How to define 'industry': Inside SC's split verdict, Pg16

Key Highlights:

• A nine-judge Supreme Court Constitution Bench delivered a fractured verdict on the definition of "industry" under Indian labour law.
• For pending cases under the repealed Industrial Disputes Act, 1947, the 1978 "triple test" from Bangalore Water Supply and Sewerage Board vs A Rajappa will continue to apply.
• The new Industrial Relations Code, 2020, will be interpreted independently based on its own text and scheme.
• The verdict resolved the immediate issue for pending cases without extending the 1978 jurisprudence to the new code.

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Detailed Insights:

• The legal debate centered on Section 2(j) of the Industrial Disputes Act, 1947, which broadly defined "industry".
• The 1978 Bangalore Water Supply judgment adopted an expansive interpretation, laying down the "triple test" for systematic activity, employer-employee cooperation, and production/distribution of goods or services.
• This "triple test" held that the absence of a profit motive was irrelevant for an activity to be considered an industry.
• Parliament attempted to amend the definition in 1982 via the Industrial Disputes (Amendment) Act to exclude certain entities like hospitals and educational institutions, but it was never notified.
• A 2005 five-judge bench in State of UP vs Jai Bir Singh expressed reservations about the 1978 ruling, leading to the reference to the current nine-judge bench.
• The Supreme Court declined to retrospectively replace the 1978 test with a narrower one for cases under the old Act.
• The new Industrial Relations Code, 2020, explicitly excludes charitable institutions, domestic services, and core sovereign government functions from its definition of "industry".
• The ruling clarified that an activity is not sovereign merely because it is performed by the state or has a welfare objective; the exception is limited to core governmental functions.

Key Concepts Involved:

• Industry: Under Indian labour law, a systematic activity involving cooperation between employer and employee for the production or distribution of goods or services.
• Triple Test: A judicial principle established in 1978 to determine if an undertaking qualifies as an industry, focusing on systematic activity, employer-employee cooperation, and service/goods production.
• Sovereign Functions: Core governmental activities that are traditionally considered exclusive to the state and generally excluded from the definition of "industry" under labour laws.
• Industrial Disputes Act, 1947: An erstwhile Indian legislation that provided for the investigation and settlement of industrial disputes.
• Industrial Relations Code, 2020: A new Indian labour code that consolidates and amends laws relating to trade unions, conditions of employment, and industrial disputes.