ABSTRACT

It was observed by the Court that from time to time various petitions have been filed
regarding the rights of workers in the unorganized sector including construction
workers, especially in areas of safety, occupational health and welfare measures, and
series of directions were issued pertaining to the matter regarding non-compliance
with the BOCW and Cess Act and the need for its effective implementation but
neither any state government nor any union territory administration took steps to
implement the laws made by the legislation for the benefit of laborers and
construction workers; thereby infringing the laborers’ right to social and economic
justice.

 In the present case, again the need for implementation of welfare schemes for
workers arose with reference to BOCW act and Cess act. The present case analysis
aims to scrutinize the background, facts, issues raised, and arguments on both sides
and highlights concepts made in the case.

INTRODUCTION

Workers are an essential part of any country’s economy and the growth and
development of a nation depend on workers largely. It should be the duty of the
government to protect and work for the welfare of workers ensuring that their rights
are not violated. In India, although there have been various laws made for the welfare
of workers due to lack of implementation, they hardly made any change, and workers
continue to suffer.

The present case is with regards to implementation of workers welfare schemes where
a petition had been filed under article 32 of the Indian Constitution.

 Article 32(2) – “The Supreme Court shall have power to issue directions or orders or
writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo
warranto and certiorari, whichever may be appropriate, for the enforcement of any of
the rights conferred by this Part”

FACTS OF THE CASE

The Petitioner is an organization working for workers right filed a writ petition under
Article 32 in which several prayers have been made but essentially the prayer was that
the BOCW Act and the Cess Act should be meaningfully implemented in letter and
spirit. On the other hand, the submissions of the learned Additional Solicitor General
appearing on behalf of the Union of India were to the effect that all efforts are being
made to ensure that there is full and effective compliance with the provisions of the
BOCW Act and that the Monitoring Committee is supervising these efforts so that all
necessary entitlements and benefits are passed on to the construction workers.

ISSUES RAISED

1. Can delay in the effective implementation of both the statutes be a ground for
invalidating the levy of cess?
2. Whether beneficial measures for the welfare of construction workers covered
under the BOCW Act and Cess Act?
3. Is cess, in fact, a tax?
4. Whether both the statutes implemented as per the intention of the parliament?
5. Does BOCW Act and Cess Act effective?
RELEVANT PROVISIONS

The BOCW Act and Cess Act were both enacted in 1996. They both provide certain
obligations to the governments and other stakeholders.

The BOCW Act whose full form is Building and Other Constructions Workers
(Regulation of Employment and Conditions of Service), to regulate the employment
and conditions of service of building and other construction workers and to provide
for their safety, health, and welfare measures and for other matters connected
therewith or incidental thereto.

Important provisions of the act –

 Section 3 & 4 – Constitution of Central and State Advisory Committee(s) to

advise the appropriate Government on matters concerning the administration of the
BOCW Act
 Section 5 – constitution of Expert Committee(s)
 Section 6&7– appointment of registering officers and registration of
establishments employing building and construction workers by making an
application to the registering officer 
 Section 12&13– registration of building and construction workers as beneficiaries
under the BOCW Act and issuance of identity cards to them
 Section 18 & 22-constitution of State Welfare Boards 
 Section 24 -Creation of a Welfare Fund
The Cess Act was enacted to provide for the levy and collection of Cess on the cost of
construction incurred by employers with a view to augmenting the resources of the
Building and Other Construction Workers Welfare Boards constituted under the
BOCW Act.

Important provisions of the act –

 Section 3 deals with levy and collection of cess

 Section 4 & 5 – says that every employer to furnish a return to the concerned
officer or authority and that officer or authority is obliged to make an assessment
of the amount of cess payable by the employer.
ARGUMENTS OF THE PETITIONERS

It was contended by the petitioner that both BOCW Act and Cess Act were made for
the welfare and protection of workers but had been continuously neglected by the
state and union territories governments and due to which Articles 15(3), 39(e) and (f)
and also Articles 45 and 47 of the Constitution violated which provided obligation for
the state to protect the basic rights of workers.

It was also argued that non-implementation also violates Article 21 of the

Constitution, which provides for the right to live with dignity and also violates
international convention namely the Safety and Health in Construction Convention
(No. 167) adopted by the International Labour Organization in 1988 and its
accompanying recommendation (No.175) which provide for a foundation of law on
which safe and healthy working conditions are built.

 The petitioner argued that there was a gross failure by the governments and still
construction workers do not have universal access number, no registration and also no
benefits under various schemes reached to them.

It was argued by the petitioner that a lot of funds being collected in the name of cess
for the welfare of workers but remain unused. Also, under these two acts, there are
certain obligation for the states like to create welfare fund, advisory committee which
had not been fulfilled by most of the states.

ARGUMENTS BY THE RESPONDENTS

The respondents were central and state governments, union territories, and ministry of
labor and CAG, who were asked to submit affidavits where it was clearly observed by
the court that all of them failed to implement BOCW  and Cess act and the intention
and purpose for which it was made actually never fulfilled despite repeated directions
by the court.

Ministry of Labour and Employment informed to the court that certain positive steps
contemplated by the Government of India.

