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Does administration and administration of a Hospital fall beneath the definition of ‘Business’?

Does management and administration of a Hospital fall under the definition of ‘Industry’? written by Surya Sunilkumar student of Ramaiah institute of legal studies

State of Bombay & Ors Vs The Hospital Majdoor Sabha (1960)


The dispute between the employees and the management in an industry is resolved according to the procedures laid down by The Industrial Dispute Act 1947. The object of this Act is to make provisions for the investigation and settlement of the industrial dispute as well for other purposes too. In-State of Bombay Vs The Hospital of Majdoor Sabha the question arose regarding the interpretation of the word industry and if cases of such nature can be tried in the Industrial tribunal under Sec.10 of the aforementioned Act.

Facts of the Case

The Appellant has a group of hospitals established since 1845. The group is under the administrative control of the Surgeon General of the Appellant and its day to day affairs are controlled by the Superintendent. The expenses and salaries of the employees are paid by the Appellant herein. The Hospital administration dismissed 2 employees by notice and replaced them with two servants who were discharged from the Civil Supplies Department. The employees filed a writ petition before Bombay High Court which held that the retrenchment orders were not void. The matter was then taken to the Court of Appeal which held that the orders do not fall within the ambit of Section 25F of the Act and hence it is invalid. The Court also held that the Industrial Disputes Act applies to hospitals and issued a writ of mandamus. Thus, the Appellants have approached the Supreme Court to set aside the judgment passed.


  • Whether the Provisions of the Industries Dispute Act, 1947 applies to the word Hospital thereby does Hospitals come under the meaning of Industry under this Act?
  • Whether the retrenchment order of two employees is invalid due to non-compliance with Section 25F of the Act?


The observations made by the court regarding the case are:

  • The employees were retrenched to make room for the servants who had a longer period of service in the Civil Supplies Department, this was done owing to the closure of the department.
  • Sec.25F of Industrial Dispute Act states the conditions precedent to retrenchment of workers. Clause (b) of this section clearly states that “…(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days’ average pay 2 [for every completed year of continuous service] or any part thereof in excess of six months…” this condition along with other two if fulfilled the section provides that no workman shall be retrenched until the condition in question has been satisfied. Section 251 of the Act provides for the recovery of monies due from employers under Chapter V. But Section 25F (b) is a mandatory provision and it cannot be ignored. Any retrenchment order which does not comply with Section 25F (b) of the Act is invalid and inoperative.
  • Considering the fact that the words used in s. 25F (b) are mandatory and their effect is clear and unambiguous, the Supreme Court stated that it is rightly held by the Court of Appeal.
  • The court referred to different cases to determine the meaning of industry under Sec.2 (j) of the industrial dispute Act. The Hon’ble court held that hospitals come under the ambit of the word industries, thus the Industrial tribunal has jurisdiction over the case filed by the petitioner.
  • Therefore the court gave the judgment stating the order passed by the High Court on the writ petition filed by the respondents is confirmed and the appeal is dismissed.

Case analysis

  • This case has attempted to interpret the true meaning of the industry. According to Sec.2 (j) “ ‘Industry’ means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicrafts or industrial occupation or avocation of workers;”. The court stated that the scope of the definition is broad therefore the hospital cannot be excluded from the meaning of industry.
  • The bench also referred to the doctrine of noscuntur a sociis, it is a concept that the meaning of a doubtful word may be ascertained by reference to the meaning of words associated with it. This doctrine gave a broader aspect of the interpretation of the word industry.
  • A combination of different doctrines and case laws helped the court decide the scope and application of Sec.2(j).
  • It should be rightly observed that when a word of the provision has to be interpreted then the court should consider the object and intent of the legislature who enacted the Act.


The Supreme Court confirmed the decision made by the High Court. It stated that the retrenchment is invalid and inoperative. And the word industry has wider scope thus hospitals are also considered as an industry.

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