Supreme Court agrees to hear challenge to definition of ‘industry’ in new central law

In August 2026, a nine-judge bench headed by Chief Justice Kant reviewed the interpretation given by Justice Iyer in 1978 to the definition of “industry” under Section 2(a). (j) of the Industrial Disputes Act of 1947. File | Photo credit: PTI

The Supreme Court on Wednesday (October 28, 2026) agreed to hear a petition by the Tamil Nadu All India Trade Union Congress (AITUC) challenging the definition of “industry” under the Industrial Relations Code (IRC) 2020 as “deliciously vague”, especially as the new law exempts a wide range of institutions from the charitable functions of state administration.

The IRC provides legal protection to workers who are employed in institutions that fall under “industry”. Section 2(p) of the IRC defines an industry as any institution engaged in “systematic activity carried on in cooperation between employer and worker for the purpose of producing, supplying or distributing goods or services to satisfy human needs or wants.”

Senior advocate Gopal Sankaranarayanan and advocate Aarthi Rajan for the union, appearing before a bench headed by Chief Justice of India Surya Kant, referred to the “industry” exemptions provided in the code.

Mr Sankaranarayanan said exemptions from “industry” included institutions wholly or substantially engaged in charitable, social or philanthropic services, “any activities of the appropriate government incidental to sovereign functions” to “any other activities as may be notified by the Central Government”.

“Is there a problem with the definition of ‘industry’?” Chief Justice Kant asked.

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Senior Counsel submitted that the definition in the Code did not meet the requirements of the “triple test”. A 1978 Constitution Bench judgment authored by Justice VR Krishna Iyer in Bangalore Water Supply and Sewerage Board v. A. Rajappa laid down the terms that any activity which was systematic or organized, carried on by employer-employee cooperation and engaged in the production of goods and services for the satisfaction of human needs, came under “industry”. The judgment included hospitals, educational institutions and municipalities in the “industry”.

In August 2026, a nine-member court headed by Chief Justice Kant reviewed the interpretation given by Justice Iyer in 1978 to the definition of “industry” under § 2(a).

In August of this year, the majority of the nine-member senate held the opinion that the “industry” according to § 2 letter p) of the Industrial Relations Code (IRC), which entered into force in November 2025, will not be “encumbered” by the interpretation in the judgment from 1978 in § 2 letter j) of the 1947 Act.

In his majority opinion, Chief Justice Kant made it clear that the 1978 judgment and its conclusion would not act as an “anchor of the sheet” or basis for any future interpretation of IRC section 2(p).

“The future of ‘industry’ in IRC § 2(p) is not burdened by the interpretation of § 2(j) in the Industrial Disputes Act,” Chief Justice Kant observed in an August 2026 ruling.

In fact, the CJI’s opinion even proposed a “refinement” of the 1978 three-fold test. While acknowledging that the basic principles of the test have stood the test of time in deciding industrial disputes, the CJI said that its elements could have been “worded differently to better reflect the scope and contours of 2(j)”. The CJI, however, said it was only a “considered opinion” and should not be used to displace the governing legal position on pending proceedings or to dig up decided cases.

Justice PS Narasimha of a nine-judge bench agreed with the Chief Justice that the authoritative interpretation of 2(j) lost its immediacy when the IRC came into force.

In a separate opinion, Justice BV Nagarathna, deputed by Justice Dipankar Datta, who wrote an independent opinion shared with Justice Ujjal Bhuyan, found the reference against the 1978 judgment “unwarranted” and unsustainable. She said it was now more important than ever to maintain an inclusive definition of industry to protect workers’ rights.

On Wednesday (October 28, 2026), the CJI said the court would read the petition and schedule the case for early hearing.

Published – 28 Oct 2026 12:58 IST