 Introduction of a Universal Access Number to be provided to every construction

worker so that if he or she migrates from one State to another, the benefit of
registration does not get lost, nor does that construction worker need to get
registered in the other State;
 Registration of construction workers – there were more than 4 crores construction
workers, only about 1.5 crores had been registered with the concerned authorities.
It was expected that the remaining construction workers would be registered before
the end of the financial year that is by 31st March, 2016;
  Ensuring that benefits of Government schemes are passed on to construction
workers, such as scholarships, skill development programs etc.
JUDGMENT

The Apex Court showed its concern on the continuous non-compliance by the states
and union territories pertaining to workers right and the failure of the intent of
the BOWC and Cess Act.

The Apex court cited Hingir-Rampur Coal Co. Ltd. v. State of Orissa, In Builders
Association of India v. Union of India, Bandhua Mukti Morcha v. Union of
India , Dewan Chand Builders & Contractors v. Union of India State of W.B. v.
Kesoram Industries Ltd judgments where BOCW Act and Cess Acts were upheld and
are welfare measured which are obligations of states through various fundamental
rights and directive principles, also it was declared that levy of cess was a fee and not
a tax. The Court noticed that despite repeated directions since 2008 through various
judgments and hearings, the governments were negligent and workers continued to
suffer.
Again the Apex Court issued directions and this time with a warning of contempt
proceedings against the government-

Direction given by the court is –

Strengthen the registration machinery, both for the registration of establishments as
well as registration of construction workers – establish and strengthen the machinery
for the collection of cess.
 There are various schemes running at different the level which do more harm and then
good as they often conflict each other and also, their implementation becomes
difficult, therefore, Instead of so many welfare schemes for workers, the Apex Court
ordered the Central Government to  have a model scheme before 30th September
2018

Ministry of Labor and Employment, the State Governments and the UTAs to conduct
a social audit on the implementation of the BOCW Act so that in future there is better
and more effective and meaningful implementation of the BOCW Act.

Apart from the specific directions, some general directions were also issued, these are
– Every State Government and UTA shall constitute a State Advisory Committee and
Expert The committee, appoint Registering Officers for registration of establishments
and construction workers, establish a Welfare Board, Welfare Fund, construction
workers should be given identity cards and should be registered, utilize Cess collected
for benefits of workers.

CONCLUSION

BOWC Act and Cess Act were made to protect the rights of the workers and are also
an obligation of government under the constitution. It should be noted that India’s
economy largely runs by an unorganized sector and therefore their role is crucial for
the country’s development. There is a need to ensure that workers being part of the
informal sector are being protected as they are vulnerable to various types of
exploitation. Governments should consider the issue as important and should comply
with the directions given by the Apex Court.

 After this landmark judgment and strict directions given by the honorable court,
Workers in the unorganized sector especially daily wage workers would get some
protection and relief and would able to enjoy welfares schemes.

Case Analysis on People’s Union for Democratic Rights vs. Union of India
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Contents

1. Introduction

2. Parties Involved

3. Date of filing case

4. Facts

5. Petitioner’s Arguments

6. Respondents Arguments

7. Issues framed

8. Judgment

9. Conclusion

Introduction
On 11th May, 1982, the case of People’s Union for Democratic Rights and
Others v. Union of India & Ors.  Was decided by a bench comprising of
Bhagwati, P.N. Islam, Baharul (J).  The Petitioners have thrown light upon
the awful and dreadful condition of labourers who were forced to work in
hostile conditions through a letter written to Bhagwati J. who treated it as a
PIL. Through this landmark judgement, Hon’ble Supreme Court has not only
widened the scope and ambit of Article 32 but also assure that the Court
belongs to everyone and if there is violation of beneficial legislations such
as labour laws it will tantamount to breach of Fundamental Rights and
along-with that has given liberal interpretation to “forced labour” and
“beggar”.
Parties Involved
Petitioner: People’s Union for Democratic Rights and Others

