Supreme Court agrees to hear challenge to definition of ‘industry’ in new Central law

The case concerns Section 2(p) of the Industrial Relations Code, 2020. AITUC Tamil Nadu says its definition of “industry” is “deliciously vague.” The union is especially challenging exemptions covering charitable institutions, sovereign government functions, and activities later notified by the Central government. The outcome could determine which workers receive the Code’s legal protections.

The dispute follows a major change in legal context. A 1978 seven-judge judgment used a three-part test to interpret “industry” broadly. In August 2026, a nine-judge Bench said that interpretation of the old Industrial Disputes Act would not control Section 2(p) of the newer Code.

Chief Justice Surya Kant said the Court would read the petition and schedule an early hearing. The Court must now examine whether Section 2(p) gives a workable definition and whether its exclusions remove institutions that should otherwise be covered. The decision may shape future industrial disputes and worker coverage.

Section 2(p) defines an “industry” through the nature of the activity, not simply the institution’s name. It requires a systematic activity involving cooperation between an employer and workers. That activity must produce, supply, or distribute goods or services. It must also aim to satisfy human wants or wishes.

The definition therefore focuses on organised work and the relationship between those who employ people and those who perform the work. For example, an institution providing services could potentially fall within the definition if its operations meet all these elements. The definition is framed broadly around goods and services rather than one particular sector.

That breadth is now under challenge. AITUC Tamil Nadu argues that the wording is unclear because the Code also excludes several categories of activity. The Supreme Court’s interpretation will clarify how Section 2(p) operates independently from the older 1978 legal test.

The definition is potentially wide because it covers any systematic activity involving employer-worker cooperation in producing, supplying, or distributing goods or services. It does not name only manufacturing or commercial businesses. Its language can therefore reach institutions whose main work is delivering services to people.

The article gives concrete examples from the 1978 Bangalore Water Supply judgment. That decision brought hospitals, educational institutions, and municipalities within the fold of “industry” when their activities met the triple test. Those examples show how an inclusive approach can extend coverage across health, education, and local government services.

The present reach is unsettled because the IRC adds express exclusions. In August 2026, the majority said Section 2(p) would not be burdened by the 1978 interpretation of the former law. The Supreme Court’s new hearing will help determine how broadly the Code applies to institutions today.

Being classified as an “industry” matters because the Industrial Relations Code gives legal protections to workers employed in institutions within that category. The classification is therefore a gateway. If an institution falls outside the definition, the article indicates that workers there do not receive those protections under the Code’s industry framework.

The article does not specify the individual protections or remedies. It does explain that the definition covers organised activity involving employer-worker cooperation and the production, supply, or distribution of goods or services. A hospital, school, or municipality could therefore become relevant when its work meets the applicable test and is not excluded.

The uncertainty comes from the Code’s exceptions and the new legal approach. The August 2026 majority separated Section 2(p) from the 1978 interpretation of the old law. The pending petition may clarify which institutions qualify and which workers fall within the Code’s safeguards.

The triple test came from the 1978 seven-judge Constitution Bench ruling in Bangalore Water Supply and Sewerage Board v. A. Rajappa. It identified three features: the activity must be systematic or organised; it must operate through cooperation between employer and employee; and it must produce goods or services to satisfy human wants. Together, these features created an inclusive definition.

The test looked beyond traditional factories or businesses. Because hospitals, educational institutions, and municipalities perform organised services through employer-worker cooperation, the judgment brought them within “industry.” This expanded the range of workers who could receive legal protections under industrial law.

Its future role is now uncertain. In August 2026, the nine-judge majority said the IRC’s Section 2(p) would not be governed by the old interpretation of Section 2(j). Chief Justice Kant suggested the triple test might be refined, while Justice Nagarathna defended retaining its inclusive approach to safeguard workers.

Section 2(p) excludes institutions wholly or substantially engaged in charitable, social, or philanthropic service. It also excludes activities of the appropriate government that relate to sovereign functions. A further exception covers any other activity that the Central government may notify. These exclusions sit alongside the Code’s general definition of industry.

AITUC Tamil Nadu objects because the exceptions may remove many service institutions from the legal framework. The union’s counsel called the definition “deliciously vague” and said it did not satisfy the triple test. The broad government-notification power is especially significant because the Central government can add another category of excluded activity.

The dispute is not merely about wording. Exclusion determines whether workers receive the IRC’s legal protections. The Supreme Court has agreed to examine the petition and will schedule an early hearing. Its decision may define how far charitable and government-related exemptions can extend.

Classification matters because it decides whether workers are covered by the Industrial Relations Code’s legal protections. That creates a basic balance-of-power question. Covered workers have the Code’s framework behind them, while employers outside the definition are not subject to that industry-based coverage in the same way. The article does not list every protection or procedure.

The definition also affects government authority. Section 2(p) excludes sovereign government activities and lets the Central government notify further exclusions. This means the boundaries of coverage are shaped both by the statutory wording and by government classification. Charitable, social, and philanthropic institutions may likewise fall outside the framework.

The Supreme Court’s decision could settle how these competing interests are balanced. The August 2026 majority rejected the old judgment as the foundation for interpreting the IRC, while Justice Nagarathna urged an inclusive definition to safeguard workers. The pending hearing will clarify the Code’s reach.