YESTERDAY, the Respondents concluded their submissions before the nine-judge Constitution Bench in the batch of cases reconsidering the ambit of the term 'industry' under the Industrial Disputes Act, 1947 (‘ID Act’).
Appearing for the respondents, Senior Advocate Indira Jaising opened arguments on Wednesday by firmly defending the correctness of the landmark ruling in Bangalore Water Supply and Sewerage Board v. R. Rajappa (1978), urging the Court not to revisit it and to reject the present reference altogether.
Jaising continued arguing on Thursday, followed by Senior Advocates C.U. Singh, Vijay Hansaria, Jayna Kothari, and Gopal Sankaranarayanan who appeared for the respondents. Senior Advocates J.P. Cama and Parthasarathi Sengupta, appointed as amici curiae by the Bench, also made their submissions. Attorney General R. Venkataramani and Senior Advocate Shekhar Naphade made their rejoinder submissions before the Court reserved the matter. Subsequently, after three days of hearings, the Supreme Court reserved judgment on March 19, 2026.
For background of the case, and the arguments raised by appellants, see here.
‘Three grounds of caution to dismiss the reference’: Jaising
Jaising on Wednesday argued that the very foundation of the reference was flawed, as it incorrectly assumed that there was a conflict between the Chief Conservator of Forests (1995) and Pratamsingh Narsinh Parmar (2001), on the definition of ‘industry.’ She submitted that Parmar was confined to its specific factual matrix where the petitioner failed to even assert or establish that his establishment was an industry and that the Court did not lay down any new principle, it simply turned on lack of pleadings and proof.
When the Chief Justice observed that this line of argument might require the Court to re-examine the judgments in depth, Jaising responded that while she would proceed on the assumption that the reference is procedurally valid, she should not be precluded from demonstrating the errors underlying it.
She then identified a second error of mischaracterisation of bench strength in earlier precedents. Jaising underscored that a judgment delivered by seven judges remains a seven-judge bench decision regardless of dissents, and its authority is not diminished by lack of unanimity. Referencing the appellant’s arguments, she argued that treating Safdarjung Hospital v. Kuldip Singh (1970) as a six-judge bench ruling while reducing Bangalore Water Supply to a five-judge decision was plainly incorrect. She maintained that precedential value cannot be diluted through such misreadings, and thus the existing legal position should be upheld.
Turning to legislative developments, Jaising pointed out a third ground for rejecting the reference. She contended that there is now a new Industry Code wherein a new definition of ‘industry’ has been enacted leaving only “pipeline matters” to be governed by the old regime. The Chief Justice, however, cautioned that if the Court were to dispose of the issue on the ground that only pending matters remain, it could still lead to future reinterpretations of Bangalore Water Supply in light of those very provisions. He remarked, "What will happen if we close the matter by saying that only limited ‘pipeline matters’ are left and therefore nothing is required to be done? Tomorrow Bangalore Water Supply will be followed in interpreting that very provision. Therefore, whatever reference is there, it has to be answered on merits.”
Jaising noted that the new labour code had, in substance, adopted the definition of 'industry' from Bangalore Water Supply. The real difficulty, she argued, lay not in the definition itself but in the breadth and ambiguity of the exceptions, particularly those relating to ‘charitable, social or philanthropic services.’ She pointed out that there was no clear legal definition of ‘social,’ except in the limited context of Corporate Social Responsibility, and warned that such a vague term could potentially encompass nearly all human activity.
CJI Surya Kant proposed that the Court could confine its analysis to the old statutory framework to avoid commenting on the validity or operation of the new code. But Jaising pointed out that it would be impossible to meaningfully answer the reference without examining how charitable activities are treated, since they were covered under the old law as well. If the Court were to now exclude them, it would, in effect, be endorsing the legislative shift. “By what methodology?,” she asked.
Justice Bagchi responded that Bangalore Water Supply, particularly Justice Krishna Iyer’s judgment, had consciously functioned as a ‘stopgap definition,’ anticipating that Parliament would eventually step in to clarify the definition. That legislative response, he noted, has now come, albeit after several decades which is why the Court’s present task is limited to determine whether the ratio in Bangalore Water Supply was correctly decided under the framework of the old ID Act, not to evaluate the new codes.
Justice Bagchi also suggested that the Court could expressly clarify that its ruling is confined to the repealed law and does not extend to the new Code.
