Context
Recently, a nine-judge Supreme Court Bench held that the broad definition of “industry” evolved in the 1978 Bangalore Water Supply judgment would continue to govern pending disputes under the repealed Industrial Disputes Act, 1947. However, it will not control the interpretation of the new Industrial Relations Code, 2020.
Explanation
- The definition of industry decides which establishments and workers get protections on disputes, retrenchment, collective bargaining and unfair labour practices.
- Under Section 2(j) of the Industrial Disputes Act, 1947, it was read broadly in Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978).
- The triple test requires a systematic activity, employer–employee cooperation, and production or distribution of goods or services satisfying human wants.
- Profit motive and capital were not necessary, so hospitals, educational institutions, municipalities and charities also qualified; only core sovereign functions — defence, law enforcement and justice — stayed outside.
- The Industrial Relations Code, 2020, effective from November 2025, replaced the 1947 Act with its own definition under Section 2(p), excluding certain charitable institutions, domestic services and specified sovereign activities.
- The Court found the 1978 framework had endured, but its refined approach applies prospectively and will not reopen concluded cases or prejudice pending ones.
- Pending proceedings under the 1947 Act keep the original triple test, while the 2020 Code is to be read on its own language — so the 1978 ruling is not “void”.
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Industry definition