Neti, Neti: How the Majority Defined the Term “Industry”

THE BRIHADARANYAKA UPANISHAD does not define the term ‘Brahman’. It keeps on saying ‘Neti-Neti’ (‘not this-not this’). Like that the five-judge majority of the nine-judge bench in describing the term “industry” under Section 2(j) of the Industrial Disputes Act went on saying as to what it is not, rather than saying what it was. This is a typical way of dodging the main issue thereby making everyone guess forever. 

When Chief Justice Surya Kant exhorted that Nyaya-nomics was needed to promote economic growth through consistent adjudication, one understood that this was the philosophy behind the majority opinion in the Bangalore Water Supply and Sewerage Board (1978) case (‘BWSSB’). That spirit sits uneasily with Karl Marx’s view that courts exist to serve the interests of the propertied classes. This is evident in the case where the Supreme Court confirmed the conviction of EMS Namboodiripad, then Chief Minister of Kerala, who was punished by the Kerala High Court for criticizing the judiciary and thereby committing contempt of court. 

In that case, Justice Hidayatullah not only said that EMS either did not understand Marxism or was deliberately misleading in his interview, but after going through several pages of writings of Marx, Engels and Lenin, he wrote: 

“…he talked of the power of the possessing classes-the landed aristocracy and the bourgeoisie-and said that they kept the working people in servitude not only by their wealth got by the exploitation of labour but also by the power of the state, by the army. the bureaucracy, and the courts. He was not charging the judiciary with taking sides but only as an evil adjunct of the administration of class legislation. The fault was with the state and the laws and not with the judiciary.”

If this statement has to be understood as a divine ordainment falling from the higher pedestals of Indian judiciary, then the fault of any legislation is to be blamed on the parliament and not on the courts which are empowered to interpret those provisions. The exercise undertaken by Chief Justice Surya Kant in the Jai Bir Singh (2026) case along with eight other judges coming with a “final” interpretation on a simple word “industry” under the Industrial Disputes Act (‘ID Act’) is a classic exercise where it was not the Parliament but the judiciary which was responsible for making the poor workers to litigate over 78 years in understanding the usage of the term “industry” within the meaning of Section 2(j) of the ID Act. 

The industrial adjudication spread over eight decades basically dealing with the provisions of the ID Act was a classic example as to how the judiciary can interpret (rather misinterpret) provisions at a heavy cost for the working class which never bargain for such an industrial adjudication as a means for achieving their lawful ends by way of court mandated litigation. It once again will be useful to refer to the alleged contumacious words attributed to EMS in his famous press interview (1967): 

“Judges are guided and dominated by class hatred, class interests and class prejudices and where the evidence is balanced between a well dressed pot-bellied rich man and a poor ill-dressed and illiterate person the judge instinctively favors the former…judiciary is part of the class rule of the ruling classes. And there are limits to the sanctity of the judiciary. The judiciary is weighted against..workers, peasants and other sections of the working classes and the law and the system-of judiciary essentially serve the exploiting classes. Even where the judiciary is separated from the executive it is still subject to the influence and pressure of the executive. To say this is not wrong.” 

The Indian workers, who had long been associated with the freedom movement despite losing substantially, and who were also assured of proper legal protection, did not bargain for the ID Act, which, in essence, neither guaranteed collective bargaining nor permitted direct action by way of strike. The only means of securing their legitimate rights was either by way of conciliation or by way of adjudication. 

It is in this context the application of the provisions of the ID Act in terms of workers employed in industry (as opposed to the employees working in agriculture) gave an inclusive definition of the term under Section 2(j) which said:

"industry" means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen;”

Since 1953, there have been several decisions of the Supreme Court interpreting the expression industry. While one trend of decisions continued to define the term with a broader social perspective, the other attempted to narrow down its application so as to exclude several categories from the purview of the statute. In 1953, when a matter came from a municipality, the issue before the court was whether there should be a profit motive involved for an institution to be covered under the ID Act. A Constitution Bench, speaking through Justice N Chandrasekhara Aiyar, clearly laid down the legal proposition that to form an industry, one need not be doing a trade or business. This was affirmed in a later decision by SK Das J.(Baroda Borough Municipality v. Its Workmen AIR 1957 SC 110)

In a subsequent case, in the context of whether a ‘hospital’ would come under the definition of ‘industry’, a three-judge Bench headed by Justice PB Gajendragadkar reiterated that institutions could not be excluded by reason of having a non-profit motive.