Jaising makes the case for Bangalore Water Supply
Firstly, Jaising argued that Bangalore Water Supply was decided on “classical principles of statutory interpretation,” leaving no justification for its reconsideration. The ID Act she submitted, was a beneficial statute, and must therefore be interpreted in a manner that advances its purpose.
As a pre-Constitution legislation, she noted, the ID Act marked a significant departure from the rigid framework of the traditional “master-servant” relationship under civil law, which typically limited relief to damages. In contrast, the ID Act (especially Section 11A’s insertion in 1971) empowers labour courts to grant reinstatement and reassess the fairness of dismissals. Referring to the Supreme Court’s decision in Workmen of Firestone Tyre and Rubber Co. (1973), she highlighted how this shift enabled labour courts to go beyond the constraints of civil courts by exercising de novo jurisdiction to examine whether a dismissal is unjustified and whether the punishment imposed is proportionate.
Drawing a sharp contrast, Jaising explained that while labour law encompasses welfare measures such as working hours and maternity benefits, its primary foundation lies in protecting workers from arbitrary dismissal, moving away from the regime of “hire and fire.” Framing the issue in broader constitutional terms, she submitted that “every democratic society is bound to give access to justice in a judicial forum.”
Earlier, Senior Advocate Naphade, for the Maharashtra government, had argued that the ‘triple test’ in Bangalore Water Supply was a ‘value-loaded’ expansion, which untethered ‘industry’ definition from its economic moorings. Responding to this, Jaising clarified that the protections under the ID Act are especially vital for those not covered under Article 311 (dismissal, removal or reduction in rank of persons employed in civil capacities under the Union or a State) of the Constitution. While certain government employees may fall within those constitutional safeguards, a vast number of workers do not, and it is for them that the Act ensures protection.
She cautioned that unless an alternative statutory framework offers equivalent access to justice, narrowing the scope of the Act would effectively exclude workers from meaningful remedies. “If another statute gives us that access, we have no complaints,” she said. “But here the question is of throwing us out.”
Secondly, she contended that the triple test laid down by Justice Krishna Iyer which included systematic activity, employer-employee cooperation, and production of goods or services, rendered profit motive irrelevant. For example, she referred to religious institutions like temples, among the wealthiest entities in the country, who were also before the Court. While the offering of prasad may be spiritual for devotees, she argued, the labour that goes into producing it is undeniably material. Invoking the doctrine of severability, Jaising submitted that even where certain functions may be classified as sovereign or spiritual, the labour component within those activities can and should be separated and brought within the ambit of labour law. Reiterating Justice Y. V. Chandrachud’s reasoning in Bangalore Water Supply, she noted that while minting coins may be a sovereign function, the workers engaged in that activity are still entitled to protection under the Industrial Disputes framework.
“Does this not surprise you?” Jaising asked the Bench, questioning why States, who were predominantly the appellants in the case, that had effectively codified the reasoning of Bangalore Water Supply in the new labour framework were now urging its reconsideration.
Responding to the appellants’ attempt to confine ‘industry’ to commercial and profit-driven activities, Jaising posed a pointed question – what is an employer to tell a worker in a charitable setup? “I am doing charity for the world, but I will not pay you a fair wage?” she asked. Jaising also took the example of the legal profession. Referring to the argument that dispensing justice is a “divine function” and therefore excluded, she asked pointedly, “What about a sweeper working in your courtroom?”
Jaising also emphasised that the ID Act is a beneficial statute and must be interpreted in light of the Directive Principles of State Policy.
‘Should privatisation come at the cost of labour protections?’: Jaising
Jaising highlighted privatisation was the stated policy priority of the government of the day, by outlining the Union government's framework of strategic disinvestment, involving substantial sale of government shareholding in Central Public Sector Enterprises (‘CPSE’) along with transfer of management and control to private entities, as well as minority stake sales through SEBI-approved methods. She also pointed to the New Public Sector Enterprises Policy, which aims to minimise the State’s presence across sectors, retaining control only in strategically identified areas such as defence, energy, and critical infrastructure, while opening non-strategic sectors to privatisation, merger, or closure.
Against this backdrop, she cautioned that labour protections cannot be weakened merely because the State chooses to privatise or characterise activities as missions rather than commercial undertakings. She concluded by responding to the argument that certain activities are driven by a larger purpose or social mission by invoking Justice Iyer’s observation that “all of life is a mission, and a life without mission is a stillborn life.”’
