Supreme Court of India Limits 1978 Industry Definition

A nine-judge Constitution Bench of the Supreme Court of India ruled 6-3 that the expansive definition of industry established in a 1978 verdict will not be used to interpret the Industrial Relations Code of 2020. Chief Justice Surya Kant, authoring the majority opinion, stated that the 2020 Act must be interpreted independently based on its own text and the specific facts of new cases.

The court was reviewing the 1978 Bangalore Water Supply and Sewerage Board judgment, which used a triple test to define industry as any systematic activity involving employer-employee cooperation for the production or distribution of goods and services. This interpretation had previously extended labor protections to millions of employees in government welfare departments, hospitals, and educational institutions. The Government of India had argued that charitable and welfare functions should not be classified as industry.

While the court limited the 1978 precedent's future application, it maintained the validity of the triple test for pending labor cases filed under the now-repealed Industrial Disputes Act of 1947. Justices B V Nagarathna, Dipankar Datta, and Ujjal Bhuyan dissented, primarily regarding the maintainability of the reference to the nine-judge bench, with Justice Nagarathna arguing the 1978 verdict was correct and did not require reconsideration.