What is ‘industry’? Nine-judge Supreme Court Bench to pronounce verdict on term’s ambit

The Supreme Court of India is set to deliver its judgment on a reference concerning the precise scope of the term ‘industry’ under Section 2(j) of the now-expired Industrial Disputes Act, 1947. The reference was directed towards an expansive definition of ‘industry’ provided by a seven-judge Constitution Bench in Bangalore Water Supply and Sewerage Board v.

A. Rajappa case in 1978. This earlier judgment had granted workers in diverse sectors, such as hospitals, educational institutions, and municipalities, rights to collective bargaining and to challenge unfair labor practices.

The 48-year-old ruling had excluded only core sovereign activities — like judiciary, law and order, and defence — from the purview of Section 2(j) to safeguard the state’s functional independence. These sovereign functions were given a triple test and a clear definition was absent. Recently, a nine-judge Bench, headed by Chief Justice of India Surya Kant, will deliberate on this issue.

Lawyers representing states like Uttar Pradesh, Maharashtra, and Punjab, alongside senior advocates Indira Jaising, C.U. Singh, and Gopal Sankaranarayanan, have urged the court to reconsider the seven-judge judgment. They argued that labeling these activities as industries ensures workers a remedy to raise grievances regarding fair wages, health and safety, occupational safety, and employment security.

Attorney-General R. Venkataramani countered that sovereign functions cannot be restricted to a precise or static definition as their nature would evolve with the state's changing role. The Supreme Court is expected to issue a verdict on August 20, 2026, thus setting the parameters for classifying an activity as either a sovereign function or an industry.