Supreme Court 6:3 Verdict Narrows Use Of 1978 ‘Industry’ Definition Under Industrial Relations Code 2020

The Supreme Court on Thursday ruled by a 6:3 majority that its landmark 1978 judgment expanding the meaning of “industry” will not serve as the basis for interpreting the Industrial Relations Code, 2020.

A nine-judge Constitution Bench headed by Chief Justice Surya Kant also held that the reference seeking reconsideration of the 1978 ruling by a seven-judge bench was legally valid.

1978 ‘Triple Test’ Continues for Old Cases

The earlier judgment, delivered in the Bangalore Water Supply and Sewerage Board case, had significantly broadened the definition of “industry” under the Industrial Disputes Act, 1947.

The ruling brought workers in a wide range of establishments, including hospitals, educational institutions, clubs and government welfare bodies, within the ambit of labour protections.

The 1978 judgment established a “triple test” to determine whether an activity qualified as an industry. Broadly, it covered systematic activities involving cooperation between employers and employees for producing or distributing goods and services.

The Supreme Court clarified that this test will continue to apply to cases pending under the now-repealed 1947 law.

2020 Labour Code to Be Interpreted Independently

However, the Constitution Bench made clear that the 1978 principles cannot be treated as a broad framework for interpreting the Industrial Relations Code, 2020.

Chief Justice Surya Kant said the majority ruling would operate prospectively, while pending disputes under the 1947 Act would continue to be decided using the earlier triple-test definition.

The court also noted that the 1947 legislation has already been repealed and replaced by the new labour code, making the reconsideration exercise largely academic in that context.

Justices P S Narasimha and Joymalya Bagchi broadly agreed with the Chief Justice’s position and held that the reference to the larger bench was valid. Justices B V Nagarathna, Dipankar Datta and Ujjal Bhuyan dissented, particularly over the maintainability of the reference.

Justice Nagarathna maintained that the 1978 judgment was correctly decided and did not require reconsideration.

The court said future disputes under the 2020 Code must be examined independently, based on the specific facts and context of each case. Detailed judgments are awaited.