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SC reserves verdict on scope of ‘industry’ under Industrial Disputes Act
SC reserves verdict on scope of ‘industry’ under Industrial Disputes Act
SC reserves verdict on scope of ‘industry’ under Industrial Disputes Act
The judgment in question was given by a seven-judge bench in Bangalore Water Supply & Sewerage Board v A. Rajappa (1978).
Published on: Mar 20, 2026 7:52 AM IST By Abraham Thomas Share via Copy link New Delhi: A nine-judge bench of the Supreme Court on Thursday reserved judgment in a batch of petitions that will determine whether a 1978 judgment was right in expanding the social welfare net under the now-repealed Industrial Disputes Act, 1947 to workers in government departments, universities, and hospitals. The bench, headed by Chief Justice of India (CJI) Surya Kant, and comprising justices BV Nagarathna, PS Narasimha, Dipankar Datta, Ujjal Bhuyan, SC Sharma, Joymalya Bagchi, Alok Aradhe and Vipul M Pancholi. (PTI) With several states, Centre and public entities opposing the 48-year-old judgment for giving a wide meaning to the term ‘industry’ under the Act, Attorney General R Venkataramani representing Centre said, “The government is certainly not anti-labour and we need not close our eyes to this fact in the present situation of liberalisation, privatisation, and globalisation (coined by the bench as LPG).” Assuring that the government will go to any extent possible to take care of labour welfare, as a closing remark to the three-day long hearing, AG added, “We are moving into a globalised world and we have to manage our domestic economy. Caution may be kept in mind by the court as defining forest department, irrigation department, research bodies as industry gives rise to a serious concern.” Also Read | SC nine-judge bench reserves verdict on definition of 'industry' The bench, headed by Chief Justice of India (CJI) Surya Kant, and comprising justices BV Nagarathna, PS Narasimha, Dipankar Datta, Ujjal Bhuyan, SC Sharma, Joymalya Bagchi, Alok Aradhe and Vipul M Pancholi, closed arguments after hearing all sides along with the amicus curiae senior advocates JP Cama and PS Sengupta. The judgment in question was given by a seven-judge bench in Bangalore Water Supply & Sewerage Board v A. Rajappa (1978), which laid down a triple test to give an expansive meaning to the term industry occurring in section 2(j) of the Act. While AG agreed with the triple test formula to identify industry: an employer-employee relationship; a continuous, organised activity; and production and distribution of goods and services for satisfying human wants and wishes, the Centre said that every establishment or undertaking qualifying this criteria cannot be branded as industry. The labour unions and workers opposed this argument claiming that for over four decades, workers have benefited by this judgment which is worker-oriented. Senior advocates Indira Jaising, CU Singh, Vijay Hansaria, Gopal Sankaranarayanan among others who represented them said on Thursday that the court should choose that interpretation which benefits the labourand gives access to just ice for the labour class. According to them, victimisation and unfair labour practices can be better remedied by industrial tribunals rather than civil courts. According to them, the Act balances interests of employers as well as the purpose of the law is to provide a dispute resolution mechanism and promote industrial peace. The two extremes presented by the case reflected in the arguments by the amicus curiae as well. Cama told the court that the 1978 judgment made a mistake by going beyond what the Act provided and including charitable institutions, non-profit undertakings within industry’s fold. Sengupta, on the other hand, said that the judgment lays down correct law in the context of the Constitution as the word “socialist” came to be added in the Preamble in the year 1976. Cama said, “Industry has to be understood in a meaning appealing to common sense. By its very nature, industry must have a profit motive as charity is antithetical to industry. The judgment goes too far to say that regardless of whether a business or undertaking is for profit, it is an industry. An employer-employee relationship cannot be the only test to determine this.” The bench reasoned that if a charitable organization cannot come within industry, by this definition educational institutions and municipal corporations will stand excluded. “If you keep the definition so narrow, the entire private sector will be hived out…The Preamble of the Act is neither pro-worker nor pro-employer but for settlement of disputes and providing industrial peace. Should we not give such an ameliorative law an expansive meaning,” the bench remarked. “Social welfare must give way to the precise language of statute. A charitable institution cannot come within trade. If government is carrying out no business, just because it is employing persons, it is not an industry. We must have the courage to say it is out of industry,” Cama said. Sengupta read out judgments to suggest the Act equally applied to government undertakings and the benefit must accrue to the working class. as well. He said, “So far as the workman is concerned, it makes little difference if the employer is charity-oriented or commercial-oriented as he puts in the same labour. Charity operates not vis-a-vis the workmen but for the ultimate recipients of charity -- the consumers.” He further stated that who is the owner, private or government, cannot determine the definition of industry but the nature of work or activity undertaken. Supreme Court Check India news real-time updates, latest news from India, latest at HindustanTime News / India News / SC Reserves Verdict On Scope Of ‘industry’ Under Industrial Disputes Act See LessNew Delhi: A nine-judge bench of the Supreme Court on Thursday reserved judgment in a batch of petitions that will determine whether a 1978 judgment was right in expanding the social welfare net under the now-repealed Industrial Disputes Act, 1947 to workers in government departments, universities, and hospitals.
