Question

Assertion (A): The respondent was engaged as a Safai Karamchari in a charitable trust. The dispute originated when he was terminated due to repeated absence from duty. The trust challenged the award on the grounds that it was not an 'industry' under Section 2(j) of the Industrial Disputes Act, 1947, and therefore the worker was not a workman, making Section 25-F inapplicable. Reason (R): The trust engaged in multifarious activities including commercial ventures and hired employees for commercial and charitable activities in an organized manner with proper remuneration. In the context of the above Assertion and Reason under the Industrial Disputes Act, 1947, which one of the following is correct?

• A. Both (A) and (R) are true, but (R) is not the correct explanation of (A).
• B. Both (A) and (R) are true, and (R) is the correct explanation of (A).
• C. (A) is false, but (R) is true.
• D. (A) is true, but (R) is false.

Hint:

For Industrial Disputes Act questions, remember the famous rule from: Bangalore Water Supply Case If there is:

• Systematic activity,

• Employer-employee cooperation,

• Production or service activity,
the organization is likely to be an Industry, even if it is charitable.

Answer 1

The Correct Option is B

Concept: The expression ``Industry'' under Section 2(j) of the Industrial Disputes Act, 1947 has been interpreted very broadly by the Supreme Court, particularly in the landmark case of Bangalore Water Supply and Sewerage Board v. A. Rajappa. The Court held that even charitable institutions may qualify as industries if they carry on systematic activities with the cooperation of employers and employees for the production or distribution of goods or services.

Step 1: Examination of Assertion (A).
The trust argued that:

• It was a charitable organization,

• Therefore it was not an industry,

• Consequently Section 25-F would not apply.
This was indeed the contention raised by the trust. Therefore, Assertion (A) is factually correct.

Step 2: Examination of Reason (R).
The trust was engaged in:

• Multiple organized activities,

• Commercial ventures,

• Employment of workers,

• Payment of wages and remuneration,

• Provision of services through systematic organization.
These factors satisfy the tests laid down in Bangalore Water Supply for determining whether an organization is an industry. Hence Reason (R) is also true.

Step 3: Relationship between Assertion and Reason.
The trust's argument failed precisely because of the facts mentioned in Reason (R). Its commercial and organized activities brought it within the definition of an industry despite its charitable character. Therefore, Reason (R) directly explains why the trust could not avoid the application of labour law protections.

Step 4: Effect on Section 25-F.
Once the organization is treated as an industry:

• The employee becomes a workman,

• Retrenchment provisions become applicable,

• Compliance with Section 25-F becomes mandatory,

• Illegal termination can be challenged.

A charitable institution does not escape labour law merely because it is charitable; organized commercial activities may bring it within the definition of an Industry.

Answer 2

This Assertion-Reason question can be tested the same way as any such question: check whether each statement is true on its own, then check whether the Reason actually supplies the explanation for the Assertion.

1. Both (A) and (R) are true, but (R) is not the correct explanation of (A): This would apply only if the trust's organised, commercial activities described in (R) were true but had no real bearing on why its "not an industry" argument failed. In fact, those very activities are the reason the argument failed, so treating (R) as unconnected to (A) understates the relationship between them.
2. Both (A) and (R) are true, and (R) is the correct explanation of (A): Assertion (A) accurately records the trust's position, namely that it argued it was not an "industry" under Section 2(j) and therefore Section 25-F could not apply. Reason (R) accurately describes the trust's actual activities, including commercial ventures and organised, remunerated employment. Since courts treat exactly this kind of organised, commercial activity as bringing an entity within the wide definition of "industry" regardless of its charitable character, (R) directly explains why the trust's argument in (A) was bound to fail.
3. (A) is false, but (R) is true: (A) merely records what the trust argued and why, which is an accurate account of the dispute; it is not a false statement.
4. (A) is true, but (R) is false: (R) accurately describes activities of the kind that expand the definition of "industry," so there is no basis to treat it as false.

Since (R)'s description of organised commercial activity is precisely what defeats a charitable body's claim to be outside the definition of "industry," it functions as the explanation for (A), not merely as an unrelated true fact.

The correct answer is that both (A) and (R) are true, and (R) is the correct explanation of (A).