A nine-judge bench [1] of the Supreme Court of India issued a verdict redefining the legal meaning of “industry” under labour law.
The ruling alters how the state determines which organizations fall under the Industrial Disputes Act and the 2020 Industrial Relations Code [4, 5]. This definition dictates which workers have access to specific legal protections and dispute resolution mechanisms.
The decision addresses long-standing ambiguity stemming from a 1978 [3] judgment known as the Bangalore Water Supply case. That earlier ruling established a “triple test” framework to determine if an entity functioned as an industry. The current verdict modifies that framework to align with modern legal requirements [2, 3].
The court was divided on the final ruling. Some reports said the bench reached the decision by a 5:4 majority [2], while other sources said the vote was 6:3 [4].
Legal experts said that the clarification was necessary for the application of the 2020 [5] labour code. The court sought to resolve contradictions that had persisted for decades regarding the scope of industrial activity in New Delhi and across India [1, 2].
There remains a discrepancy among legal reports regarding the exact impact on existing cases. Some sources said the verdict modifies the 1978 definition [2, 3], while others suggested the court retained the triple test for pending cases under the Industrial Disputes Act, while separating it from the 2020 code [4].
“The ruling alters how the state determines which organizations fall under the Industrial Relations Code.”
This ruling attempts to modernize Indian labour law by narrowing or shifting the definition of an 'industry,' which directly impacts the bargaining power of employees in non-traditional sectors. By updating the 1978 framework, the court is attempting to provide a more stable legal foundation for the 2020 Industrial Relations Code, though the narrow split among the judges suggests continued legal volatility and potential future challenges.