Two distinct changes took place soon after the 1960s. First, the composition of the Court underwent extensive changes when most of the old guards left the Supreme Court. Second, there were two significant developments that took place at the national level. The first was the Indo-China border dispute resulting in a declaration of Emergency in 1962, and the second, the Indo-Pakistan war of 1965. During the former, many of the leaders of the leading trade union federation of workmen, the AITUC were detained under various detention laws. There were restrictions on trade unions and social movements. This had a bearing on the minds of judges when they were adjudicating labour disputes. Subsequent decades saw certain smaller Benches consistently doubting prevailing conceptions of the term ‘industry’. At least three cases took diametrically opposite views. Justice Gajendragadkar was responsible for initiating this line of inquiry, stating that the expansive definition of industry required stricter demarcations.

Once the line of distinction was started, it was easy for others to carry this battle further. Justice Hidayatullah, in a three-judge Bench, exempted the Madras Gymkhana Club from the application of the Industrial Disputes Act, stating that the element of trade or business was completely missing in a members’ club.

Later, sitting in a six-judge Bench, Justice Hidayatullah wrote for the unanimous Court that a hospital was not an industry and distinguished the earlier Bombay Hospital case. The Court held that the hospital was not engaged in an economic activity, was run as a department of the Government, and that the treatment of persons was part of the functions of the Government. In Dhanrajgirji Hospital v. Workmen (1975) a subsequent bench comprising of Justices NL Untwalia and A Alagiriswami, known for their conservative views on labour matters, did not lag behind and by following Safdarjung Hospital held that the Dhanrajgirji Hospital is also not an industry covered by the ID Act.

In this dilly-dallying of interpretative process of a labour legislation (which Justice Krishna Iyer calls as semantic luxury) over three decades for the first time saw the advent of few judges into the higher judiciary with social justice values and the true spirit of constitutional morality imbibed in them of which Justice Krishna Iyer was one of them. Naturally the ding-dong battle over the word “industry” for which a simple meaning could not be found was referred to a larger bench of seven judges so that the issue of constant litigation with heavy consumption of time and energy will be put an end to was constituted by Chief Justice MH Beg. 

Justice Krishna Iyer in defining the term “industry” did not want to be legalistic but pragmatic so that the purpose of the legislation is kept in mind as an interpretative tool. He also applied the normal dictionary meaning to define the term. In his judgment, he traced the line of decisions starting from Banerjee’s case (1953) to ISI case (1976) which consistently and harmoniously run to have an objective meaning of the term “industry”. The larger bench which accepted the sole opinion of Justice Krishna Iyer, also overruled the other decision which stood in the way of a harmonious construction and put an artificial slant to the definition. It is necessary to extract certain passages from the judgement to show the judicial statesmanship of Justice Krishna Iyer and his passion for expanding the horizon of labour jurisprudence:

“Legalese and logomachy have the genius to inject mystique into common words, alienating the laity in effect from the rule of law……Natural meaning is nervous of acceptance in court where the meaning of meanings is lost in uncertain erudition and cases have even cancelled each other out while reading meaning.” 

Even though Chief Justice Beg who initially did not sign the majority opinion prepared by Krishna Iyer and stated that he will write a separate opinion finally fell in line with the majority. Thus everyone thought that the issue of the term “industry” was finally settled and there would be no more litigation on that score which this poor country can never afford. 

The Constitution of India was also amended by the 42nd amendment the word “socialism” and “secularism” was introduced into the preamble. It is needless to state that in Kesavananda’s case the court held that the preamble of constitution is also a basic structure of the Constitution. Notwithstanding the socialist preamble to the constitution, the judges have their own way of adjudicating labour statutes without the social philosophy knitted into it.  The challenge to the prior permission for closure introduced by way of Section 25-O was when under challenge while striking down the provision, Justice Untwalia observed: “so long as the private ownership of an industry is recognised and governs an overwhelmingly large proportion of our economic structure, is it possible to say that principles of socialism and social justice can be pushed to such an extreme so as to ignore completely or to a very large extent the interests of another section of the public namely the private owners of the undertakings?”.

