Case: Workmen Of Indian Standards Institution Vs. Management Of Indian Standards Institution

his turnover and to his reputation by marketing uniform quality of goods of high standard assured by compliance with the standards and the consumer, to benefit from lower prices, higher quality and more safety - in short, get value for the money spent by him. The Institution renders what are termed "extension services" to industries which opt for them and these extension services are made available in three distinct phases, namely, pilot study, systematic development and evaluation. If this is not rendering of material services to a section of the community, we fail to see what other activity can be so regarded. There is also co-operation between the management of the Institution and the employees who are associated together for rendering these material services. It is true that the standards are prepared by Sectional Committee which are composed of representatives of all concerned, including scientists and technicians, with consumer interest playing a dominant role and they are not exclusively the result of the work carried out by the employees, but the participation of the employees is not altogether absent. Not only do the employees who are technicians participate in the work relating to various aspects of preparation of standards but the draft standards are also verified in the laboratories of the Institution which are operated by the employees. Moreover, the distribution and sale of standards prepared and published by the Institution is being made through the employees. The Certificate Marketing Scheme, maintenance of laboratories and libraries, publication of ISI bulletin, Standard Monthly Additions and other magazines, journals and leaflets and publicity of the activities of the Institution are all carried on with the help of the employees. There are a large number of employees of the Institution belonging to Grades II, III and IV, apart from officers in Grade I. Some of the employees in Grade II are technical people closely associated with the technical activities of the Institution. There can, therefore, be no doubt that the activities of the institution fall within the category of undertaking analogous to trade or business and must be regarded as an "industry" within the meaning of S. 2(j).25. This view which we are taking receives support from an earlier decision of this Court in the Ahmedabad Textile Industrys Research Association v. The State of Bombay and others (supra). The question was whether the activity of the appellant-Association, which was a textile research institute established for the purpose of carrying on research and other scientific work in connection with the textile trade or industry and other trade and industries allied therewith or necessary whereto, was an "industry" for the purpose of the Act. This Court analysed the activity of the appellant-Association and pointed out that it is an "activity" systematically undertaken; its object is to render material services to a part of the community (namely member-mills) - the material services being the discovery of processes of manufacture, etc., with a view to secure greater efficiency, rationalisation and reduction of costs of the member-mills; it is being carried on with help of employees (namely, technical personnel) who have no rights in the results of the research carried on by them as employees of the association; it is organised or arranged in a manner in which a trade or business is generally organised; it postulates co-operation between employers (namely, the association) and the employees (namely, the technical personnel and others) which is necessary for its success, for the employers provide monies for carrying on the activities of the association and its object clearly is to render material services to a part of the community by discovery of process of manufacture, etc., with a view to secure greater efficiency, relationlisation and reduction of costs. "It was observed by this Court that the undertaking as a whole is" in the nature of business or trade organised with the object of discovering ways and means by which the member-mills may obtain larger profits in connection with their industries, and on this view, the Court held that "the appellant-Association is carrying on an activity which clearly comes within the meaning of the word "industry" in S. 2(j). "This case bears a very close analogy to the present case and indeed, some of the observations made by this Court in that case - particularly those underlined by us - aptly describe the nature of the activities of the Institution and the reasoning on which the decision in this case is based is equally applicable in the decision of the present case.26. There is also one other decision of this Court which amply supports the view we are taking and that is the decision in the Management of the FICCI v. Workmen (supra). The question which arise in that case was whether the federation of Indian Chambers of Commerce and Industry, for short referred to as FICCI, was an industry within the meaning of S. 2(j). This Court reviewed most of the earlier decisions on the subject and after summarising the broad test for determining what is an industry, proceeded to analyse the activities of FICCI and pointed out that "the Federation carries on systematic activities to assist its members and other businessmen and industrialists and even non-members, as for instance, in giving them the right to subscribe to their bulletin; in taking up their cases and solving their difficulties and in obtaining concessions and facilities for them from the Government. These activities are business activities and material services, which are not necessarily confined to the illustrations given by Hidyatullah. C.J., in the Gymkhana case by way of illustration only, rendered to businessmen, traders and industrialists who are members of the constituents of the Federation. There can in our view be no doubt that the Federation is an industry within the meaning of S.2(j) of the Act." This decision is also very apposite and helpful and leaves no doubt that the activities of the Institution in the present case are an "industry" so as to attract the beneficent provisions of the Act.