Holding

The Law Department of the State Government cannot be considered an "industry" within the meaning of Section 2(s) of the Industrial Disputes Act, 1947.

Summary

Ganeshilal, a temporary peon in the Law Department of the Rajasthan State Government, was terminated and claimed the dismissal violated Section 25‑G of the Industrial Disputes Act, 1947. The State contended that the Law Department was not an "industry" within the meaning of Section 2(s) of the Act, and therefore the employee could not be deemed a "workman". The Labour Court and the Rajasthan High Court had held the department to be an industry, relying on earlier Supreme Court decisions concerning other government departments. The Supreme Court reversed this view, holding that the accepted concept of an industry cannot be applied to the Law Department, and that the lower courts had not explained how it qualified as an industry. The Court also emphasized that precedents must be applied only to the extent of their ratio decidendi and not by blind reliance on observations. Although the orders of the lower courts were set aside, the Court noted that the employee had already been reinstated and left it to the State to decide whether he should continue in service. The appeal was therefore partly allowed.

Issues considered

The applicability of Section 2(s) of the Industrial Disputes Act, 1947 to the Law Department of a State Government, i.e., whether the department qualifies as an "industry".
Whether the termination of a temporary employee in such a department falls within the protection of Section 25‑G of the Act.
The proper method of applying precedent, specifically the distinction between ratio decidendi and obiter observations.

Legislation cited

Constitution of Indias. Article 226
Industrial Disputes Act, 1947s. 25-G, s. 2(s)

Subjects

Industrial Disputes Actdefinition of industryworkmangovernment departmenttermination of serviceprecedentratio decidendiSection 2(s)Section 25-G

Judgment

)

--. STATE OF RAJASTHAN A
v.
GANESHILAL

DECEMBER I 0, 2007
B
[DR. ARIJIT P ASAYAT AND P. SATHASIVAM, JJ.]
'
Industrial Disputes Act, 1947-s. 2(s)-Termination ofemployee
ofLaw department ofState Government-Industrial dispute raised-
Resisted on the ground that the department is not an 'industry'- C
Courts below giving relief to workman holding it to be 'industry'-
On_ appeal, held: Law department is not an 'industry '-However, since
the employee had been reinstated, it is left to the department to
consider continuance of the employee.
D
Judgment-Precedential value of-Applicability-Held: Reliance
on a judgment sans its factual background is impermissible-A
judgment is a precedent on its own facts-Only the ratio has the binding
effect and not every observation-Observations of courts should not
be read as a statute-Precedent.
E
Respondent was employed as a peon by Law Department of
the appellant State as a temporary employee on contract basis. His
services were terminated. He raised an industrial dispute alleging
that the termination was in violation of Section 25-G of Industrial
Disputes Act, 1947. The claim was resisted on the ground that Law F
Department of the State Government was not an 'industry'. Labour
Court held that Law Department was an 'industry' in view of the
judgments of the Supreme Court holding various departments, hotel,
Public Works Departments, Irrigation Department as an 'industry'.
The view was upheld by Single Judge as well as Division Bench of G
High Court. Hence the present appeal.
Partly allowing the appeal, the Court
HELD: 1. The Law Department of the State Government
1197 H
1198 SUPREME COURT REPORTS [2007] 12 S.C.R.

A cannot be considered as an 'industry'. The accepted concept of an
industry cannot be applied to the Law department of the Government.
The la hour Court and the High Court have not even indicated as to
how the Law Department is an industry. However, it appears that
the respondent has been reinstated to the post he was holding at the
B time of termination. In view of this fact, even though it has been held
that the orders passed by the courts below are clearly unsustainable, ,
it is left to the appellant to consider wh~ther the respondent can be
continued, in view of the fact that he worked for some years.
[Paras 8, 10, 16 and 17) [1201-A, B; 1203-E-F]
c 2.1. Reliance by a court on a decision without looking into the
factual background of the case before it is clearly impermissible. A
decision is a precedent on its own facts. Each case presents its own
features. Circumstantial flexibility, one additional or different fact
may make a world of difference between conclusions in two cases.
D Disposal of cases by blindly placing reliance on a decision is not
proper. [Paras 11and14] (1201-C,D; 1203-A)

2.2. A decision is an authority for what it actually decid~s. What
is of the essence in a decision is its ratio and not every observation
E found therein nor what logically flows from the various observations
made in the judgment. The enunciation of the reason or principle on
which a question before a Court has been decided is alone binding
as a precedent. It is not everything said by a Judge while giving a
judgment that constitutes a precedent. The only thing in a Judge's
F decision binding a party is the principle upon which the case is
decided and for this reason it is important to analyse a decision and
isolate from it the ratio decidendi. A case is a precedent and binding
for what it explicitly decides and no more. Judgments of Courts are
not to be construed as statutes. The words used by Judges in their
G judgments are not to be read as if they are words in an Act of
Parliament. To interpret words, phrases and provisions of a statute,
it may become necessary for judges to embark into lengthy
discussions but the discussion is meant to explain and not to define.
Judges interpret statutes, they do not interpret judgments. They
H interpret words of statutes; their words are not to be interpreted as
ST ATE v. GANESH! LAL [PASA YAT, J.] 1199

