A) ABSTRACT / HEADNOTE
This landmark judgment in State of Bombay & Others v. The Hospital Mazdoor Sabha & Others, reported in [1960] 2 SCR 866, fundamentally redefined the concept of industry under the Industrial Disputes Act, 1947. The Supreme Court ruled that hospitals run by the State can fall within the ambit of “industry” as defined in Section 2(j) of the Act, if their activities are systematically and habitually carried out using hired labour and organised in a business-like fashion. The retrenchment of employees without compensation was declared void due to the mandatory nature of Section 25F. The Court further clarified that sovereign functions alone lie outside the definition of industry, and not welfare functions like health and education. This expansive interpretation reinforced the socio-economic objectives of a welfare state and emphasized the progressive intent behind the Industrial Disputes Act. The Court’s reasoning underlines a pivotal shift towards including welfare activities within labour protection regimes, setting a precedent that continues to impact jurisprudence on labour rights and State accountability.

Keywords: Industry definition, Industrial Disputes Act, Section 2(j), Hospital as Industry, Retrenchment, Section 25F, State Employment, Labour Law, Welfare State, Public Utility Service.

B) CASE DETAILS
i) Judgement Cause Title: State of Bombay & Others v. The Hospital Mazdoor Sabha & Others
ii) Case Number: Civil Appeal No. 712 of 1957
iii) Judgement Date: 29 January 1960
iv) Court: Supreme Court of India
v) Quorum: P.B. Gajendragadkar, K. Subba Rao, and K.C. Das Gupta, JJ.
vi) Author: Justice P.B. Gajendragadkar
vii) Citation: [1960] 2 SCR 866
viii) Legal Provisions Involved: Article 226 of the Constitution of India, Section 2(j), 25F, and 25H of the Industrial Disputes Act, 1947
ix) Judgments overruled by the Case: Brij Mohan Bagaria v. N.C. Chatterjee, (1958) II LLJ 190 (disapproved)
x) Case is Related to which Law Subjects: Labour and Industrial Law, Constitutional Law

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT
The genesis of the case arose from the termination of services of two ward servants—Mrs. Vatsala Narayan and Mrs. Ruth Isaac—employed at the J.J. Group of Hospitals in Bombay, which were under State management. Their trade union, the Hospital Mazdoor Sabha, challenged the termination orders, contending that they violated Sections 25F and 25H of the Industrial Disputes Act, 1947. A Single Judge initially dismissed the writ petition on the premise that the remedy lay elsewhere under Section 25I. However, the Division Bench reversed this, ruling that the termination was illegal for not adhering to the condition precedent of paying retrenchment compensation under Section 25F. The core issue then shifted to the applicability of the Act to State-run hospitals, raising the question: can a government-managed hospital be treated as an “industry” under Section 2(j) of the Act?

D) FACTS OF THE CASE
The J.J. Group of Hospitals, managed by the State of Bombay, included five hospitals founded mostly through donations but administered and funded entirely by the State. The petitioners, two female ward servants, were terminated to accommodate civil supply employees transferred due to departmental closure. They challenged the retrenchment under a writ petition, asserting that no compensation under Section 25F(b) had been paid, which made the retrenchment void. The State argued the hospitals were not “industry” and thus not subject to the Act. The case raised significant constitutional and interpretative questions regarding the applicability of labour law provisions to non-commercial, welfare State activities.

E) LEGAL ISSUES RAISED
i) Whether retrenchment without payment of compensation under Section 25F(b) renders the termination void?
ii) Whether hospitals run by the State of Bombay qualify as an “industry” under Section 2(j) of the Industrial Disputes Act, 1947?
iii) Whether sovereign or regal functions of the State include public health and exempt such institutions from labour laws?

F) PETITIONER/ APPELLANT’S ARGUMENTS
i) The counsels for Petitioner / Appellant submitted that the J.J. Group of Hospitals did not qualify as an “industry” under Section 2(j). They contended that the functions of the hospital were welfare-based and not economic or commercial in nature. Since the primary objective of the hospital was to serve the public and not earn profits or engage in trade, it lacked the essential features of an industry. They argued further that the employees were not entitled to retrenchment compensation as the employer—being a sovereign arm of the State—was exercising administrative prerogatives. The State invoked the doctrine of sovereign functions to argue immunity from industrial jurisprudence, stating that health services, like policing and justice, were core state functions.

