Nine-judge Supreme Court Bench reserves verdict on ambit of ‘industry’

A nine-judge Bench of the Supreme Court reserved judgment on Thursday (March 19, 2026) on whether educational institutions, hospitals, and sovereign functions of the government and its instrumentalities would fall within the definition of ‘industrial activity’ under the Industrial Disputes Act.

The Bench headed by Chief Justice of India Surya Kant and comprising Justices BV Nagarathna, PS Narasimha, Dipankar Datta, Ujjal Bhuyan, Satish Chandra Sharma, Joymalya Bagchi, Alok Aradhe and Vipul M Pancholi reserved its verdict on the third and final day of oral arguments.

The question of law in the reference before the proposed nine-judge Bench concerns a 1978 judgment delivered in Bangalore Water Supply and Sewerage Board v. A. Rajappa by Justice V.R. Krishna Iyer as a member of a seven-judge Bench.

The 1978 judgment had expanded the definition of ‘industry’ under Section 2(j) of the Industrial Disputes Act, 1947. The judgment had introduced a triple test and included hospitals, educational institutions and municipalities as industries.

States like Uttar Pradesh, Maharashtra and Punjab, represented by Additional Solicitor General KM Nataraj and senior advocates Shekhar Naphade and Shadan Farasat, respectively, urged the apex court to relook the seven-judge Bench judgment. Senior advocates like Indira Jaising, CU Singh, and Gopal Sankaranarayan argued in favour of keeping the reasoning of the 1978 judgment intact.

Remedy for workmen

Ms. Jaising had submitted that bringing enterprises under the definition of industry provide workmen with a remedy to ventilate their grievances in relation to fair wages, health and safety, occupational safety, security of employment and challenge unfair dismissals before a judicial authority. “A democratic society governed by the rule of law is dutybound to provide a grievance redressal forum of a judicial nature to all its citizens, where their substantive rights can be ventilated,” she submitted.

The 1978 judgment had expanded the ambit of ‘industry’ to hold that any systematic activity, whether or not done for a profit motive, including charitable and government-run services, were an industry if they met the ‘triple test’ parameters. The judgment was designed to benefit employees to claim the status and legal protection as industrial ‘workers’. The 1978 judgment had only exempted sovereign functions from the ambit of the definition of ‘industry’.