A petition has been filed before the Supreme Court challenging the exclusion of charitable institutions, activities relatable to sovereign functions and other government-notified activities from the definition of 'industry' under the newly introduced Industrial Relations Code, 2020 (IR Code).
The petition filed by the Tamil Nadu unit of the All India Trade Union Congress (AITUC) came up for hearing on Wednesday before a Bench of Chief Justice of India (CJI) Surya Kant and Justices Joymalya Bagchi and V Mohana.
Senior Advocate Gopal Sankaranarayanan, appearing for the petitioner, submitted that the August 20 judgment delivered by a nine-judge Constitution Bench did not examine the definition of 'industry' under the Industrial Relations Code, 2020.
"This is a challenge to the definition of industry under the new Code. Your Lordships have expressly left that issue open in the Constitution Bench. Notice can be issued and the matter can be taken up at some point."
"Is there any problem with this definition?" CJI Kant asked.
Sankaranarayanan replied,
"Yes. Your Lordships had gone through the triple test. Eight out of nine judges had taken that view. The new definition excludes charitable and sovereign activities. It also permits the government to notify activities for exclusion. This is a vires challenge on the same issue. Notice can go at least."
"I would like to go through it," CJI Kant said.
The IR Code, though enacted in September 2020, came into force on November 21, 2025, repealing the Industrial Disputes Act, 1947.
Section 2(p) of the Code excludes from the scope of "industry", institutions engaged in charitable, social or philanthropic service, activities relatable to sovereign functions, domestic service and any other activity notified by the Central government.
The petition challenges all exclusions barring domestic service. It contends that the exclusions depart from the functional "triple test" laid down in Bangalore Water Supply and Sewerage Board v. A Rajappa by exempting establishments based on the character of the employer rather than the nature of the activity, thereby violating Articles 14, 19(1)(c) and 21 of the Constitution.
According to the plea, the nine-judge Constitution Bench, in its August 20 judgment, held that legacy proceedings under the repealed Act would continue to be governed by Bangalore Water Supply. However, it expressly left open the interpretation and validity of Section 2(p).
The judgment warrants, rather than forecloses, judicial examination of the new statutory regime, the petitioner has contended.
On the sovereign functions exclusion, it argues that welfare, developmental or public-service activities do not become sovereign merely because they are undertaken by the government.
The residuary clause allows the Centre to exclude any other activity without an express criterion, standard or procedural safeguard, the plea has contended.
The petition was filed through advocate Aarthi Rajan.
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