A nine-judge Bench of the Supreme Court has reserved its judgment on whether institutions like hospitals, educational bodies, and certain government functions qualify as ‘industry’ under the Industrial Disputes Act, 1947. The case revisits the landmark 1978 ruling that significantly broadened the definition of ‘industry’.
19 March 2026, New Delhi
Background: The 1978 Judgment
The issue stems from the landmark ruling in Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978), authored by Justice V.R. Krishna Iyer. This seven-judge Bench judgment expanded the definition of ‘industry’ under Section 2(j) of the Industrial Disputes Act. It introduced the ‘triple test’, under which any systematic activity involving cooperation between employer and employee for production or service would qualify as an industry, regardless of profit motive. This interpretation brought hospitals, educational institutions, and municipal bodies within its ambit, while excluding only sovereign functions.
Current Constitutional Reference
The present nine-judge Bench, led by Chief Justice of India Surya Kant, is reconsidering the correctness of the 1978 ruling. The central question is whether such a broad interpretation should continue, particularly in relation to government functions and welfare institutions.
States like Uttar Pradesh, Maharashtra, and Punjab have urged the Court to narrow the definition, arguing that not all public or welfare activities should be treated as industrial.
Arguments For and Against
Senior advocates including Indira Jaising defended the 1978 judgment, emphasizing that a broad definition ensures workers’ access to legal remedies concerning wages, job security, and unfair dismissal. On the other hand, opposing counsel argued that excessive expansion blurs the distinction between commercial and sovereign functions, potentially overburdening public institutions.
What Lies Ahead
The Court’s decision is expected to have far-reaching implications on labour rights and the functioning of public institutions. It will determine the balance between employee protections and administrative flexibility in non-commercial sectors.
