Supreme Court's Nine-Judge Bench to Define 'Industry' Under Labour Law: Implications for Worker Rights

Indian Express - Explained · 18 Mar 2026 · 2 min read
Prelims · Polity Mains · GS2 Polity and constitution High relevance

A nine-judge Constitution bench is re-examining the definition of 'industry' under labour laws, which will determine statutory protections for workers across sectors, potentially reversing the expansive 1978 Bangalore Water Supply judgment.

Key points

Nine-judge Constitution bench led by CJI Surya Kant is revisiting the definition of 'industry' under the Industrial Disputes Act, 1947 and Industrial Relations Code, 2020, impacting millions of workers' rights.

Bangalore Water Supply vs A Rajappa (1978) had established a 'triple test' for industries: systematic activity, employer-employee cooperation, and production/distribution of goods/services, covering even non-profit entities like hospitals and universities.

[GS2-Polity] The case exemplifies judicial interpretation expanding fundamental rights under Article 43 (Living Wage) and Article 21 (Right to Livelihood), creating tension with legislative intent.

1982 Amendment Act attempted to exclude hospitals/educational institutions but was never notified, leaving the 1978 precedent operative and causing conflicting judgments across states.

[GS3-Economy] The court will assess whether the expansive definition acts as a 'deterrent to private enterprise', balancing worker protections with ease of doing business under labour reforms.

Key issue: Whether state welfare activities discharging constitutional obligations should be subject to industrial law, affecting schemes like MGNREGA and public health services.

The bench will evaluate the Industrial Relations Code, 2020's consolidated framework, testing legislative competence under Entry 22, List III (Labour) of the Seventh Schedule.

Judicial cleavage is evident since 2005 when a five-judge bench questioned the 1978 ruling's rationale, referring it to larger benches due to its seven-judge authority.

[GS4-Ethics] The case raises ethical questions about balancing worker dignity with employer autonomy, particularly in essential services like healthcare and education.

Way Forward: Parliament should enact clear sector-specific labour protections, establish alternative dispute mechanisms for excluded sectors, and align the Industrial Relations Code with contemporary workplace realities through tripartite consultations.

Key terms

Industrial Disputes Act, 1947

A central legislation governing industrial relations, providing mechanisms for investigation and settlement of disputes, and regulating layoffs/retrenchments. Its Section 2(j) defines 'industry', now under judicial scrutiny for overbreadth.

Bangalore Water Supply vs A Rajappa (1978)

Landmark SC judgment where a seven-judge bench expansively defined 'industry' to include non-traditional sectors, applying a worker-centric 'triple test'. This widened labour rights but caused implementation challenges.

Industrial Relations Code, 2020

One of four labour codes consolidating 29 central laws. Section 2(m) redefines 'industry' but remains unimplemented. Aims to balance worker protections with employer flexibility under India's labour reform agenda.

Triple Test

Judicial doctrine from Bangalore Water Supply case determining an 'industry': (1) systematic activity, (2) organized employer-employee cooperation, (3) production/distribution of goods/services. Criticized for ignoring profit motive and sectoral specificities.