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]The definition is in two parts. The first part says that it means any business, trade, undertaking, manufacture or calling of employers and then it goes on to say in the second part that it includes any calling, service, employment handicraft, or industrial occupation or avocation of workmen. This Court had occasion to consider this definition in the case of State of Bombay v. The Hospital Mazdoor Sabha,L.L.J. 251], where this Court sought to expand the concept of "industry" by a process of judicial interpretation (to meet the changing requirements of modern currents ofthought). It was pointed out by this Court that "S. 2(j) does not define "industry" in the usual manner by prescribing what it means : the first clause of the definition gives the statutory meaning of "industry" and the second clause deliberately refers to several other items of industry and brings them in the definition in an inclusive way." But this interpretation of the definition was disapproved by a larger Bench of this Court in Management of Safdarjung Hospital v. K. S. Sethi,L.L.J. 266]. We shall immediately proceed to examine that decision, as that is the decision which presently holds the field and must ultimately govern the determination of the present case. But before we do so we must refer to another decision of this Court which came a little before Safdarjung Hospital case (supra). That is the decision in Secretary, Madras Gymkhana club employees Union v. Management of the Gymkhana (supra). While dealing with the definition of "industry" in this case, it was pointed out by this Court that "denotation of the term "industry" is to be found in the first part relating to employers and the full connotation of the term is intended to include the second part relating to workmen" and it was concluded : "If the activity can be described as an industry with reference to the occupation of the employers, the ambit of the industry, under the force of the second part, takes in the different kinds of activity of the employees mentioned in the second part. But the second part standing alone cannot define "industry" .... But the inclusive part of the definition the labour force employed in an industry is made an integral part of the industry for purpose of industrial disputes although industry is ordinarily something which employers create or undertake." We may point that the concept underlying the observation that "industry is ordinarily something which employers create or undertake" is gradually yielding place to the modern concept which regards industry as a joint venture undertaken by employers and workmenan enterprise which belongs equally to both. But we need not dwell on this any longer, as it is not of immediate concern to us in this case. It is sufficient to point out that the interpretation of the definition of "industry" given in Madras Gymkhana case (supra) struck a slightly different note from what it was understood to mean in the State of Bombay v. Hospital Mazdoor Sabha case (supra). But again in Safdarjung Hospital case (supra) this Court found it necessary to qualify what it had said in the Madras Gymkhana case (supra) in regard the meaning of "industry" and after referring to the definition of industry in S.4 of the Commonwealth Conciliation and Arbitration Act,this Court observed :"Although the two definitions are worded differently the purport of both is the same. It is not necessary to view our definition in two parties. The definition read as a whole denotes a collective enterprise in which employers and employees are associated. It does not exist either by employers alone or by employees alone or by employees alone. It exists only when there is a relationship between employers and employees, the former engaged in business, trade, undertaking, manufacture or calling employers and the latter engaged in any calling, service, employment, handicraft or industrial occupation or avocation. There must, therefore, be an enterprise in which the employers follow their avocation as detailed in the definition and employ workmen. The definition no doubt seeks to define "industry" with reference to employers occupation but includes the employees, for without the two there can be no industry. An industry is only to be found when there are employers and employees, the former relying upon the services of the latter to fulfill their own occupations."The Court then proceeded to add that "every case of employment is not necessarily productive of an industry. Domestic employment, administrative services of public officials, service in aid of occupations of professional men, also disclose relationship of employers and employees but they cannot be regarded as in the course of industry." A workmen can be regarded as one employed in any industry only "If he is following one of the vocations mentioned in conjunction with his employers engaged in the vocations