AITUC has challenged the provisions Section 2(p)(ii)(i), Section 2(p)(ii)(ii) and Section 2(p)(ii)(iv) of the Industrial Relations Code, 2020.

A petition has been filed before Supreme Court of India under Article 32 of the Constitution challenging the constitutional validity of the statutory definition of “industry” under the Industrial Relations Code, 2020.

All India Trade Union Congress, Tamil Nadu has challenged the exclusionary clauses contained in Section 2(p)(ii)(i), Section 2(p)(ii)(ii) and Section 2(p)(ii)(iv) of the Industrial Relations Code, 2020, which exclude institutions engaged in charitable, social or philanthropic service, activities relatable to sovereign functions, and any other activity notified by the Central Government from the statutory definition of “industry”.

The plea was taken up on Wednesday when a CJI Surya Kant led bench had refrained from issuing notice saying that it would like to read the papers first and then take up the issue.

Originally, the expression “industry” was defined under Section 2(j) of the Industrial Disputes Act, 1947. The scope of this definition was authoritatively interpreted by a Seven-Judge Constitution Bench of the Supreme Court in Bangalore Water Supply and Sewerage Board v. A. Rajappa which settled the law by establishing the now well-known functional “triple test” for determining whether an activity constitutes an industry. 

As part of the consolidation of labour laws, Parliament enacted the Industrial Relations Code, 2020 along with three other labour codes. Section 2(p) of the Code broadly reproduces the functional formulation recognised in Bangalore Water Supply, and has introduced broad statutory exclusions under Section 2(p)(ii).

These exclusions are alleged to have departed from the principles laid down by the Constitution Bench by excluding entire classes of establishments based on the character of the institution rather than the nature of the activity performed.

"...the impugned exclusions under Section 2(p)(ii) of the Code are worded in statutory language that is considerably broader than the narrow sovereign exception recognised in Bangalore Water Supply, and may potentially exclude welfare schemes, research institutions and public service bodies that would otherwise satisfy the statutory test of industry. It is therefore essential that the wide amplitude accorded to the threshold definition “industry” in Bangalore Water Supply be reaffirmed," the plea states.

Court has been told these exclusions raise serious constitutional concerns under Articles 14, 16, 19(1)(c) and 21 of the Constitution, as they arbitrarily deprive large classes of workers of statutory labour protections and create irrational distinctions between similarly situated workers. "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 plea submits.

Recently, a nine-judge bench of the Supreme Court by a 5:4 majority modified the definition of 'industry' as interpreted in 1978 by a seven-judge bench judgment in Bangalore Water Supply & Sewerage Board v. R Rajappa & Others.

Court has ruled that certain aspects of the triple test and the accompanying guidelines formulated in Bangalore Water Supply require further refinement, while the essential framework laid down therein has stood the test of time.

The said ruling will remain applicable only prospectively and will not apply to pending disputes/ cases. The 9-judge bench also refrained from examining the new definition of 'industry' under the Industrial Relations Code, 2020. The Court also said that the pending cases may be decided in accordance with earlier definition.

Case Title: ALL INDIA TRADE UNION CONGRESS, TAMIL NADU VS. UNION OF INDIA & ANR.