital Mazdoor Sabha’, wherein the question which arose out of the factual background was the fact that whether or not a government hospital is part of the term ‘industry’. If yes, then can such disputes be referred to the industrial tribunals under Section 10 of the Industrial Disputes Act?

The Judge on Bench: Gajendragadkar, P.B, JJ

Name of the Judge(s) authored the Judgment: P. Gajendragadkar, JJ.

Appellant: State of Bombay.

Defendant: The Hospital Mazdoor Sabha; a trade union which is registered under the Industrial Trade Unions Act.

Relevant Citation: 1960 AIR 610, 1960 SCR (2) 866.

Statutory Provisions Discussed: Section 2(j), and Section 25F of the Industrial Disputes Act, 1947.

Factual matrix of the Case

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. 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. 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. 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.

Sections Interpreted and Examined

Section 2(j): Section 2(j) of the Industrial Disputes Act, 1947 defines ‘industry’ as any business, trade, undertaking, manufacture, or calling of employers and includes any calling, service, employment, handicraft or industrial occupation or avocation of workmen”.

Section 25(F): Section 25F lays down conditions precedent to retrenchment of workmen.

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?

Contentions of the Appellant

  1. 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. The Appellate court passed an impugned judgment holding the appellants liable for non-compliance of Section 25F of the Act.
  3. 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.

Contentions of the Defendants

  1. 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. The non-compliance of the conditions laid down under Section 25F makes the retrenchment order of their termination invalid and improper.

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 denotion.
  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.

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.[1] 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.[2]
  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.

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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]
  3. The Court referred to the precedent set by the Supreme Court in D.N. Banerjee v. P.R. Mukherjee and Ors[4], 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.[5] 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.

The Final Verdict

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’.

Analysis of the Case

  • 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’.
  • Furthermore to ascertain such a wide scope which was established, in Bangalore Water Supply v. A. Rajappa[6], 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.
  • 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.
  • 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’.[7]

REFERENCES

[1] Webster N, “Noscitur a Sociis”.

[2] (1897) SCS 34; (1898) SLR 634.

[3]  Mittal S, “State of Bombay & Ors. v. The Hospital Mazdoor Sabha” , Law Times Journal, October 21, 2020, available at: https://lawtimesjournal.in/state-of-bombay-ors-vs-the-hospital-mazdoor-sabha/#_edn4 (Last visited on May 25, 2021).

[4]  (1952) SC; (1953) 58 AIR 302.

[5] (1929) HCA 11; (1929) 41 CLR 569.

[6]  (1978) SC 207; (1978) 3 AIR 548.

[7] State of Uttar Pradesh V. Jai Bir Singh (2005) SC 897; (2005) 5 AIR.

BY KINJAL GUPTA | BENNETT UNIVERSITY

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