mentioned in relation to the employers." Thus, a basic requirement of "industry" is that the employers must be "carrying on any business, trade, undertaking, manufacture or calling of employers. If they are not, there is no industry as such." Now, what these expressions mean has been discussed in a large number of cases decided by this Court. These Cases have all been reviewed in the Madras Gymkhana case. We, are, however, not directly concerned with any of these expressions except "undertaking", for the case of the workmen is not that the management of the Institution is carrying on any business, trade, manufacture or calling but it rests on a very limited ground, namely, that the management of the Institution is carrying on an undertaking. It, therefore, becomes necessary to inquire what is the meaning and scope of the term "undertaking" as used in the definition in S. 2(j).What then are the attributes or features which make an undertaking analogous to trade or business so as to attract the applicability of S. 2(j). It is difficult to enumerate these possible attributes or features definitely or exhaustively. Indeed, it would not be prudent to do so. So infinitely varied andis human activity and with the incredible growth and progress in all branches of knowledge and ever widening areas of experience at all levels, it is becoming so diversified and expanding in so many direction hitherto unthought of, that no rigid and doctrinaire approach can be adopted in considering this question. Such an approach would fail to measure up to the needs of the growing welfare State which is constantly engaged in undertaking new and varied activities as part of its social welfare policy. The concept of industry, which is intended to be a convenient and effective tool in the hands of industrial adjudication for bringing about industrial peace and harmony, would lose this capacity for adjustment and change. It would be petrified and robbed of its dynamic content. The court should, therefore, as far as possible avoid formulating of adopting generalisations and hesitate to cast the concept of industry in a narrow rigid mould which would not permit of expansion as and when necessity arises. Only some working principle may be evolved which would furnish guidance in determining what are the attributes or characteristics which would ordinarily indicate that an undertaking is analogous to trade or business.9. What can fairly be regarded as sufficiently elastic or flexible working principle for this purpose has been discussed in a number of decisions of this Court of which we may refer only to three, namely, the Hospital Mazdoor Sabha case. The Madras Gymkhana case The Safdarjung Hospital case. Though the language used in these decisions to state the working principle is not uniform and there are minor variation in the formulation according as one aspect is more emphasised than the other, the working principle laid down is basically the same.It would thus be seen that the broad test for determining when an undertaking can be said to be analogous to trade or business laid down in the Safdarjung Hospital case (supra) was the same as in the Hospital Mazdoor Sabha case (supra). The Safdarjung Hospital case (supra) did not make any real departure in the enunciation of the test. It is only in the application of this test to the case of hospitals that the Safdarjung Hospital case (supra) took a different view and observed that the judgment in the Hospital Mazdoor Sabha case (supra) had taken an extreme view of the matter which was not justified." There was also one other ground on which the decision in the Safdarjung Hospital case (supra) disapproved of the view taken in the Hospital Mazdoor Sabha case (supra) and that ground was that the decision in the Hospital Mazdoor Sabha case proceeded on an erroneous basis that an activity, in order to be an undertaking analogous to trade or business, need not be an economic activity and applied a wrong test, namely, "can such activity be carried on by private individuals or group of individuals ?" It would, therefore seems that, in view of the decision in Safdarjung Hospital case, this last test applied in the Hospital Mazdoor Sabha can must be rejected as irrelevant and it must be held that an activity, in order to be recognised as an undertaking analogous to trade or business must be an economic activity in the sense that it is productive of material goods or material services.11. To summarise, an activity can be regarded as an "industry" within the meaning of S. 2(j) only if there is relationship of employer and employees and the former is engaged in "business, trade, undertaking, manufacture or calling of employers" and the latter, "in any calling, service, employment, handicraft or industrial occupation or avocation." Though "undertaking" is a word of large import and it means anything undertaken or any project or enterprise, in the context in which it occurs, it must be read as meaning an undertaking analogous to trade or business. In order that an activity may be regarded as an undertaking analogous to trade or business, it must be "organised or arranged in a manner in which trade or business is generally organised or arranged." It must not be casual nor must it be for oneself nor for pleasure. And it must rest onbetween employer and employees who associate together with a view to production, sale or distribution of material goods or material services. It is entirely irrelevant whether or not there is profit motive or investment of capital in such activity. Even without these two features an activity