_, statutes. Observations of Courts are neither to be read as Euclid's A
;
'
theorems nor as provisions of the statute and that too taken out of
their""context. These observations must be read in the context in which
they appear to have been stated.
[Paras 11and12) [1201-D, E, F, G; 1202-B, C, DJ
B
State ofOrissa v. Sudhansu Sekhar Misra and Ors., AIR (1968)
SC 647 and Union of India and Ors. v. Dhanwanti Devi and Ors..
(1996) 6 sec 44, referred to.
Quinnv. Leathern, (1901) AC 495 (H.L.); London Graving Dock
Co. Ltd. v. Horton, (1951) AC 737; Home Office v. Dorset Yacht Co., c
.. (1970) 2 All ER 294 and Herrington v. British Railways Board, (1972)
2 WLR 537 and (1971) 1WLR1062, referred to .
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3021 of
2006.
D
.. From the Judgment and Order dated 21.05.2004 of the High Court
of Judicature for Rajasthan at Jodhpur in D.B. Civil Special Appeal No.
391 of2004.
Manish Kumar and Ansar Ahmad Chaudhary for the Appellant.
E
Nikilesh Rarnachandran for the Respondent.
The Judgment of the Court was delivered by
DR. ARI.ITT PASAYAT, J. 1. Challenge in this appeal is to the
order passed by a Division Bench of the Rajasthan High Court, Jodhpur, F
f
upholding the view taken by the learned Single Judge. Before the High
Court challenge was to the award of the Labour Court, Bikaner.
2. Background facts are almost undisputed and are as follows:
Respondent was working as a peon attached to the Public G
Prosecutor. He was getting an amount ofRs.1,000/- p.m. as a temporary
~
employee on a contract basis. He was engaged under the Joint Legal
Remembrance and Director, Litigation, Law Department, Jaipur. His
services were terminated by notice dated 5.12.1998 w.e.f. 7.12.1998,
and according to him, it was in violation of the provisions of Section 25- H
1200 SUPREME COURT REPORTS [2007] 12 S.C.R.

A G of the Industrial Disputes Act, 1947 (in short the 'Act'). Therefore, a
dispute was raised. A reference was made to the Labour Court, vide
Notification No. F 1(1)(1145) L.F./2.000 dated 31st July, 2000, under
Section 10 of the Act. The reference was of the following dispute:

B "Whether the termination from service on 7.12.1998 of the
applicant Slrri Ganeshilal son of Shri Noratmal Barber by the non-
applicant (1) Additional Public Prosecutor, Rajgarh District Churu
(2) Joint Law Adviser and Director Litigation, Law Department,
Rajasthan Churu is proper and valid? If not then to what relief the
applicant is entitled for?"
c
3. The claim was resisted by the present appellant on the ground
that the Law department is not an industry.
4. On a reference to the Labour Court the Presiding Officer, Labour
D Court, held that Law department was an industry in view of what has
been stated by this Court in relation to various departments, hotel, school,
public works department, irrigation department. This view has been
accepted by learned Single Judge who held that there was no scope for
interference under Article 226 of the Constitution of India, 1950 (in short
E 'the Constitution').
5. The Division Bench after referring to Section 2(s) of the Act held
that the view of the Labour Court was correct.
6. Learned counsel for the appellant submitted that by no stretch of
imagination the Law department can be considered to be an industry.
F Learned counsel for the respondent on the other hand submitted that the )
Labour Court and the High Court were justified in their views.
7. Section 2(s) of the Act defines "workman" as follows:
"any person (including an apprentice) employed in any industry
G to do any manual, unskilled, skilled, technical, operational, Clerical
or supervisory work for hire of reward, whether the terms of
employment be express or implied, and for the purposes of any
proceeding under this Act in relation to an Industrial Dispute,
includes any such person who has been dismissed, discharged or
H retrenched in connection with, or as a consequence of, that dispute,
/~.

