By Bhushan Arora
#bhushanscribbles
During a Supreme Court hearing on 29 January 2026 in a public interest litigation (PIL) filed by domestic workers’ unions (Penn Thozhilargal Sangam and others), the bench led by Chief Justice Surya Kant expressed broad economic and policy concerns about extending minimum-wage protections to domestic workers
The CJI voiced a deep scepticism about trade unionism’s role in India’s industrial development. He said that unions — disparagingly referred to in some coverage as “jhanda unions” (flag-waving groups) — have been “largely responsible” for halting industrial growth and causing closures of traditional industrial units across the country. The oral observations made by the Hon’ble Chief Justice of India, attributing India’s industrial slowdown and the closure of industrial units largely to “flag-bearing” trade unions, call for careful and reasoned scrutiny. While the judiciary’s concern for employment generation and economic vitality is entirely legitimate, placing the primary responsibility for industrial stagnation on trade unions raises serious constitutional, historical, economic, and institutional concerns.
Such a characterisation not only oversimplifies complex structural challenges facing Indian industry, but also risks undermining constitutionally protected labour institutions that were consciously created to address deep-seated inequalities in a developing economy.
Under colonial rule, India’s industrial labour regime was marked by:
Extreme and unregulated labour exploitation
Absence of minimum wages, job security, or workplace safety
Criminalisation of strikes and collective resistance
Suppression of any form of worker organisation.
Labour treated purely as a disposable input for imperial profit
Workers had no institutional voice. Industrial relations were coercive, and resistance was routinely met with repression. This historical reality is crucial, because trade unions did not arise in a vacuum—they were born as a response to systemic injustice.
Independent India deliberately rejected the colonial labour regime. The Constitution and subsequent labour legislation aimed to:
Humanise industrial relations
Balance capital and labour interests
Prevent exploitation in a labour-surplus economy
Ensure social stability in a newly independent nation
Trade unions emerged not as obstacles to growth, but as corrective mechanisms in an inherently unequal manpower structure. Their role was stabilising, not destructive.
Trade unions in India were not an accident of ideology or political indulgence. They were a deliberate constitutional and legislative choice.
Article 19(1)(c) guarantees the fundamental right to form associations and unions
Directive Principles of State Policy (Articles 38, 39, 43) mandate:
Social and economic justice
Living wages
Humane conditions of work
India consciously adopted a welfare-state model, not laissez-faire capitalism. The legislature recognised certain economic realities:
Individual workers lack bargaining power
Unregulated managerial authority leads to exploitation
Industrial peace requires collective negotiation, not unilateral managerial authority
Growth without labour protection produces inequality and unrest and inequility.
Trade unions were therefore empowered to stabilise industry, not to sabotage it.
The Industrial Disputes Act, 1947 was enacted to replace chaos with institutional order. Its objectives included:
Preventing arbitrary dismissals
Institutionalising conciliation, arbitration, and adjudication
Reducing wildcat strikes and sudden lockouts
Moving industrial conflict from the streets to rule-based forums
Union recognition under the ID Act was intended to channel labour discontent, not to grant veto power over industrial operations.
To suggest today that this statutory framework itself is responsible for industrial decline is, in effect, to allege that Parliament committed a fundamental policy error—a position that no constitutional court has ever endorsed.
If trade unions are “largely responsible” for industrial stagnation, the logical implications are profound:
Parliament erred in recognising trade unions
Constitutional protection of collective bargaining is misguided
Labour rights are economically counter-productive
Such implications amount to judicial second-guessing of legislative wisdom, a boundary courts have traditionally respected. Courts in India traditionally exercise judicial restraint on socio-economic policy, especially where constitutional rights and legislative standards intersect.The judiciary’s role is to interpret the law—not to recast the Republic’s political economy through oral observations.
Empirical data does not support the claim that trade unions are the primary cause of industrial decline.
