The Supreme Court on Thursday, by a 5:4 majority, refined the expansive test laid down nearly five decades ago to determine what constitutes an “industry” under the now-repealed Industrial Disputes Act, while unanimously protecting all pending disputes from the impact of the new formulation.
She also held that the enactment of the new labour code meant there was no need for the Supreme Court to pronounce upon the correctness of the old judgment in a manner that could create uncertainty and affect industrial peace. A nine-judge Constitution bench headed by Chief Justice of India Surya Kant also upheld, by a majority, the maintainability of the reference that had brought the 1978 landmark Bangalore Water Supply & Sewerage Board Vs A Rajappa judgment back for reconsideration.
The CJI also said that the court was refraining from commenting on the definition of “industry” under the new law. The previous interpretation, he made clear, could not be treated as a “sheet-anchor” for interpreting the definition under the new Code.
The test broadly required a systematic and organised activity involving cooperation between employer and employee and the production or distribution of goods or services to satisfy human wants and wishes. The nine-judge bench has deliberately kept the new legal regime outside the scope of its ruling. The issue eventually reached a seven-judge bench, which in 2017 referred the question to a larger bench.
The dispute centred on the sweeping interpretation given to Section 2(j) in Bangalore Water Supply, where a seven-judge bench evolved a three-fold test for determining whether an activity constituted an “industry”. The nine-judge bench was asked to decide, among other issues, whether the triple test was correctly laid down; whether the unnotified Industrial Disputes (Amendment) Act, 1982, or the Industrial Relations Code, 2020, had any bearing on the interpretation; whether social welfare activities undertaken by government departments could constitute “industrial activities”; and which State activities would qualify as sovereign functions outside Section 2(j).
