What is ‘industry’? Nine-judge Supreme Court Bench to pronounce verdict on term’s ambit
A nine-judge Constitution Bench of the Supreme Court is set to pronounce its verdict on the correct legal scope of the term "industry" under the Industrial Disputes Act, 1947.
The reference asks whether the wide definition of "industry" laid down by a seven-judge Bench in Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978) should be reconsidered.
Uttar Pradesh, Maharashtra, and Punjab sought a relook, arguing the 1978 ruling swept in government welfare schemes and sovereign functions that should be excluded.
The Bench heard final arguments in March 2026 and reserved judgment on whether state enterprises, welfare schemes, and sovereign functions fall within the definition of "industry."
Section 2(j), Industrial Disputes Act, 1947 — Definition of "Industry"
Section 2(j) of the Industrial Disputes Act, 1947 defines "industry" broadly as "any business, trade, undertaking, manufacture or calling of employers" and includes "any calling, service, employment, handicraft, or industrial occupation or avocation of workmen." The scope of this definition determines which entities' employees can invoke the Act's dispute-resolution and worker-protection machinery.
Key Details
- The Industrial Disputes Act, 1947 is the principal central legislation governing investigation and settlement of industrial disputes, layoffs, retrenchment, and strikes/lockouts in India (now largely subsumed under the Industrial Relations Code, 2020, not yet fully in force).
- Whether an establishment qualifies as an "industry" determines whether its workers get statutory protections such as reference to Labour Courts/Industrial Tribunals and restrictions on retrenchment.
- The definitional ambiguity has been litigated repeatedly since 1960, making it one of Indian labour law's longest-running interpretive questions.
The nine-judge Bench verdict will authoritatively settle how far this definition extends — directly affecting whether government departments, welfare schemes, hospitals, and educational institutions can be treated as "industries" for labour-law purposes.
Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978) — the "Triple Test"
This seven-judge Bench verdict of 1978 gave the widest-ever interpretation of "industry," holding that any systematic activity organised through cooperation between employer and employees for producing goods or rendering services qualifies, regardless of profit motive — subject only to a narrow exclusion for core sovereign functions.
Key Details
- The "triple test" laid down: (i) systematic activity, (ii) cooperation between employer and employee, (iii) for production/distribution of goods or services to satisfy human wants (profit motive irrelevant).
- The judgment held that even charitable institutions, hospitals, universities, and public-sector bodies like the Bangalore Water Supply Board could qualify as "industry."
- Only activities that are "regal" or "sovereign" in a narrow sense (e.g., defence, law-making, the administration of justice) were excluded from the definition.
The current nine-judge Bench (larger than the seven-judge Bench that decided Bangalore Water Supply) is precisely examining whether this 1978 "triple test" swept the definition too wide, and whether it needs to be narrowed or overruled.
Constitution Benches and the Principle of Precedent
Under Article 145(3) of the Constitution, any case involving a "substantial question of law as to the interpretation of the Constitution" must be heard by a Bench of at least five judges; by judicial convention, a larger Bench of equal-or-greater strength is required to overrule or reconsider a decision of a smaller Bench.
Key Details
- Since Bangalore Water Supply was decided by a seven-judge Bench, reconsidering it required convening a Bench of at least seven, and here a nine-judge Bench was constituted — the second-largest in recent years (after the eleven-judge Bench on certain matters).
- The reference originated from State of U.P. v. Jai Bir Singh, where a five-judge Bench in 2005 doubted the correctness of the 1978 ruling as being too "worker-oriented" and referred it to a larger Bench.
- The doctrine ensures judicial discipline: smaller Benches remain bound by larger-Bench precedents until overruled by an equal or larger Bench.
The nine-judge strength itself reflects the constitutional requirement to match or exceed the seven-judge Bangalore Water Supply Bench before its ratio can be revisited or overturned.
- Bangalore Water Supply and Sewerage Board v. A. Rajappa was decided by a seven-judge Bench in 1978.
- The current reference originated in State of U.P. v. Jai Bir Singh, referred to a larger Bench by a five-judge Bench in May 2005.
- The nine-judge Bench heard final arguments in March 2026 (17–19 March) and reserved judgment; the Bench was led by the Chief Justice of India.
- Article 145(3) mandates a minimum five-judge Bench for substantial constitutional interpretation questions; convention requires an equal-or-larger Bench to reconsider prior precedent.