The J&K&L HC while upholding the award passed by the Industrial Tribunal-cum-Labour Court, Chandigarh [hereinafter referred to as “the Tribunal”] whereby the Tribunal had turned down and returned the reference under the Industrial Disputes Act, 1947 to the Central Government as “not maintainable”, held that the Small Industries Service Institute, Jammu does not qualify to be an “industry‟ under the Industrial Disputes Act, 1947 and, therefore, is not amenable to the provisions of the Industrial Disputes Act, 1947. 

The Court was adjudicating the matter wherein the Petitioner had thrown challange to an Award passed by the Tribunal under Article 226 of the Constitution. Brief facts leading to the matter were that the Petitioner had raised a dispute relating to his termination with the management of Small Industries Service Institute, which came to be referred to the Tribunal by the Central Government. Before the Tribunal, the Respondents took a preliminary objection with regard to the maintainability of the reference on the ground that it was not an “industry‟ as defined in the Industrial Disputes Act and as such not amenable to the provisions of the Industrial Disputes Act, 1947. The Tribunal upon consideration of the matter concluded that the respondent-Institute performing consultancy services was not covered under the definition of “industry‟ and, therefore was not amenable to the provisions of the Act. 

The High Court restricted its consideration to the dispute as to maintainability, and formulated the following question for determination;

“Whether the Small Industries Service Institute, Jammu qualifies to be an ‘industry’ under the Industrial Disputes Act, 1947 and, therefore, amenable to the provisions of the Industrial Disputes Act, 1947?”

The Court observed that for determining whether or not the Respondent-Institute is an industry, the nature of activities performed by it are to be considered. The Court, in deciding the issue at hand, relied on the Supreme Court ruling in Bangalore Water Supply and Sewerage Board v. R.Rajappa and others [(1978) 2 SCC 213] wherein the majority accepted the ‘triple test’ enunciated in D.N. Banerji v. P.R.Mukherjee and others [AIR 1953 SC 58] for determining whether a particular organization is “industry‟ as defined in Section 2(j) of the Act, that is,

“(a) an organization where a systematic activity is carried out; 

(b) the activity is organized by cooperation between employer and employee (the direct and substantial element is chimerical); and 

(c) the activity is for production and /or distribution of goods and services calculated to satisfy human wants and wishes (not spiritual or religious but inclusive of material things or services geared to celestial bliss i.e. making on a large scale Prasad or food).”

The Court also relied upon the ‘Dominant Nature Test’ enunciated by the Supreme Court where in complex of activities, the test would be predominant nature of services and integrated nature of departments with all departments integrated with industry also being an industry. 

Applying the principles laid down by the Supreme Court to the case before it, the Court noted that the object and functions of the respondent-Institute clearly indicate that its main function is providing consultancy services to entrepreneurs for starting their business ventures or to the State Government for implementing the Central Government policies. Further holding that no doubt the activity carried out by the respondent-organization/Institute is a systematic activity providing services calculated to satisfy the human wants, however, there has to be a nexus, either direct or indirect, between the services provided by an employee and the services rendered by the Institute in order for the organization to qualify for the term “industry‟ as defined in Section 2(j) of the Act, it observed that, the Petitioner having worked as a Class-IV employee, “the duties performed by a person in the office as Class-IV do not directly or even remotely contribute towards the performance of duties of consultancy and the experts providing the intended services to the beneficiaries”. The Court, thus, dismissed the Petition as being without any merit.