STATE v. GANES HI LAL [PASAYA T, J.] 1201

or whose dismissal, discharge or retrenchment has led to that A
dispute."
8. For bringing in application of Section 2(s) of the Act, the workman
must be employed in an industry. The Law department can, by no stretch
of imagination, be considered as an industry.
B
9. Learned counsel for the appellant submitted that whether any
government department can be treated as industry is under consideration
of a larger Bench of this Court.
10. The Labour Court and the High Court have not even indicated
as to how the Law department is an industry. Merely stating that in some C
cases Irrigation department, Public Works Department have been held
to be covered by the expression "industry" in some decisions.
11. Reliance on the decision without looking into the factual
background of the case before it is clearly impermissible. A decision is a D
precedent on its own facts. Each case presents its own features. It is not
everything said by a Judge while giving a judgment that constitutes a
precedent. The only thing in a Judge's decision binding a party is the
principle upon which the case is decided and for this reason it is important
to analyse a decision and isolate from it the ratio decidendi. According
to the well-settled theory of precedents, every decision contains three E
basic postulates - (i) findings of material facts, direct and inferential. An
inferential finding of facts is the inference which the Judge draws from the
direct, or perceptible facts; (ii) statements of the principles of law
applicable to the legal problems disclosed by the facts; and (iii) judgment
based on the combined effect of the above. A decision is an authority for F
what it actually decides. What is of the essence in a decision is its ratio
and not every observation found therein nor what logically flows from the
various observations made in the judgment. The enunciation of the reason
or principle on which a question before a Court has been decided is alone
binding as a precedent. [See: State ofOrissa v. Sudhansu Sekhar Misra G
and Ors., AIR (1968) SC 64 7 and Union of India and Ors. v.
Dhanwanti Devi and Ors., [1996] 6 SCC 44]. A case is a precedent
and binding for what it explicitly decides and no more. The words used
by Judges in their judgments are not to be read as if they are words in
Act of Parliament. In Quinn v. Leathem (1901) AC 495 (H.L.), Earl of H
1202 SUPREME COURT REPORTS [2007] 12 S.C.R.

A Halsbury LC observed that every judgment must be read as applicable
to the particular facts proved or assumed to be proved, since the generality
of the expressions which are found there are not intended to be exposition
of the whole law but governed and qualified by the particular facts of the
case in which such expressions are found and a case is only an authority
B for what it actually decides.
12. Courts should not place reliance on decisions without discussing
as to how the factual situation fits in with the fact situation of the decision
on which reliance is placed. Observations of Courts are neither to be read
as Euclid's theorems nor as provisions of the statute and that too taken
C out of their context. These observations must be read in the context in
which they appear to have been stated. Judgments of Courts are not to
be construed as statutes. To interpret words, phrases and provisions of a
statute, it may become necessary for judges to embark into lengthy
discussions but the discussion is meant to explain and not to define. Judges
D interpret statutes, they do not interpret judgments. They interpret words
of statutes; their words are not to be interpreted as statutes. In London
Graving Dock Co. Ltd. v. Horton, (1951) AC 737 at p.761, Lord Mac
Dermot observed:
"The matter cannot, of course, be settled merely by treating
E the ipsissima vertra of Willes, J as though they were part of an Act
of Parliament and applying the rules of interpretation appropriate
thereto. This is not to detract from the great weight to be given to
the language actually used by that most distingu\shed judge."

F 13. In Home Office v. Dorset Yacht Co. (1970) 2 All ER 294,
Lord Reid said, "Lord Atkin' s speech.... .is not to be treated as if it was
a statute definition. It will require qualification in new circumstances."
Megarry, J in ( 1971) l WLR l 062 observed: "One must not, of course,
construe even a reserved judgment of Russell L.J. as if it were an Act of
G Parliament." And, in Herrington v. British Railways Board, (1972) 2
WLR 537, Lord Morris said:
"There is always peril in treating the words of a speech or
judgment as though they are words in a legislative enactment, and
it is to be remembered that judicial utterances made in the setting
H of the facts of a particular case."
STATE v. GANESHILAL[PASAYAT,J.] 1203

I4. Circumstantial flexibility, one additional or different fact may make A
a world of difference between conclusions in two cases. Disposal of cases
by blindly placing reliance on a decision is not proper.
I5. The following words of Lord Denning in the matter of applying
precedents have become locus classicus:
B
"Each case depends on its own facts and a close similarity
between one case and another is not enough because even a single
significant detail may alter the entire aspect, in deciding such cases,
one should avoid the temptation to decide cases (as said by
Cordoza) by matching the colour of one case against the colour
of another. To decide therefore, on which side of the line a case C
falls, the broad resemblance to another case is not at all decisive."
*** *** ***
"Precedent should be followed only so far as it marks the path
of justice, but you must cut the dead wood and trim off the side D
branches else you will find yourselflost in thickets and branches.
My plea is to keep the path to justice clear of obstructions which
could impede it."
16. As noted above, the accepted concept of an industry cannot E
be applied to the Law department of the Government.
17. That being so, the view expressed by the Labour Court and the
High Court is indefensible. However, it appears that the respondent has
been reinstated to the post he was holding at the time of termination. In
view of this fact, even though we have held that the orders passed are F
clearly unsustainable. We leave it to the appellant to consider whether
the respondent can be continued, in view of the fact that he worked for
some years.
18. The appeal is allowed to the aforesaid extent without any order
as to costs. G
K.K.T. Appeal partly allowed.