SC, by 6:3 majority, rules 2020 Industrial Relations Code won’t follow 1978’s broad, labour-friendly ‘industry’ definition.A seven-judge panel’s request for reconsideration of the 1978 ruling was deemed legitimate by a nine-judge Constitution bench led by Chief Justice Surya Kant.
The Industrial Disputes Act of 1947’s definition of “industry” was further expanded by the 1978 verdict in the Bangalore Water Supply and Sewerage Board case. Millions of workers in industries like hospitals, schools, clubs, and government social agencies are now protected by labor laws.Along with Justices Satish Chandra Sharma, Alok Aradhe, and Vipul M. Pan, Justice Surya Kant wrote the majority ruling.
A systematic activity involving cooperation between employers and employees for the production or distribution of goods and services would qualify as a “industry” under the test, which was developed by Justice V R Krishna Iyer in the 1978 ruling. This broad definition extends statutory labor protections to workers in a variety of industries.
Nonetheless, the court declared that the 1978 decision could not serve as a general framework for understanding the 2020 labor code.
The CJI said the majority ruling is valid and will apply prospectively, while pending cases under the Industrial Disputes Act, 1947, will continue to be decided using the three-part test laid down in the 1978 Bangalore Water Supply judgment.
He said the 1978 ruling would not be used as a blanket reference for interpreting the 2020 Act, whose provisions must be examined on their own terms.
- Judges split over validity of reference
Justices P S Narasimha and Joymalya Bagchi, in separate judgments, broadly endorsed the CJI’s position and held that the reference seeking a review of the 1978 ruling on the meaning of “industry” was valid.
However, Justices B V Nagarathna, Dipankar Datta and Ujjal Bhuyan disagreed, particularly on whether the matter could be referred to the nine-judge bench for reconsideration.
Justice Nagarathna maintained that the 1978 judgment was correctly decided and did not require a fresh review.
The judges were unanimous in pointing out that the Industrial Disputes Act, 1947, had been repealed and replaced by a new law, making the issue largely academic in that regard.
The majority further clarified that its decision would not determine how the 2020 Labour Code is interpreted. Disputes arising under the new legislation will have to be considered independently, based on the facts and circumstances of each case.
The full judgments are awaited.
- What was altered by the 1978 decision
The ruling delivered by the Supreme Court on February 21, 1978, regarding the *Bangalore Water Supply and Sewerage Board* case considerably widened the scope of “industry” under Section 2(j) of the Industrial Disputes Act.
The “triple test” introduced in the 1978 judgment became a crucial standard for determining whether an undertaking or activity qualified as an “industry”. The broad interpretation had significant consequences for workers associated with various institutions and services.
The latest proceedings attracted close attention from labour and industrial sectors due to their possible implications for workers’ rights and the safeguards available under the 1947 Act.
On February 16, the nine-judge bench identified a number of issues for consideration, including whether the test outlined in paragraphs 140 to 144 of Justice Krishna Iyer’s 1978 judgment remained the correct legal test for determining what constitutes an “industry”.
The bench also considered the relevance of the Industrial Disputes (Amendment) Act, 1982, which apparently was never implemented, as well as the Industrial Relations Code, 2020, which came into effect on November 21, 2025, in interpreting the term “industry” under the 1947 Act.
It also examined whether social welfare programmes, government schemes, and enterprises operated by government departments or their instrumentalities could fall within the scope of “industrial activities” under Section 2(j) of the 1947 legislation.
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