Respondent:  1. Union of India

2. Delhi Administration

3. Delhi Development Authority

Date of filing case

16th November, 1981
Facts
1. It was a prestigious moment for India to host Asian Games 1982, and
to complete its undertaking the Government of India has to
accomplish various construction projects such hotels, stadiums, etc. as
per international standards.
2. Various authorities were entrusted with project, relevant here are
Delhi Development authority, New Delhi Municipal Committee and
Delhi Administration.
3. These authorities engaged Contractors as Principal Employers U/S 7
of The Contract Labour (Regulation and Abolition) Act, 1970 for
execution of their projects.
4. These Contractors entered into contract with Jamadarsto heir
workmen for construction purposes.
5. Workmen from different parts of the country were hired especially
from Rajasthan, Uttar Pradesh and Orissa.
6.  Men at Rs. 9.25/- per day, women at Rs. 7/- per day and children
even below the age of 14 year were employed as workmen and above
 that Rs. 1/- was deducted from their wages by Jamadars as their
commission.
7. Workmen were not given equal wages and were not even entitled to
their minimum wages and were forced to work at feverish place and
often beyond the working hours.
1. Children were dying of mal-nutrition and due to working in
hazardous condition were frequently becoming victims of serious
accidents and some were dying.
2. The terrible working and living conditions of these workers were first
brought to public notice by a fact-finding team of the People’s Union
for Democratic Rights (PUDR) which visited some of the major sites in
July and August 1981 and interviewed the workers as well as their
employers.
3. PUDR address a letter to Bhagwati J. about the same who later
treated it as PIL and the case was filed on 16th Nov, 1981.
Petitioner’s Arguments
1. Women are not been given equal wages which is contrary to the
provisions of Equal Remuneration Act, 1976.
2. Workers are not even entitled to their minimum wages as Rs. 1 was
one deducted by Jamadars causing violation of Minimum Wages Act,
1948, which was admitted by Union of India in its reply affidavit but
was denied by other three respondents.
3. It was argued that Article 24 of Constitution was violated and the
provisions (Sec 3(3)) of Employment of Children Act, 1938 were
breached as children below 14 were engaged in construction works.
4. Alleged violation of various provisions of Contract Labour (Regulation
and Abolition) Act, 1970 by Contractors which resulted in deprivation
and exploitation of workers such as they were deprived proper living
conditions, medical and other facilities.
5. Contractors were not implementing the provisions of Inter-State
Migrant Workmen (Regulation of Employment and Conditions of
Service) Act, 1979 though the Act has already been brought in force
on 2nd Oct, 1980.
Respondents Arguments
1. Contented that present petition under Art 32 of Indian Constitution is
liable to be dismissed since; there is no violation of Fundamental
Rights of workers but of merely various labour laws.
2. It was argued that the respondents are miss-joined and are liable to
be deleted from the array of parties because the violation (if any) is
caused by private contractors and not the State since; workmen are
the employees of Contractors and not of respondents.
3. The respondents clearly denied the allegations of petitioner and on
contrary stated that as far as Equal Remuneration Act, 1976 and
Contract Labour (Regulation and Abolition) Act, 1970 they were
complying with the provisions with utmost care and when any matter
brought to them, they take action against Contractors by way of
prosecution.
4. It was conceded that Jamadars might be deducting Rs. 1 from
minimum wages payable to workers whereas UOI clearly admitted
this fact.
5. It was contended that provisions of Employment of Children Act, 1938
are not applicable in this case since; construction work is not specified
as hazardous workplace in its Schedule so there is no breach of Sec
3(3) as well as of Art 24 of Indian Constitution.
6. With regard to Inter-State Migrant Workmen (Regulation of
Employment and Conditions of Service) Act, 1979, it was argued that
since, power to enforce the provisions is delegated to Administrator
of Delhi on 14th July, 1981 but they could not be enforced as rules to
be made under Act were not finalized until 4th June, 1982.
Issues framed
1. Whether petitioner organisation is entitled to maintain the petition
on behalf of labourers?
2. Whether this petition is maintainable against Union of India, Delhi
Administration and Delhi Development Authority when in actual the
offending parties are private contractors?
 3. Whether this petition is maintainable as there is no breach of
fundamental rights of labourers but of ordinary rights under labour
laws?
4. Whether the Court can pass directions under Article 32 against
private contractors?
Judgment
 While dealing with first issue, it was held that petitioner organisation
has locus standi to approach to this Court on behalf of poor, ignorant,
illiterate people because firstly, they were working in a bona-fide faith
and secondly the traditional rule of standing of judicial process which
only allows those people to approach to court to whom legal injury
has been caused has now been jettisoned by this Court through the
Case of Judges’ Appointment and Transfer case[1] and revolutionised the
concept considering the prevailing socio-economic conditions.
 With respect to second issue, it was held that although the workmen
were employed under Contractors but it was the respondent
authorities who entrusted the Asiad project to Contractors and
therefore, they cannot escape from their obligation of the observance
of various labour laws. Also, Respondent authorities being Principal
Employers were bound by Sec 20 of Contract Labour (Regulation and
Abolition) Act, 1970 and by Sec 17 & 18 of Inter-State Migrant
Workmen Act, 1979 to provide amenities and allowances to workmen.
And as far as, employment of children below 14 is concerned then it
is clearly provided under Article 24 of Indian Constitution which bars
the same and is enforceable against everybody.
 The court did not accept the plea of respondents that there is no
violation of FR. Since, the petition includes the violation of Article 24
due to employment of children below 14 and also violation of
provisions of following labour laws amounts to violation of following
FR’s–
 Inter-State Migrant Workmen Act, 1979 and Contract Labour Act,
1970 – Article 21 – after the judgement of Maneka Gandhi v. Union of
India[2] and Francis Coralie Mullin V. Administrator and ors.[3] Art 21 has been
given new dimensions which includes right to live with basic human
 dignity and here the two beneficial legislation were intended to
ensure the labourers the basic human dignity of which they remain
deprived by respondents.
 Minimum Wages Act, 1948 – Article – 23 – The nature and scope of
Article 23 has been discussed, and held that labour which is not
rendered willingly but as a result of force or compulsion is ‘forced
labour’. Also, when a person provides services for remuneration which
is less than the minimum wage, said service will fall under Forced
Labour.
 Equal Remuneration Act, 1976 – Article 14 – Not giving equal wages
to both men and women for their equal amounts to violation of right
to equality.
Therefore, it was held that non-observance of labour laws by respondents
have resulted into violation of FR’s of labourers.

