Supreme Court To Hear Nine-Judge Bench Reference On Definition Of ‘Industry’

New Delhi, Feb 17 (KNN) The Supreme Court on March 17 will hear a reference before a proposed nine-judge Constitution Bench on the interpretation of the term ‘industry’ under Section 2(j) of the Industrial Disputes Act, 1947.

The reference arises from a reconsideration of the seven-judge Constitution Bench ruling in Bangalore Water Supply v. A. Rajappa, delivered in 1978, which adopted an expansive interpretation of the term ‘industry’. 

The judgment had extended the definition to include government undertakings, public utilities, hospitals, educational and research institutions, professions and clubs.

A bench comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice Vipul Pancholi observed that several broad legal issues arise for consideration in the reference.

Key Issues Identified by the Bench

The Court indicated that its deliberations would focus on whether the tests laid down by Justice V.R. Krishna Iyer in the Bangalore Water Supply judgment correctly determines what constitutes an ‘industry’; whether the unnotified Industrial Disputes (Amendment) Act, 1982, and the Industrial Relations Code, 2020 have any bearing on the interpretation of Section 2(j).

It also indicated whether social welfare schemes and activities undertaken by government departments or their instrumentalities qualify as industrial activities under the Act; what categories of State functions fall within or outside the ambit of Section 2(j); and any other issues that may arise during the hearing.

The bench noted that a substantial portion of the pre-case management process has been completed and the matter is ready for final hearing.

Chief Justice Surya Kant stated that the formal constitution of the nine-judge bench will be notified through an administrative order.

The outcome of the reference is expected to have significant implications for labour jurisprudence, particularly concerning the applicability of industrial dispute mechanisms to government bodies and welfare institutions.

Impact on MSMEs

The Supreme Court’s reconsideration of the definition of ‘industry’ under the Industrial Disputes Act could significantly affect MSMEs by clarifying which entities fall under labour law obligations. 

A narrower definition may reduce compliance burdens for certain small establishments, while a broader interpretation could extend industrial dispute mechanisms to more MSMEs, impacting hiring practices, dispute resolution, and regulatory costs.

(KNN Bureau)