SC 9-judge bench to revisit definition of 'industry'

Supreme Court to Revisit Nearly 50-Year-Old Definition of 'Industry'

India's apex court is set to undertake a significant judicial review that could reshape the landscape of labor law protections across the nation. A nine-judge Constitution Bench, led by Chief Justice of India Surya Kant, will commence hearings on March 17 and conclude on March 18, 2026, to examine the correctness of an expansive definition of "industry" that has governed employer-worker relations for decades. This hearing represents a pivotal moment in Indian jurisprudence, as the court seeks to address longstanding questions about which institutions should fall under labor law protections.

The definition under scrutiny originates from a landmark 1978 judgment delivered by a seven-judge bench in the Bangalore Water Supply case. That ruling established a broad interpretation of "industry" under Section 2(j) of the Industrial Disputes Act, 1947, which effectively brought universities, hospitals, government institutions, and welfare organizations within the ambit of labor law regulations. For nearly five decades, this definition has shaped how labor protections apply across diverse sectors, influencing countless institutions and millions of workers.

The Historical Context and Legal Journey

The road to this nine-judge bench hearing reflects a complex judicial history marked by conflicting interpretations and growing recognition of the need for authoritative clarification. Petitions challenging the expansive definition have been pending since 2002, indicating the urgency with which various stakeholders have sought resolution. In January 2017, a seven-judge bench led by then Chief Justice T.S. Thakur formally referred the matter to a nine-judge Constitution Bench, acknowledging that the issue carried substantial and systemic implications requiring the highest level of judicial scrutiny.

The journey toward this hearing also reveals deepening doctrinal inconsistency within the judiciary. In 1996, a three-judge bench upheld the broad interpretation by holding that a social forestry department constituted an "industry." However, by 2001, a two-judge bench adopted a narrower interpretation, creating confusion about the law's actual scope. Recognizing these contradictions and their far-reaching consequences, a five-judge bench in 2005 determined that the matter warranted comprehensive re-evaluation in light of evolving economic realities and changing circumstances.

The Triple Test and Its Implications

At the heart of the 1978 ruling lies the "triple test" established by Justice Krishna Iyer, which has served as the framework for determining whether an activity qualifies as an "industry" under labor law. This test comprises three essential elements: systematic activity, organized cooperation between employer and employee, and production or distribution of goods and services to satisfy human needs. By adopting this broad formulation, the court virtually brought every organized economic activity under the Industrial Disputes Act, fundamentally expanding labor law protections.

The nine-judge bench will specifically examine whether this triple test correctly interprets the statutory definition provided in Section 2(j) of the Industrial Disputes Act. The definition itself is expansive, describing "industry" as any business, trade, undertaking, manufacture, or calling of employers, and including any calling, service, employment, handicraft, or industrial occupation of workers. The court will also consider which state activities, if any, should fall outside this definition, potentially excluding sovereign functions such as defense and law and order from labor law protections.

Scope of the Hearing and Procedural Arrangements

The Supreme Court has meticulously organized the hearing schedule to ensure comprehensive and balanced presentation of arguments from all stakeholders. The bench has allocated nine hours spread across the two-day hearing, with solicitor general Tushar Mehta and other law officers representing the Union government receiving four hours to present their case. Counsel opposing the government's position will also receive four hours, while petitioners have been allocated three hours for their submissions and an additional one hour for rejoinder arguments.

To prepare adequately for the hearing, the court has directed all parties to update their written submissions or file additional fresh submissions by February 28, 2026. The nodal counsel from both sides have been instructed to prepare inter se arrangements to ensure arguments remain within the stipulated timeline. This careful management reflects the court's recognition that the matter requires thorough examination without unnecessary delays or procedural complications.

Broader Implications for Labor Law and Business Operations

The outcome of this nine-judge bench decision carries profound implications for labor law protections across multiple sectors of the Indian economy. For businesses and foreign investors, the decision will significantly affect labor compliance obligations, workforce restructuring flexibility, unionization risks, and operational requirements in public-private partnerships and welfare-linked ventures.

A substantial part of case management for this case stands concluded, and the bench has granted parties further liberty to update their written submissions, recognizing the complexity and importance of resolving this long-standing legal question.

If the bench narrows the definition of "industry," numerous institutions currently classified as industries would lose labor law protections, potentially reducing obligations related to worker unionization, collective bargaining, and dispute resolution. Conversely, if the court maintains the expansive interpretation, the current framework would continue applying to universities, hospitals, and government agencies, preserving existing protections. The decision will clarify the legal position of several institutions that have for decades operated under the 1978 precedent, providing much-needed certainty to both employers and workers.

What Lies Ahead

As the scheduled hearing approaches, legal experts, employers, workers, and policymakers across India await the bench's definitive pronouncement on this fundamental issue. The nine-judge Constitution Bench's deliberation will not merely revisit a historical judgment but will fundamentally shape the future scope and reach of labor law protections in the country. With questions pending for over two decades and conflicting judicial interpretations creating confusion in the lower courts, this hearing represents an opportunity for the apex court to provide authoritative guidance on a matter affecting millions of workers and thousands of institutions.

The Supreme Court's decision on the definition of "industry" will likely have cascading effects throughout the Indian legal system, influencing how lower courts interpret labor law obligations and how institutions structure their operations and labor relations. As the nation's highest court prepares to hear arguments on this pivotal issue, the implications for India's evolving economic landscape and labor protections remain profound and far-reaching.