Supreme Court modifies 1978 ‘industry’ definition for new labour code

A nine-judge Constitution Bench of the Supreme Court has ruled that the expansive definition of ‘industry’ established in the 1978 Bangalore Water Supply and Sewerage Board (BWSSB) verdict will not automatically apply to the Industrial Relations Code, 2020.

In a split decision, the court held that while the reference to reconsider the 1978 judgment was valid, the principles from that landmark case cannot serve as a ‘sweeping anchor’ for interpreting the new 2020 Code. Instead, cases arising under the new law must be decided independently based on their specific facts and circumstances.

The court clarified that the ruling is prospective. The ‘triple test’ framework evolved in 1978 remains valid for adjudicating pending labour-related cases under the now-repealed Industrial Disputes Act, 1947. However, the bench noted that certain elements of the triple test require refinement to better reflect the scope of current legal provisions.