{"id":370354,"date":"2026-08-25T21:18:22","date_gmt":"2026-08-25T15:48:22","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=370354"},"modified":"2026-08-25T21:18:22","modified_gmt":"2026-08-25T15:48:22","slug":"how-the-sc-ruling-redefined-industry","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/how-the-sc-ruling-redefined-industry\/","title":{"rendered":"How the SC Ruling Redefined \u2018Industry\u2019"},"content":{"rendered":"<p><strong>UPSC Syllabus: Gs Paper 3- <\/strong>Indian economy and Industry<\/p>\n<h2 class=\"yellow-h2-box\"><strong>Introduction<\/strong><\/h2>\n<p>The Supreme Court\u2019s nine-judge Constitution Bench revisited the meaning of <strong>\u201c<\/strong><strong>industry\u201d<\/strong> under Indian labour law. The issue centred on the <strong>1978 Bangalore Water Supply<\/strong> precedent and its triple test. Pending disputes under the <strong>Industrial Disputes Act, 1947<\/strong> will continue under this test. However, the <strong>Industrial Relations Code, 2020<\/strong>, which came into force in November 2025, will be interpreted independently.<\/p>\n<h2 class=\"yellow-h2-box\"><strong>Evolution of the Definition of \u2018<\/strong><strong>Industry\u2019<\/strong><\/h2>\n<ol>\n<li><strong> Definition under the 1947 Act: <\/strong>Section 2(j) of the Industrial Disputes Act, 1947 defined \u201cindustry\u201d, but its broad wording created disputes over its actual scope.<\/li>\n<li><strong>The 1978 Bangalore Water Supply ruling:<\/strong><\/li>\n<\/ol>\n<ul>\n<li><strong>The triple test: <\/strong>The 1978 ruling treated an undertaking as an industry when it involved systematic activity, employer-employee cooperation, and production or supply of goods or services.<\/li>\n<li><strong>Profit motive was not necessary: <\/strong>The Court held that an activity could remain an industry even when it was not carried out to earn profit.<\/li>\n<li><strong>Wider institutional coverage: <\/strong>The broad definition brought hospitals, educational institutions and municipalities within the legal definition of an industry.<\/li>\n<li><strong>Impact on workers:<\/strong> The broad interpretation enabled workers across diverse sectors to seek legal recourse, enforce labour rights and engage in collective bargaining.<\/li>\n<li><strong>Dominant nature test:<\/strong> Where an establishment performed several activities, its dominant nature could help determine whether it qualified as an industry.<\/li>\n<li><strong>Core sovereign function exception:<\/strong> Only genuine core functions, such as defence, judiciary and law enforcement, remained outside the scope of industry.<\/li>\n<\/ul>\n<ol start=\"3\">\n<li><strong>Parliament<\/strong><strong>\u2019<\/strong><strong>s 1982 response: <\/strong>The Industrial Disputes (Amendment) Act, 1982 sought to exclude several institutions, but its amended definition was never notified.<\/li>\n<li><strong>The Industrial Relations Code, 2020: <\/strong>The new Code introduced its own definition and exclusions, including charitable institutions, domestic services and sovereign government functions.<\/li>\n<\/ol>\n<h2 class=\"yellow-h2-box\"><strong>Why Was the 1978 Interpretation Referred for Reconsideration?<\/strong><\/h2>\n<ol>\n<li><strong>Continuing judicial disagreement: <\/strong>Courts later differed on whether government welfare activities and certain departmental functions could be treated as industries.<\/li>\n<li><strong>The Social Forestry dispute: <\/strong>In 1996, a three-judge Bench treated the Social Forestry Department as an industry, while a later two-judge Bench took a narrower view regarding a forest department.<\/li>\n<li><strong>The 2005 Jai Bir Singh ruling: <\/strong>A five-judge Bench expressed reservations about the expansive 1978 interpretation of \u201cindustry\u201d and referred the matter to a larger Bench for reconsideration.<\/li>\n<li><strong>The 2017 seven-judge Bench: <\/strong>The matter was placed before a seven-judge Bench, which directed that it should be examined by a nine-judge Constitution Bench.<\/li>\n<li><strong>Validity of the reference: <\/strong>The recent Bench itself differed on whether the 2005 reference was properly made, producing an effective 6:3 majority supporting its validity.<\/li>\n<li><strong>The recent nine-judge hearing: <\/strong>The Bench examined the correctness of the triple test, sovereign functions and the continuing relevance of the 1978 precedent.<\/li>\n<\/ol>\n<h2 class=\"yellow-h2-box\"><strong>Recent Supreme Court Ruling: What Did the Court Decide?<\/strong><\/h2>\n<ol>\n<li><strong>Refinement of the 1978 test:<\/strong> By a <strong>5:4 majority<\/strong>, the Court held that the 1978 triple test required further refinement, while its essential framework had stood the test of time.<\/li>\n<li><strong>Pending cases under the old law:<\/strong> Pending proceedings under the Industrial Disputes Act, 1947 will continue to be decided using the existing <em>Bangalore Water Supply<\/em> triple test.<\/li>\n<li><strong>No effect on existing cases:<\/strong> The reformulated test will apply only in the future and will not affect pending or already concluded cases.<\/li>\n<li><strong>Independent interpretation of the new Code:<\/strong> The meaning of \u201cindustry\u201d under the Industrial Relations Code, 2020 will be interpreted independently under its own text and statutory scheme, without being governed by the 1978 precedent.<\/li>\n<li><strong> Five Distinct Judicial Views on the Definition of \u2018<\/strong><strong>Industry\u2019<\/strong><\/li>\n<li><strong> CJI Surya Kant and three judges<\/strong><\/li>\n<\/ol>\n<ul>\n<li><strong>Need for refinement:<\/strong> CJI Surya Kant, joined by Justices Satish Chandra Sharma, Alok Aradhe and Vipul M. Pancholi, held that the 1978 triple test required refinement.