All India Radio v. Santosh Kumar & Ors.

(1998)
AIR 1998 SC 941
Presented By: Ayuushman Aroraa & Satyam Singh
 TIMELINE OF THE CASE

Date Event
Pre-1993 Facts
Respondents were either clerks or linemen/watchmen working at the relevant time
as employees of either All India Radio or Door Darshan Kendra's

1989-1993 The Respondents challenged the orders of termination or non-regularization

before the authorities constituted under the Industrial Disputes Act,1947.
Their termination orders were set aside and regularisation was granted.

1993 Writ Petitions filed by AIR and Door Darshan in the High Court against the order
of the Authority was dismissed.
1998 The batch of petitions were disposed off by the Supreme Court
 Issue
 Whether All India Radio and Door Darshan, are
'industries' within the meaning of the said term as defined
by Section 2(j) of the Industrial Disputes Act, 1947 ?
 Do All India Radio and Door Darshan discharge
“sovereign functions”?
 RULES APPLIED

Industrial Disputes Act, 1947, Section 2(j)

Industrial Disputes Act, 1947, Section 25-F
 Rule – 2(j), 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;”
 Section 25-F, Industrial Disputes Act,1947
Conditions precedent to retrenchment of workmen

No workmen employed in any industry who has been in continuous service for not less than one year under
the employer shall be retrenched by that employer until:

(a) The workman has been given one month’s notice in writing indicating the reasons for retrenchment and
the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the
period of notice.

(b) The workman has been paid, at the time of retrenchment, compensation which shall be equivalent to
fifteen days average pay (for every completed year of continuous service) or any part thereof in excess of
six months and

(c) Notice in the prescribed manner is served on the appropriate government

 Arguments by Appellants
 ThatAIR and Doordarshan discharge sovereign functions of State and are not
industries within the meaning of S.2(j) of the Industrial Disputes Act of 1947.
 Thecounsel for the Appellants had vociferously relied on the decision in
Bombay Telephone Canteen, Employees' Association and Prabha Devi
Telephone Exchange v. Union of India wherein it was held that telephone
exchanges run by the Central Government were discharging sovereign
functions. (overruled by General Manager Telecom v. A Srinivasa Rao)
 BRIEF HISTORY OF JUDICIAL DECISIONS
 D.N. Banerji vs. P.R. Mukherji – Definition of Industry should be given a wider meaning, don’t restrict.

 City of Nagpur v. Its Employees- Profit motive is not an essential element.

 Hospital Mazdoor Sabha Case-Hospital can also come under the definition of an industry, analogous to
trade and business.

 Safdurjung Hospital Case- Sovereign function of State, Hospital is not an industry.

 University of Delhi Case- Educational Institution is not an industry, main function is to provide education.

 Madras Gymkhana Club Case- Clubs are not an industry, not liable to give bonus.

 Bangalore Water Supply Case- overruled Safdurjung Hospital Case, University of Delhi Case, Madras
Gymkhana Club Case.
 “Sovereign Function”
Secretary, Madras Gymkhana Club v. Management of the Gymkhana Club

The existence of the industry from the employers perspective.

Services of the Club for the members themselves – not for the society in general

Management of Safdarjung Hospital v. Its Workmen

Introduced the ”material services” test. In intellectual services, no employer employee co-operation.
Professional services “According to their needs”
Bangalore Water Supply v. A. Rajappa

 If it be true that one must have regard to the nature of the activity and not to who engages in it, it seems to me
beside the point to enquire whether the activity is undertaken by the State (Para 179)

 In fact, to concede the benefit of an exception to the State's activities which are in the nature of sovereign functions
is really to have regard not so much to the nature of the activity as to the consideration who engages in that
activity; for, sovereign functions can only be discharged by the State and not by a private person. If the State's
inalienable functions are excepted from the sweep of the definition contained in Section 2(j), one shall have
unwittingly rejected the fundamental test that it is the nature of the activity which ought to determine whether the
activity is an industry.

 TRIPLE TEST :a) systematic activities b) organized by cooperation between employer and employees
c) for the production of goods and services calculated to satisfy human wants and wishes would
constitute industry.
 Dominant Nature Test
(a) where a complex of activities, some of which qualify for exemption others not, involves employees on the total
undertaking, some of whom are not 'workmen' as in the University of Delhi Case or some departments are not
productive of goods and services if isolated, even then, the predominant nature of the services and the integrated
nature of the departments as explained in the Corporation of Nagpur, will be true test. The whole, undertaking
will be 'industry' although those who are not 'workmen' by definition may not benefit by the status.

(b) Notwithstanding the previous clauses, sovereign functions, strictly understood, alone qualify for exemption,
not the welfare activities or economic adventures undertaken by government or statutory bodies.

(c) Even in departments discharging sovereign functions, if there are units which are industries and they are
Substantially severable, then they can be considered to come within sec. 2(j).

(d) Constitutional and competently enacted legislative provisions may well remove from the scope of the Act
categories which otherwise may be covered thereby.
 Other Issues

 Were the Termination Orders violative of Section 25-F of the Industrial

Disputes Act,1947?

 No, as there was no submission raised by the Counsel for the Appellant.

 Thus, the appeal is dismissed and the he respondents concerned will be

reinstated in service with all the benefits available to them under the
impugned orders.
 Judgement
 Discussed Bangalore Water Supply case (save and except the sovereign functions all the other
activities of the employers would be covered within the term “ industry”.)

 The functions discharged by AIR and Doordarshan cannot be said be confined to sovereign functions as
they carry out commercial activity for profit by getting advertisements broadcasted and serials
telecasted by charging fees.

 Held that the decision in Bangalore Water Supply will hold the ground as long as the amending
definition of 1982 comes into effect.

 Therefore, AIR and Doordarshan are industries within the meaning of S. 2 (j) of the Act.

 And the termination orders are in violation of S- 25F of the Act.

 Analysis

 The Court scrutinised the functions performed by the organisations and they were as
follows:(a)commercial activity for profit
(b)telecast of commercial advertisements
(c)Entertainment activities like serials (taken from DD Manual Vol.I)

 A perusal of these functions shows that they are not purely sovereign in nature. Moreover, they
charge appropriate fee and appropriate charges.

 Overruled
Bombay Telephone Canteen, Employees' Association, Prabha devi Telephone Exchange v. Union of
India - telephone exchanges run by the Central Government were discharging sovereign functions
(previously struck down in General Manager, Telecom v. A. Srinivasa Rao).

 The amendment to Section 2(j) is not in force and the ratio laid down in the BWSS case is settled
law.
 Analysis by Mr. KK Chaudhuri
CHANGING CONCEPT OF INDUSTRY

 The question 'what is an 'industry?' has continuously baffled the courts ever since the enactment of the
Industrial Disputes Act, 1947. Though the Act provides a definition of 'industry' in Section 2(j), the definition
is not very precise and has defied consistent interpretation.

 As a result, judicial effort has been directed at evolving tests by reference to characteristics regarded as
essential for regarding an activity as an 'industry'’. The cases decided by the courts, however, show that
these tests have not been uniform.

 The courts have been guided by an empirical rather than a strictly analytical approach : sometimes the tests
have been liberally conceived, at other times narrowly.
 Question

 What would ensure a consistent and dependable definition of industry? A

comprehensive list as passed by the Legislature or a judicially developed
definition which responds to factual circumstances?