B.A. LL.B. (Five Years) Sem 5 Labour Law I 2016 Dec Question Paper with Solutions

The words: 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".

1. The employer limb. "Business, trade, undertaking, manufacture or calling of employers" looks at the activity from the employer's side.
2. The workmen limb. The words after "includes" look at it from the workmen's side, and widen it.

The words are among the widest in the statute book. The courts' task has been to find their limits.

University of Delhi v. Ram Nath, AIR 1963 SC 1873. Two drivers of buses run by Miranda House, a college of the University, were discharged when the loss-making service stopped. They claimed retrenchment compensation. The Supreme Court held that the University's educational work was not an industry. Teachers, who do the real work, are not workmen, and the drivers' role was "minor, subsidiary and insignificant". "Education in its true aspect is more a mission and a vocation rather than a profession or trade or business".

Management of Safdarjung Hospital v. Kuldip Singh Sethi, AIR 1970 SC 1407. A clerk of the Government's Safdarjung Hospital in New Delhi claimed arrears on a revised pay scale. A Bench of six Judges held that neither this hospital nor two others heard with it were industries. An industry must be an economic activity analogous to trade or business. A hospital could be an industry only if run "as a business in a commercial way". Hospital Mazdoor Sabha, it said, "took an extreme view".

4. Dominant nature. Where an institution carries on several activities, the predominant nature of its services decides. If that is an industry, the whole undertaking is one.
5. Wide reach. Professions, clubs, educational and research institutions, co-operatives and charitable projects are industries if they meet the test.
6. Narrow exceptions. Only sovereign functions, strictly understood, are outside. A small charity run by volunteers, without employees in the industrial sense, may also be outside. Even within a sovereign department, severable units of an industrial kind are industries.

The Court overruled Safdarjung Hospital, University of Delhi and several cases on clubs and professions, and approved Hospital Mazdoor Sabha.

State of U.P. v. Jai Bir Singh, (2005) 5 SCC 1. The question was whether a State's social forestry department was an industry. A five-Judge Bench noted that Bangalore Water Supply had made almost every organised activity an industry, and that the 1982 amendment lay dormant. It referred Bangalore Water Supply to a larger Bench for reconsideration. A nine-Judge Bench answered on 20 August 2026 (2026 SCC OnLine SC 1684). The Judges wrote several opinions. The Chief Justice's lead opinion refined the test, requiring goods or services of "a discernible commercial character", but only for the future. The Court was clear that disputes still pending under the 1947 Act are decided by the Bangalore Water Supply test.

An assessment

The wide reading protects workers wherever they are organised to produce goods or services, whoever employs them. That was its purpose, and Hospital Mazdoor Sabha and Bangalore Water Supply both rest on it. Its cost is that charities, research bodies and Government welfare schemes carry the full weight of the Act, including retrenchment rules and adjudication. Parliament twice tried to answer that. In 1982 it passed an amendment it never brought into force, and in 2020 it wrote express exclusions into the Code. The Supreme Court's 2026 refinement points the same way, but only for the future.

Where the law stands now

The 1947 Act was repealed on 21 November 2025 by section 104 of the Industrial Relations Code 2020. Section 2(p) of the Code writes the triple test into the statute. Capital and profit are irrelevant, and workers engaged through contractors are covered. It expressly excludes four things. The first is an institution owned or managed by an organisation wholly or substantially engaged in charitable, social or philanthropic service. The others are sovereign functions of Government, including defence research, atomic energy and space; domestic service; and any activity the Central Government notifies. The 2026 ruling says it is not an aid to reading the Code.

Conclusion. "Industry" under section 2(j) began with a wide working principle in Hospital Mazdoor Sabha. It was narrowed in University of Delhi and Safdarjung Hospital, and settled in Bangalore Water Supply. That case's triple test brings in almost every organised activity producing goods or services, except sovereign functions and small voluntary charities. Jai Bir Singh questioned it, but the 2026 decision left it to govern every pending dispute. The Code now writes the triple test into law with express exclusions.