Case Note & Summary
The judgment of the Supreme Court of India, delivered by a three-judge Bench, resolved a preliminary question in an appeal arising out of a reference made under Section 10A of the Industrial Disputes Act, 1947. The appellant, the General Manager, Telecom, contested the competence of the reference on the ground that the Telecommunication Department of the Union of India was not an 'industry' within the meaning of Section 2(j) of the Act. The matter had been pending in the High Court when the appellant sought to challenge the reference, and the point was referred to the Supreme Court. A two-judge Bench of the Supreme Court, while hearing the matter, doubted the correctness of an earlier two-judge Bench decision in Sub-Divisional Inspector of Post, Vaikam v. Theyyam Joseph, which had held that the functions of the Postal Department are part of the sovereign functions of the State and therefore not an industry. Consequently, the matter was placed before the present three-judge Bench. The central legal issue before the Court was whether the Telecommunication Department of the Union of India is an 'industry' under the unamended Section 2(j) of the Industrial Disputes Act, 1947. The Court noted that the 1982 amendment to the definition of 'industry' had not been brought into force by the Central Government through a notification, so the earlier definition, which was considered by a seven-judge Bench in Bangalore Water Supply and Sewerage Board v. A. Rajappa, continued to apply. The Court extracted the dominant nature test from paragraph 143 of Justice Krishna Iyer's judgment in Bangalore Water Supply: where an undertaking is engaged in commercial activity and is not discharging sovereign functions of the State, it qualifies as an industry. The appellant's counsel did not dispute that, under this test, the Telecommunication Department is an industry because it is engaged in a commercial activity and the department is not engaged in any sovereign functions of the State. The Court, however, had to address two decisions of coordinate two-judge Benches that had taken a contrary view. In Sub-Divisional Inspector of Post, Vaikam v. Theyyam Joseph, the Court had held that the functions of the Postal Department are part of sovereign functions and thus not an industry; this decision was rendered without any reference to the seven-judge Bench decision in Bangalore Water Supply. A later two-judge Bench in Bombay Telephone Canteen Employees' Association v. Union of India followed Theyyam Joseph and held that the Telephone Nigam is not an industry, observing that a strict application of Bangalore Water Supply would lead to catastrophic consequences. The Supreme Court in the present case expressly disagreed with that observation, stating that it was in direct conflict with the seven-judge Bench decision by which the Court was bound. The Court emphasized that it is not permissible for a Bench of lesser strength to take a view contrary to a larger Bench decision or to bypass it so long as it holds the field. Judicial discipline required following Bangalore Water Supply, which had been rendered nearly two decades earlier and whose correctness the Court saw no reason to doubt. Accordingly, the Court held that the Telecommunication Department of the Union of India is an industry within the meaning of Section 2(j) of the Industrial Disputes Act, 1947, and that the decisions in Sub-Divisional Inspector of Post, Vaikam v. Theyyam Joseph and Bombay Telephone Canteen Employees' Association v. Union of India cannot be treated as laying down the correct law. The only point for decision having been answered against the appellant, the appeal was dismissed with no order as to costs.
Headnote
A) Labour Law - Definition of 'Industry' - Dominant Nature Test - Industrial Disputes Act, 1947, Section 2(j) - The Supreme Court considered whether the Telecommunication Department of the Union of India is an industry under the unamended Section 2(j) of the Industrial Disputes Act, 1947. The Court applied the dominant nature test from Bangalore Water Supply v. A. Rajappa, which holds that an undertaking engaged in commercial activity and not discharging sovereign functions of the State is an industry. Held that the Telecommunication Department is an industry within Section 2(j). (Not mentioned) B) Precedent - Binding Effect of Larger Bench Decisions - Judicial Discipline - Industrial Disputes Act, 1947, Section 2(j) - A two-judge Bench in Sub-Divisional Inspector of Post, Vaikam v. Theyyam Joseph and a later two-judge Bench in Bombay Telephone Canteen Employees' Association v. Union of India held that postal/telecom functions were sovereign and not industry, conflicting with the seven-judge Bench decision in Bangalore Water Supply v. A. Rajappa. The Court held that it is not permissible for a Bench of lesser strength to take a view contrary to a larger Bench decision so long as it holds the field, and judicial discipline requires following Bangalore Water Supply. Held that those two decisions cannot be treated as laying down correct law. (Not mentioned) C) Industrial Disputes - Reference under Section 10A - Competence of Reference - Industrial Disputes Act, 1947, Section 10A and Section 2(j) - The appellant contended that the reference under Section 10A was incompetent because the department was not an industry. Since the Court held the department is an industry under Section 2(j), the reference was competent and the appeal was dismissed. Held that the reference was valid and the appeal failed. (Not mentioned)
Issue of Consideration
Whether the Telecommunication Department of the Union of India is an 'industry' within the meaning of Section 2(j) of the Industrial Disputes Act, 1947.
Final Decision
The appeal was dismissed with no order as to costs. The Court held that the Telecommunication Department of the Union of India is an 'industry' within the meaning of Section 2(j) of the Industrial Disputes Act, 1947, following the binding seven-judge Bench decision in Bangalore Water Supply v. A. Rajappa. The decisions in Sub-Divisional Inspector of Post, Vaikam v. Theyyam Joseph and Bombay Telephone Canteen Employees' Association v. Union of India were declared not to be correct law.
Law Points
- Telecom Department of Union of India is an industry under Section 2(j) of Industrial Disputes Act
- 1947
- dominant nature test
- sovereign functions exemption
- binding precedent of larger bench
- judicial discipline
- reference under Section 10A competent
