SC sends 'industry' definition to nine-judge Bench for fresh review

The Supreme Court has referred the scope of the term "industry" under labour law to a nine-judge Bench, which will revisit a 1975 ruling and assess the effect of later legislative developments

The Supreme Court on Monday decided to place before a nine-judge Constitution Bench the question of how the term “industry” should be understood under the Industrial Relations Code, 2020, and its predecessor, the Industrial Disputes Act, 1947.

 

A Bench comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice Vipul M Pancholi indicated that the larger Bench will commence hearings on March 17 and is likely to conclude them the following day.

 

The reference requires reconsideration of a seven-judge ruling which has governed the field for five decades.

 

The new Constitution Bench will examine whether the legal test formulated in paragraphs 140 to 144 of a 1975 judgment by Justice VR Krishna Iyer correctly interprets the scope of “industry”.

   

It will also assess whether the Industrial Disputes (Amendment) Act, 1982, which was enacted but never operationalised, had any legal bearing on the definition, and whether the subsequent Industrial Relations Code alters or influences that interpretation.

 

Another key issue is whether welfare schemes and social service activities undertaken by government departments or public instrumentalities can be treated as industrial activities under labour law. The Bench will further determine which categories of state functions, if any, fall outside the ambit of Section 2(j) of the Industrial Disputes Act.

 

In the 1975 decision, the Court laid down a “triple test” to identify an industry. An establishment would qualify if it carries out systematic activity, involves organised cooperation between employer and employee, and engages in the production or distribution of goods or services aimed at satisfying human wants or needs.

 

That interpretation substantially widened the coverage of labour protections, bringing within its fold institutions such as clubs, hospitals and educational establishments.

 

Recording that substantial case management had already been completed, the Bench allowed parties to update or file additional written submissions by February 28, 2026. Nodal counsel on both sides have been directed to prepare fresh compilations of pleadings, documents and evidence.

 

The petitioners have been allotted three hours to present their arguments, along with one additional hour for rejoinder. The Court asked counsel to coordinate among themselves to ensure that submissions are concluded within the stipulated time and to comply with the Registry’s procedural requirements.