Definition of ‘industry’ review: A wasteful exercise of judicial time

In 1978, following a “zigzag” series of conflicting decisions, a seven-judge bench of the Supreme Court delivered a landmark ruling on the definition of “industry” under Section 2(j) of the Industrial Disputes Act, 1947. Its decision in Bangalore Water-Supply & Sewerage Board v R. Rajappa propounded an expansive definition of the term. Now, after 48 years and two references to a larger bench, Chief Justice Surya Kant constituted a nine-judge bench to reconsider the matter.

The reference to a larger bench is a wasteful exercise of judicial time. 

Who’s afraid of Justice Krishna Iyer’s opinion?

It must be understood that there was some initial disagreement in Bangalore Water Supply. Chief Justice M.H. Beg wanted to write a separate order, but in the final round everyone fell in line with Justice V.R. Krishna Iyer. In defining the term “industry”, Justice Krishna Iyer wanted to be pragmatic and not legalistic, so that the purpose of the legislation is kept in mind as an interpretative tool. “Dictionary in hand, decisions in head and Constitution at heart,” he pointed to the Supreme Court’s consistent adoption of the objective meaning of the term from D.N. Banerjee v P.R. Mukherjee (1952) to Indian Standards Institution (1975). Accepting the sole opinion of Justice Krishna Iyer, the Bench overruled other decisions which had interrupted this consistency. In Justice Krishna Iyer’s words: 

“Legalese and logomachy have the genius to inject mystique into common words, alienating the laity in effect from the rule of law… Natural meaning is nervous of acceptance in court where the meaning of meanings is lost in uncertain erudition and cases have even cancelled each other out…

For those who know English and are not given to the luxury of splitting semantic hairs, this conclusion argues itself.”

A key consideration for him was the “personality” of the statute, its welfare basis and as he put it, the fact that the “legislation has something to do with social justice between the ‘haves’ and the ‘have-nots’.” 

However, Justice Krishna Iyer was clear in his caution against straining the language of the definition. He stated that the “crusade” for new ideas of human justice cannot occur through interpretation of an “old, imperfect enactment”. On the other hand, he clarified that it was legitimate to “project the value-set of the Constitution” and Directive Principles while interpreting the provision. 

A crucial aspect of the Judgement is its recognition that despite the “innocuous” addition of the word ‘socialist’ to the Constitution, India is a “pluralist society with a capitalist backbone.” The Bench’s decision to place an authoritative resolution on the definition was informed by its understanding of the attempt to de-industrialise activities with the aim of excluding “labour unrest” and the “worker menace” from the precincts of “elite professionalism and industrialism.”

Unsurprisingly, the pressure lobby was not satisfied with the definition given by the Court. There were attempts to derail the Judgement by bringing in new labour legislations; one in 1978, and another in 1982. Both bills were resisted by the working class and were never passed by the parliament. Ultimately Parliament accepted the Judgement, virtually borrowing Justice Krishna Iyer’s words when it amended the definition of “industry” in 1982. Its exclusion of a large number of workers from the ambit of the Act however, makes it fortunate that it is yet to be notified even though more than 40 years have gone by.

Opinions on the reference

In 2005, in State of U.P. v Jai Bir Singh, a five-judge Constitution Bench referred the Bangalore Water Supply decision for reconsideration by a larger bench. It expressed a clear opinion that the definition adopted by Justice Krishna Iyer was over-expansive, one-sided and too “worker-oriented”. In his 2008 book, ‘The Court and the Constitution of India’, Justice O. Chinnappa Reddy responded to the reference; 

“Perhaps the learned judges would also say that Articles 15 and 16 on Fundamental Rights and all the Directive Principles of State Policy were oriented in favour of the weaker sections and should therefore be interpreted strictly and not broadly.”

Justice K. Sukumaran, a retired judge of the Kerala High Court, criticised the reference in the book ‘Justice Krishna Iyer at Ninety.’ He wrote:

“The working class in India had a raw deal, at least in the initial period of the Indian Republic. The narrowest interpretation was placed on ‘industrial dispute’ by a court of law.  The mistake was later corrected.  The mindset of the judiciary of the times is reflected in the [Bangalore Water Supply] decision.”

In the same book, Fali S. Nariman, a renowned Senior Advocate of the Supreme Court, wrote that social philosophy was more than an interpretative tool for Justice Krishna Iyer. He contends that a new school of jurisprudence was founded by Justice Krishna Iyer’s approach of being influenced by “the dominant need of the times.”

Is the current review infructuous?

After the 2005 reference, several chief justices came to the post and never took up the matter. Only 12 years later did a seven-judge Bench think it fit to refer the matter further. Another 9 years passed and until this year, no chief justice has ever thought to constitute a larger bench. On the other hand, the present Chief Justice decided to hear the matter, despite subsequent developments such as the passing of the Industrial Relations Code, 2020 to replace the I.D. Act—Section 2(p) of the Code is a virtual reproduction of the 1982 Amendment.

The 2005 Constitution Bench was concerned about application of the I.D. Act to hospitals and educational institutions and wanted reconsideration of the term “industry” only on those issues. If it was notified, the 1982 Amendment would have excluded these two categories. The Bench could have easily questioned the central government as to why the relevant sections of the Amendment were not brought into force. Instead, it referred the matter to a larger bench, turning it into an academic question.

On 21 November 2025, the IR Code was notified and it is currently in the process of being brought into effect across several states. Thus, as the nine-judge bench takes up the reference, there is virtually nothing for it to decide.

In the past 40 years, several disputes have been decided by labour courts, tribunals, high courts and the Supreme Court on the basis of the Bangalore Water Supply case. Any reversal of the definition cannot set at naught all the decisions arrived at during the interregnum period from 2005 to 2026. Inevitably, if the nine-judge bench were to overrule the Bangalore Water Supply decision, it can only take effect prospectively. Such a hypothetical declaration will be irrelevant since the I.D. Act does not exist anymore. If the nine-judge bench upholds Justice Krishna Iyer’s interpretation, then the entire exercise is an enormous waste of the Supreme Court’s time as pointed out by Justice Chinnappa Reddy. 

In any event, a similar controversy arose over the definition of “retrenchment” under Section 2(oo) of the I.D. Act. Justice Krishna Iyer’s decision in State Bank of India v N. Sundara Money (1976) favoured a broad interpretation, conflicting with the narrow view taken by an earlier Constitution Bench decision in Hariprasad Shukla v A.D. Divekar (1956). Shortly after the Sundara Money decision, parliament amended the law to narrow the definition. However, many judges continued to follow Justice Krishna Iyer’s approach and after 14 years, his definition was upheld by a five-judge bench in Punjab Land Development & Reclamation Corpn. Ltd. v Presiding Officer (1990).

Earlier, in 1983, Justice Ranganath Misra quoted Lord Devlin and stated that the view adopted in Sundara Money has been “absorbed into the consensus,” allowing no scope for an “anti-clockwise operation”. 

If the nine-judge bench decides to overrule by a 5:4 majority, then they will overrule the opinion of seven judges who decided unanimously. This will be only a number game and is not in the good interest of this country. For the last 75 years the courts are yet to concur on the true meaning of the term “industry” and allowing litigation galore in the fight between labour and capital which this country can ill afford.

Justice K. Chandru is a former judge of the High Court of Madras.