SC agrees to hear AITUC challenge to definition of ‘industry’ in new law

1. At a Glance

• What it is: The Supreme Court has agreed to hear a petition by the All India Trade Union Congress (AITUC), Tamil Nadu. The petition challenges how 'industry' is defined in Section 2(p) of the Industrial Relations Code (IRC), 2020. It calls the definition "deliciously vague" [1].
• Why the definition matters: The IRC protects workers only if their institution counts as an 'industry'. So the definition decides which workers get the Code's protections [1].
• Core dispute: The Code leaves out charitable, social and philanthropic bodies, the government's sovereign functions, and any activity the Centre notifies. The petitioner says these exclusions narrow the "triple test" set by a seven-judge Constitution Bench in 1978, in a judgment written by Justice V.R. Krishna Iyer [1].
• UPSC relevance: The case links labour law reform, judicial review, the separation of powers (rule-making delegated to the executive) and workers' rights under Part III/IV. It is high-yield for GS-II and GS-III.

2. Why in the News

• 28 October 2026 (Wednesday): The SC agreed to hear AITUC Tamil Nadu's petition challenging the definition of 'industry' in the IRC, 2020. It was reported in The Hindu's 29 October 2026 edition [1].
• Bench: headed by Chief Justice of India Surya Kant [1].
• Counsel for the union: senior advocate Gopal Sankaranarayanan and advocate Aarthi Rajan [1].
• The CJI asked: "Is there a problem with the definition of 'industry'?" Counsel replied that the definition fails the 'triple test' [1].

3. Background & Evolution

• 1947: The Industrial Disputes Act, 1947 defined 'industry' under the old regime. The IRC's carve-out for charitable bodies is a break from that Act [4].
• 1978: A seven-judge Constitution Bench, in a judgment written by Justice V.R. Krishna Iyer, set out the 'triple test' for deciding what counts as 'industry' [1].

• The case is commonly cited as Bangalore Water Supply & Sewerage Board v. A. Rajappa. This name is not in the retrieved excerpt, so verify it.

• 2019: The IR Code Bill, 2019 was examined by the Parliamentary Standing Committee on Labour (2019-20). The committee noted that excluding charitable, social and philanthropic institutions departs from the ID Act, 1947 [4].

• 28 September 2020: The Industrial Relations Code, 2020 (Act No. 35 of 2020) was enacted [2].
• November 2025: PIB issued a factsheet titled "Industrial Relations Code, 2020: Promoting Harmony and Ease of Doing Business" [3].
• October 2026: The SC agreed to hear the AITUC challenge [1].

4. Core Static Facts

Item	Fact
Statute	Industrial Relations Code, 2020 — Act No. 35 of 2020, dated 28 Sept 2020 [2]
Definition provision	Section 2(p) [1][2]
Definition text	"Any systematic activity carried on by co-operation between an employer and worker for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes" [1]
Irrelevant factors	Whether capital is invested, or whether the activity aims at profit, does not matter [2][3]
Exclusions (per the petitioner)	(i) Institutions wholly or substantially engaged in charitable, social or philanthropic service; (ii) any activity of the appropriate government relatable to sovereign functions; (iii) any other activity notified by the Central Government [1]
Committee-stage exclusions (2019 Bill)	Charitable/social/philanthropic organisations, domestic service, and Centre-notified activities [4]
Judicial benchmark	'Triple test' — 1978, 7-judge Constitution Bench, written by Justice V.R. Krishna Iyer [1]
Related "wage" rule	50% ceiling on exclusions from 'wages'. It applies to gratuity, retrenchment compensation and social-security calculations. This is separate from the definition of 'industry' [3]
Petitioner	AITUC, Tamil Nadu [1]
Bench	Headed by CJI Surya Kant [1]

5. Multi-Dimensional Analysis

Legal / Constitutional

• Section 2(p) follows the wording of the triple test, but its listed exclusions reduce its reach. The union argues this does not meet the 1978 Constitution Bench standard [1].
• The clause letting the Centre exclude "any other activity" by notification raises a question of excessive delegation. It lets the executive change the scope of a statute [1].
• The phrase "sovereign functions" is open-ended. Applied broadly, it could remove protections from large parts of public-sector employment [1].

Social

• Workers in charitable, social and philanthropic institutions could lose IRC protections. This group includes many employees of hospitals, educational trusts and NGOs [1][4].
• The 2019 committee report shows the charitable carve-out was flagged as a departure from the ID Act, 1947 before the Code was enacted [4].

Economic

• The government presents the IRC as promoting "harmony and ease of doing business" [3].
• Because capital investment and profit motive are irrelevant, non-profit and low-capital activities stay inside the core definition [2][3]. The listed exclusions then cut that coverage back.

Ethical / Governance

• There is a trade-off between keeping labour law predictable for employers and protecting workers' rights.
• Vague drafting ("deliciously vague") shifts the power to decide coverage onto executive notifications and court cases [1].

Historical

• Since 1978, courts have read 'industry' broadly under Justice Krishna Iyer's triple test. The 2020 Code is an attempt by the legislature to narrow that reading [1][4].