 Lastly while dealing with the fourth issue, it was held that where there
is violation of Article 17, 23 or 24, Court can pass directions against
private individuals since they are enforceable against private
individuals also.
Conclusion
In my opinion the judgement given by Hon’ble Supreme Court is credible
and up to the point. Otherwise, the Court will only belong to rich people
who can afford to contest their case but through this judgement the Court
has made it clear that this Court belongs to every citizen of India and
everyone has right to justice. Through this judgement the concept of forced
labour has also widened which helped many people of unprivileged class to
fight their case. It also shows that where there is a breach of beneficial
legislation of labour laws that amounts to strict violation of Fundamental
Rights of Labour then there is a right to move to Court under Article 32 to
seek their grievances, and has made sure that Supreme Court is and will
always remain the protector and guarantor of Fundamental Rights

In the Supreme Court of India

1973 AIR 1227, 1973 SCR (3) 587

Petitioner

The Workmen of Firestone Tyre and Rubber Co. of India

(Pvt.) Ltd.

Respondents

The Management and Ors.

Date of Judgement

06.03.1973

Bench

Justice Vaidyialingam, C.A; Dua, I.D.

Introduction
The Industrial Disputes Act, 1947 was initiated in April 1947 to
regulate industrial disputes and make them easily accessible to
workers. The main intention behind it was to ensure a level playing
field between employers and workers so that no party is exploited
and peace and harmony are maintained.

The Act also gives provisions and procedural guidelines for

investigations of the disputes and the powers conferred to the
regulating bodies.

Background
The Trade Dispute Act, 1929 was introduced in 1929 for the primary
aim of the settlement of industrial disputes arising between people
involved in an industrial organization. This Act gave the trade
unions a legitimate legal status but, failed to create a favorable
atmosphere in the industry to settle the disputes amicably.

However, later this defect was overcome during the Second World
War (1938-1945) by empowering under Rule 81-A, of the Defense
of Indian Rules which stated that industrial disputes were to be
referred to an adjudicator for settlement.With the termination of the
Second World War, Rule 81-A was to be rescinded on 1st October
1946, but it was kept alive by recourse to Government’s Emergency
Powers. This main provision was hence retained in the new act
which is currently called the Industrial Disputes Act, 1947.

Constitutional and Statutory Provisions Discussed

1. Amendment of Industrial Tribunal Act in 1971
2. Section 11A of the Tribunal Act

Facts:
The Workmen of Firestone Tyre and Rubber Co. of India had a
Dispute with its employer regarding the termination of its workmen
on a Domestic Enquiry finding. During the pendency of the Dispute,
the Industrial Tribunal Act had been Amended in 1971, and Section
11A conferring the powers of Appellate Authority to the Industrial
Tribunal over the Domestic Enquiry decision had been inserted.

The Tribunal decided the case in favor of the Employer, refusing to

have a Retrospective effect of Section 11A.

Issues
1. What is the proper interpretation of section 11A of the
Industrial Disputes Act and whether it has a retrospective
 application (whether it applies to industrial disputes pending
as on 15-12-1971)

Arguments Advanced

Argument by counsel for petitioners

 It is now obligatory on an employer to hold a proper
domestic inquiry in which all material evidence will have to
be adduced. When a dispute is referred for adjudication and
it is found that the domestic inquiry conducted by the
management is defective or if it is found that no domestic
inquiry at all had been conducted, the order of discharge or
termination passed by the employer becomes unjustified
and the Labour Tribunals have no option but to direct the
reinstatement of the workmen concerned.
 Even in cases where a domestic inquiry has been held and
finding of misconduct recorded, the Labour Tribunals have
now full power and jurisdiction to reappraise the evidence
and to satisfy themselves whether the evidence justifies the
finding of misconduct and if the inquiry proceedings are held
to be proper and the finding of misconduct is also accepted,
the Tribunal has no power to consider whether the
punishment of dismissal or discharge was necessary and the
Tribunal can give any other relief to the workman.
 In cases where an employer had not conducted any inquiry
or when the inquiry conducted by him is held to be
defective, the employer will not be given an opportunity to
adduce evidence before the Labour Tribunal for justifying
his action.
 If an employer does not conform to the provisions of the
Standing Orders, he commits illegality and order passed,
which is illegal, has only to be straightway set aside by the
Tribunal.
  Only such evidence, which could and should have been
produced by the parties in the domestic inquiry, is not
allowed to be adduced before the Tribunal
 According to the learned Counsel, Section 11A applies not
only to references, which are made on or after 15-12-1971
but also to all references already made and which were
pending adjudication on that date. It is pointed out that
Section 11A has been incorporated in Chapter IV of the Act
dealing with procedure, powering, and duties of authorities.
Accordingly, Section 11A deals with matters of procedure.
Applying the well-known canon of interpretation, procedural
laws apply to pending proceedings also.
  No right, much less any vested right, of the employers
have been taken away or affected by Section 11A.
Considerable stress has been laid on the use of the
expressions ‘has been referred’ occurring in Section 11A, as
conclusively indicating the applicability of the section even
to disputes already referred.
 Assuming that an employer has a right to adduce evidence
for the first time before the Tribunal that right ensures to
him only after the Tribunal had adjudicated upon the
validity of the domestic inquiry. It cannot be characterized
even as a right, much less a vested right, because it is
contingent or dependent upon the Tribunal’s adjudication on
the domestic inquiry. The Tribunal, when it adjudicates a
dispute on or after 15-12-1971, has to exercise the powers
conferred on it by Section 11A, even though the dispute
may have been referred before that date. Hence it is clear
that the section applies even to all proceedings pending
adjudication on 15-12-1971.

