Congress flags concerns over Supreme Court’s ruling on definition of ‘industry’

The Congress on Saturday (August 22, 2026) expressed concern over the Supreme Court’s recent ruling on the definition of “industry”, saying any move to narrow the scope of the law could weaken safeguards available to workers.

The judgment in State of Uttar Pradesh vs Jai Bir Singh, delivered on August 20, 2026, had raised important questions about the future interpretation of labour law, Congress general secretary in-charge of communications Jairam Ramesh said.

The Modi government’s Industrial Relations Code, 2020, had already “significantly weakened essential safeguards for our workers”, he said.

The Supreme Court’s majority judgment revisited the interpretation of “industry” laid down in its landmark 1978 judgment in the Bangalore Water Supply and Sewerage Board vs A. Rajappa case, in which the court had evolved the “Triple Test” — systematic activity, cooperation between employer and employee and production or distribution of goods or services to satisfy human wants and wishes.

The judgment had also held that the absence of a profit motive did not by itself take an activity outside the definition of an industry. The main exception was core sovereign functions, including the judiciary, law and order and defence.

This broad interpretation had, for nearly five decades, brought a wide range of workers within the protection of labour laws, Mr. Ramesh said.

The recent majority judgment, he claimed, sought to narrow the approach by requiring an activity to have a “discernible commercial character” resembling trade or business. It also widened the scope of the sovereign-function exemption, potentially excluding more government activities from the definition of “industry”, he added.

“The Supreme Court has clarified that this reformulation will not disturb concluded or pending proceedings under the erstwhile Industrial Disputes Act as amended from time to time, and will not govern the interpretation of the new Industrial Relations Code. But leaving this ‘hypothesis’ on the record creates an interpretive vacuum that could open a Pandora’s box of litigation and uncertainty, particularly before Labour Courts and Industrial Tribunals,” Mr. Ramesh said.

He praised Justice B.V. Nagarathna’s dissent, saying she had rightly held that the 1978 judgment did not require reconsideration and had cautioned against disturbing settled law.

Justice Nagarathna also pointed to the changes in India’s industrial landscape following liberalisation, privatisation, and globalisation. Justices Dipankar Datta and Ujjal Bhuyan concurred with her that the 1978 judgment did not require reconsideration.

“The August 2026 majority judgment is concerning because it injects uncertainty into labour relations at a time when clarity is essential for industrial peace,” Mr. Ramesh said.

“In an open economy with increasing private delivery of services, any move to narrow or distance the law from the broad definition of ‘industry’ risks weakening worker safeguards precisely when they are needed most,” the Congress leader said.