C.U. Singh flags practical and doctrinal concerns
On doctrine, Senior Advocate C.U. Singh, on Wednesday, representing the National Trade Union Initiative, argued that Bangalore Water Supply, far from overreaching, actually narrowed the scope of sovereign functions by carving out limited exceptions. In contrast, earlier rulings like Safdarjung had incorrectly assumed such immunity.
He also addressed concerns around repeal, noting that although the ID Act has been replaced, courts routinely interpret repealed statutes for pending cases. However, he flagged a key practical difficulty that any reinterpretation now may have to operate prospectively, given the volume of cases already decided under the existing framework.
Singh also underscored the structural logic of the ID Act itself. Reading provisions such as Sections 2(g), 2(j), 2(k), and 2(n) together, he argued that government departments and public utilities are clearly contemplated within the statutory scheme. He highlighted that the Act creates a specialised dispute-resolution framework, particularly through mandatory conciliation in public utility services, demonstrating that its protections are designed to extend broadly, including to State-linked activities.
‘States already have the power to exempt, no need for judicial intervention’: Singh
On Thursday, Singh drew the Court's attention to the definition of “appropriate government” under Section 2(a), which contemplates industries carried on by the Central Government and extends to the Employee State Insurance Corporation, the Coal Mines Provident Fund, Oil and Natural Gas Commission, Airport Authority of India, Air Transport Services, and banking companies, including the Reserve Bank of India.
"The body which formulates monetary policy of the country is an industry under this Act,” he submitted. All central public sector undertakings, subsidiary companies, and autonomous bodies owned or controlled by the Union government fall within the definition, he argued, making it abundantly clear that government establishments were never intended to be excluded.
Singh pointed to “a series of safety valves” already embedded within the Act – Proviso B to Section 9A, Section 9B, Section 19(4), Section 36A, and Section 36B – which collectively vest in the appropriate government ample power to exempt industries or classes of industries from the Act's operation where public interest demands. If the States genuinely believed certain sectors ought to fall outside the Act’s coverage, these tools were already entirely in their hands. “They will shoot the gun off the Supreme Court’s shoulders,” he said, “and then tell all the workers in their State that they were let down by the Supreme Court, not by us politically.”
‘Fatal faults in Safdarjung’: Singh
Singh then argued that the Safdarjung Hospital decision suffered from three fatal flaws.
The first flaw was that while the Court correctly noted that the definition of ‘industry’ was borrowed from Australia, it incorrectly reproduced the unamended Australian definition of 1904 rather than the amended definition of 1911, which was the actual precursor to Section 2(j). On the basis of this wrong text, the Court arrived at an erroneous conclusion about the scope of “means and includes.”
The second flaw was that the Court had, without any principled bases or engagement with statutory text, held that hospitals are industry only if run privately on a commercial basis, while excluding government-run hospitals.
He added that the scheme of conciliation under Sections 20, 22, and 24 further reinforced the case for a broad reading. That scheme, designed to protect not merely workers but industries, employers, and the public at large, expressly covers hospitals, conservancy, sanitation, municipalities, and universities as public utility services. “I am surprised,” he said, “that State governments want this scheme to be jettisoned for certain classes of industries.”
‘Welfare legislation must be read to advance its object’: Hansaria
Senior Advocate Vijay Hansaria argued that Bangalore Water Supply’s triple test did not expand the definition of ‘industry’; it only explains it. Any business, trade, or undertaking will, as a matter of course, involve systematic activity, cooperation between employer and employee, and the production or distribution of goods or services, the three elements identified by Justice Krishna Iyer. The test is descriptive of what already exists within those words, not an addition to them.
Hansaria noted that the Act was enacted to protect workers who possess no bargaining power and remain at the mercy of their employers, without which remedies such as reinstatement under Section 11A would simply not be available. Unfair labour practices, too, could not be addressed unless the activity in question qualifies as an industry. A narrower definition, he cautioned, does not merely affect the Act’s reach in the abstract, but directly determines whether individual workers can access any remedy at all.
‘Sovereign exception must be read narrowly’: Kothari
Senior Advocate Jayna Kothari argued that the ID Act’s object was to protect workers and ensure they are not left without meaningful remedies. She submitted that the meaning of any statutory provision, particularly in beneficial legislation, must be understood in its broader context than be confined to literal meanings. She argued that Bangalore Water Supply correctly adopts this approach, reading the definition in light of Articles 38, 39, 42, 43, and 43A of the Directive Principles of State Policy.
