Supreme Court constitutes 9 Judge Bench to decide if Expansive ‘Industry’ interpretation needs Rethink

The Supreme Court has constituted a nine-judge Constitution Bench to reconsider the sweeping interpretation of the term “industry” under the Industrial Disputes Act laid down in the landmark 1978 ruling in Bangalore Water Supply and Sewerage Board v. A. Rajappa. The bench, headed by Chief Justice of India Surya Kant, will examine whether the decades-old precedent continues to reflect the correct legal position, a question that could significantly reshape the scope of labour laws in India.

The controversy traces back to the 1978 judgment where a seven-judge bench adopted an expansive meaning of “industry,” holding that any organised activity carried out through cooperation between employers and employees for producing or distributing goods or services could qualify, even if profit was not the objective. Over time, this broad approach sparked repeated debates about whether government departments, welfare schemes, and other public activities should also fall within labour law regulations.

The present reference, originating from litigation dating back to 2002, gradually escalated through multiple benches before being placed before a larger Constitution Bench for authoritative reconsideration.

The upcoming Constitution Bench will specifically review whether the legal test formulated by Justice V.R. Krishna Iyer in the 1978 ruling correctly defines “industry” under Section 2(j) of the Industrial Disputes Act. The Court will also consider whether subsequent legislative developments, including the Industrial Disputes (Amendment) Act, 1982 and the Industrial Relations Code, 2020, affect the interpretation of the provision.

As framed by the Court, the key question is “whether the test laid down… to determine if an undertaking or enterprise falls within the definition of ‘industry’ lays down correct law.” The nine-judge bench is scheduled to hear the matter over two days beginning March 17.