SC’s nine-judge bench verdict today on what constitutes an ‘industry’

The Supreme Court on Thursday will rule on a pivotal issue in labour law: defining what qualifies as an "industry" under the Industrial Disputes Act. A nine-judge Constitution bench, led by Chief Justice Surya Kant, is considering whether to uphold, alter, or dismiss the expansive criteria established by a seven-judge bench over five decades ago.

This decision could redefine the scope of industrial law and influence which entities, from educational institutions to government departments, can invoke industrial dispute resolution mechanisms. The core of the dispute revolves around a 1978 ruling in Bangalore Water Supply & Sewerage Board vs A Rajappa that broadly interpreted "industry" under Section 2(j) of the Industrial Disputes Act.

This interpretation encompassed activities involving systematic organization, employer-employee cooperation, and the production or distribution of goods or services. The significant consequences of this interpretation include subjecting various entities—educational bodies, charitable organizations, and government departments—to industrial dispute mechanisms.

Critics argue that the 1978 ruling blurred the line between genuine industrial activities and state-run welfare functions. The issue reached a seven-judge bench in 2017, which referred the matter to a larger bench for further consideration. The nine-judge bench now must determine whether the 1978 test remains valid, the impact of the Industrial Disputes (Amendment) Act 1982 (though never notified), and whether the Industrial Relations Code 2020 changes the legal landscape.

Another critical question concerns whether social welfare activities conducted by government departments can be classified as "industrial activities" under the Act. The bench includes CJI Surya Kant and justices BV Nagarathna, PS Narasimha, Dipankar Datta, Ujjal Bhuyan, SC Sharma, Joymalya Bagchi, Alok Aradhe, and Vipul M Pancholi.

Both the government and labor groups have weighed in, with the government cautioning against applying the triple test mechanically, which could expand the industrial dispute regime to encompass a wide range of government functions. The workers' side, however, supports the 1978 ruling as a landmark precedent that provides a specialized mechanism for addressing unfair labor practices, arguing that industrial tribunals are better equipped than civil courts to handle such issues.

The court will also consider the broader implications of adopting a more restrictive definition, which could exclude a large part of the private sector from the industrial dispute framework.