With several states, Centre and public entities opposing the 48-year-old judgment for giving a wide meaning to the term ‘industry’ under the Act, Attorney General R Venkataramani representing Centre said, “The government is certainly not anti-labour and we need not close our eyes to this fact in the present situation of liberalisation, privatisation, and globalisation (coined by the bench as LPG).”
Assuring that the government will go to any extent possible to take care of labour welfare, as a closing remark to the three-day long hearing, AG added, “We are moving into a globalised world and we have to manage our domestic economy. Caution may be kept in mind by the court as defining forest department, irrigation department, research bodies as industry gives rise to a serious concern.”
Also Read | SC nine-judge bench reserves verdict on definition of 'industry'
The bench, headed by Chief Justice of India (CJI) Surya Kant, and comprising justices BV Nagarathna, PS Narasimha, Dipankar Datta, Ujjal Bhuyan, SC Sharma, Joymalya Bagchi, Alok Aradhe and Vipul M Pancholi, closed arguments after hearing all sides along with the amicus curiae senior advocates JP Cama and PS Sengupta.
The judgment in question was given by a seven-judge bench in Bangalore Water Supply & Sewerage Board v A. Rajappa (1978), which laid down a triple test to give an expansive meaning to the term industry occurring in section 2(j) of the Act.
While AG agreed with the triple test formula to identify industry: an employer-employee relationship; a continuous, organised activity; and production and distribution of goods and services for satisfying human wants and wishes, the Centre said that every establishment or undertaking qualifying this criteria cannot be branded as industry.
The labour unions and workers opposed this argument claiming that for over four decades, workers have benefited by this judgment which is worker-oriented.
Senior advocates Indira Jaising, CU Singh, Vijay Hansaria, Gopal Sankaranarayanan among others who represented them said on Thursday that the court should choose that interpretation which benefits the labourand gives access to just ice for the labour class.
According to them, victimisation and unfair labour practices can be better remedied by industrial tribunals rather than civil courts.
According to them, the Act balances interests of employers as well as the purpose of the law is to provide a dispute resolution mechanism and promote industrial peace.
The two extremes presented by the case reflected in the arguments by the amicus curiae as well. Cama told the court that the 1978 judgment made a mistake by going beyond what the Act provided and including charitable institutions, non-profit undertakings within industry’s fold. Sengupta, on the other hand, said that the judgment lays down correct law in the context of the Constitution as the word “socialist” came to be added in the Preamble in the year 1976.
Cama said, “Industry has to be understood in a meaning appealing to common sense. By its very nature, industry must have a profit motive as charity is antithetical to industry. The judgment goes too far to say that regardless of whether a business or undertaking is for profit, it is an industry. An employer-employee relationship cannot be the only test to determine this.”
The bench reasoned that if a charitable organization cannot come within industry, by this definition educational institutions and municipal corporations will stand excluded. “If you keep the definition so narrow, the entire private sector will be hived out…The Preamble of the Act is neither pro-worker nor pro-employer but for settlement of disputes and providing industrial peace. Should we not give such an ameliorative law an expansive meaning,” the bench remarked.
“Social welfare must give way to the precise language of statute. A charitable institution cannot come within trade. If government is carrying out no business, just because it is employing persons, it is not an industry. We must have the courage to say it is out of industry,” Cama said.
Sengupta read out judgments to suggest the Act equally applied to government undertakings and the benefit must accrue to the working class. as well. He said, “So far as the workman is concerned, it makes little difference if the employer is charity-oriented or commercial-oriented as he puts in the same labour. Charity operates not vis-a-vis the workmen but for the ultimate recipients of charity -- the consumers.”
He further stated that who is the owner, private or government, cannot determine the definition of industry but the nature of work or activity undertaken.
Source: HindustanTimes
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