Who is a worker? SC bench to revisit landmark 1978 ruling

For nearly five decades, a single judicial ruling has quietly shaped the working lives of millions of Indians. That ruling — delivered in 1978 by a seven-judge bench of the Supreme Court — decided that the word “industry” in Indian labour law should be read as broadly as possible, bringing hospitals, schools, charitable organisations and even some government departments under the protective umbrella of labour rights. Now, a nine-judge Constitution Bench is examining whether that interpretation was right all along, or whether it stretched the law beyond what Parliament ever intended.

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The hearings, which began on March 17 before a bench led by Chief Justice Surya Kant, represent one of the most consequential labour law proceedings in Indian judicial history. The question at stake, seemingly technical, has very human consequences: which workers can raise a dispute about their wages, their dismissal, their conditions of service? Who is entitled to the protections the law offers, and who is left outside its reach?

How it all began

The story goes back to 1978, when the Bangalore Water Supply and Sewerage Board disputed a labour tribunal's jurisdiction over its workers. A seven-judge bench, in a judgment authored by the late Justice VR Krishna Iyer, ruled decisively in favour of an expansive definition. Under what came to be called the “Triple Test,” any organisation that engaged in a systematic activity, employed workers, and produced goods or services — whether or not it was run for profit — would qualify as an “industry” under the Industrial Disputes Act, 1947. The consequence was far-reaching: a charitable hospital, a private university, a research institute, a cooperative society — all fell within the definition.

This was a deliberate ideological choice. Justice Krishna Iyer believed that the purpose of labour law was to protect the weaker party in the employment relationship, and that restricting protection to factories and commercial enterprises alone would betray that purpose. The ruling was celebrated by trade unions and labour advocates as a victory for working people. Employers, unsurprisingly, saw it differently.

Over the following decades, a series of cases chipped away at the certainty the 1978 ruling had provided. Conflicting decisions emerged on whether government departments performing welfare functions were “industries.” In 2005, a five-judge bench expressed doubt about whether the Bangalore Water Supply judgment had actually commanded a majority, and referred it for reconsideration. By 2017, a seven-judge bench decided that only a nine-judge bench — larger than the original — could revisit the ruling. That bench has now finally assembled.

What is being argued?

Those who want the court to revisit the 1978 ruling argue that Justice Krishna Iyer's judgment took an ideologically loaded, worker-oriented approach that went far beyond what the statute required. Senior Advocate Shekhar Naphade told the bench that the time had come to return to the plain meaning of words like “trade,” “business,” and “manufacture.” Teaching, he argued, is an act of intellectual enlightenment, not a material service, and education — now a fundamental right under Article 21A — cannot simply be classified as an industry. The logic is that when the state performs a constitutional obligation, it should not be treated as a commercial enterprise.

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The Union government, through Attorney General R Venkataramani, made perhaps the most pointed submission on the first day of the hearing. Courts, he warned, should not substitute their own social or economic philosophy for legislative judgment. An over-expansive interpretation burdens employers and deters private enterprise at a time when job creation is a pressing national priority. He also pointed to Parliament’s decision to replace the Industrial Disputes Act with the Industrial Relations Code, 2020 — a signal, he said, that the legislature has already chosen to restructure what was an unwieldy and sprawling definition.

On the other hand, Senior Advocate Indira Jaising argued forcefully that the 1978 judgment needs no reconsideration at all. The entire reference, she submitted, rests on a false premise — that the bench in the Bangalore Water Supply case was itself divided. The bench should reject the reference rather than reopen settled law. Crucially, she reminded the court that any ruling it delivers will affect workers on both sides of the dispute: labour disputes are raised by workers seeking protection, but also by employers seeking to escape liability. Restricting the definition does not make the disputes disappear; it merely removes the forum where workers can seek redress.

The complication no one can ignore

There is an additional layer of complexity that runs through the entire proceeding. The Industrial Disputes Act, whose Section 2(j) defines “industry,” has already been repealed. The Industrial Relations Code, 2020 came into force in November 2025, replacing the old law. Some lawyers argued before the bench that the entire reference is now moot — the court would essentially be interpreting a provision that no longer exists. The bench was unconvinced. Justice BV Nagarathna put it plainly: whatever the court says will apply to the large number of cases that were filed and are pending under the old law. Those cases must be decided somehow.

What hangs in the balance?

If the nine judges narrow the definition of “industry,” the consequences will be immediate and severe for a large section of the workforce. Workers in hospitals, schools, NGOs, government welfare departments and professional organisations could find themselves outside the statutory framework that governs wages, working hours, layoffs and dispute resolution. There is no alternative mechanism in place to absorb them. The 1982 amendment to the Industrial Disputes Act, which had sought to define “industry” more precisely, was passed by Parliament but never brought into force — a sign of how politically toxic the question has always been. A restrictive ruling without a replacement framework would leave a legal vacuum.

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If the court leaves the 1978 ruling intact, the long-standing uncertainty around sovereign functions and government welfare schemes will persist. State governments and employer associations have complained for decades that the broad definition makes it impossible to restructure public services, close down unviable departments or implement policies that would otherwise be straightforward management decisions in a commercial enterprise. That argument has acquired new urgency with the push towards privatisation and economic liberalisation.

Why it matters now

The nine-judge bench sits at an unusual moment. The old law is gone, replaced by a new code whose provisions carry their own ambiguities. Hundreds of thousands of cases under the old act remain pending in labour courts across the country. The decision will not merely settle an academic debate about the scope of a definition — it will determine, in very practical terms, whether a hospital nurse, a schoolteacher, a welfare officer or a charitable trust employee has a legal right to a fair hearing when things go wrong at work. That is a question about the kind of society India chooses to be, dressed, as constitutional questions often are, in the language of statutory interpretation.