Case: Union Of India And Another Vs. Ladu Lal Jain

v. The Hospital Mazdoor Sabha,(1960) 2 SCR 866 : (AIR 1960 SC 610 ) the question was whether the relevant provisions of the Industrial Disputes Act, 1947, applied to the group of hospitals run by the State of Bombay and whether they are "industry" within the meaning of the Act. The decision of the question depended on the interpretation of the definition of industry prescribed by S 2 (j) of the Act. This section provides that industry means any business, trade, undertaking etc, of employers. In considering the question it became necessary to enquire whether that activity, i. e. the running of the hospitals, would be an undertaking if it is carried on by a private citizens or group of private citizens, It was held that if a hospital is run by private citizens for profit, it would be an undertaking very much like the trade or business in their conventional sense. It was observed at p. 878 (of SCR): (at pp.615-616 of AIR);"Thus the character of the activity involved in running a hospital brings the institution of the hospital within S.2 (j) Does it make any difference that the hospital is run by the Government in the interpretation of the word undertaking in S. 2 (j)? In our opinion, the answer to this question must be in the negative. It is the character of the activity which decides the question as to whether the activity in question attracts the provision of S. 2 (j); who conducts the activity and whether it is conducted for profit or not do not make a material difference. To similar effect were the observations in the Corporation of the City of Nagpur v. Its Employees," (1960) 2 SCR 942 at p. 962: (AIR 1960 SC 675 at p. 684)where it was said:"If a service rendered by an individual or a private person would be an industry, it would equally be an industry in the hands of a corporation."It was earlier said at p. 960 (of SCR); (at p.683 of AIR);"Monetary consideration for service is, therefore, not an essential characteristic of industry in a modern State.""Barring the regal functions of a municipality, if such other activities of it, if undertaken by an individual, would be industry, then they would equally be industry in the hands of a municipality."13. Lastly, in Satya Narain v. District Engineer, P.W.D. AIR 1962 SC 1161 the question for determination was whether plying motor buses by the Government by way of commercial activity amounts to its running it on a public service. In determining this question, this Court observed at p. 1163:"It is undoubtedly not easy to define what is public service and each activity has to be considered by itself for deciding whether it is carried on as a public service or not. Certain activities will undoubtedly be regarded as public services, as for instance, those undertaking in the exercise of the sovereign power of the State or of government functions. About these there can be no doubt. Similarly a pure business undertaking though run by the Government cannot be classified as public service. But where a particular activity concerns a public utility a question may arise whether it falls in the first or the second category. The mere fact that that activity may be useful to the public would not necessarily render it public service. An activity however beneficial to the people and however useful cannot in our opinion, be reasonably regarded as public service if it is of a type which may be earned on by private individuals and is carried on by Government with a distinct profit motive. It may be that plying stage carriage buses even through for hire is an activity undertaken by the Government for ensuring the people a cheap, regular and reliable mode of transport and is in that sense beneficial to the public. It does not, however, cease to be a commercial activity if it is run with profit motive. Indeed even private operators in order to attract custom are also interested in providing the same facilities to the public as the Government undertaking provides. Since that is so, it is difficult to see what difference there is between the activity carried on by private industrials and that carried on only Government. By reason of the fact that a commercial undertaking is owned and run by the State it does not ipso facto become a "public service."This case simply held that commercial activity carried on with profit motive cannot be held to be public service. It does not hold that such activity carried on by Government will not be business if conducted without profit motive.14. We are of opinion that profit element is not a necessary ingredient of carrying on business, though usually business is carried on for profit. It is to be presumed that the Railways are run on a profit, though it may be that occasionally they are run at a loss.15. The case reported as Director of Rationing and Distribution v. The Corporation of Calcutta, (1961) I SCR 158: (AIR 1960 SC 1955) relied on for the appellants is really of no help to them. It was in connection with the sovereign activities of the State that it was said that the State was not bound by any statute unless the statute provided to that effect in express terms or by necessary implication. The contention that the Government could not get the benefit of this law in connection with its business activities was neither repelled nor considered. It was held to have no foundation as there was nothing on the record that the Food Department of the Government of West Bengal by undertaking rationing and distribution of food on a rational basis had embarked upon any trade or business and, in the absence of any such indication, it appeared that the department was discharging the elementary duty of a sovereign to ensure proper and equitable distribution of available food stuffs with a view to maintaining peace and good government.

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

Explanation:
0[ds]2. The contention of the appellants is that this view of the Subordinate Judge, confirmed by the High Court, is wrong.We are of opinion that profit element is not a necessary ingredient of carrying on business, though usually business is carried on for profit. It is to be presumed that the Railways are run on a profit, though it may be that occasionally they are run at a loss.15. The case reported as Director of Rationing and Distribution v. The Corporation of Calcutta, (1961) I SCR 158: (AIR 1960 SC 1955) relied on for the appellants is really of no help to them. It was in connection with the sovereign activities of the State that it was said that the State was not bound by any statute unless the statute provided to that effect in express terms or by necessary implication. The contention that the Government could not get the benefit of this law in connection with its business activities was neither repelled nor considered. It was held to have no foundation as there was nothing on the record that the Food Department of the Government of West Bengal by undertaking rationing and distribution of food on a rational basis had embarked upon any trade or business and, in the absence of any such indication, it appeared that the department was discharging the elementary duty of a sovereign to ensure proper and equitable distribution of available food stuffs with a view to maintaining peace and good government.