6. Recent Developments (last 12-18 months)

• November 2025: PIB factsheet on the IRC, 2020 issued, stressing harmony and ease of doing business [3].
• 28 October 2026: The SC Bench headed by CJI Surya Kant agreed to hear the AITUC Tamil Nadu petition on Section 2(p) [1].

7. Prelims Hooks

• 'Industry' is defined in Section 2(p) of the Industrial Relations Code, 2020 [1].
• The IRC, 2020 is Act No. 35 of 2020, dated 28 September 2020 [2].
• Under the IRC, capital investment and profit motive are irrelevant to whether an activity is an 'industry' [2][3].
• The 'triple test' for 'industry' comes from a 1978 seven-judge Constitution Bench judgment [1].
• That judgment was written by Justice V.R. Krishna Iyer [1].
• The definition's three elements: systematic activity, employer-worker co-operation, and production, supply or distribution of goods or services [1].
• Exclusions include institutions wholly or substantially engaged in charitable, social or philanthropic service [1].
• Government activity "relatable to sovereign functions" is excluded [1].
• The Central Government can exclude further activities by notification [1].
• The 2019 Bill was examined by the Standing Committee on Labour (2019-20) [4].
• The IRC caps exclusions from 'wages' at 50% [3].
• Petitioner: AITUC, Tamil Nadu. Bench headed by CJI Surya Kant [1].

8. Can Parliament Simply Overrule the 1978 Triple Test?

• The triple test explained the old law. It is not part of the Constitution
• The 1978 Bench was explaining what 'industry' meant in the Industrial Disputes Act, 1947. It was not saying what the Constitution requires [1].
• Parliament can usually change the law that a judgment was based on. Once the law changes, the old reading no longer binds.

• So the union's argument that the Code "fails the triple test" [1] is weak if it stands alone. To win, the union must show that the exclusions break a constitutional rule, such as equality under Article 14.

• The Supreme Court itself had doubts about the triple test

• A later Supreme Court bench found "compelling reasons" to send the meaning of 'industry' to a larger bench. That could mean reconsidering the 1978 ruling [6].

• So the benchmark the union relies on was itself waiting for review.

• Parliament wanted a narrower definition as far back as 1982

• In 1982 the legislature amended the ID Act's definition of 'industry'. That amendment was never brought into force [6].
• The 2020 Code finally put into law a narrowing that had been sitting unused for nearly four decades.

9. The Strongest Case for the Narrow Definition, and Its Limits

• The government's best argument: the 1978 reading was too wide
• The 1978 test pulled hospitals, research bodies and even some government departments into strike and dispute law.
• A recent Supreme Court judgment (2026) calls the broad reading in Bangalore Water, especially its application to research institutions, "a point of inflection" that later invited reconsideration [7].

• On this view, Parliament is fixing a problem the courts themselves noticed.

• What this argument gets right

• Parliament may decide policy. Choosing not to apply industrial dispute rules to genuine charities is a legitimate choice.

• What it cannot answer: three parts of the definition are still loose

• "Wholly or substantially" charitable: the law does not say how much charity counts as "substantially". The Standing Committee said this wording is ambiguous and open to many interpretations [5].
• "Sovereign functions": the Code does not list them. Each department can claim the label, and workers learn whether they are covered only after a court case.

• "Any other activity" by notification: this lets the Centre change who is covered without going back to Parliament [1].

• So the strongest version of the petition is about vagueness and delegation, not the 1978 test

• Parliament may narrow the definition. The question is whether it can leave the exact boundary to executive notification and case-by-case guesswork.

10. What Parliament's Own Committee Warned, and What Was Ignored

• The committee asked for charitable institutions to be brought back in
• The Standing Committee on Labour (2019-20) noted that the definition left out charitable bodies, including educational institutions run by charitable trusts [5].
• It said this exclusion was not justified. Some such institutions have "established big business empires" and employ thousands of workers [5].

• The enacted Code still excludes them [1].

• The committee asked for limits on the notification power

• It recommended that the Code itself spell out the exact cases in which the Centre may exclude an activity [5].
• The final text still has an open-ended power to exclude "any other activity" [1].

• This is the core of the excessive delegation question: Parliament hands its law-making job to the executive without setting clear limits.

• A second gap: one key word is never defined

• The Code covers an "industrial establishment", but it does not define "establishment" [8].
• Other labour codes define terms like "trade" and "business". The IRC does not [8].
• So even workers inside the definition of 'industry' may not know which workplace rules apply to them.

11. How the ILO Draws the Line: by Job, Not by Activity

• The ILO allows only a small, named list of exclusions
• The ILO (International Labour Organization) sets global labour standards.
• Convention 98 deals with collective bargaining, which means workers negotiating pay and conditions as a group. It does not apply to public servants engaged in the administration of the State. The armed forces and the police are the only other groups that may be excluded [9].

• Convention 87, on freedom of association, already covers the public service [9].

• The IRC instead excludes whole activities

• The Code leaves out any government activity "relatable to sovereign functions" [1].
• The ILO excludes particular kinds of workers, such as police or senior administrators.

• Under the IRC, a driver, cleaner or clerk in a 'sovereign' department could lose protection only because of the department they work in, not the job they do.

