The Supreme Court has reserved its verdict on whether to reconsider the wide definition of “industry” under the Industrial Disputes Act. The ruling could significantly impact labour rights, businesses, and the future of industrial regulation in India.
The Supreme Court of India on Thursday reserved its judgment in a crucial case that could redefine the meaning of the term “industry” under the Industrial Disputes Act, 1947. A nine-judge Constitution Bench is currently examining whether the landmark 1978 ruling in Bangalore Water Supply & Sewerage Board (BWSSB) v. R Rajappa & Others needs reconsideration.
The 1978 judgment had given a very broad meaning to the word “industry,” bringing almost every organized activity within its scope, regardless of whether it was profit-driven or not. Over the years, this wide interpretation has been questioned in several cases, with demands to limit its application mainly to traditional business or manufacturing activities.
The present case has a long history. In 2005, a five-judge Constitution Bench expressed doubts about the correctness of the 1978 ruling and referred the issue for reconsideration. Later, in 2017, a seven-judge Bench directed that the matter be placed before a nine-judge Bench. After years of delay, the hearing finally began on March 17 and continued for three days before the Court reserved its verdict.
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, heard detailed arguments from both sides, including the Central government, State governments, and trade union representatives.
The Central government argued that the current broad definition of “industry” has far-reaching consequences. It submitted that including almost every activity within the definition places a heavy burden on employers and may discourage private investment, especially in a globalised economy.
On the other hand, trade unions strongly opposed any attempt to narrow the definition. Senior Advocate CU Singh argued that governments already have the legal power to exempt certain industries from the Act if required. However, instead of using this power, they are seeking a judicial route.
He said,
“If some States feel that some class of industries are protected and they don’t need protection under the Industrial Disputes Act, they have all the power. They can issue Section 36B notification. But they are doing it (by) shooting from the shoulders of the Supreme Court and then (they) will tell the workers that ‘no, no, not us but the Supreme Court has let you down’. You cannot cry after 48 years,”
Senior Advocate Gopal Sankaranarayanan, appearing for the All India Trade Union Congress, supported the 1978 judgment and highlighted how Justice VR Krishna Iyer had carefully carved out limited exceptions in that ruling.
He explained,
“Justice Krishna Iyer draws a distinction between clubs like the Madras Gymkhana and similar institutions, and small community clubs formed by individuals for their own recreation. He indicates that only such self-serving, community-based clubs would fall outside the scope,”
Sankaranarayanan further suggested a practical approach for interpreting the term “industry,” focusing on the nature of the activity rather than who performs it or why.
He stated,
“The approach that would be commended, keeping in mind the broader context of industrial harmony and the balance between Article 19(1)(g) and Article 21 rights of both employers and employees, is as follows: First, to examine only the activity. The new provision uses the word “activity.” One must see whether it falls within the wide expressions “undertaking,” “calling,” or “avocation.” Second, to ignore who is carrying out the activity, since that is not germane to the purpose of industrial regulation. Third, to ignore the motive behind the activity, so long as it is lawful. A charitable activity cannot be be permitted to be unregulated.”
Another counsel, Advocate Shivam Singh, also defended the wide scope of the Industrial Disputes Act. He argued that the Act was designed as a complete legal framework for resolving industrial disputes and should not be diluted by forcing workers to seek remedies under other laws.
He said,
“The legislature did not seek to subsume or align other enactments such as the various State Shops and Establishments Acts within this framework. Those statutes were enacted subsequently by different States at different points of time and serve distinct purposes. Second, the Industrial Disputes Act should not be viewed as overlapping with other statutes, but rather as supplementing the overall framework of labour regulation,”
He further emphasized,
“The legislature did not seek to subsume or align other enactments such as the various State Shops and Establishments Acts within this framework. Those statutes were enacted subsequently by different States at different points of time and serve distinct purposes. Second, the Industrial Disputes Act should not be viewed as overlapping with other statutes, but rather as supplementing the overall framework of labour regulation,”
During the hearing, Justice Joymalya Bagchi highlighted the core objective of the Industrial Disputes Act, stressing that it is meant to maintain industrial peace rather than favour either employers or workers.
He observed,
“So, if we do not take an expansionist definition of ‘industry’, we leave out various human activities where an employer-employee interface exists, from the scope of this ameliorative law aimed at industrial peace,”
Senior Counsel JP Cama raised concerns about expanding the definition too much, warning that it could disturb the balance intended by the legislature. He stressed the need to maintain clear distinctions within employment relationships.
He said,
“There is an attempt to bring everyone within the fold in the name of social welfare. But in doing so, one must be careful not to disturb the legislative balance. Unless the activity is relatable to business, it would fall outside the expression ‘industry’. That is the core principle. Take the example of workers engaged through contractors. When they work through a contractor, they are not employees of the principal employer. When the contractor leaves, the workers go with him. If, however, they are absorbed into the establishment, then from that point onward their status changes. These distinctions must be maintained within the framework of the statute,”
Finally, Attorney General R Venkataramani, representing the Union government, urged the Court to stay within the limits of the statutory text while interpreting the law.
He submitted,
“I have consulted the government. Government is not anti-labour. Labour welfare has to be taken care of. We are moving towards a globalised economy and we need to take a call on how to manage the affairs,”
The Supreme Court’s upcoming judgment is expected to have major implications for labour law in India. It will determine whether the broad interpretation of “industry” continues or whether a narrower, more business-focused definition is adopted, impacting both workers’ rights and employer obligations across sectors.
Case Title:
Bangalore Water Supply & Sewerage Board (BWSSB) v. R Rajappa & Others
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