What is ‘industry’? Nine-judge Supreme Court Bench to pronounce verdict on term’s ambit

A nine-judge Bench of the Supreme Court headed by Chief Justice of India Surya Kant is scheduled on Thursday (August 20, 2026) to pronounce its judgment on a reference about the exact ambit of the term ‘industry’ under Section 2(j) of the now-repealed Industrial Disputes Act, 1947.

The reference is centred around an expansive definition given to ‘industry’ in a 1978 judgment by a seven-judge Constitution Bench, authored by Justice V.R. Krishna Iyer, in the Bangalore Water Supply and Sewerage Board v. A. Rajappa case. The verdict had provided workers employed in a wide range of sectors with a legal recourse, including collective bargaining, against unfair labour practices by employers.

The 48-year-old verdict had exempted only core sovereign activities — such as the judiciary, law and order, and defence — from the purview of Section 2(j) in order to protect the state’s functional autonomy.

The judgment had introduced a triple test and included hospitals, educational institutions, and even municipalities as industries.

States seek relook

States like Uttar Pradesh, Maharashtra, and Punjab, represented by Additional Solicitor General K.M. Nataraj and senior advocates Shekhar Naphade and Shadan Farasat, respectively, have urged the top court to revisit the seven-judge Bench’s judgment.

Accordingly, a nine-judge Bench framed several questions to consider. One question was whether “social welfare activities and schemes or other enterprises” undertaken by government departments or its instrumentalities could be construed as industrial activity under Section 2(j) of the Industrial Disputes Act. Another question considered was whether “state/sovereign activities” would also fall within the definition of industry under Section 2(j).

Senior advocates such as Indira Jaising, C.U. Singh, and Gopal Sankaranarayanan argued in favour of keeping the reasoning of the 1978 judgment intact.

Grievance redressal for all

Ms. Jaising submitted that bringing enterprises under the definition of industry provided workmen with a remedy to ventilate their grievances in relation to fair wages, health and safety, occupational safety, and security of employment, and challenge unfair dismissals before a judicial authority.

“A democratic society governed by the rule of law is dutybound to provide a grievance redressal forum of a judicial nature to all its citizens, where their substantive rights can be ventilated,” she said, in a submission before the nine-judge Bench.

The lawyers argued that though the Industrial Relations Code has already replaced the Trade Unions Act, 1926; the Industrial Employment (Standing Orders) Act, 1946; and the 1947 law, the top court should still authoritatively clarify when an activity can be classified as a sovereign function, or as an industry.

Attorney-General R. Venkataramani submitted that sovereign function cannot be bound to an exhaustive or closed definition. The nature of sovereign functions would change with the evolving role of the state, he said.