<\/li>\n<li><strong>Commercial character:<\/strong> They proposed that an activity should have a discernible commercial character similar to trade or business, even if profit motive remains irrelevant.<\/li>\n<li><strong>Effect of the new law:<\/strong> However, their reformulated test could not apply under the repealed 1947 Act because the Industrial Relations Code, 2020 had already come into force.<\/li>\n<\/ul>\n<ol start=\"2\">\n<li><strong> Justice B.V. Nagarathna<\/strong><\/li>\n<\/ol>\n<ul>\n<li><strong>No need for reconsideration:<\/strong> She defended the broad 1978 definition and warned that changing it could create uncertainty and disturb industrial peace..<\/li>\n<li><strong>Importance of the broad definition:<\/strong> She viewed the broad test as important when privatisation and economic changes were shifting workers across sectors.<\/li>\n<\/ul>\n<ol start=\"3\">\n<li><strong> Justices Dipankar Datta and Ujjal Bhuyan<\/strong><\/li>\n<\/ol>\n<ul>\n<li><strong>Importance of settled precedent:<\/strong> Justice Datta, with Justice Bhuyan agreeing, stressed that a long-settled seven-judge Bench precedent should not be reopened without strong reasons.<\/li>\n<li><strong>Objection to the reference:<\/strong> They considered the 2005 reference flawed and held that the required grounds for reconsidering the 1978 ruling were not established.<\/li>\n<\/ul>\n<ol start=\"4\">\n<li><strong> Justice Joymalya Bagchi<\/strong><\/li>\n<\/ol>\n<ul>\n<li><strong>Valid reference, but no reformulation:<\/strong> Justice Bagchi accepted the validity of the reference but disagreed with the need to redraft the 1978 triple test.<\/li>\n<li><strong>Support for the existing approach:<\/strong> He rejected the need to reformulate the triple test, holding that concerns about it covering every organised activity were misplaced. He also held that the absence of profit motive did not take an activity outside the scope of an industry.<\/li>\n<\/ul>\n<ol start=\"5\">\n<li><strong> Justice P.S. Narasimha<\/strong><\/li>\n<\/ol>\n<ul>\n<li><strong>Reconsideration became unnecessary:<\/strong> Justice Narasimha held that debating changes to the triple test had become unnecessary because the Industrial Disputes Act, 1947 had been repealed.<\/li>\n<li><strong>Focus on the new legal framework:<\/strong> He viewed the issue as having limited future relevance because disputes under the Industrial Relations Code would require independent interpretation.<\/li>\n<\/ul>\n<h2 class=\"yellow-h2-box\"><strong>Significance of the Ruling<\/strong><\/h2>\n<ol>\n<li><strong>Continuity for pending disputes:<\/strong> Pending cases under the Industrial Disputes Act, 1947 will continue to be decided using the <strong>1978 Bangalore Water Supply triple test<\/strong>.<\/li>\n<li><strong>No reopening of settled cases:<\/strong> The ruling protects concluded decisions by ensuring that the reformulated approach does not operate retrospectively.<\/li>\n<li><strong>A separate framework for the new labour law:<\/strong> The <strong>Industrial Relations Code, 2020<\/strong> is not bound by the 1978 interpretation and must be understood through its own provisions.<\/li>\n<li><strong>Scope for fresh judicial interpretation:<\/strong> Future courts will determine how the new Code applies to different activities and where the boundaries of \u201cindustry\u201d should be drawn.<\/li>\n<li><strong>Impact on worker protection:<\/strong> The future interpretation of \u201cindustry\u201d under the Code will affect which establishments and workers can claim protection under industrial dispute law.<\/li>\n<li><strong>A shift from precedent to statutory interpretation:<\/strong> The ruling moves future disputes away from automatic reliance on the 1978 precedent towards interpretation based on the text and scheme of the new Code.<\/li>\n<\/ol>\n<p><strong>Conclusion<\/strong><\/p>\n<p>The ruling preserves the <strong>1978 triple test<\/strong> for pending disputes under the old law. It does not automatically extend the same interpretation to the <strong>Industrial Relations Code, 2020<\/strong>. This creates a separate framework for interpreting \u201cindustry\u201d under the new labour law. Future courts will determine its scope and its impact on workers and establishments.<\/p>\n<p><strong>Question for practice:<\/strong><\/p>\n<p>Examine how the Supreme Court\u2019s recent ruling has reshaped the interpretation of \u201cindustry\u201d under Indian labour law.<\/p>\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.thehindu.com\/news\/national\/how-supreme-courts-new-ruling-changes-the-definition-of-industry-explainer\/article71372126.ece\"><strong>The Hindu<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>UPSC Syllabus: Gs Paper 3- Indian economy and Industry Introduction The Supreme Court\u2019s nine-judge Constitution Bench revisited the meaning of \u201cindustry\u201d under Indian labour law. The issue centred on the 1978 Bangalore Water Supply precedent and its triple test. Pending disputes under the Industrial Disputes Act, 1947 will continue under this test. However, the Industrial&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/how-the-sc-ruling-redefined-industry\/\">Continue reading <span class=\"screen-reader-text\">How the SC Ruling Redefined \u2018Industry\u2019<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230],"tags":[216,8184,10498],"class_list":["post-370354","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","tag-gs-paper-3","tag-indian-economy","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/370354","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=370354"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/370354\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=370354"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=370354"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=370354"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}