Why Supreme Court Is Revisiting Justice Krishna Iyer’s 48-Year Old Definition Of ‘Industry’
The Supreme Court of India is revisiting Justice V.R. Krishna Iyer’s 1978 expansive definition of “industry” under the Industrial Disputes Act, 1947, due to long-standing judicial conflicts and its wide-reaching labor law implications. A nine-judge Constitution Bench, headed by Chief Justice Surya Kant, began hearings on March 17-18, 2026, to resolve these issues authoritatively.
The 1978 Bangalore Water Supply case established the “triple test” for “industry”: systematic activity, employer-employee relationship, and production/distribution of goods/services for human needs, even without profit motive. This broad interpretation included hospitals, schools, clubs, and government welfare activities under labor protections like dispute resolution and retrenchment rules.
Judicial divergence arose, with a 2001 bench favoring a narrower view limited to commercial activities, prompting a 2005 five-judge bench and 2017 seven-judge bench to refer it to a larger nine-judge bench amid evolving economic realities and the unenforced 1982 amendment. The review addresses whether sovereign functions, welfare schemes, and the new Industrial Relations Code, 2020, alter this scope.
A narrower definition could exempt state welfare and certain nonprofits from IDA obligations, easing compliance for public entities and investors in sectors like healthcare and education. It impacts collective bargaining, union rights, and restructuring under India’s labor framework.
