State Relief Undertakings Not 'Industry' Under Section 2(j) of Industrial Disputes Act:
H.K. Makwana v. State of Gujarat

Introduction

The case of H.K. Makwana v. State of Gujarat and Others (1994) adjudicated by the Gujarat High Court is a landmark judgment concerning the classification of state-led relief undertakings under the purview of the Industrial Disputes Act, 1947. The central issue revolves around whether the relief works undertaken by the State Government during natural calamities such as famine, flood, earthquake, or scarcity constitute an 'industry' as defined under Section 2(j) of the Act. This commentary provides an in-depth analysis of the judgment, elucidating the court's reasoning, the precedents considered, and the implications for future jurisprudence.

Summary of the Judgment

The Gujarat High Court, in a Full Bench comprising esteemed judges, addressed two pivotal questions:

• Whether employment offered to persons engaged in scarcity relief works by the State constitutes employment in 'industry' under Section 2(j) of the Industrial Disputes Act, 1947.
• Whether the prior decision by the Division Bench in J. J. Shrimali v. District Development Officer (1989) that such relief works do not amount to an 'industry' is well-founded.

After meticulously reviewing relevant statutes, constitutional provisions, and precedents, the Court affirmed that relief undertakings by the State during calamities do not qualify as 'industry' under Section 2(j). The primary reasoning was that such activities are part of the State's sovereign and inalienable duty to provide livelihood to afflicted individuals, rather than commercial or industrial enterprises aimed at production or distribution of goods and services.

Analysis

Precedents Cited

The judgment extensively referenced several key cases to frame its reasoning:

• Bangalore Water Supply v. A. Rajappa (AIR 1978 SC 548): This Supreme Court decision provided a broad interpretation of 'industry', encompassing charitable and philanthropic activities under certain circumstances.
• J. J. Shrimali v. District Development Officer (1989): The Division Bench held that state relief undertakings are not industries as they represent sovereign functions rather than commercial enterprises.
• Sanjit Roy v. State of Rajasthan (AIR 1983 SC 328) and Das Raj v. State of Punjab (1988 I CLR 620): These cases dealt with the applicability of labor laws to state projects, although their relevance was limited in this context.
• Olga Tellis v. Bombay Municipal Corporation (AIR 1986 SC 180): This Supreme Court case linked the right to livelihood with the right to life, emphasizing the state's obligation to provide adequate means of livelihood.
• Various High Court decisions, including Bihar Relief Committee v. State of Bihar and Umayammal v. State Of Kerala, were also referenced to underline the distinction between state functions and industries.

Legal Reasoning

The Court's analysis was structured around the definition of 'industry' under Section 2(j) of the Industrial Disputes Act, which includes "any business, trade, undertaking, manufacture or calling, service, employment, handicraft, or industrial occupation or avocation of workmen." The key points in the Court's reasoning include:

• Sovereign Functions vs. Industrial Activities: The Court emphasized that relief undertakings during calamities are sovereign functions aimed at fulfilling the state's primary duty to provide for its citizens, distinguishing them from commercial or industrial enterprises.
• Nature of Activity: Relief works are not systematic, continuous, or aimed at production/distribution of goods/services for profit, which are hallmarks of industrial activities.
• Employer-Employee Relationship: The organization and relationships in relief work do not mirror those found in traditional industries. Employment in relief works is often ad-hoc, temporary, and lacks the structured employer-employee dynamics typical of industrial settings.
• Functional Focus: The decisive factor is the functional nature of the activity. Relief undertakings are humanitarian efforts rather than economic ventures.
• Legislative Intent: The Industrial Disputes Act aims to maintain industrial peace and resolve disputes in commercial enterprises. Relief works during calamities do not fall within this legislative intent.

Impact

This judgment has significant implications for both state governments and workers engaged in relief works:

• Exemption from Industrial Disputes Act: State-led relief undertakings are exempt from the provisions of the Industrial Disputes Act, simplifying administrative processes during emergencies.
• Clarification on 'Industry' Definition: The judgment reinforces a functional and contextual approach to defining 'industry', preventing the Act's scope from being overextended to include non-commercial state activities.
• Judicial Precedent: Future cases involving state relief works will likely refer to this judgment to determine applicability of labor laws and industrial regulations.
• Legislative Guidance: Highlights the need for clearer legislative definitions to address ambiguities between state functions and industrial activities.

Complex Concepts Simplified

Section 2(j) of the Industrial Disputes Act, 1947

This section defines 'industry' comprehensively to include a wide range of activities such as business, trade, manufacture, and services involving workmen. The broad definition aims to cover various forms of economic activities where industrial disputes might arise.

Sovereign Functions

Sovereign functions refer to the fundamental duties and responsibilities of the state, particularly those enshrined in the Constitution, such as providing relief during natural disasters. These functions are distinct from commercial or industrial activities as they are performed for the welfare of citizens rather than for profit.

Directive Principles of State Policy

Articles 39(a) and 41 of the Indian Constitution fall under the Directive Principles, which guide the state's governance but are not enforceable by courts. They outline the state's role in securing an adequate means of livelihood and the right to work, especially during circumstances like natural calamities.

Conclusion