RELIGIOUS INSTITUTIONS THROUGH THE CURRENT OUTLOOK OF THE INDUSTRIAL RELATIONS CODE, 2020

PREMISE

The Government of India adopted the new Industrial Relations Code, 2020 (hereinafter in short as “IRC”) on September 28th, 2020, in order to modernise the country’s existing labour and employment legislation. The IRC annuls three key labour acts namely: the Industrial Disputes Act, 1947 (hereinafter in short as “ID Act”), Trade Unions Act, 1926, and the Industrial Employment (Standing Orders) Act, 1946. The IRC is divided into 14 chapters, each with 104 sections and three schedules. It intends to consolidate and revise legislation relating to, inter alia, trade unions, working conditions in industrial enterprises, and the inquiry and resolution concerning Industrial disputes. Although some provisions have been retained from the present structure, such as trade unions, closure, lay-off, retrenchment, and so on,  New contemporary essentials have been added to simplify and structure the existing regulations.

The Industrial Relations Code, 2020 referred to as IRC followed the proposal of 1982 and defined industry as “any systematic activity carried out by co-operation between employer and workmen, employed directly or indirectly for the production, supply, distribution of goods or services with a view to satisfying human wants, including sales and business promotion activities,”[i] regardless of the amount of money invested or if the task is carried out. However, it also puts out certain exclusions of three kinds of activities: voluntary, philanthropic, or social charity-based activities; religious institutional activities; and sovereign governmental activities, including such government agencies as are involved in defence, atomic energy, and space-based activities. Based on such exclusions as listed above, it can presume that educational establishments that are required to operate as charitable organisations and hospitals, research and development organisations religious trusts, and other similar institutions that are actually classified as businesses under the ID Act, would also be exempt from the IRC.

TEST FOR DETERMINING THE SCOPE OF INDUSTRY

Triple Test–  The Supreme Court established the triple test in the landmark case of Bangalore Water Supply & Ors. v. R. Rajappa & Ors. (hereinafter “Bangalore Water Supply Case”)[ii]:

  • Systematic activity should be present.
  • Should be organised by cooperation between the employee and the employer
  • For the creation and/or distribution of goods and services that are customised to meet human needs and desires.

In this case, the following points were also emphasised:

1. Industry excludes spiritual or religious services, as well as those targeted toward celestial joy.

2. The absence of a financial motivation or a profitable aim is immaterial, regardless of whether the effort is public, joint, private, or other.

3. The focus of the organisation and the nature of the activity is the deciding factor, with a particular emphasis on the connection between employer and the employee.

4. The organisation does not cease to be an industry if it’s a trade or business even it has philanthropic ideology or motivation.

As a result of the judgement in the Bangalore Water Supply case, educational institutions, clubs, professions, research institutes, co-operatives, and charity organisations, and other similar initiatives cannot be exempted from the scope of Industry described in the Act if they meet the three criteria specified above.

Religious Institutions are not considered as industrial establishments

The religious institutes work on the premise of providing a place of devotion and prayer to the devotees, and such establishments are working for an environment promoting spirituality. Charitable contributions are what fuels them. Religious institutes are far from working as an industrial and commercial undertaking. The following cases shed light on this problem in the words of the Supreme Court and High Courts.

The Punjab & Haryana High Court, in the case of Shiromani Gurudwara Parbandhak Committee of Management Gurudwara Dukh Nivaran Sahib v. Presiding Officer Labour Court,[iii] ruled that the Gurudwara Parbandhak Committee is not a commercial organisation. It does not distribute goods and services satisfying human wants. The Gurdwara Parbandhak Committee functioning is said to be religious and spiritual with the aim of supervising and controlling all notified Gurdwaras under the Sikh Gurdwaras Act and cannot be considered an industry. The Court further held that operation of free kitchen i.e., Langar and distribution of Karah Parshad will not put the Committee of the Gurdwara Parbandhak in the ambit of the Industrial Disputes Act of 1947. Naturally, the Committee will not come under Industry in Industrial Relations Code of 2020.

