A nine-member Bench of the Supreme Court has delivered a verdict holding that a nearly half-century-old expansive interpretation of 'industry' will not apply under the new Industrial Relations Code (IRC), 2020. The reference before the Constitution Bench, headed by Chief Justice of India Surya Kant, centered around a broad definition established in a 1978 seven-judge Constitution Bench judgment in the Bangalore Water Supply and Sewerage Board v. A. Rajappa case.
The 1978 verdict, authored by Justice V.R. Krishna Iyer, had previously granted workers in a wide range of employment legal recourse, including collective bargaining, against unfair labour practices. It had introduced a 'triple test' stating that any systematic or organized activity operating on employer-employee cooperation to produce goods and services for human wants came within the ambit of 'industry', exempting only core sovereign activities like judiciary, law and order, and defence.
The majority on the Bench held that 'industry' under Section 2(p) of the IRC, which came into force in November 2025, would not be burdened by the interpretation given to Section 2(j) of the Industrial Disputes Act, 1947, in the 1978 judgment. Chief Justice Surya Kant stated that the 1978 judgment and its conclusion would not act as the foundation for any future interpretation of Section 2(p) of the IRC, effectively confining the legacy verdict to industrial disputes pending before courts, tribunals, and labour authorities prior to the IRC.
The majority opinion was authored by Chief Justice Surya Kant and supported by Justices Satish Chandra Sharma, Alok Aradhe, and Vipul M. Pancholi. Justices P.S. Narasimha and Joymalya Bagchi expressed agreement in separate opinions. Justice Narasimha noted that an authoritative interpretation of Section 2(j) had lost its immediacy with the coming into force of the IRC. While Justice Bagchi agreed with the validity of the reference and the prospective application of the IRC, he held that the 1978 judgment had correctly determined the scope of 'industry'.
Meanwhile, a dissenting minority on the Bench comprising Justices B.V. Nagarathna, Dipankar Datta, and Ujjal Bhuyan found the reference against the 1978 verdict unwarranted. Justice Nagarathna highlighted India's shifting industrial landscape toward privatisation, liberalisation, and globalisation, arguing that an inclusive definition of industry remains necessary to protect workers in a privatised economy. Justices Datta and Bhuyan corroborated this view, with Justice Datta stating that institutional credibility lies in respecting finality.
The Supreme Court clarified that any pending proceedings before courts, tribunals, or labour authorities under the 1947 Act should still be decided as per the interpretation of Section 2(j) established in the 1978 Bangalore Water Supply and Sewerage Board judgment.
"This Supreme Court ruling marks a notable transition in the legal framework governing industrial relations in India. By clarifying that the 1978 precedent will not encumber the Industrial Relations Code, 2020, for future disputes, the judgment brings distinct legal parameters for businesses operating under the new code. Employers and enterprises must carefully evaluate how future labour disputes will be interpreted under the updated statutory framework, while pending legacy cases will continue to be governed by the previous standards." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