In the meantime, the Govt. of India appointed Ravindra Varma Commission (1982) to go into the working of the labour legislations.  The commission recommended consolidation of independent labour enactments and for codification as well as simplification of its provisions. But the Parliament did not make any such change except an amendment by way of Amending Act 46/1982. The Amending Act while virtually incorporating the substance of the judgment in BWSSB defined the term “industry” once again with a whole lot of exemptions provided therein. The definition of the term 2(j) excluding the exemptions provided read as follows:

“Sec 2 (j) "industry" means any systematic activity carried on by co-operation between an employer and his workmen (whether such workmen are employed by such employer directly or by or through any agency, including a contractor) for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature), whether or not, 

(i) any capital has been invested for the purpose of carrying on such activity; or

(ii) such activity is carried on with a motive to make any gain or profit”

For some of the excluded categories, the Parliament also brought a Bill (Hospital and other institutions Redressal of Grievances of Employees Bill, 1988).  However, due to the resistance by the unions and workers, the move to make it into an act was dropped.  Likewise, the 1982 amendment remained without being notified even till date. This only means that the Parliament which has to make a law did not think it fit to take the legal basis of the BWSSB judgment out of purview by substituting a new legislation. This position continued from 1982 till now i.e. a period of 44 years. 

But in the meanwhile, a bench of two judges in the Jai Bir Singh case referred the matter for decision by a larger bench and observed: 

“Pressing demands of the competing sectors of employers and employees and the helplessness of legislature and executive in bringing into force the Amendment Act compel us to make this reference.” (Jai Bir Singh, 2005) 

This statement made by the bench was factually incorrect because already the 1982 amendment was on the statute book and the govt. did not notify the amendment for its own policy reasons over which the court can hardly say anything. 

When this reference was made to a larger bench, Fali S Nariman commented (Fali S.Nariman (2005), Justice V.R.Krishna Iyer’s Contribution to the process of Justice, (Justice Krishna Iyer at 90), Universal Law Publishing Co., p. 57 ).: 

“Krishna Iyer always did what he thought was right – he never bothered about the consequences.  In the Bangalore Water Supply case, he deliberately widened the spectrum of what was meant by the word “industry” under Section 2(j) of the ID Act, overruling what the Supreme Court had previously and almost consistently said about this word and its restricted interpretation and carrying six of his colleagues with him. When Parliament intervened to re-define narrowly the term “industry” in the Act, almost nullifying his judgment, the amendment did not bother him.  His approach in this, as in all matters, was influenced only by his own sense of the dominant need of the times.  In the same case, after noticing the rival contentions of counsel for each of the parties he said :

“Is it not obvious from these rival thought-ways that law is value-loaded, that social philosophy is an inarticulate interpretative tool?  This is inescapable in any school of jurisprudence. His social philosophy was more than an interpretative tool.  It has been the mainspring of almost all his judicial dicta.  He founded this new “school of jurisprudence” – which had many adherents.  It still has” 

Justice Chinnappa Reddy in his memoirs wrote on the attempt to derail BWSSB judgment (O.Chinnappa Reddy (2008), The Court and the Constitution of India, Oxford University Press, p.187):    

“Though this case has stood the test of time for over a quarter of a century, in State of UP vs. Bir Singh(2005 (5) SCC 1), the Court while holding that the main aim of the Industrial Disputes Act was to regulate and harmonize the relationship between employers and employees for maintaining industrial peace and social harmony, appeared to water down the Bangalore Water Supply case and stated that labour should not be given any advantage over the employer.  The learned judges seemed to think that the judgment of Krishna Iyer J in Bangalore Water Supply case was over-expansive and one-sided, that is, worker-oriented.  Perhaps the learned judges would also say that Articles 15 and 16 on Fundamental Rights and all the Directive Principles of State Policy were oriented in favour of the weaker sections and should therefore be interpreted strictly and not broadly”  

Notwithstanding the reference to a larger bench, none of the succeeding 15 Chief Justices of India have constituted a larger bench of 9 judges perhaps knowing its futility and wastage of time. But at the same time, in the economic sphere, the spread of Liberalization, Privatization and Globalization (‘LPG’) had its own impact on the judges of the Supreme Court and they were also making their own ideas of economic policies notwithstanding the constitutional thrust. 

To cap it all, Justice Lakshmanan went another extreme and happily declared that socialism is beginning to wither away which is no longer valid in the light of liberalization and observed: “Socialism might have been a catchword from our history. It may be present in the Preamble of our Constitution….due to the liberalization policy adopted by the Central Government from the early nineties, this view that the Indian society is essentially wedded to socialism is definitely withering away.”

