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  • Writer's pictureBrain Booster Articles



R. Sanjay Rakul, III year of B.B.A.,LL.B.(Hons.)


The economy of a country mainly depends upon the industry. The industry is providing a platform to the people to earn money by working in the industry. But still, some of the people don’t know whether hospitals, law firms, educational institutions and municipal corporations are coming under industry or not? The Industry Disputes Act deals with industry. Section 2(j) of the Industry Disputes Act explains the term industry. According to this section, industry means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft or industrial occupation or avocation of workmen. This article covers the pros and cons of the term ‘industry’.


In Bangalore Water Supply vs. A. Rajappa[i], the Hon’ble Supreme Court enlisted a triple test to determine whether an institution comes under the industry or not? The tests are as follows:

1. Systematic activity

2. Organized by co-operation between employer and employees

3. For production and distribution of goods and services calculated to satisfy human wishes

These three tests will determine whether an institution is an industry or not?

Is Hospital an Industry?

In State of Bombay vs. Hospital Mazdoor Sabha[ii], the Supreme Court held that the state is carrying on an ‘undertaking’ within sec. 2(j) of the Industrial Dispute Act, when it runs a group of hospitals to give medical relief to the citizens and for helping to impart medical education. The court observed that the activity systematically or habitually undertaking for the production or distribution of goods comes under ‘undertaking’ and it states that the hospital comes under the term industry.

In Management of Safdarjung Hospital vs. Kuldip Singh[iii], the Hon’ble Supreme Court held that if a hospital is run by a government for the treatment of patients doesn’t come under industry. The charitable hospital even though it was run by a private association doesn’t come under industry. If hospitals, nursing homes or a dispensary is commercially run as a business, there may be elements of the industry.

In Dhanrajgiri Hospital vs. Workmen[iv], the Hon’ble Supreme Court held that the main activity of the hospital was imparting training in nursing and the beds in the hospital were meant for their practical training. It was not carrying on any economic activity like trade or business, hence, hospitals won’t come under industry.

In Bangalore Water Supply vs. A. Rajappa, the Hon’ble Supreme Court overruled both the previous judgments. The court held that the hospital facilities are sure services and hence industry.

Is Educational Institution an Industry?

In the University of Delhi vs. Ramnath[v], the Supreme Court held that a university or an educational institution, educational services are provided to the society to satisfy human wants and wishes. Hence it comes under industry.

Is Law firm an Industry?

In National Union of Commercial Employees vs. M.R.Meher[vi], the Supreme Court held that the law firm is not an industry.

This judgment was overruled in Bangalore Water Supply vs. A. Rajappa, the Supreme Court held that success mainly depends on the excellence in their respective spheres. Hence, the law firm will come under the industry.

Is Municipal institution an Industry?

In Corporation of City of Nagpur vs. Its Employees[vii], the Supreme Court held that a municipal corporation carries out various activities, sovereign or non-sovereign. Some particular department of corporation falls under the definition of the industry of all employees of that department of corporations falls under the definition of industry all employees of that department would be entitled to benefits of Industrial Dispute Act.


To determine whether an institution is an industry the court will follow the provided guidelines in the Bangalore Water Supply vs. A. Rajappa. Hence, according to the Industrial Dispute Act the hospital, educational institution, law firm and municipal institutions are coming under industry.

[i] AIR 1978 SC 548 [ii] AIR 1960 SC 610 [iii] AIR 1970 SC 1406 [iv] AIR 1975 SC 2032 [v] AIR 1963 SC 1873 [vi] AIR 1962 SC 1080 [vii] AIR 1960 SC 675


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