Physical Research Laboratory v. K.G. Sharma (1997) 4 SCC 257
Is PRL an “industry” under Section 2(j) of the Industrial Disputes Act, 1947?
Quick Summary
The Supreme Court held that Physical Research Laboratory (PRL) is not an “industry” under Section 2(j) of the Industrial Disputes Act.
PRL’s main work is scientific research serving State objectives. It does not provide commercial services to consumers. Hence, ID Act remedies did not apply here.
Issues
- Does PRL fall within “industry” under Section 2(j) ID Act?
- Are PRL employees “workmen” entitled to ID Act protections?
Rules
Section 2(j) (ID Act): “Industry” = employer–employee cooperation to produce or supply goods/services for society’s needs.
Sovereign functions are excluded. Where activities are mixed, apply the dominant nature test.
Facts (Timeline)
Arguments
Appellant: PRL
- Core activity is public-interest research, not market service.
- Functions align with governmental objectives → sovereign in character.
- Hence, ID Act definition of “industry” does not fit.
Respondent: K.G. Sharma
- Employer–employee setup existed; work supported PRL’s operations.
- Dominant nature should be seen as service-oriented; benefits due till 60.
- Labour Court correctly treated PRL as an industry.
Judgment
The Supreme Court allowed PRL’s appeal and set aside the Labour Court’s award.
PRL is not an “industry” under Section 2(j). Its research is non-commercial and aimed at State purposes, so ID Act protections did not extend to this dispute.
Ratio Decidendi
Where the dominant nature is non-commercial research for governmental objectives, the unit is not an “industry,” even if some supportive tasks resemble industrial work.
Why It Matters
- Draws a clear line between public research bodies and market-facing service units.
- Shows how the dominant nature test works for mixed-activity institutions.
- Guides classification of laboratories, observatories, and similar entities.
Key Takeaways
- “Industry” needs a consumer-facing goods/services objective.
- Government-linked research labs may fall outside the ID Act.
- Dominant nature decides when activities are mixed.
Mnemonic + 3-Step Hook
Mnemonic: “PRL = PUBLIC RESEARCH, NOT INDUSTRY”
- Purpose: Who is served—market or State?
- Process: Is it commercial or research-led?
- Predominance: Dominant nature controls → Not an industry.
IRAC Outline
| Issue | Rule | Application | Conclusion |
|---|---|---|---|
| Is PRL an “industry”? | Section 2(j) + sovereign exclusion + dominant nature test. | PRL’s main function is non-commercial research for State aims. | Not an “industry.” |
| Are ID Act remedies available? | They apply only if the unit is an “industry.” | Since PRL is outside 2(j), ID Act protections do not apply. | Labour Court award set aside. |
Glossary
- Industry (ID Act)
- Organised activity providing goods/services to the public with employer–employee cooperation.
- Sovereign Functions
- Core state duties like law-making, defense, policing, and justice.
- Dominant Nature Test
- When mixed tasks exist, the overall character of the organisation decides its classification.
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