How the SC ruling redefined ‘industry’, Pg8

Key Highlights:

• The Supreme Court of India recently ruled that the 1978 interpretation of ‘industry’ will not automatically apply to the Industrial Relations Code (IRC), 2020.
• This decision effectively severs the new labour regime from the expansive, worker-friendly precedent set in the 1978 Bangalore Water Supply and Sewerage Board v. R. Rajappa case.
• The IRC, 2020, which came into force in November 2025, replaced the Industrial Disputes Act, 1947.
• Pending cases under the Industrial Disputes Act, 1947, will continue to be governed by the 1978 precedent.
• Future disputes under the Industrial Relations Code, 2020, will have the term ‘industry’ interpreted afresh based on its own text and statutory context.

Detailed Insights:

• The 1978 Bangalore Water Supply judgment, authored by Justice V.R. Krishna Iyer, significantly broadened the definition of ‘industry’ under Section 2(j) of the Industrial Disputes Act, 1947.
• This judgment introduced the triple test, classifying systematic operations with employer-employee cooperation to provide goods or services as an industry.
• The broad 1978 definition included activities like hospitals, educational institutions, and municipalities, granting workers in these sectors legal recourse and collective bargaining rights.
• The nine-member Constitution Bench, led by Chief Justice of India Surya Kant, held that the 1978 ruling would no longer be the "sheet anchor" for interpreting ‘industry’ under the IRC, 2020.
• A majority view on the Bench, including Chief Justice Kant, suggested a "reformulated" triple test for prospective application, though it is now non-existent for the repealed 1947 Act.
• Justices B.V. Nagarathna, Dipankar Datta, and Ujjal Bhuyan formed a minority view, arguing that re-evaluating the 1978 judgment was "unwarranted" and could create uncertainty.
• Justice Nagarathna highlighted that the 1978 judgment was crucial during India's economic liberalisation, protecting public sector workers transitioning to private employment.

Key Concepts Involved:

• Industrial Relations Code (IRC), 2020: A new labour law in India that consolidates and amends laws relating to trade unions, industrial employment, and the investigation and settlement of industrial disputes.
• Industrial Disputes Act, 1947: The previous central legislation that provided for the investigation and settlement of industrial disputes, now replaced by the IRC, 2020.
• Bangalore Water Supply and Sewerage Board v. R. Rajappa (1978): A landmark Supreme Court judgment that significantly broadened the definition of ‘industry’ under the 1947 Act.
• Triple Test: A criterion established in the 1978 judgment to determine if an activity constitutes an ‘industry’, based on systematic activity, employer-employee cooperation, and provision of goods/services.