can be an undertaking analogous to trade or business. It is also immaterial "that its objects are charitable or that it does not make profits or even where profits are made, they are not distributed amongst the members, " or that its activity is subsidised by the Government. Again it is not necessary that "the employer must always be a private individual .......... The Act, in terms, contemplates cases of industrial disputes where the Government or a local authority or a public utility service may be the employer ......." It also makes no difference that the material services rendered by the undertaking are in public interest. The concept of public interest in a modern welfare State, where new social values are fast emerging and old dying out, is indeed so wide and so broad and comprehensive is its spectrum and range that many activities which admittedly fall within the category of "industry" are clearly designed to subserve public interest. In fact, whenever any industry is carried on by the Government, it would be in public interest, for the Government can act only in public interest. Whether an activity is carried on in public interest or not can, therefore, never be a criterion for determining its character as an industry. Having thus examined the legal concept of industry as expounded in the decisions of this Court, we may now proceed to consider whether the activity of the Institution can be characterised as an industry in the light of the broad test discussed by us.The Rules and Regulations of the Institution makes various provisions in regard to the mechanics of the functioning of the Institution. Rule 2 lays down that there shall be two categories of members, namely, subscribing members and committee members and their rights and privileges are enumerated in Rule 5, Rule 7 vests the management of the affairs of the Institution in a General Council and its composition is laid down in Rule 8 and its functions, in Rule 11. Rule 15 provides for the constitution of the Executive Committee and it lays down that the Executive Committee shall have the powers to manage theaffairs of the Institution, including administration of ISI (Certification Marks) Act, 1952 in conformity with policies laid down by the General Council. The Institution can have different branches as may be decided upon by the General Council under Rule 18. Rule 19 says that a division shall constitute the main section of the technical activities of the Institution and Rule 20 declares that the work of a division shall be controlled by a Division Council. What shall be the constitution of a Division Council is laid down in Rule 22 and that Rule provides that a Division Council shall be constituted from the representatives of the respective interests of users, manufactures and other persons or bodies concerned in or associated with the industries included in the Division. Rule 26 deals with Sectional Committees and it says that the Sectional Committee shall be appointed by a Division Council or if necessary, by Executive Committee for the preparation of a particular standard or group of standards and the Sectional Committee shall be composed of representatives of such interests as, in the opinion of the Division Council of Executive Committee, are concerned with the standards referred to the Committee. It emphasises that on the Sectional Committee all interests shall be adequately represented including scientists and technicians, but consumer interest shall, as far as possible predominate.14. Now, at this stage it would be convenient to explain what are standards and why they are necessary to be established. Standards are technical documents describing constructional, operational and technological requirements of a material, a product or a process for a given purpose. They furnish such details as material to use, dimensions and sizes to be adopted performance to be expected, and quality to be achieve; they also give methods of tests for comparing the judging quality of goods produced by the manufacturer. Standards may be any one or more of the following five categories : (a) Dimensional Standards which secure interchangeability and eliminate unnecessary variety of types for the same or similar purposes; (b) Performance and quality Standards which ensure that the final article will be fit for the job it is designed to do; (c) Standard Methods of Tests which enable or products intended for the same purpose to be compared uniformly; (d) Standard Technical Terms and Symbols which provide a common, easily understood technical language for the industry, and (e) Standard Codes of Practices which set out the most efficient methods of installation, use and maintenance of equipment and recommend methods of technical operations. These are necessary in order to meet the challenges posed by the fast developing industrial economy of the country and mass production of economic goods and services. The manufacturer should be able to produce goods of specified quality so that he can win the confidence andof the consumer and build up internal and external markets for his products. He should also be able to increase his productivity, produce goods at minimum cost and achieve overall economy by best utilization of human and material resources at its disposal. Standards which are based on the consolidated results of science, technology and experience, furnish guidance to the manufacturer in this behalf and confer economic benefits for the development of industry and smooth flow of commerce.15. The procedure for preparing standards is laid down in Rule 29 of the Rules