India’s GDP has grown consistently since liberalisation
Manufacturing and services expanded even during periods of strong union presence (1950s–1980s)
MSMEs flourished in labour-regulated environments
There is no credible macroeconomic evidence establishing that:
Trade unions caused nationwide industrial closures
Union activity directly correlates with GDP slowdown
Industrial decline in specific sectors is more credibly linked to Technological obsolescence, Poor corporate governance, Policy shocks (Demonetisation, GST transition issues),Credit contraction, High cost of capital, Import dependence and global competition
In many cases, labour disputes are symptoms of distress, not its root cause.
Trade unions emerged from material necessity, not political theatrics:
Unsafe working conditions
Wage theft and arbitrary layoffs
Absence of social security
Extreme power asymmetry between employer and worker
They functioned as institutions of industrial democracy, securing gains that are now taken for granted:
Eight-hour workday
Minimum wages
Provident fund and gratuity
Maternity benefits
Workplace safety standards
Dismissing them as “Jhanda Unions” trivialises decades of struggle that underpin modern labour protections.
No authoritative national study conclusively links union presence to industrial slowdown
ILO research consistently finds that stable industrial relations enhance productivity
Economies with strong unions—Germany, Nordic countries—often outperform low-union economies
Union suppression is not a prerequisite for growth; institutional balance is.
The International Labour Organization (ILO) treats freedom of association and the right to form unions for collective bargaining as fundamental human rights at work. which are considered Core Labour Standards.
This is not optional or symbolic — it’s foundational.
8. Why the Remarks Are Institutionally Problematic
The bench was considering a specific PIL about welfare measures for domestic workers, not a broad adjudication on trade unionism nationwide. CJI's comments reflected an economic viewpoint about labour regulation and unintended consequences of well-meaning reforms, expressed orally during a hearing. These are not a formal judicial ruling on the economic role of unions.
The comments are concerning because they:
Oversimplify complex economic realities
Delegitimise constitutionally protected institutions
Risk eroding public confidence in collective bargaining
Blur the line between judicial observation and policy advocacy
Judicial restraint is especially vital when addressing socio-economic frameworks deliberately crafted by Parliament. Chair of CJI must be especially cautious when commenting on socio-economic structures that Parliament has consciously designed.
The timing of the remarks — just weeks before a nationwide general strike by central trade unions (scheduled for 12 February 2026) — adds to the controversy. It is felt that such comments from the judiciary could influence public debate and may potentially weaken the proposed strike and may derail the organized labour’s negotiating position through collective negotiations.
9. How the Supreme Court has historically looked at unions
Ironically, What I have stumbled upon is a quiet but very consistent constitutional thread in Supreme Court jurisprudence. the Court has repeatedly acknowledged that collective bargaining and trade unions are not aberrations, but a structural reality of modern industrial society.
That is why, in several judgments, the Court observed that:
Capital and labour are no longer isolated individuals; both have organised themselves into groups, and collective bargaining has come to stay as a mode of resolving labour disputes and determining service conditions.
Balmer Lawrie Workers’ Union, Bombay v. Balmer Lawrie & Co. Ltd. (1984) 1984 INSC 241 :
State Bank of India & Anr. v. All Orissa State Bank Officers’ Association & Ors. (2002), 5 SCC 669
Hindustan Lever Employees’ Union v. Hindustan Lever Ltd. (1994) 4 SCC 392 and 1995 Supp (1) SCC 499
Girja Shankar Kashi Ram v. Gujarat Spinning & Weaving Co. Ltd. (1962) and Santuram Khudai v. Kimatrai Printers & Processors (P) Ltd. (1978)
In the citations above, The Supreme Court upheld the exclusive representation rights of a recognized trade union in collective bargaining/industry forums and affirmed that recognised unions function as an indispensable channel of collective bargaining between workers and management.
Trade unions are not enemies of growth. They are products of India’s constitutional commitment to social justice and industrial peace. Industrial stagnation cannot be attributed to labour organisations without rigorous empirical evidence.
To do so risks shifting blame away from systemic failures in governance, finance, and industrial policy. India does not need fewer rights—it needs better regulation, stronger institutions, and fairer growth.
Vilifying trade unions may produce sharp soundbites, but it makes for poor constitutional economics and weaker industrial democracy.