New Delhi, March 17 A nine-judge constitutional bench of the Supreme Court on Tuesday said it will examine the legal correctness of the 1978 judgment of a seven-judge bench that gave a broad interpretation of the term "industry" to govern labor relations.
On February 21, 1978, a seven-judge bench delivered a verdict on the definition of the term "industry" while deciding the plea of the Bangalore Water Supply and Sewerage Board, expanding the definition and bringing millions of employees in hospitals, educational institutions, clubs, and government welfare departments under the protection of the Industrial Disputes (ID) Act, 1947.
On Tuesday, the nine-judge bench, headed by Chief Justice Surya Kant, commenced hearing on a batch of petitions to determine the legal correctness of the decades-old definition of "industry".
The CJI made it clear that the bench would not deal with the definition of the term "industry" as referred to in the 1982 legislation, as that law "never came into force" and therefore, cannot be relied upon.
He also said that the bench would not deal with the term as defined in the Industrial Relations Code, 2020, which came into effect in 2025, as it may be challenged in court.
"This does not mean we are helpless. There is a reference before us. We are directly examining the question of whether the interpretation of the original provision in the Bangalore (case) was correct or not," the CJI said.
"If that interpretation was wrong, if that provision has been completely misconstrued by giving such a wide meaning, then we will correct our mistake," said the bench, which also comprises Justices B V Nagarathna, P S Narasimha, Dipankar Datta, Ujjal Bhuyan, Satish Chandra Sharma, Joymalya Bagchi, Alok Aradhe, and Vipul M Pancholi.
The bench had earlier formulated the broad issues for its adjudication, and the first issue reads: "Whether the test laid down in paragraphs 140 to 144 in the opinion rendered by Justice V R Krishna Iyer in the Bangalore Water Supply and Sewerage Board's case (of 1978) to determine if an undertaking or enterprise falls within the definition of 'industry' lays down correct law?"
"And whether the Industrial Disputes (Amendment) Act, 1982 (which seemingly did not come into force), and the Industrial Relations Code, 2020 (with effect from November 21, 2025), have any legal impact on the interpretation of the expression 'industry' as contained in the principal Act?" it said.
At the heart of the dispute is the 1978 ruling delivered by Justice V R Krishna Iyer, which expanded the definition of the term "industry" and established the "Triple Test" to define it.
According to the ID Act, the term "industry" means any business, trade, undertaking, manufacture, or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen.
The 1978 verdict expanded the definition and provided the triple test and said that if there was "systematic activity" undertaken by an organization and there is cooperation between employer and employees in carrying out that activity and production of goods and services, then the entity can be termed as "industry" and workmen will be entitled to protection under the ID Act.
This wide interpretation brought hospitals, educational institutions, and even charitable organizations under the ambit of labor laws.
Commencing the arguments, Attorney General R Venkataramani dealt with the issue of whether the "over-inclusive" definition has led to a "glut of litigation" and whether it unfairly categorizes sovereign and welfare functions of the State as "industrial".
The top law officer said that while the Triple Test is "logically correct" in a vacuum, its "indiscriminate application" has led to the over-inclusion of activities that do not resemble trade or business.
He argued that modern constitutional states perform welfare activities that, while not strictly "sovereign", like policing or defense, should perhaps not be treated as "industries".
Justice Nagarathna said that the 1978 judgment was a product of the 1970s socialist era. "We are now in 2026. We have had many years of LPG (Liberalisation, Privatisation and Globalisation)," Justice Nagarathna said.
She questioned whether the scope of "industry" should remain expansive or if a balance must be struck, given that many functions previously reserved for the State are now handled by the private sector.
Justice Datta raised a procedural question regarding the validity of the reference itself.
He questioned how a five-judge bench in the Jai Bir Singh case in 2005 could question the authoritative judgment of 1978 of the seven-judge bench in the Bangalore Water Supply case.
The hearing will continue on Wednesday.
The 1978 verdict had come following a dispute that originated when several employees of the Bangalore Water-Supply and Sewerage Board were penalized for alleged misconduct.
The employees challenged the punishment before the Labour Court under the ID Act, claiming that the disciplinary action violated principles of natural justice.
The Board raised a preliminary objection, arguing that it was a statutory body performing essential civic functions such as providing water supply and sewerage facilities and, therefore, did not qualify as an "industry" within the meaning of the Act.
The labour court rejected the objection, a decision that was subsequently upheld by the Karnataka High Court.
The matter eventually reached the Supreme Court.