and Regulations of the Institution. The underlying principles for the preparation of standards are that they shall be in accordance with the needs of the industry and fulfill a generally recognised want, that the interests of both producers and consumers shall be considered and that periodic review, shall be undertaken. The work of standardisation of any specific subject can be undertaken only when the Division Council concerned is satisfied, as a result of its own deliberations or of an investigation and consultation with the producer and consumer interests, that the necessity for standarisation has been established. When the subject has been so investigated and the need established, the Division Council concerned would refer the work to an appropriate Sectional Committee and the Sectional Committee would then explore and study the subject and prepare a draft of the proposed standard. The draft standard would then be issued a draft form for a period to be determined by the Sectional Committee but not less than three months and widely circulated amongst those likely to be interested for the purpose of securing critical review and suggestions for improvement which, if found desirable, would be incorporated in the draft. This procedure for circulation can, in an appropriate case, be curtailed or dispensed with by the Division Council. The consideration of the comments received as a result of the circulation of the draft standard would be undertaken by the Sectional Committee and the final draft prepared after verification in the appropriate laboratories where necessary. The standard so finalized by the Sectional Committee would then be referred to the Division Council concerned for adoption and on such adoption by the Division Council, it would be published as an Indian Standard.It will, therefore, be seen that the Standard Mark is the most authentic representation to the consumer that the article or process in respect of which it is used conforms to the relevant Indian Standard and Indian Standard thus becomes meaningful and advantageous by reason of the use of the Standard Mark. But no one can use the Standard Mark without a licence from the Institution and even if there is a licence, the standard mark cannot be used in relation to an article or process unless such article or process confers to the relevant Indian Standard. The issue of licences for use of Standard marks under the certification marks scheme is, therefore, a very important activity of the Institution complementary as well as supplementary to preparation and publication of Indian Standards. The Certification Marks Scheme has been making considerable progress from year to year and while, according to the Annual Report of the Institution fromthe total number of licences issued since the inception of the scheme upon 31st March, 1968 and 1665  the annual value of goods covered under the scheme was approximately Rs. 3, 800 million, the total number of licences granted upto 31st March, 1974 increased to 3784 and the annual value of goods covered under the scheme rose to approximately Rs. 5, 000 million during the yearas per the figures contained in the Annual Report for that year. The total income from certification marking does not appear to have been shown separately in the Annual Report of there Institution for the yearbut according to the Annual Report forit was Rs. 5.2 million during that year. The Annual Reports of the Institution clearly reveal that from year to year the total number of licences granted by the Institution is steadily increasing and so is the total income from certification marking.21. The Institution has also several laboratories for the purpose of carrying out testing operations. It has a well equipped library at the Headquarters and there are also laboratories at the branch offices where testing of different articles is carried out. The testing work carried out in these laboratories has shown a consistent rise over the years and while during the yearthe number of samples received for testing was 3853 and the value of testing work done was Rs. 3, 96, 468, the number of samples received duringwas 12726 and the value of testing working done during that year was Rs. 8, 76, 847.58. The samples tested at the laboratories are not only those submitted but the manufacturers, distributors and consumers, but also those taken by the Inspectors for the purposes of ascertaining whether any article or process in relation to which the Standard Mark is used conforms to the Indian Standard or whether the Standard Mark has been improperly used in relation to any article or process. The laboratories are also used in connection with the preparation of Indian Standards as contemplated in cl. (f) of Rule 29 of the Rules and Regulations of the Institution.22. Then, the Institution maintains libraries at the Headquarters and at the branch offices which render useful service to the subscribing members, the Committee members, the Staff members and others. The library at the Headquarters, which is open to visitors has complete sets of overseas standards and specifications and related indices. It has also classified subject catalogues for consultation and retrieval of information of standardization. It also prepares and circulates for the benefit of its users a monthly list of current published information on standardization. It has also brought outbibliographies at the request of technical staff and Committee members and also published an important bibliography, namely, "World List of Standards on Paper Products." Quite often, technical enquiries are received from