Shaurya Kapoor
The Supreme Court of India today stands at the crossroads of balancing competing Sustainable Development Goals (SDGs). At this intersection there is a term that has generated more litigation than almost any other in Indian labour law: the deceptively simple word “industry.” A nine-judge Constitution Bench has recently concluded hearings in State of U.P. v. Jai Bir Singh on the scope of that word under Section 2 (j) of the Industrial Disputes Act, 1947, and has reserved its judgment.
The Statutory Definition
Section 2(j) defines “industry” broadly to include any business, trade, undertaking, manufacture, or calling of employers, and extends to services, employment, handicrafts, and industrial occupations of workmen. While expansive on its face, the provision has required sustained judicial interpretation to determine its limits.
The Landmark 1978 Ruling
The most authoritative interpretation came in Bangalore Water Supply & Sewerage Board v. A. Rajappa. A seven-judge bench held that any systematic activity organised through employer–employee cooperation for the production or distribution of goods or services constitutes an industry, regardless of profit motive.
This “triple test” – systematic activity, organised cooperation, and production/distribution — significantly expanded the scope of labour protections. Hospitals, educational institutions, clubs, and even charitable organisations were brought within the ambit of labour regulation.
The Growing Discomfort
Over time, the breadth of A. Rajappa generated institutional and policy concerns. The inclusion of charitable and philanthropic bodies—often non-commercial and service-driven—raised questions about regulatory overreach. Similarly, applying industrial dispute mechanisms to hospitals and educational institutions created tensions, given the essential nature of these services.
In State of Uttar Pradesh v. Jai Bir Singh, a five-judge bench noted that A. Rajappa had contributed to a “docket explosion” in labour courts and was not a unanimous ruling. Recognising the need for a principled recalibration, the Court referred the issue to a larger bench.
Why a Nine-Judge Bench?
As per the Constitution Bench judgment of the Supreme Court in Central Board of Dawoodi Bohra Community v. State of Maharashtra, a bench of equal strength cannot overrule a coordinate bench and must refer the question to a bench of greater strength. Since A. Rajappa was decided by a seven-judge bench, only a larger bench could overrule it. Accordingly, in 2017, a seven-judge bench referred the matter to a nine-judge Constitution Bench. The case has now been heard in March 2026, over two decades after the initial reference.
The Legislative Backdrop
The legal landscape has since evolved with the enactment of the Industrial Relations Code, 2020, which consolidates key labour laws including the Industrial Disputes Act, 1947. Effective November 21, 2025, the Code explicitly excludes charitable, social, and sovereign governmental functions from the definition of “industry.”
However, the Supreme Court has clarified that it will adjudicate the present reference under the 1947 Act, as the interpretation of Section 2(j) continues to govern pending and transitional disputes. The Code nonetheless reflects a clear legislative intent to narrow the scope—raising broader questions of policy coherence and regulatory design.
Balancing India’s 2030 SDG Commitments
The Court must now determine whether the A. Rajappa “triple test” should be retained, refined, or overruled. But beyond statutory interpretation, the nine judges are weighing a critical policy dilemma directly tied to India’s adoption of the UN’s 2030 Agenda for Sustainable Development.
As India races toward the 2030 deadline to achieve these goals, the outcome of this judgment will dictate how the nation balances competing developmental priorities. Expanding the definition of “industry” heavily protects decent work and institutional accountability (SDG 8 and SDG 16). However, treating essential public services as industrial battlegrounds risks disrupting the continuous delivery of good health and well-being (SDG 3) and quality education (SDG 4). The judgment is expected to settle one of the most enduring interpretive controversies in Indian labour law by finally deciding where that balance lies.
Shaurya is innately passionate about all things law and fervently driven to make his mark in the Indian legal macrocosm. He has completed his LLB from Campus Law Centre, Faculty of Law, University of Delhi and has extensively worked across the city with advocates specialising in a wide variety of legal fields.
Planetary Objectives 