Arguments for respondents:

 The counsel took the support of the common-law
relationship of master and servant[1] and stated that the
right of an employer to manage his affairs in his own way
 provided he does not act arbitrarily is kept intact by this
amendment.
 An employer is expected to hold a domestic inquiry before
an order of dismissal or termination is passed. He is also
bound to follow, in such cases, the principles of natural
justice and the procedure laid down by the relevant
Standing Orders.
 The Tribunal will not interfere with the finding recorded by
an employer in a proper inquiry merely on the ground that it
would have come to a different conclusion. The punishment
to be noted out was entirely within the powers and
jurisdiction of an employer and it was no part of the
jurisdiction of a Tribunal to decide whether the said
punishment was justified except in very rare cases where
the punishment imposed is grossly out of proportion, so as
to suggest victimization or unfair labor practices.
 But Under Section 11A, after the Tribunal holds that the
inquiry has been conducted properly by an employer and
that the finding of misconduct is correct, it has jurisdiction
to consider whether the punishment requires modification.
If it holds that the punishment has to be modified, it has the
power to do so and award a lesser punishment. Section 11A
comes into effect only at the time when the Tribunal
considers the punishment to be imposed.
 While previously the Tribunal had no power to interfere with
the punishment, it is now clothed with such a power. This is
the only modification regarding the powers of the
management that has been introduced by Section 11A.  
 With reference to section 33 of the Act, the proper way of
interpreting Section 11A would be to hold that it comes into
play after a Tribunal bar held the inquiry proceedings
conducted by the management to be proper and the finding
of guilt justified. It is then that the Tribunal can consider
whether the punishment imposed is justified. If it is of the
opinion that the punishment is not justified, it can alter the
same.
  The retrospective operation should not be given unless it
appears very clearly by the terms of the section or arise by
necessary and distinct interpretation. The employers would
have molded their behavior according to the principles laid
down by a series of decisions and if the rights recognized in
an employer are to be taken away, that can be done so only
by a clear expression to that effect; or such intention to
take away or interfere with those rights must appear by
necessary intendment.
  The words of the section clearly show that it applies only to
disputes in respect of which a reference is made after the
section has come into force I.e. 15-12-1971. The
expressions ‘have been referred’ in the section only signify
that on the happening of a particular event, namely, a
reference made in the future, the powers are given to the
Tribunal, whatever they may be, can be exercised.

Judgment:

Ratio Decidendi:
 The Court observed that the right to take disciplinary action
and to decide upon the degree of punishment is only a part
of the managerial functions. However, if a dispute is
referred to the Tribunal, the tribunal is equipped with the
power to see if the employer’s action is justified. According
to Indian iron and steel Co. Ltd. case, [2] the court can
interfere in the dispute (i) when there is want of good faith;
(ii) when there is victimization or unfair Labour practice, (iii)
when the management has been guilty of an error or a
violation of the principles of natural justice or (iv) when
findings are completely baseless and perverse as per the
materials
 When a proper inquiry has been held by an employer, and
the finding of misconduct is deemed to be a possibility the
Tribunal, as an appellate body has no jurisdiction to oversee
 a judgment and go beyond the decision of the employer.
The interference with the decision of the employer will be
justified and imposed only when the findings arrived at the
inquiry shows that management is guilty of exploitation,
unfair labor practice, or malicious intentions.  In the
case of Madras v. workers of Buckingham and Carnatic
company Ltd.,[3] it was held that decision of the
Management in relation to the charges against the
employee will not prevail-if (a) there is want of bona fide, or
(b) it is a case of victimization or unfair labor practice or
violation of the principles of natural justice, or (c) there is a
basic error of facts or, (d) there has been a perverse finding
on the materials.
 In cases when no inquiry has been held by an employer/if
the inquiry held is defective, the Tribunal can satisfy itself
about the legality of the order only when it gives an
opportunity to the employer and employee to present
evidence before it. It is up to the employer to
adduce/present evidence for the first time justifying his
action and to the employee to adduce evidence contra.
 The Court also opined that the effect of an employer not
holding in inquiry is that the Tribunal would not have to
consider only whether there was a prima facie case. The
Court will the opine on the issue about the merits of the
impugned order of dismissal and on the evidence adduced
before it which will decide for itself whether the misconduct
alleged is proved or not.
 In cases like these, the idea of exercising managerial functions
does not arise at all and cannot be disputed.

