Supreme Court agrees to hear challenge to definition of ‘industry’ in new Central law

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Published - October 28, 2026 12:58 pm IST - NEW DELHI

In August 2026, a nine-judge Bench headed by Chief Justice Kant had reviewed the interpretation given by Justice Iyer in 1978 to the definition of ‘industry’ under Section 2(j) of the Industrial Disputes Act, 1947.

File | Photo Credit: PTI

The Supreme Court agreed on Wednesday (October 28, 2026) to hear a petition filed by the All India Trade Union Congress (AITUC) Tamil Nadu challenging the definition of ‘industry’ under the Industrial Relations Code (IRC) 2020 as “deliciously vague”, especially when the new law exempts a wide array of institutions from charitable to sovereign functions of the government.

The IRC affords legal protections to workers who are employed in institutions which come under the ambit of ‘industry’.

Section 2(p) of the IRC defines industry as any institution engaged in a “systematic activity carried on by co-operation between an employer and worker for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes”.

Appearing before a Bench headed by Chief Justice of India Surya Kant, senior advocate Gopal Sankaranarayanan and advocate Aarthi Rajan, for the trade union, referred to the exceptions to ‘industry’ listed in the Code.

Mr.

Sankaranarayanan submitted that the exceptions to ‘industry’ included institutions wholly or substantially engaged in charitable, social or philanthropic service to “any activity of the appropriate government relatable to sovereign functions” to “any other activity as may be notified by the Central government”.

“Is there a problem with the definition of ‘industry’?” Chief Justice Kant asked.

Editorial | Triple test, adrift: On the ruling on definition of ‘industry’

The senior counsel said the definition in the Code did not meet the requirements of the ‘triple test’.

A 1978 seven-judge Constitution Bench judgment, authored by Justice V.R.

Krishna Iyer, in the Bangalore Water Supply and Sewerage Board v.

A.

Rajappa case, had laid down conditions that any activity which was systematic or organised, operated on the basis of employer-employee cooperation and dealt in the production of goods and services to satisfy human wants came within the ambit of ‘industry’.

The judgment had brought even hospitals, educational institutions and municipalities within the fold of ‘industry’.

In August 2026, a nine-judge Bench headed by Chief Justice Kant had reviewed the interpretation given by Justice Iyer in 1978 to the definition of ‘industry’ under Section 2(j) of the Industrial Disputes Act, 1947.

However, the nine-judge Bench had been preceded by the coming into force of the 2020 Code, which largely made the reference to it infructuous.

The majority on the nine-judge Bench in August this year had held that ‘industry’ under Section 2(p) of the Industrial Relations Code (IRC), which came into force in November 2025, would not be “burdened” by the interpretation in the 1978 judgment of Section 2(j) of the 1947 Act.

In his majority opinion, Chief Justice Kant had clarified that the 1978 judgment and its conclusion would not act as the “sheet anchor” or the foundation for any future interpretation of Section 2(p) of the IRC.

“The future of ‘industry’ in Section 2(p) of IRC is not burdened by the interpretation of 2(j) in the Industrial Disputes Act,” Chief Justice Kant had observed in the August 2026 judgment.

In fact, the CJI’s opinion had even suggested a “refinement” of the 1978 triple test.

While acknowledging that the core principles of the test had stood the test of time in deciding industrial disputes, the CJI said its elements could have been “articulated differently so that the scope and contours of 2(j) could have been better reflected”.

However, the CJI had said this was only a “considered opinion”, and should not be used to displace the governing legal position on pending proceedings or dig up decided cases.

Justice P.S.

Narasimha on the nine-judge Bench had agreed with the Chief Justice that an authoritative interpretation of 2(j) had lost its immediacy with the coming into force of the IRC.

In her separate opinion, Justice B.V.

Nagarathna, seconded by Justices Dipankar Datta, who wrote an independent opinion shared with Justice Ujjal Bhuyan, found the reference against the 1978 verdict “unwarranted” and not maintainable.