Not only exhorting their ideas of economy, an open attack against the authors of pro-socialist judgments also started.  Disagreeing with Justice Krishna Iyer’s interpretation of Article 39(b) of the Constitution, a nine-judge bench headed by Dhananjay Chandrachud CJI ruled with a 7:2 majority that not all private properties can be classified as “material resources of the community”, which would otherwise permit states to acquire them for distribution towards ‘common good’ under the Constitution. The doctrinal error in the Krishna Iyer approach was, postulating a rigid economic theory, which advocates for greater state control over private resources, as the exclusive basis for constitutional governance.

Undaunted by all these criticisms, Chief Justice Surya Kant constituted a nine-judge bench of which he made himself a centre stage and embarked upon dissecting the BWSSB judgment in his own way. The outcome was a 5:4 majority and curiously the bench made several jurisprudential experiments which have never been heard of till this date. The majority held that BWSSB will continue to prevail over the existing disputes pending in various courts and also those which are finalized during the period of reference.   

But at the same time, conscious of the fact that a new labour code has come into force (Industrial Relations Code, 2020) under which Section 2(p) defined the term “industry” which is nothing but a reproduction of the 1982 amendment of Section 2(j) of the ID Act. At the same time, the new IR Code had excluded several institutions including the government. departments, charitable social and philanthropic services, domestic services and also any other activity which can be excluded by the order of the government. There was no mention of any Alternate Dispute Resolution mechanism for the excluded services. 

Knowing fully well that if no mention of the new IR Code is made the same will be susceptible for challenge in future. Therefore, the majority held that the rationale of BWSSB will not apply to the new legislation and it will be considered in case of any challenge on its own merits. This kind of advance ruling over a new law has never been made part of the Indian jurisprudence. The term “industry” in English could mean only the same whether it is 1947 or 1978 or 1982 or 2026. To say that BWSSB principle will not apply to the new law what the majority attempts to do was to keep open the issue of litigation over the term “industry” for another several decades which can only fatten the purse of the lawyers and not certainly the litigants especially the poor workers who have been footballed already eight decades thanks to the number game (constitution of benches) played by the court.  

One is unable to comprehend as to what exactly the Justice Surya Kant-led bench was attempting to deal with the issue of the legality of BWSSB judgment given by a seven-judge bench headed by Justice Krishna Iyer and which continued to operate from 1978 and for the last 48 years in the field of industrial adjudication. 

If BWSSB judgment is prospectively overruled, then how the term “industry” which was litigated for over eight decades will be decided in future is an issue no one knows the answer to. On the contrary, it would have been proper for the nine-judge bench instead of writing a large treatise on a dead issue to hold that there was no necessity to go into the issue raised in view of the new legislation which in any way excludes several categories of employments from out of the purview of the Industrial Relations Code and such exclusionary issues will have to be fought out on different principles and not on the meaning of the term “industry”. 

Perhaps in the Nyaya-nomics of Justice Surya Kant the decision-making process was largely influenced by the new economic system and his opinion was an endorsement of what EMS said and was unjustly punished by the very same court. 

One cannot escape to note that the majority did not keep in mind the prophetic words of Justice Iyer who forewarned in the BWSSB judgment with the following words:

“A pluralist society with a capitalist backbone, notwithstanding the innocuous adjective 'socialist' added to the Republic by the Constitution (42nd Amendment Act, 1976) regards profit-making as a sacrosanct value. Elitist professionalism and industrialism is sensitive to the 'worker' menace and inclines to exclude such sound and fury as 'labour unrest' from its sanctified precincts by judicially de-industrialising the activities of professional men and interest groups to the extent feasible. Governments in a mixed economy, share some of the habits of thought of the dominant class and doctrines like sovereign functions, which pull out economic enterprises run by them, come in handy. The latent love for club life and charitable devices and escapist institutions bred by clever capitalism and hierarchical social structure, shows up as inhibitions transmuted as doctrines, interpretatively carving out immunities from the 'industrial' demands of labour by labelling many enterprises 'non-industries'. Universities, clubs, institutes, manufactories and establishments managed by eleemosynary or holy entities, are instances. To, objectify doctrinally subjective consternation is casuistry.”