Supreme Court scraps 1978 industry ruling for new labour code

A nine-judge Supreme Court bench held on Thursday that the 1978 Bangalore Water Supply judgment, which gave a broad definition to 'industry' and expanded workers' rights, will not apply to disputes under the new Industrial Relations Code, 2020. Chief Justice Surya Kant, writing for the majority, said the 1978 interpretation would not 'burden' the future definition of 'industry' under the new code, confining the old verdict to legacy disputes pending before courts and tribunals under the 1947 Act.

The majority upheld the validity of the reference but said the new code must be interpreted on its own text. The court acknowledged the 'triple test' from 1978 had stood the test of time but said its articulation could be refined. Justices P.S. Narasimha and Joymalya Bagchi agreed the reference was valid. In dissent, Justice B.V. Nagarathna, joined by Justices Dipankar Datta and Ujjal Bhuyan, called the reference unwarranted and stressed the need to retain the inclusive definition to safeguard workers in an era of privatisation.

Livemint reported the court had 'upheld' the 1978 judgment but said future disputes would fall under the new code. The Hindu reported the majority had effectively scrapped the 1978 precedent for future cases and noted the dissent's warning about workers' protections. The ruling leaves pending disputes under the old Act governed by the 1978 framework, while all new disputes will be decided solely under the Industrial Relations Code, 2020.