Broad definition of 'industry' may deter private players, Centre tells SC

Centre tells Supreme Court that an expansive definition of "industry" could impose disproportionate obligations on employers and discourage private sector participation

The Union government on Tuesday cautioned the Supreme Court against an overly broad interpretation of the term “industry”, arguing that such an approach could impose disproportionate obligations on employers and discourage private sector participation.

 

Attorney General R Venkataramani, appearing for the Centre before a nine-judge Constitution Bench, said labour jurisprudence must strike a careful balance between safeguarding workers’ rights and ensuring that businesses remain viable.

 

He submitted that stretching the definition beyond reasonable limits risks bringing a wide array of professions, particularly those rooted in intellectual or skill-based pursuits, within the regulatory fold, potentially stifling enterprise in a job-scarce economy.

 

 

The Bench, led by Chief Justice of India Surya Kant and comprising Justices BV Nagarathna, PS Narasimha, Dipankar Datta, Ujjal Bhuyan, Satish Chandra Sharma, Joymalya Bagchi, Alok Aradhe and Vipul M Pancholi, has commenced hearing a long-pending reference on the scope of “industry” under the Industrial Disputes Act, 1947.

 

The proceedings revisit the correctness of the court’s 1978 ruling in Bangalore Water Supply & Sewerage Board v. R Rajappa, which adopted an expansive interpretation encompassing virtually all organised activity, irrespective of profit motive.

 

Venkataramani urged judicial restraint, warning against courts infusing statutory interpretation with ideological preferences. He pointed out that Parliament has since intervened to refine what was earlier seen as an imprecise and overly elastic definition. While acknowledging that legal concepts may evolve, he stressed that this cannot justify unchecked expansion divorced from legislative intent.

 

Additional Solicitor General K M Nataraj, representing Uttar Pradesh, echoed the need for equilibrium, arguing that a sweeping definition would upset the balance between employers and employees. Senior advocate Shekhar Naphade, supporting a narrower reading, called for a return to the ordinary meaning of terms such as “trade”, “business” and “manufacture”, cautioning against value-driven interpretations.

 

Naphade also flagged concerns over including sectors like education within “industry”, contending that teaching, grounded in intellectual and constitutional obligations, cannot be equated with commercial activity.

 

The hearing also touched upon the legal landscape following the repeal of the Industrial Disputes Act. While some counsel argued that the issue now survives only for transitional disputes, others maintained that any ruling could influence the interpretation of the new labour codes.

 

The Bench indicated that its eventual ruling would be carefully confined to the pre-repeal framework, leaving questions arising under the new regime open for future adjudication.

 

Law experts say the Supreme Court’s reconsideration of “industry” could reshape the reach of labour protections, potentially excluding sectors such as charities, hospitals, educational and research institutions, and some government functions if the definition is narrowed.

 

This may limit workers’ access to labour courts and remedies such as reinstatement, while pushing disputes towards contractual or constitutional routes, they said.

 

At the same time, while employers could benefit from reduced exposure to industrial disputes, a narrower definition may trigger fresh litigation over coverage boundaries and influence how broadly the Industrial Relations Code, 2020, operates in practice, said Rishabh Gandhi, founder of Rishabh Gandhi and Advocates.