 The Tribunal can get jurisdiction to consider the evidence

placed before it for the first time only, if no inquiry has been
held or after the inquiry conducted by an employer is found
to be defective in justification of the action.
 Adducing evidence for the first time: An employer, who
wants the opportunity of adducing evidence to justify his
actions for the first time before the Tribunal, should ask for
 it at the appropriate stage. If asked, the Tribunal has no
power to refuse since the giving of an opportunity to an
employer is in the interest of both the management and the
employee and to come at an equitable decision about the
alleged misconduct.[4]
 Punishment: The bench stated that once the misconduct is
proved (either in the inquiry or by the evidence placed), the
punishment imposed cannot be interfered with by the
Tribunal except in cases where the punishment is extremely
harsh and exploitative. The Tribunal can consider not only
whether the finding of misconduct recorded by an employer
is correct, but can also differ from the said finding if a
proper case is made out.[5]
  Under section 11A by the Tribunal is reached only when it
has to consider the punishment after having accepted the
finding of guilt recorded by an employer. It has to be
remembered that a Tribunal may hold that the punishment
is not justified because the misconduct alleged and found
proved is such that it does not warrant dismissal or
discharge.
 The Tribunal can also hold that the order of discharge or
dismissal is not justified because the misconduct is not
established by the evidence. To come to a conclusion the
Tribunal is equipped to consider and judge the evidence for
itself and it may hold that the misconduct is not proved or
that the misconduct proved does not entail the punishment
of dismissal. This is why Section 11A now gives full power to
the Tribunal to go into the evidence and satisfy itself on
both these points.
 Materials on Record: According to the Court, the expression
‘materials on record’, occurring in the Act cannot be
confined only to the materials which were available at the
domestic inquiry. They must be held to refer to materials on
the record before the Tribunal and they take in (1) the
evidence was taken by the management at the inquiry/
proceedings of the inquiry, or (2) the above evidence with
any further evidence before the Tribunal, or(3) evidence
 placed before the Tribunal for the first time in support of the
action taken by an employer as well as the evidence given
by the workman.
 In case an employer with a limited number of workmen may
himself be a witness to misconduct committed by a
workman, he will be disabled from conducting an inquiry
against the workman because he cannot both be an inquiry
officer and also a witness in the proceedings but he will
certainly be entitled to take disciplinary action for which role
he can file a charge sheet and impose the necessary
punishment, after calling for explanation, without holding
any prior inquiry. This will be a case where no inquiry at all
has been held by an employer. But the employer will have
sufficient material available with him which could be
produced before any Tribunal to satisfy it about the
justification for the action taken
 The principle is well established that a retrospective
operation is not to be given to a statute so as to impair an
existing right. This is the general rule. But the legislature is
competent to pass a statute so as to have retrospective
operation, either by clearly expressing such intention or by
necessary and distinct intendment.[6]
 That procedural law has always been held to operate even
retrospectively, as no party has a vested right in the
procedure[7].

Obiter Dicta:
 The Court emphasized that before imposing the
punishment, an employer is expected to conduct a proper
inquiry as regulated by the Standing Orders, and by the
principles of natural justice. The inquiry cannot be an empty
formality.
 The mere fact that no inquiry has been held or that the
inquiry has not been properly conducted cannot absolve the
Tribunal of its duty to decide whether the case that the
 workman has been guilty of the alleged misconduct has
been made out. The proper way of performing this duty is
for the Tribunal to take evidence of both sides in respect of
the alleged misconduct
 A case of defective inquiry stands on the same footing as no
inquiry.
 It cannot be recognized that the Tribunal should
straightaway reinstate an employee if itis found that no
domestic inquiry or if it is defective.
 It is open to the Tribunal to deal with the validity of the
domestic inquiry if one has been held as a preliminary issue.
If it’s finding on the subject is in favor of the management,
then there will be no occasion for additional evidence being
cited by the management. However if the finding on this
issue is against the industry’s management, the Tribunal
allows the employer to present extra evidence that can
justify his actions[8]
 Even after Section 11A, the employer and employee can
adduce evidence regarding the legality or validity of the
domestic inquiry, if one had been held by an employer.
 There is no provision either in this statute or in the Act
which states that an order of dismissal or discharge is illegal
if it is not preceded by a proper and valid domestic inquiry.
 It was held that if the inquiry was defective or no inquiry
had been held, as required by the Standing Orders, the
entire case would be open before the Tribunal and the
employer would have to justify, on evidence as well that its
order of dismissal or discharge was proper. (The industrial
Employment (Standing Orders) Act 1946 applies only to
those industrial establishments which are covered by
Section 1(3). But the field of operation of the Act is much
wider and it applies to employers who may have no
standing orders at all.)
 The Tribunal, cannot call for further or fresh evidence, as an
appellate authority may normally do under a particular
 statute when considering the correctness or otherwise of an
order passed by a subordinate body.
 Section 11A applies only to disputes which are referred for
adjudication after the section has come into force since the
proviso in it refers to “in any proceeding under this section”.

Conclusion:
The scheme of the section and particularly the wording of the
Proviso hence indicate that Section 11A does not apply to disputes
which had been referred before 15-12-1971. The section applies
only to disputes which are referred for adjudication on or after 15-
12-1971 and not before the said date. To the extent that the
decision of the Labour Court in the three orders (Nos. 1995 of 1972,
1996 of 1972 and 2386 of 1972, are contrary to our decision on
both the points, they are set aside and the appeals allowed to that
extent. The Tribunal and the Labour Courts concerned in all these
appeals will proceed with the adjudication of the disputes in
accordance with the views expressed in this judgment.

In the Supreme Court of India

1978 AIR 548, 1978 SCR (3) 207

Petitioner

Bangalore Water Supply & Sewerage Board, etc.

Respondent

R. Rajappa & ors.

Date of Judgement

21 February 1978
Bench

Chief Justice M. Hameed Ullah Beg; Justice Y.V.

