The Centre told a 9-judge Supreme Court Bench that an overly wide definition of “industry” can burden employers and discourage private investment. The Court is now re-examining the landmark 1978 ruling that brought almost all professions under the scope of “industry.”
The Central government on Tuesday told the Supreme Court that giving a very wide meaning to the term “industry” can create serious problems for employers and may even discourage private companies from entering the market. The issue is being heard by a 9-judge Constitution Bench, which has started examining the scope of the definition of “industry” under the Industrial Disputes Act, 1947.
The submissions were made by Attorney General for India R Venkataramani before a Bench led by Chief Justice of India (CJI) Surya Kant, along with Justices BV Nagarathna, PS Narasimha, Dipankar Datta, Ujjal Bhuyan, Satish Chandra Sharma, Joymalya Bagchi, Alok Aradhe and Vipul M Pancholi.
The Court is reviewing the correctness of the landmark 1978 judgment in Bangalore Water Supply & Sewerage Board v. R Rajappa, where a seven-judge Bench had taken a very broad view of the term “industry” and included almost every profession, even those not driven by profit.
Arguing for the Centre, the Attorney General cautioned the Court against expanding the definition too much. He stressed that courts must not replace legislative wisdom with their own views.
He said,
“Industrial law must balance both sides, preventing exploitation of workers but also ensuring that employers are not placed in a position where they cannot function, as growth of industry is itself a matter of public good. An over-expansive interpretation can deter private enterprise in a country where employment opportunities are scarce, and even professions based on skill, talent and intellectual attainment risk being unnecessarily brought within the fold of ‘industry.’ We must be cautious not to fall into expansionism driven by ideology; courts should not substitute their own social or economic philosophy for legislative judgment,” the AG said.
He further pointed out that Parliament has already stepped in and modified the earlier vague definition under Section 2(j) of the Act. Referring to this, he said,
“It would be difficult to ignore that legislative intent. The Court itself, from Bangalore Water Supply onwards, has struggled with this clumsy and expansive definition, attempting to give it meaning consistent with the anti-exploitation object of the Industrial Disputes Act, but that exercise has its limits. There is also a recognised need in law to retain a certain degree of openness in definitions, allowing them to evolve over time, but that does not justify unbounded expansion,” he said.
The Attorney General also explained that labour relations have changed significantly over time. According to him,
“Construction worker welfare legislation was the most progressive one in the 1980s and now we have crossed all those thresholds,”
the AG said.
Supporting the Centre’s stand, Additional Solicitor General KM Nataraj, appearing for the State of Uttar Pradesh, argued that a balanced approach is necessary. He said,
“There is a need to balance the competing interests of employer and employee. We cannot give sweeping definition here,”
Nataraj said.
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Senior Advocate Shekhar Naphade also opposed the earlier wide interpretation and suggested a more objective reading of the law. He stated,
“What is required now is to objectify the process of interpretation. The time has come to do so. We must look at the plain meaning of the words ‘trade’, ‘business’, and ‘manufacture’,” he submitted.
He further raised concerns about including the education sector within the definition of “industry” and emphasized its unique role in society. He said,
“Let us come to teaching. What is the essence of teaching? It is intellectual enlightenment. It cannot be equated with a material service. Education is the foundation of the progress of any country. Article 41 of the Directive Principles requires the State to take steps to provide education. Article 21A now makes education a fundamental right. Even prior to that, this Court had recognised it as part of the right to life. Therefore, what the State performs as a statutory obligation cannot be treated as an industry at all. That is another aspect,”
he said.
The case has a long legal history. After the 1978 judgment, several later cases questioned the wide definition of “industry.” In 2005, a five-judge Constitution Bench referred the matter for reconsideration, noting that the earlier ruling was not unanimous. Later, in 2017, a seven-judge Bench directed that a nine-judge Bench should hear the issue. The hearing has now finally begun.
An important aspect discussed during the hearing was the repeal of the Industrial Disputes Act. Senior Advocate CU Singh pointed out that the definition being examined no longer exists in the current law, making the issue more limited in scope. The Court observed that the matter now mainly affects old or pending cases.
However, Senior Advocate Indira Jaising warned that any decision by the Court could still impact the new legal framework. She said,
“This may not be fair to us on this side. There is one side asking for reconsideration of Bangalore Water Supply and there is this side saying it need not be reconsidered. We are not called upon here to address you on the question of new law. The danger has to be averted. The danger has to be averted by not transgressing into the constitutional validity of the new law. The issue will be raised in the time to come,”
Jaising said.
In response, the CJI clarified that the Court can limit its ruling to the old law and avoid affecting future challenges.
Justice Dipankar Datta also questioned whether the reference to the larger Bench was properly justified. He noted that the earlier five-judge Bench had not clearly explained the need for reconsideration and asked whether such a reference was valid.
Justice BV Nagarathna highlighted how economic reforms since 1991—liberalization, privatization and globalization—have changed the role of the State and private sector. She said that many functions earlier performed by the government are now handled by private players, making it necessary to reconsider whether the definition of “industry” should remain broad or be narrowed down.
Interestingly, while referring to “LPG” reforms, Justice Nagarathna remarked on their broader significance, even mentioning their importance for women, to which the Attorney General humorously responded that there was no shortage of LPG.
The case is significant because the Court’s decision could reshape labour law interpretation in India, especially in balancing worker rights with economic growth and private investment.
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