On sovereign functions, Kothari urged the Court to apply the exception with restraint. Only functions that are sovereign in the strictest sense fall outside the Act. These are not welfare or economic activities carried out by the State. She argued that it is the nature of the activity, not the character of the entity performing it, that governs the question.
Kothari also drew the Court’s attention to the plight of sanitation and hazardous cleaning workers, often employed by municipalities and local bodies, who are among the most vulnerable in the workforce. Excluding such activities from the definition of ‘industry’ would leave them without reinstatement, compensation, or safe working conditions.
‘Diluting the definition leaves the most vulnerable without remedy’: Sankaranarayanan
Senior Advocate Gopal Sankaranarayanan addressed the twin issues of sovereign functions and charitable activities.
On charity, he argued that the exception carved out by Justice Iyer in Bangalore Water Supply was confined to only small, self-serving clubs formed by individuals purely for their own recreation. That modest carve-out had since been stretched well beyond its original bounds in subsequent jurisprudence. Noting this, he asked: if the words of Section 2(j) are of wide amplitude and carry no genuine ambiguity, what principled basis exists for cutting back on the definition that Parliament chose?
Sankaranarayanan also referred to Justice P.B. Gajendragadkar’s judgement in Keshav Mills Co. v. Commissioner of Income tax (1965) which had laid down that before revising a long-standing precedent, a court must first satisfy itself that it is “satisfied with a fair amount of unanimity amongst its members that a revision of the said view is fully justified”; and if that threshold is met, it must then examine:
“What would be the impact of the error on the general administration of law or on public good? Has the earlier decision been followed on subsequent occasions either by this Court or by the High Courts? And, would the reversal of the earlier decision lead to public inconvenience, hardship or mischief ?”
On each of these counts, he submitted, the case for disturbing Bangalore Water Supply falls short.
Sankaranarayanan also pointed out a structural question: if activities such as defence research, military establishments, or forest departments are excluded from “industry,” the workers engaged in those sectors necessarily cease to qualify as “workmen” under the Act, a consequence he described as flowing inevitably from the fact that the two concepts are “inextricably tied.”
‘Where no fee is charged and no benefit accrues, industry cannot be presumed’: Cama
Senior Advocate J.P. Cama, one of the two amici curiae, clarified that industry carried on by the government remains an industry. The real question is whether the underlying activity satisfies the definition in Section 2(j) at all.
On the word “undertaking”, Cama submitted that it cannot be read in isolation and must take colour from the surrounding words. Invoking the principle of ejusdem generis, he argued that “undertaking” must be read alongside “business” and “trade.” “If everything else around it is industry, then surely one word cannot itself stand out,” he said, adding that an undertaking is either an industry in its entirety or a component part of one.
Cama departed from Justice Iyer’s triple test on the point that it places significant weight on the existence of an employer-employee relationship. Cama argued that this cannot be the governing criterion, since even a purely altruistic organisation may have such a relationship. The threshold question must instead be whether the activity itself is in the nature of business, trade, or undertaking, since that would determine whether the person employed qualifies as a workman becomes relevant.
On charity, Cama argued that where an activity confers no benefit on the employer or department and no fee or consideration is charged, it cannot be treated as industry. Contrary to Justice Iyer's position, he maintained that profit motive is not irrelevant, as a business and trade cannot exist without it. “There has to be something more than charity," he said.
This led to questions from the Bench. Justice B.V. Nagarathna asked why free education should be excluded if “the structure is the same.” Justice Joymalya Bagchi observed that “the idea of profit is more economic than it is of law.” Justice P.S. Narasimha gave the example of outsourced government functions and said workers' rights would become “terribly dependent” on whether the government performs an activity directly or through contractors. In response, Cama maintained that even if such outcomes appear unjust, “unjust does not make it correct or legal,” and the Court cannot expand the statute on the basis of equitable instincts alone.
‘Philanthropic motive of the employer is irrelevant to the worker’: Sengupta
Senior Advocate Parthasarathi Sengupta, the second amicus curiae, focussed on the objects and reasons of the ID Act. He reminded that the Act was born out of the defects of the Trade Disputes Act, 1929, whose central failing was that while restraints had been placed on strike and lockout in public utility services, no provision existed to render proceedings for settlement of industrial disputes binding on the parties. The primary purpose of the present Act, investigation and settlement of industrial disputes, must therefore inform every question of interpretation arising under it. “There cannot be an industrial dispute unless there is an industry,” he said, framing the definition as the threshold question on which the entire statutory scheme rests.