• Why this matters for the case

• The ILO list gives the Court a narrower, workable meaning of "sovereign functions" if it chooses to read the phrase down. To read down means the Court keeps a law but gives it a narrower meaning so that it stays valid.

12. What Each Side Should Do Next

• Ministry of Labour: put the notification limits into the Code itself
• This is what the Standing Committee recommended [5].

• Listing the grounds for exclusion would answer the excessive delegation charge without giving up the policy.

• Ministry of Labour: test charities by what they do, not by their legal form

• The committee's concern was large trust-run businesses that employ thousands [5].

• A rule based on size, number of workers or fee income would separate a real charity from a business run as a trust.

• Supreme Court: decide the pending reference along with this petition

• The question of whether the 1978 test still holds was already sent to a larger bench [6].

• Deciding the AITUC petition separately could leave two different meanings of 'industry' in force at the same time.

• Supreme Court: read the definition down instead of striking it out

• The Court can limit "sovereign functions" to core State work, close to the ILO list of police, armed forces and State administrators [9].
• The Court can also require every Centre notification to give reasons.
• This keeps the Code working while closing its widest gaps.

13. Anchors for Answers

• Report/Committee: Standing Committee on Labour (2019-20), report on the IR Code Bill, 2019. It recommended including charitable institutions and listing the notification grounds in the Code itself [5]
• Law/Case: Bangalore Water Supply & Sewerage Board v. A. Rajappa (1978, seven judges): the triple test [1]. A later reference to a larger bench questioned it [6]. The 1982 amendment narrowing 'industry' was never brought into force [6]
• Law/Case: Section 2(p), Industrial Relations Code, 2020: three exclusions, including "any other activity" notified by the Centre [1][2]
• Comparison: ILO Conventions 87 and 98. Only the armed forces, police and public servants in State administration may be kept out of collective bargaining, compared with the IRC's open-ended "sovereign functions" [9]

14. Mains Relevance

• GS-II: Separation of powers and delegated legislation; judicial review; government policies and interventions; protection of vulnerable sections.
• GS-III: The Indian economy and employment; labour reforms; ease of doing business.
• GS-IV (secondary): Balancing efficiency against justice in public policy.
• Possible questions: 1. The definition of 'industry' in the Industrial Relations Code, 2020 marks a legislative departure from the judicially evolved 'triple test'. Critically examine. (250 words) 2. Discuss whether broad executive powers to exclude activities from labour statutes are consistent with the doctrine against excessive delegation. (150 words) 3. Labour codes aim to balance ease of doing business with worker protection. Evaluate in the context of the Industrial Relations Code, 2020. (250 words)

15. Related Topics to Study Next

• Industrial Disputes Act, 1947: the earlier definition of 'industry' that the IRC replaces [4].
• The four Labour Codes: the other codes (Wages, Social Security, OSH) complete the consolidation framework.
• Doctrine of excessive delegation: relevant to the Centre's open-ended power to exclude activities by notification [1].
• Sovereign vs non-sovereign functions of the State: the basis for the sovereign-function exclusion [1].
• Trade unions and the right to form associations (Art. 19(1)(c)): relevant to AITUC's standing and collective-bargaining rights.
• Directive Principles on labour (Arts. 38, 39, 41-43A): constitutional backing for worker protection.
• ILO conventions on freedom of association and collective bargaining: the international standard for comparison.
• Parliamentary Standing Committees: their role in scrutinising Bills, as with the 2019 IR Code Bill [4].

16. NCERT Concepts to Revise

• Delegated legislation (Polity): The Centre can exclude activities by notification, raising the question of Parliament handing essential law-making powers to the executive.
• Constitution bench (Polity): The 1978 'triple test' came from a seven-judge Constitution Bench, and the petition challenges the Code against that benchmark.
• Judicial review (Polity): The Supreme Court is asked to test whether Section 2(p) of the Code is valid against its own earlier ruling.
• Trade unions (Polity): AITUC is a central trade union, and the petition seeks to protect its members' coverage under labour law.
• Workers' rights (Economy): The definition decides which workers get protections, so excluded charitable and sovereign-function employees may lose fair-pay and safety safeguards.
• Separation of powers (Polity): The case tests how far the legislature and executive can narrow a definition the judiciary set earlier.

17. Common Errors / Trap Areas

• Section number: 'industry' is in Section 2(p) of the IRC, not Section 2(j). Section 2(j) defined 'industry' in the ID Act, 1947. That ID Act detail is not in the retrieved sources, so verify it [1].
• Bench size and year: the triple-test case was decided by a seven-judge Bench in 1978. It was not a five-judge Bench, and it was not in the 1980s [1].
• Wrong definition: the 50% ceiling concerns 'wages', not 'industry' [3].
• Profit motive: aspirants often assume a profit motive is needed. Under the IRC, capital and profit motive are irrelevant [2][3].
• Act number and year: the IRC is Act No. 35 of 2020. Do not confuse it with the Code on Wages, which is from 2019 [2].
• Petitioner identity: the petitioner is AITUC's Tamil Nadu unit, not the national body as such [1].