A hospital should be an industry or not?

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Healthcare is one of the leading sectors, not only in the Indian Subcontinent but across the globe. HDI (Human Development Index) places healthcare as the most important criterion to evaluate the rankings. Indian Healthcare industry was valued at $1.9 Billion in the FY 2020 and growing at an exponential rate.

In order to regulate this mammoth industry, it is essential to form a legal framework. The code of Industry cover three major aspects 1947 code, the 1978 code, and the 2020 code. Wherein each code definition of industry differs from time to time.

So, according to the 1947 code the definition of Industry is;

“Industry means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen”[1]

The definition of Industry in 1978 is:

“Industry in the Act is not meant to provide more than a guide. It raises doubts as to what could be meant by the “calling of employers” even if business, trade, undertaking or manufacture could be found capable of being more clearly delineated. It is however clear that there is no mention of any profit motive.

The word “manufacture” of employers could not be interpreted literally. It is however evident that the term “employer” necessarily postulates employees without whom there can be no employers. But the second part of the definition makes the concept more nebulous as it extends the definition to “any calling, service, employment, handicraft or industrial occupation or avocation of workmen.

This part relating to workmen must necessarily indicate something which may exclude employers and include an industry consisting of individual handicraftsmen or workmen only. At any rate, the meaning of industrial dispute includes disputes between workmen and workmen also. Therefore, the wide ambit of the last part of the definition cannot be cut down by searching for a predominant meaning in the first part”[2].

This definition was propounded in the case of Bangalore water supply in 1978.

The definition of Industry according to the 2020 code:

“Industry means any systematic activity carried on by co-operation between an employer and worker (whether such worker is employed by such employer directly or by or through any agency, including a contractor) for the production, supply or distribution of goods or services with a view to satisfying human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature), whether or not, —

  • any capital has been invested for the purpose of carrying on such activity; or
  • such activity is carried on with a motive to make any gain or profit, but does not include-
  • institutions owned or managed by organisations wholly or substantially engaged in any charitable, social or philanthropic service; or

 any activity of the appropriate Government relatable to the sovereign functions of the appropriate Government including all the activities carried on by the departments of the Central Government dealing with defence research, atomic energy, and space; or

  • any domestic service; or
  • any other activity as may be notified by the Central Government;”[3]

Every code has a different definition with varied explanations, which clearly states that Industry, therefore, can not be strictly defined but can only be described.

Does a hospital come under the definition of the industry? To cover this aspect first we have to see the proper definition of a hospital. So, a “Hospital, is an institution that is built, staffed, and equipped for the diagnosis of disease; for the treatment, both medical and surgical, of the sick and the injured; and for their housing during this process”[4].

Hospital is a huge profit-making industry, hospital sector alone was valued 4 lack crore in FY 17 and is expected to grow to reach 8.6 lakh crore in FY 22.

The broad aspects of a hospital as an industry comes under the purview of the definition of industry. The main work of the hospital is to provide health and medical facility to the patient and for providing better facilities, a huge number of paid staff is required. Paid staff means a hospital is a good profit-making industry. When a patient comes to the hospital then the hospital staff hands over a big bill to the patient to generate a good profit.

Some arguments are given by the hospital in the case of Bombay Mazdoor Sabha for stating a hospital should not be considered as an industry, but the judgment of the court considers a hospital as an industry and also state that hospital comes under the definition of the “Industry”.

But there are a bunch of questions arising in the general aspects should these things covers in hospitals as an industry: –

  1. State medical facilities to the government employers?
  2. Free treatment of poor people in the hospital?
  3. Chemist shops in the hospital?
  4. Food facilities for the patient in the hospital?
  5. Other staff except doctors can be covered in the hospital as an industry?

So, medical facilities and the free treatment to the poor by the hospitals and by the states it doesn’t mean that hospital is not an industry, free treatments, and free medical facilities is an exception. But you can not take this exception as an argument to prove that a hospital is not an industry.

Hospital is a huge profit-making industry where under a lot of activity running for smoothing the works of the hospital. Food facilities and the other staffs except doctors are also an important part of the hospital but if we talk about and counted these things separately, they can not be considered as a separate industry they all are part of the hospital and collectively called practice in one industry under the definition of Industrial Dispute act.

Sec. 33 C of the Industrial Dispute Act 1947

(2) “Where any workman is entitled to receive from the employer any money or any benefit which is capable of being computed in terms of money and if any question arises as to the amount of money due or as to the amount at which such benefit should be computed, then the question may, subject to any rules that may be made under this Act, be decided by such Labour Court as may be specified in this behalf by the appropriate Government”[5]

The triple test rule which was found in the case of Bangalore Water supply clears what can be considered as an industry and the three rules are Systematic activity, employer and employee relation, and last goods and services according to human wants.

Hospitals are working on the principle of systematic activity, and employer and employee relations and also provide good services according to human wants.

What is the difference between Needs and wants? Is the definition of need and wants the same? One more commonly arising question, after coming off the triple test rule in Bangalore Water Supply Case in 1978, when we talk about the 3rd principle of the Triple test rule which talks about providing service according to Human wants there is a thin line difference between wants and needs and also these two things differ according to the economic capacity of a human. So, the difference between needs and wants is never in the controversy of arguments[6].

There is one more case State of Bombay v. Hospital Mazdoor Sabha 1960 in this case, the judgement of the court stated that hospital is a profit-making industry and it also comes under the preview of industry definition. So, is considered as an industry.


Various judicial interpretations collectively talk about what is to be included in the definition of the Industrial Dispute Act of 1947. Not only the hospitals but other profit-making ventures which include systematic activity, employer and employee relations, and also works for providing things according to human wants are to be categorized under the definition of “Industry” in The Industrial Dispute Act 1947.

Now it’s a time to think from a different perspective to make the new upcoming future of the industry. The whole argument about considering whether Hospital is an industry or not is a still in question. We have to make some criteria to recognise what to include in the definition of Industry and also those are defined as Sovereign functions are not be considered as industry and the complexity of this issue is still unresolved.

Respective industrial codes are also insufficient to define the term Industry, Therefore, it requires a dedicated probe by the legislature to exemplify this term. In the author’s opinion, an expert committee must be constituted for the same.

All the health insurance sector provides medical health insurance to the people the existence of the health insurance sector is directly proportional to the Hospital. The existence of hospitals determines the existence of the medical insurance sector. So, the Health Insurance sector is not a separate industry it is also counted in the Hospital as an industry.



[1] The Industrial Dispute Act, 1947, 2(j), No. 14, Acts of Parliament, 1947 (India).

[2] 1978 AIR 548, 1978 SCR (3) 207

[3] The Industrial Dispute Act, 1947, 2(P), No. 35, Acts of Parliament, 2020 (India).

[4]  Britannica https://www.britannica.com/science/hospital (Nov. 14, 2022)

[5] The Industrial Dispute Act, 1947, 33(C), No. 14, Acts of Parliament, 1947 (India).

[6] 1978 AIR 548, 1978 SCR (3) 207

This article has been authored by Saket Jain, a law student at UPES, Dehradun.

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