AITUC Challenges Industrial Relations Code Industry Definition in Supreme Court

• The All India Trade Union Congress (AITUC) has challenged the constitutional validity of the 'industry' definition in India's Industrial Relations Code, 2020.
• Specific sections of the Code are contested for excluding charitable, social, and sovereign activities from the definition of 'industry'.
• The plea argues these exclusions depart from the Supreme Court's landmark 'triple test' established in *Bangalore Water Supply v. A. Rajappa*.
• Workers in excluded sectors, such as charitable hospitals, may lose access to statutory labour protections and dispute resolution mechanisms.
• A recent nine-judge bench modified the *Bangalore Water Supply* interpretation of 'industry' but ruled it applies only prospectively, not affecting pending cases.

Workers employed in establishments such as charitable hospitals, welfare institutions, and other public or service organisations would thereby be denied access to the statutory machinery for investigation and settlement of industrial disputes and rendered unable to challenge illegal termination, retrenchment or unfair labour practices before Labour Courts and Industrial Tribunals.

The All India Trade Union Congress (AITUC) in Tamil Nadu has initiated a legal challenge before the Supreme Court of India, questioning the constitutional validity of the definition of "industry" as outlined in the Industrial Relations Code, 2020. The petition, filed under Article 32 of the Constitution, specifically targets exclusionary provisions within Section 2(p)(ii)(i), Section 2(p)(ii)(ii), and Section 2(p)(ii)(iv) of the Code.

These contested clauses remove several categories from the statutory definition of "industry," including entities involved in charitable, social, or philanthropic services, activities linked to sovereign functions, and any other activities that the Central Government may choose to notify. The AITUC contends that these exclusions are unconstitutional, arguing they infringe upon fundamental rights guaranteed by Articles 14, 16, 19(1)(c), and 21 of the Constitution. During the initial hearing, a bench led by Chief Justice Surya Kant opted to review the submitted documents thoroughly before proceeding with the issuance of a formal notice.

The concept of "industry" in India's labour law has a significant judicial history, originally defined under Section 2(j) of the Industrial Disputes Act, 1947. A pivotal interpretation of this definition was provided by a seven-judge Constitution Bench of the Supreme Court in the landmark case of *Bangalore Water Supply and Sewerage Board v. A. Rajappa*. This ruling established a functional "triple test" to determine whether a particular activity qualified as an industry, setting a crucial precedent for India labour law definition of industry.

The Industrial Relations Code, 2020, enacted as part of a broader effort to consolidate various labour laws, largely incorporates the functional framework established in *Bangalore Water Supply* within its Section 2(p). However, the Code introduces specific statutory exclusions under Section 2(p)(ii), which are now at the heart of the AITUC's Supreme Court challenge Industrial Relations Code industry definition.

The AITUC's plea asserts that the exclusions introduced by Section 2(p)(ii) of the Industrial Relations Code, 2020, represent a significant departure from the principles laid down in *Bangalore Water Supply*. The core argument is that these new provisions categorize establishments based on their institutional character rather than the actual nature of the activities they perform, which was the cornerstone of the previous judicial interpretation. The petition highlights that the language used for these exclusions is considerably broader than the narrow sovereign exception recognized in *Bangalore Water Supply*, potentially impacting a wide array of organizations.

This redefinition could lead to the exclusion of welfare schemes, research institutions, and various public service bodies that would otherwise satisfy the established criteria for an "industry." Consequently, workers employed in sectors such as charitable hospitals, welfare institutions, and other public or service organizations would be denied access to statutory labour protections. This includes the crucial machinery for investigating and settling industrial disputes, effectively preventing them from challenging illegal terminations, retrenchment, or unfair labour practices before Labour Courts and Industrial Tribunals, thereby creating irrational distinctions among similarly situated workers.

In a related but distinct development, a nine-judge bench of the Supreme Court recently revisited the interpretation of 'industry' as established in the 1978 *Bangalore Water Supply* judgment. By a 5:4 majority, the bench ruled that while the essential framework of the "triple test" remains robust, certain aspects and accompanying guidelines require further refinement. This recent modification to the definition of 'industry' is significant for the evolving landscape of India's labour laws.

Crucially, the Supreme Court clarified that this new ruling will apply only prospectively. This means it will not impact pending disputes or cases that are currently before the courts. Therefore, the ongoing challenge by the AITUC concerning the constitutional validity Industrial Relations Code and its definition of "industry" will be adjudicated based on the legal interpretations and precedents that were in effect prior to this recent nine-judge bench decision.

Lawyers and compliance officers must closely monitor the Supreme Court's proceedings regarding the definition of 'industry' under the Industrial Relations Code, 2020. The outcome will determine the scope of statutory labor protections and dispute resolution mechanisms for organizations previously excluded, such as charitable or social service entities, potentially altering compliance obligations and worker rights.

Source: Original reporting via Live Law