G) RESPONDENT’S ARGUMENTS
i) The counsels for Respondent submitted that the definition of “industry” under Section 2(j) was intentionally broad and inclusive. They argued that regular, systematic activities employing labour to deliver essential services—even without profit motive—fell under the ambit of “industry”. They contended that the State, by running hospitals with organized labour and managerial structure, was engaging in an undertaking as defined under Section 2(j). As such, the retrenchment was subject to Section 25F, which mandates compensation. Since no such compensation was paid, the retrenchment orders were illegal. They also asserted that sovereign immunity could not shield welfare functions such as healthcare, which could equally be provided by private actors under similar arrangements.

H) RELATED LEGAL PROVISIONS
i) Section 2(j) of the Industrial Disputes Act, 1947: Defines “industry” to include any business, trade, undertaking, or service involving employer-employee relationship.
ii) Section 25F of the Industrial Disputes Act, 1947: Requires that no workman be retrenched without notice and retrenchment compensation.
iii) Section 25I: Provides for recovery of dues but does not override the invalidity of actions contravening Section 25F.
iv) Article 226 of the Constitution of India: Empowers High Courts to issue writs for enforcement of legal rights.

I) JUDGEMENT

a. RATIO DECIDENDI
i) The Supreme Court held that payment of retrenchment compensation under Section 25F(b) is a mandatory condition precedent to lawful retrenchment. Non-compliance renders the action void and inoperative.
ii) The Court ruled that the definition of “industry” under Section 2(j) is wide and includes hospitals, provided they systematically provide material services using organised labour. The fact that a hospital is State-run and not profit-oriented does not exclude it from the definition.
iii) The Court distinguished between sovereign functions (policing, justice, governance) and welfare activities, holding that healthcare is not sovereign and can be regulated under industrial law.

b. OBITER DICTA
i) The Court opined that an activity does not cease to be an industry merely because it lacks profit motive. An organised, habitual activity employing labour to provide services to the public qualifies as an “undertaking”.
ii) It disapproved the application of the doctrine of quid pro quo, noting that remuneration or profit is not essential to define an industry.

c. GUIDELINES

• The term “industry” includes systematic activities undertaken using labour, whether or not conducted for profit.

• State-run welfare institutions like hospitals may fall under this definition.

• Retrenchment without fulfilling conditions under Section 25F is invalid.

• The doctrine of sovereign function must be strictly confined to core governance tasks.

• A hospital, though providing welfare, is not sovereign and remains subject to industrial regulation.

J) CONCLUSION & COMMENTS
The judgment broke new ground by applying labour laws to government-run welfare institutions. It signalled a judicial acknowledgment of India’s shift toward a welfare state where government services were to be held accountable like private employers. By upholding the broad language of Section 2(j), the Court ensured the inclusion of workers across economic and non-economic sectors under protective labour regimes. This case fortified workers’ rights in public sector employment and clarified the reach of industrial jurisprudence. Its influence remains profound in labour law, public sector employment, and the interpretation of sovereign immunity.

K) REFERENCES

a. Important Cases Referred
[1] D.N. Banerji v. P.R. Mukherjee & Ors., [1953] SCR 302
[2] Baroda Borough Municipality v. Its Workmen, [1957] SCR 33
[3] Sri Vishuddhananda Saraswathi Marwari Hospital v. Their Workmen, (1952) II LLJ 327
[4] Federated State School Teachers’ Association of Australia v. State of Victoria, (1929) 41 CLR 569
[5] Coomber v. Justices of Berks, (1883) AC 61
[6] Corporation of Glasgow v. Glasgow Tramway & Omnibus Co., (1898) AC 631
[7] Brij Mohan Bagaria v. Chatterjee (N.C.), (1958) II LLJ 190 (disapproved)
[8] National Union of Commercial Employees v. Meher (M.R.), (1959) II LLJ 38

b. Important Statutes Referred
[9] Industrial Disputes Act, 1947, Section 2(j), Section 25F, Section 25I, Section 25H
[10] Article 226 of the Constitution of India
[11] Indian Trade Unions Act, 1926
[12] Directive Principles of State Policy, Part IV, Constitution of India