Chandrachud; Justice P.N. Bhagwati; Justice V.R. Krishna
Iyer; Justice Jaswant Singh; Justice V.D. Tulzapurkar,;
Justice D.A. Desai

Introduction: 
The unprecedented momentous judgment in this case which was
pronounced by the Supreme Court of India scrutinized the definition
of “industry” as per section 2(j) of the Industrial Dispute Act, 1947.
The Supreme court of India carried out in-depth the study of the
definition in a comprehensive manner. The axiom laid down by the
Apex Court eradicated the consensus influx of presumption made in
regard to the definition “industry”. It becomes unpredictable in
terming the definition that speculates great importance as the
mechanism for settlement and compensation in relation to the
Industrial disputes can only be resolved in a proposition when
variances related to the industry arises. With the stated principles in
the judgment, it annulled numerous past judgments of the Supreme
Court but reduced the burden for the legislature by fixing up the
issues in the right perspective. The two functional bodies i.e.,
“employer” and “employee” are the nucleus in every setup industry
where any minute conflicts between them can rupture the
foundation of an industry. The Supreme Court conducted tests
through various aphorisms that what shall be included and to be
excluded in the sphere of the definition.

Background of the study: 

Political Background: 
While observing closely the Supreme Court raised questions about
the construction of legislation where the drafter failed to produce
the reliable meaning and definition of the word “industry” in the
purview of Industrial Dispute Act, 1947. To remove such austerity
from the legislative framework the Court must use their
interpretation skills more vigilantly to repair such loopholes. In the
case of Seaford Court Estates Ltd. v. Asher,1 Lord Denning,
L.J., said “When a defect appears a judge cannot simply fold his
hands and blame the draftsman. He must set to work on the
constructive task of finding the intention of Parliament and then he
must supplement the written words to give ‘force and life’ to the
intention of the legislature. A judge should ask himself the question
of how, if the makers of the Act had themselves come across this
ruck in the texture of it, they would have straightened it out? He
must then do as they would have done. A judge must not alter the
material of which the Act is woven, but he can and should iron out
the creases”.

International Background: 
The Apex Court cited the reference mentioned in Maxwell,
Interpretation of Statutes,2which interprets that “It is necessary,
therefore, to take the Act as a whole and examine its salient
provisions. The long title shows that the object of the Act is “to
make provision for the investigation and settlement of industrial
disputes, and certain other purposes.”

Judicial Background:
In reference to the case Budge Municipality case, 3 the Apex
Court dealt with the objects of the Act to define the term “industry”
the Court said “When our Act came to be passed, labor disputes had
already assumed big proportions and there were clashes between
workmen and employers in several instances. We can assume that
it was to meet such a situation that the Act was enacted, and it is
consequently necessary to give the terms employed in the Act
referring to such disputes as wide an import as reasonably
possible.”
Constitution and Statutory Provisions: 
 Section 2(j) of the Industrial Dispute Act 1947 

Facts and Procedural History:

 The respondents in this leave application were employees in
Bangalore Water-Works and Sewerage Board.
 For some misconduct, the Appellant Board imposed fines on
the employees and recovered a sum from them.
 Looking at this the respondent employees filed claim
application No.5/72 under Section 33C (2) of the Industrial
Dispute Act,1947, before the Labour Court alleging that
such imposition of fines is against the Natural Justice.
 The Appellant board objected before the labor court on
grounds that the board is a statutory body and its main
function is to render service to the citizens and not carrying
business with a profit motive and hence bars them from the
definition of “industry”.
 The Labour Court overruled the objections and considered
that the board comes under the ambit of section 2 (j) i.e.,
“industry”.
 The Appellant Board filled two Writ application/s No.868 and
2439  of 1973  before the Karnataka High Court where
again the division bench of Karnataka High Court held that
the Appellant board comes under the sphere of “industry”.
 Lastly, the aggrieved Appellant Board knocked on the doors
of the Supreme Court through a Special Leave
Application.       

Issues: 
 1. Whether Bangalore Water-Works and Sewerage Board
comes in the parameter of section 2(j) of the Industrial
Dispute Act, 1947
2. Whether the following activities/services are Industry?

 Sovereign functions
 Municipalities
 Hospitals
 Charitable institutions
 Clubs
 Universities and research Institutions
 Professional Firms
 Voluntary services 

Judgment:

Ratio Decidendi:
The definition which depicts the meaning under 2 (j) “industry”
means any business, trade, undertaking, manufacturer or calling of
employer’s and includes any calling service, employment,
handicraft, or industrial occupation or avocation of workmen. 

To make it relevant and to prove the definition, the Apex court

conducted a test to determine whether an activity is consumed by
the definition of “industry” or not, and can also be referred to as the
Triple Test Method. The Apex segregated in three parts: 

Part 1 “industry”:

a. includes systematic activity, organized cooperation between

employer and employee, production, procurement and
 distribution of goods and services for fulfilling human wants
and needs,
b. Where the activity is para-trade or Quasi-business
undertaken by the public, joint, private, philanthropic or
labor sector which may include profit and gainful objective
c. It is in the human sector, the way the relations between an
employee-employer is set up which initiates to give rise to
claims, demands, settlements and peace in industry. That is
the Raison d’etre of industrial law itself. 
Part 2:

a. Provided some non-trade or business may still be “industry”

depends upon the nature of the activity,
b. The definition of industry is quite comprehensive, two
standpoints are from the view of employers and the view of
employees, any trade or activity falls in either of the two
standpoints will construe Industry.
Part 3:

These guiding principles shall also be applied in examining the

economic operations as well as the statutory ideology shall be
merged with the statutory definition even though the comfy
connotes with Industrial disputes between an employee and
employer.

