The Cure Prescribed by the Nine-Judge Bench on ‘Industry’ Is Worse Than the Illness – Indian PSU

The Supreme Court’s nine-judge Constitution Bench judgment of August 20, 2026, revisiting the meaning of “Industry” under labour law, raises a fundamental question: was this judicial exercise really necessary, and does the new formulation strengthen workers’ rights or further complicate an already weakened labour-protection framework?

In my view, the answer is deeply troubling.

For more than nine years, the country waited for a nine-judge Bench to reconsider the definition of “Industry” laid down by the seven-judge Bench in the landmark Bangalore Water Supply and Sewerage Board v. R. Rajappa judgment of 1978. That judgment, authored by Justice V. R. Krishna Iyer, established the famous “triple test” for determining whether an activity constituted an industry.

The nine-judge Bench has now modified that jurisprudence. Five judges of the nine-member Bench have held that the triple test requires further refinement, while maintaining that the essential framework laid down in 1978 has stood the test of time. Four judges dissented.

That dissent is particularly significant.

Justice Nagarathna, in her dissenting opinion, took the view that there was no compelling reason to revisit the definition in Bangalore Water Supply. She also made an important constitutional point: merely because a function is performed by the State, it should not automatically be excluded from the definition of an industry. Government departments and their instrumentalities undertaking social-welfare activities may, depending upon the nature of their functions, fall within the scope of Section 2(j).

Justices Datta and Bhuyan also questioned the very necessity of the reference, observing that the reference made in Jai Bir Singh served no practical, jurisprudential or doctrinal purpose.

These dissenting views deserve serious consideration.

A Judgment at the Wrong Moment?

The timing of the judgment cannot be ignored.

The legal landscape has changed dramatically since the 1978 judgment. The Industrial Disputes Act, 1947, which provided the principal statutory framework within which the earlier jurisprudence developed, has now been replaced by the Industrial Relations Code, 2020.

This creates an obvious question: what practical purpose is served by substantially reworking a judicial definition developed under an earlier legislative framework when the legislature itself has enacted a new labour-law regime?

For workers and trade unions, this is not merely an academic question.

The definition of “industry” determines the universe of workers and establishments that can potentially come within the protective framework of industrial relations legislation. Consequently, any narrowing or exclusion can have profound consequences for labour rights.

The Real Problem Lies Beyond the Triple Test

The debate should therefore not be reduced to whether the triple test formulated in 1978 requires judicial refinement.

The larger question is: what happens to workers who fall outside the statutory definition altogether?

The Industrial Relations Code has created exclusions and exceptions affecting several categories of activities. Among the concerns raised by the trade-union movement are activities connected with sovereign functions, including defence research, atomic energy and space.

There is an inherent contradiction here.

An establishment may contain workers performing highly organised, technical and productive activities, yet the legal characterisation of the institution or its function may determine whether those workers receive the protection associated with industrial law.

That approach risks shifting the emphasis from what work is actually being performed to who the employer is and what institutional label is attached to the activity.

That is a dangerous departure from the underlying philosophy of labour jurisprudence.

Workers Are Not Institutions

A worker does not cease to be a worker merely because the organisation employing him is a government department, a public institution, a research establishment or an organisation performing a function described as sovereign.

The nature of the work matters.

The employment relationship matters.

The existence of organised labour matters.

The contribution of workers to the functioning of an establishment matters.

If two workers perform substantially similar industrial or technical functions, their basic labour protections should not depend entirely upon the institutional label placed above them.

This is precisely why the broad philosophy of the Bangalore Water Supply judgment remained important for decades.

Justice Krishna Iyer’s approach recognised the realities of modern employment and industrial organisation. It looked beyond formal labels and examined the actual character of an activity.

That principle should not be weakened without compelling justification.

Hospitals, Educational Institutions and Charitable Organisations

Another area of concern is the treatment of workers employed in hospitals, educational institutions and charitable organisations.

These institutions may perform socially valuable functions. But social value does not eliminate the employment relationship.

A nurse remains a worker.

A technician remains a worker.

A laboratory employee remains a worker.

A maintenance worker remains a worker.

A non-teaching employee in an educational institution remains a worker.

The charitable character of an organisation should not become a justification for denying basic labour protections to the people who make that organisation function.

If the law excludes such workers from important labour protections, the consequence is not merely legal classification. It is a transfer of bargaining power away from labour.

The Larger Corporate and Governmental Pressure

The trade-union movement has long argued that the restructuring of labour laws has been influenced by pressures from powerful corporate and governmental interests seeking greater flexibility in employment.

The argument advanced in favour of such reforms is familiar: India needs flexibility, investment, competitiveness and ease of doing business.

But there is another side to that equation.

Flexibility for whom?

If flexibility means easier restructuring for employers but weaker bargaining power for workers, then flexibility becomes another word for insecurity.

If competitiveness requires workers to surrender established protections, then the country must ask whether the cost of competitiveness is being unfairly imposed on labour.

Economic growth and workers’ rights are not mutually exclusive.

India needs both.

The Constitution Cannot Be Reduced to a Business Case

The Constitution does not merely protect economic activity.

It also speaks of social and economic justice, equality and dignity.

The freedom to form associations and unions is an important part of the constitutional framework.

Labour law must therefore be examined not merely through the prism of industrial productivity or investment climate but also through the prism of constitutional morality and social justice.

The question before the country should be simple:

Does economic reform strengthen the dignity and security of working people, or does it progressively reduce their ability to negotiate with those who control capital and institutions?

The Nine-Judge Bench Has Not Settled the Larger Labour Question

The Supreme Court has now refined the jurisprudence surrounding “Industry”. But the judgment cannot, by itself, resolve the larger crisis confronting Indian labour.

The real battle is taking place on another terrain — the changing statutory framework and the shrinking practical space for collective bargaining and labour protection.

That is why I believe the cure prescribed by the nine-judge Bench may ultimately prove worse than the illness.

The problem was not simply that the definition of industry was too broad or insufficiently refined.

The problem was that millions of workers already faced insecurity, weakening bargaining power and an unequal relationship with employers.

Changing the judicial definition without addressing that structural imbalance risks treating the symptom while ignoring the disease.

The Trade Union Movement Will Not Remain Silent

Trade unions are already on the warpath against what they regard as four anti-worker labour codes.

The latest judicial development will inevitably become part of that larger struggle.

The issue is no longer merely about Section 2(j), the triple test or the technical boundaries of the word “industry”.

It is about what kind of labour regime India wants.

Do we want a system in which workers have meaningful collective bargaining power and legal protection?

Or do we want a system in which institutional classification increasingly determines who receives protection and who does not?

The answer will shape the future of Indian industrial relations.

The trade-union movement must therefore continue its struggle against every attempt to weaken the constitutional commitment to social and economic justice, equality, dignity of labour and freedom of association.

Workers cannot be expected to accept that their rights should become the price of economic reform.

The battle for the dignity of labour is far from over.

Disclaimer: This is an opinion piece reflecting the views of C. Srikumar. The arguments, opinions and conclusions expressed in this article are solely those of the author and do not necessarily represent the views of the Supreme Court of India, the Government of India, AITUC, any political party, or any other organisation. The publication of this opinion on www.indianpsu.com does not constitute an endorsement of the views expressed herein by the portal, its editorial team, its Editor-in-Chief, or its management.