SC reserves verdict on 'industry' definition, re-examines 1978 ruling

Supreme Court reserves verdict on redefining "industry" under labour law, revisiting 1978 ruling that expanded scope of protections across sectors

The Supreme Court on Thursday reserved its verdict on a reference that could reshape the scope of labour protections under the Industrial Disputes Act, 1947, by revisiting the meaning of the term “industry.” 

A nine-judge Constitution Bench led by Chief Justice of India Surya Kant concluded hearings on whether the court’s landmark 1978 judgment had adopted an expansive interpretation, bringing a wide range of organised activities, irrespective of profit motive, within the ambit of “industry”, requires reconsideration. The court also posed the question of whether temples can fall within the ambit of an “industry” as the debate turns on whether religious institutions, which often undertake large-scale administrative, charitable, and economic activities, can be equated with organised economic enterprises employing labour for systematic operations. 

The Tamil Nadu Hindu Religious and Charitable Endowments (HR&CE) department opposed the inclusion of temples within the ambit of “industry,” arguing before the court that such a classification would be legally unsustainable. It contended that temple activities are inherently non-commercial and lack any profit-driven objective.

 

Appearing on its behalf, senior advocate Jaideep Gupta submitted that temples are primarily funded through public donations, with only limited surplus generated by certain institutions. He argued that their functioning cannot be likened to that of industrial establishments. Gupta further emphasised that the concept of an “industry” necessarily presupposes an organised employer-employee framework directed towards the production of goods or delivery of services, a threshold that religious institutions, in his view, do not meet.

 

During the three-day hearing, the Union government and several state authorities argued that such a broad reading imposes excessive regulatory burdens and could discourage private participation in economic activity. They urged the court to adopt a narrower construction aligned more closely with commercial or manufacturing operations.

 

Opposing this view, trade union representatives contended that any dilution would strip workers in several sectors of statutory safeguards. They maintained that governments already possess the power to exempt categories of establishments and should not seek judicial intervention to recalibrate policy choices.

 

Senior counsel appearing for labour groups emphasised that the original ruling had carefully balanced competing interests while carving out limited exclusions, such as certain community-based clubs. They argued that the focus should remain on the nature of the activity rather than the identity of the entity or its profit orientation.

 

On the other hand, counsel supporting a restrictive interpretation submitted that the Industrial Disputes Act was never intended to override or subsume other labour and commercial statutes. They cautioned against an approach that blurs distinctions between different forms of employment relationships.

 

The Bench also engaged with concerns about maintaining industrial harmony, noting that the legislation is designed to facilitate dispute resolution rather than favour either employers or employees.

 

Attorney General R Venkataramani, appearing for the Centre, urged the court to adhere closely to the statutory text, cautioning against expanding the law’s reach in the name of welfare. He said the government remains committed to labour protection but must also balance competing economic considerations in an increasingly globalised environment.