What Is “Industry”? Supreme Court’s Nine-Judge Bench to Revisit Labour Law Definition

February 16, 2026

Introduction: A Constitutional Reassessment of Labour Law

The Supreme Court of India is set to revisit one of the most consequential questions in Indian labour jurisprudence: What constitutes an “industry”?
A nine-judge Constitution Bench, scheduled to hear the matter on March 17 and 18, will reconsider the expansive interpretation laid down in the landmark Bangalore Water Supply case (1978).

Chief Justice of India Surya Kant described the reference as the first matter referred to a nine-judge bench in the Court’s history, highlighting its constitutional and institutional significance.

The outcome will have far-reaching implications for labour rights, public administration, educational institutions, charities, and government departments.

Background of the Reference: State of Uttar Pradesh v. Jai Bir Singh

Origin of the Reference

The lead case State of Uttar Pradesh v. Jai Bir Singh seeks reconsideration of the definition of “industry” under labour laws.

In 2017, a seven-judge bench referred the matter to a larger Constitution Bench, acknowledging the long-standing controversy and criticism surrounding the existing legal interpretation.

The Statutory Framework: Definition of “Industry”

Industrial Disputes Act, 1947

Section 2(j) – Definition of Industry

The Industrial Disputes Act, 1947 defines “industry” as:

“Any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen.”

This broad and ambiguous definition led to judicial interpretation becoming the primary source of law.

Industrial Disputes (Amendment) Act, 1982 (Un-notified)

Parliament enacted an amendment in 1982 to narrow the definition of “industry,” excluding sovereign functions and certain charitable and educational institutions.
However, the amendment was never notified, and therefore never came into force, leaving the Bangalore Water Supply ruling as the governing law.

Industrial Relations Code, 2020

The Industrial Relations Code, 2020, part of India’s labour law consolidation reform, also addresses the definition of “industry”.
However, questions remain whether it effectively alters the Bangalore Water Supply test or merely replicates earlier statutory ambiguities.

The nine-judge bench will examine whether the Code changes the legal position.

Judicial Precedents on the Meaning of “Industry”

Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978)

Seven-Judge Bench Landmark Judgment

This judgment provided the widest interpretation of “industry” and formulated the Triple Test:

Systematic activity
Organised by cooperation between employer and employee
For production or distribution of goods or services to satisfy human wants

The Court held that profit motive is irrelevant, and even charitable or non-profit organisations could be industries.

Consequences of the Ruling

Universities
Hospitals
Charitable organisations
Cooperative societies
Public sector undertakings

were brought within the scope of labour law dispute mechanisms.

Safdarjung Hospital v. Kuldip Singh (1970)

Before Bangalore Water Supply, the Court held hospitals were not industries.
Bangalore Water Supply overruled this restrictive approach.

University of Delhi v. Ram Nath (1963)

The Court earlier excluded universities from the definition of industry, a view later overturned by Bangalore Water Supply.

State of Gujarat v. Pratamsingh Narsinh Parmar (2001)

The Court reiterated that even government departments could be industries unless performing sovereign functions.

The Sovereign Function Doctrine

Concept and Judicial Interpretation

The Court has consistently distinguished between:

Sovereign functions (e.g., law enforcement, taxation, defense, judiciary)
Non-sovereign commercial or welfare activities

In Bangalore Water Supply, the Court held that only core sovereign functions are excluded from the definition of industry.

The nine-judge bench will reconsider whether social welfare activities by the State should be treated as industrial activities.

Constitutional Provisions Involved

Article 19(1)(g) – Freedom of Profession and Trade

Employers argue that an overly broad definition of industry restricts freedom to conduct business due to stringent labour compliance requirements.

Article 21 – Right to Livelihood

Employees rely on Article 21 to argue for broad labour protections, including industrial dispute mechanisms.

Directive Principles of State Policy

Article 38

Mandates the State to secure social order and justice.

Article 39

Ensures adequate means of livelihood and fair distribution of resources.

Article 43

Directs the State to ensure a living wage and decent conditions of work.

These provisions support expansive labour protections, influencing judicial interpretation.

Key Questions Before the Nine-Judge Bench

The Supreme Court has framed critical questions, including:

1. Is the Bangalore Water Supply Test Correct Law?

Whether the Triple Test should continue to govern the definition of industry.

2. Effect of the 1982 Amendment and Industrial Relations Code, 2020

Whether legislative developments have narrowed or modified the judicial definition.

3. Are Social Welfare Activities of the State “Industry”?

Whether government departments performing welfare functions should be subject to labour dispute laws.

Implications of the Nine-Judge Bench Decision

If the Definition Is Narrowed

Universities, charities, and autonomous bodies may be excluded
Reduced labour protections for employees in non-commercial sectors
Reduced litigation burden on such institutions

If the Broad Definition Is Reaffirmed

Continued coverage of non-profit and public institutions
Stronger labour rights and dispute resolution mechanisms
Increased compliance and litigation costs for institutions

Why This Case Is Constitutionally Significant

This reference will determine:

The balance between labour rights and administrative efficiency
The boundary between sovereign and non-sovereign State functions
The extent of judicial interpretation versus legislative intent
The future architecture of India’s labour jurisprudence

A nine-judge bench ruling will have binding constitutional authority under Article 141, shaping labour law for decades.

Conclusion

The Supreme Court’s reconsideration of the meaning of “industry” represents one of the most significant labour law references in Indian history.
The outcome will reshape employment protections, institutional governance, and public sector accountability.

Whether the Court narrows the definition or reaffirms its expansive scope, the judgment will mark a constitutional turning point in the relationship between the State, employers, and workers.