In Harihar Bahinipaty And Ors. v. State Of Orissa, the High Court of Orissa ruled that the Puri Jagannath temple is not an industry. It is not a place where people’s basic needs are not provided. It is a spiritual organisation that deals with the distribution of prasadam[iv]. The temple, it was discovered, does not suit the purpose of a hotel in terms of providing meals. The fact that some of the department’s activities have an industrial flavour will make no difference if the  primary mission of the department is religious.

The Supreme Court through the judgement of Tirumala Devasthanam v. Commissioner of Labour, held that the Tirupati Devasthanam, which incorporated a number of religious establishments in Tirumala and Tirupati and whose major role was to organise for worship at its temples and to allow visitors from all over India to visit temples and give their prayers, and it was treated as a single religious institution for the purposes of the Charitable and Religious Endowments Act. The Apex Court through the case of University of Delhi v. Ramnath, also supported the decision by ruling that the principal activity or object must be considered while determining whether a public institution is an industry or not.

Are Religious Institutions partly considered as industrial establishments?

Even though the provisions given in IRC, 2020 and the Bangalore Water Supply Case state explicitly that religious institutions are not considered as an industry, the High Courts are divided on the issue whether certain departments of religious institutions were carrying on the ‘industry’. Religious institutes have often come under fire for their financial background, and some of its units having being involved in financial and commercial activities.

The High Court of Kerala in Travancore Devaswom Board v. State of Kerala had held that the Maramat Department of the Devaswom Board constituted under Travancore Cochin High Religious Institutions Act, 1950 was carrying on an industry under section 2 (j) of the ID Act because of three reasons:

  • Construction of buildings for various purposes was undertaken.
  • There was co-operation between labour and capital and,
  • The work had been undertaken by private persons.

Though the Devaswom as a whole was not found to be an industry in Guruvayoor Devaswom v. Their Workmen, the satram and cattle establishments in the case were found to be separate units from the temple. They were not inextricably linked to the temple’s religious services. As a result, the two businesses could be considered “industry” under the Act’s definition.

Although an institution as a whole is not considered an industry under Section 2(j) of the ID Act, the decision of the Supreme Court in Nagpur Corporation v. Its Employees, itself is authority for the proposition that certain units within an institution can be considered an industry under Section 2(j) of the ID Act.

Conclusion

Religious institutes do not satisfy the conditions under section 2(p) of the code of being considered as an industry since it comes under the opinion of committing charitable and philanthropic services without creating an atmosphere of an industrial undertaking and wholly submitting to committing religious and spiritual activities without seeking any types of returns or gains. The honourable benches noted that the activities carried out in a temple are solely religious in nature and that the temple must operate in a different environment than that of an industrial or commercial enterprise. All the provisions of the previous labour laws and the current IRC of 2020 explicitly state that the religious institutions will not come under the ambit of industries and will not be considered as such. The Supreme Court case of Nagpur Corporation v. Its employees held that some departments which are visualised in various situations can be covered within the definition of industry. Analysing the above decisions, the perusal clearly shows that Religious Institutions are not considered but can have some units which may be considered as industries contingent on the nature of their activity.


[i] Industrial Disputes Act, 1947, § 2, No. 14, Acts of Parliament, 1947 (India).

[ii] Garima Pahwa, The Bangalore Water Supply v/s R. Rajjapa, Legal Services India (Aug. 13, 2021, 11:48 AM),  https://www.legalserviceindia.com/legal/article-2943-the-bangalore-water-supply-v-s-r-rajjapa.html

[iii] PLR (2003) 135 P&H 462

[iv] Prasadam (also called prasad or prasada) is a material substance of food that is a religious offering in both Hinduism and Sikhism, which is consumed by worshipers.


Varshunn Bhan Miskeen and Aditya Pandey, 3rd year students at Hidayatullah National Law University, Raipur.

Picture credits: Fossil Free


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