the industry and the necessary information is supplied by the libraries of the Institution. The libraries also disseminate technical information on national and overseas standards, specifications and other allied subjects.It is clear from the resume of the activities of the Institution given above that the undertaking of the Institution answers the broad test laid down in the Safdarjung Hospital case and explained by us in the earlier part of the judgment and must be held to be an industry within the meaning of S. 2(j). The activities of the Institution are carried on in a systemic manner and are organised or arranged in a manner in which trade or business is ordinarily organised or arranged. The Institution derives large income from its activities, which was about Rs. 4.5 million inand rose to about Rs. 10.2 million ina bulk of the income being accounted for by sale proceeds of Indian Standards and Certification Marking fees. The object of the activities of the Institution is to render material services to a part of the community, namely, manufactures, distributors and consumers. Standards set the recognised level of good quality,for building domestic and export markets and developing goodwill and prestige for the manufacturer : they provide the framework for mass production, increase in productivity, simplification in production process and enhancement in labour efficiency : They make for dimensional interchangeability by setting national and also international patterns of interrelated sizes : they incorporate result of the latest developments in research and technology : they increase consumer confidence and goodwill bringing wide markets and quick turnover with savings for the buyer and they bring more profits and lower costs by optimum utilization of scarce resources. The brochure on "standards for textiles" points out that amongst various advantages which accrue from the application of standards in themanufacturing programmes are increased efficiency, less waste of manpower and material, higher productivity through longer runs in the factory. Simplified buying, costing and cataloguing and stabilizing and promoting exports by sending goods of uniform quality abroad. The Certification Marking Scheme involving issue of licences for use of Standards Marks, maintenance of laboratories and libraries, bringing out various publications, such as ISI bulletin, standards monthly additions and other brochures and leaflets and publicity through different kinds of media, which constitute the other activities of the Institution apart from preparation and publication of standards, are intended to promote implementation of standards, create consciousness about the importance of standardization and quality control amongst different sectors of the economy and further inplant standardization activity, with a view to helping the manufacturer, to set up production and lower manufacturing cost, increase labour efficiency by simplifying production processes and ensure dependable and quality goods, increase consumer confidence and goodwill and achieve greater turnover and increased profits by maximum utilization of human and material resources, the distributor, to add to his turnover and to his reputation by marketing uniform quality of goods of high standard assured by compliance with the standards and the consumer, to benefit from lower prices, higher quality and more safetyin short, get value for the money spent by him. The Institution renders what are termed "extension services" to industries which opt for them and these extension services are made available in three distinct phases, namely, pilot study, systematic development and evaluation. If this is not rendering of material services to a section of the community, we fail to see what other activity can be so regarded. There is alsobetween the management of the Institution and the employees who are associated together for rendering these material services. It is true that the standards are prepared by Sectional Committee which are composed of representatives of all concerned, including scientists and technicians, with consumer interest playing a dominant role and they are not exclusively the result of the work carried out by the employees, but the participation of the employees is not altogether absent. Not only do the employees who are technicians participate in the work relating to various aspects of preparation of standards but the draft standards are also verified in the laboratories of the Institution which are operated by the employees. Moreover, the distribution and sale of standards prepared and published by the Institution is being made through the employees. The Certificate Marketing Scheme, maintenance of laboratories and libraries, publication of ISI bulletin, Standard Monthly Additions and other magazines, journals and leaflets and publicity of the activities of the Institution are all carried on with the help of the employees. There are a large number of employees of the Institution belonging to Grades II, III and IV, apart from officers in Grade I. Some of the employees in Grade II are technical people closely associated with the technical activities of the Institution. There can, therefore, be no doubt that the activities of the institution fall within the category of undertaking analogous to trade or business and must be regarded as an "industry" within the meaning of S. 2(j).25. This view which we are taking receives support from an earlier decision of this Court in the Ahmedabad Textile Industrys Research Association v. The State of Bombay and others (supra).