Centre To SC: Excessive Expansion Of 'Industry' Definition Can Deter Private Players
Attorney General contended that industrial law must balance both sides: preventing workers' exploitation while ensuring employers aren't placed in a position where they cannot function.
By Sumit Saxena
Published : March 17, 2026 at 8:38 PM IST
New Delhi: Broadening the definition of "industry" could burden employers and deter private investment, the Centre told the Supreme Court on Tuesday as the apex court's 9-judge Constitution Bench began reviewing the term under the Industrial Disputes Act, 1947.
The bench said it will examine the legal correctness of the 1978 judgment of a seven-judge bench that gave an expansive interpretation of the term "industry" to govern labour relations.
The nine-judge bench headed by Chief Justice Surya Kant commenced the hearing on a batch of petitions to determine the legal correctness of the decades-old definition of "industry".
On February 21, 1978, a seven-judge bench delivered a verdict on the definition of the term "industry" while deciding the plea of Bangalore Water Supply and Sewerage Board and expanded the definition, which brought millions of employees in hospitals, educational institutions, clubs and government welfare departments under the protection of the Industrial Disputes (ID) Act, 1947.
A nine-judge constitution bench comprising Chief Justice Surya Kant and Justices B V Nagarathna, P S Narasimha, Dipankar Datta, Ujjal Bhuyan, Satish Chandra Sharma, Joymalya Bagchi, Alok Aradhe and Vipul M Pancholi is hearing the matter.
On Tuesday, the Centre contended before the apex court that excessive expansion of the definition of "industry" has "serious consequences" as it can burden employers and deter private players from entering the market.
Attorney General R Venkataramani contended that industrial law must balance both sides: preventing exploitation of workers while ensuring employers are not placed in a position where they cannot function, as industry growth is itself a matter of public good.
He stressed that an over-expansive interpretation can deter private enterprise in a country where employment opportunities are scarce, and even professions based on skill, talent and intellectual attainment risk being unnecessarily brought within the fold of "industry."
He further pressed that it is essential to be cautious not to fall into expansionism driven by ideology and courts should not substitute their own social or economic philosophy for legislative judgment.
The AG, referring to the repeal of the Industrial Disputes Act, submitted that Parliament has already intervened to restructure "a rather vague and somewhat amorphous" definition under Section 2(j).
Justice Nagarathna orally observed that the judgment came in the 1970s, and then there were reforms in 1991 and added that many of the functions which the state was doing are being performed by the private sector.
She said the question now is what the scope of the definition of industry should be: should it still be very expansive, should it be restricted, or should a balance be struck?
Referring to liberalisation, privatisation, and globalisation as "LPG," Justice Nagarathna, in a lighter vein, said it is important for women as well. AG replied that there was no shortage of LPG. The hearing is likely to continue on Wednesday.
On February 16, the court formulated the broad issues to be adjudicated by the nine-judge bench.
"Whether the test laid down in paragraphs 140 to 144 in the opinion rendered by Justice V R Krishna Iyer in 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?" the bench had said.
The apex court had said one of the issues to be adjudicated by the nine-judge bench would be whether social welfare activities and schemes or other enterprises undertaken by the government departments or their instrumentalities can be construed to be "industrial activities" for the purpose of Section 2(j) of the Industrial Disputes Act, 1947.
In 2017, a seven-judge constitution bench had said it was of the opinion that the appeals before it be placed before a bench comprising nine judges keeping in view the "serious and wide-ranging implications" of the issue.
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