Sengupta argued that the Act was a balanced statute, one that protects labour while simultaneously placing checks on workmen, including restrictions on the right to strike. He drew the Court's attention to the definition of “employer” under Section 2(g), which contemplates industries carried on by departments of the Central or State Government as well as local authorities. This is a provision that would be entirely unnecessary if such entities were outside the definition altogether. Reading Sections 2(g), 2(j), 2(k), and 2(n) together, he argued that government departments and public utilities are clearly contemplated within the scheme. The First Schedule reinforces this, he added, listing service in hospitals and dispensaries without distinguishing between those run by government, local bodies, or private employers, and extending to oil fields and establishments manufacturing nuclear fuel and heavy water.
On the forum question, Sengupta submitted that the working class has nowhere else to go. The industrial adjudicatory machinery cannot be substituted by service tribunals or other bodies dealing with government employment. Industrial tribunals possess powers that no civil court or administrative tribunal can match. They can prescribe new wage scales and direct reinstatement of a terminated worker.
Sengupta pointed out that the word “socialist” was inserted into the Preamble through the 42nd Amendment of 1976, and that Bangalore Water Supply was decided two years later. The interpretation of labour law, he submitted, cannot be divorced from that constitutional context. On the question of interpretive doubt, he relied on the principle that in industrial law, read in the perspective of Part IV of the Constitution, the benefit of any doubt must go to the weaker section. The very fact that the question had travelled to a nine-judge bench after 48 years was itself proof that doubt existed.
On charity, Sengupta referred to Justice Krishna Iyer’s judgment in Bangalore Water Supply which had distinguished between two species of charitable activity. Where a high-minded employer hires workers like any non-philanthropic counterpart and produces goods and services for the needy without charging a price, the enterprise remains an industry.
“For them the charitable employer is exactly like a commercial-minded employer. Both extract hard work, both raise similar wages, both treat them as human machines and nothing more.” The material difference between a commercial and a compassionate employer, he submitted, lies not in the relationship with workers but with the recipients of the goods and services. Charity, he argued, operates vis-à-vis the consumers of the end product not the workers who produce it.
“A person may be philanthropic, trying to do charitable jobs, but at whose cost? At the cost of the labour.” From the worker’s perspective, the employer's philanthropic motivations are entirely beside the point, and it is the nature of the work rendered by the workman that determines whether something is an industry. “For him, charity must begin at home.”
‘Welfare purpose cannot override the plain text of the statute’: Attorney General
Attorney General R. Venkataramani, in his rejoinder, urged that even the most welfare-oriented legislation does not license courts to go beyond what the text actually provides. He clarified that the government is “not anti-labour,” but submitted that in a changing, globalised economy, the law must be applied with precision.
Venkataramani argued that Bangalore Water Supply had pushed the interpretive pendulum to an extreme. The triple test, he acknowledged, is a useful analytical framework within the domain of trade and business, but it cannot be treated as the final word on every activity, and cannot be applied mechanically to governmental functions of a constitutional character. He also clarified that the designation of an activity as a public utility service does not automatically bring it within the definition of ‘industry’. The activity must independently satisfy the statutory test.
Venkataramani argued that Bangalore Water Supply had pushed the interpretive pendulum to an extreme. The triple test, he acknowledged, is a useful analytical framework within the domain of trade and business, but it cannot be treated as the final word on every activity, and cannot be applied mechanically to governmental functions of a constitutional character. He also clarified that the designation of an activity as a public utility service does not automatically bring it within the definition of ‘industry’. The activity must independently satisfy the statutory test.
‘Widespread application of an erroneous judgment cannot cure its error’: Naphade
Senior Advocate Shekhar Naphade, in his rejoinder, addressed the issue of prospective overruling. He submitted that the doctrine was invoked in I.C. Golaknath v. State of Punjab (1967) under exceptional circumstances where invalidating agrarian reforms threatened far-reaching consequences for transformative legislation. The present case involves individual rights and raises no comparable concern, and there is accordingly no basis to apply the doctrine here.
He also rejected the argument that the widespread application of Bangalore Water Supply in subsequent decisions provides any reason to treat it as correctly decided. “If the judgement is erroneous, it is erroneous,” he said, adding that no volume of citations can convert an error into good law. On the triple test, he reiterated that its origins in Australian jurisprudence gave it no special authority in Indian statutory framework, and that repeated application over five decades cannot be treated as a substitute for principled analysis of whether the test was ever right to begin with.
The nine-judge Bench has reserved judgment.