Now the supreme court, based on these mentioned Triple Test

theory they summarised whether the following activities would fall
under industry or not:

1. Sovereign functions: The Supreme Court held that

sovereign functions strictly understood, alone qualify for the
exemption, not the welfare activities or economic
adventures undertaken by the government or statutory
bodies. Even in departments discharging sovereign
functions, if there are units that are industries and they are
 substantially severable, then they can be considered to
come within Section 2(j).
2. Municipalities: Departments of the municipality which
were held to be industry 
3. Tax 
4. Public conveyance
5. Fire brigade 
6. Lighting
7. Waterworks 
8. City engineers 
9. Enforcement
10. Sewerage
11. Health
12. Market 
13. Public gardens
14. Education
15. Printing press
16. Building 
17. General administration
Department of municipal discharges many functions some may
include in the definition of industry or some non-industrial,
particularly subdominant function shall prevail in the criterion for
the Act 4(Corpn.of city of Nagpur v. Employees, AIR 1960 SC
675)

 Hospitals: Hospitals come under the ambit of industry

whether it is State or Private, absence of profit or gains
from the business activity doesn’t term down to be an
exclusion in the context of this section. The true focus is
glancing at the nature of the activity and relations between
 an employee and employer. For this, the Court concluded
that “If that be so, if a private citizen runs a hospital
without charging any fees from the patients treated in it, it
would nevertheless be an undertaking under Section 2(j)
Thus the character of the activity involved in running a
hospital brings the institution of the hospital within Section
2(j) further the institutions held to be industry are State
Hospital i.e., Ayurvedic Pharmacy and Hospital (State of
Bombay v. Hospital Mazdoor Sabha),5Activities of
Panjrapole (Lalit Hari Ayurvedic College Pharmacy v.
Workers Union),6 ( Bombay Panjrapole v.
Workmen).7
 Charitable Institutions: There are three categories to
define charitable Institutions firstly the establishments
meant for yielding profit but profits are extracted for
humanitarian purpose secondly those who don’t yield profits
but who recruit employees for the purpose of business
where goods are procured and made available to the
indigent people and lastly the persons in the charitable
institution work for the humane purpose fulfilled by men
who work not for wages or paying but to fulfill the passion
The first two criteria fall under industry but the last criteria
only there some intersection relation of cooperation of
employers and employees.
 Clubs: The clubs which are established as a social
institution where the relationship between an employee and
employer seen for the serving of the community is an
Industry. Certain gurukuls, cooperative, clubs may be
excluded from the definition where minimal or marginal
employees are hired. 

 Universities/Research Institutions: The Court observed

that If the triple tests of ‘systematic activity, co-operation
between employer and employee and production of goods
and services were alone to be applied, a University, a
college, a research institute or teaching institution will be an
industry. The following institutions were held “industry”:
Ahmedabad Textile Industries Research Association, Tocklai
 Experimental Station, Indian Standard Institute and
universities. 
 Professional Firms: For professional firms, in the words of
the Apex Court held that a lawyer or a solicitor could not
raise a dispute with his litigants in general on the footing
that they were his employers. Nor could doctors raise
disputes with their patients on such a footing. Again, the
personal character of the relationship between a doctor and
his assistant and a lawyer and his clerk may be of such a
kind that it requires complete confidence and harmony in
the productive activity in which they may be cooperating so
that, unless the operations of the solicitor or the lawyer or
the doctor take an organized and systematized form of a
business or trade, employing a number of persons, in which
disputes could arise between employers and their
employees, they would not enter the field of industry.
 Voluntary services: Establishments or institution engaged
in altruistic mission or for any free services who employee
themselves for such activities like a lawyer volunteering to
run free legal service or a doctor serving in their spare
hours in a free medical center or any such establishments
are exempted from the definition of “industry”.
With this Triple Test Method, the apex court critically examined and
advanced the meaning of “industry” where it was held that Banglore
Water Works shall be included in the purview of definition and Act.

The Apex Court even cited certain establishments that are not in the
sphere of the industry are Posts and Telegraphs Department
( Union of India v. Labour Court),8 Central Institute of
Fisheries, Construction, And Maintenance of National and
State Highways (State of Punjab v. Kuldip Singh and
another). 9 

Conclusion : 
 The Court in this above Banglore Water Supply Case dismissed the
appeal of the Appellant Board and rightly restored judicial discipline
and eradicated the unnecessary turmoil caused chaos with the
interpretation of the statue. Seven apex Judges briefly explained
and interpreted the statute provisions and even opined on the part
of the legislature to removes the fog in the drafting perspective so
that it won’t tarnish the basic interpretation of Act. With the
enforcement of a newly advanced definition, the sectors and
establishment/s which were on the darker side of the statute were
brought in to the limelight so that the contingent issues may be
resolved by these laid down principles.