Supreme Court severs 1978 industry definition from 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 case will not automatically apply to the Industrial Relations Code (IRC), 2020, which replaced the Industrial Disputes Act, 1947, in November 2025. The court effectively creates a clean slate for future labour law disputes, departing from a worker-friendly precedent that had stood for nearly half a century. Justice Nagarathna, in a dissenting note, cautioned that altering the definition could create uncertainty and disrupt industrial peace.

Left-leaning trade unions have strongly criticised the verdict, alleging it reflects a structural tilt towards managerial interests. AITUC general secretary Amarjeet Kaur said the majority left crucial questions to future litigation instead of confronting the narrower architecture of Section 2(p) of the IRC. CITU's Elamaram Kareem said the judgment gives immunity to the IRC from the 1978 'triple test' that defined an industry by systematic activity, employer-employee relation, and production of goods or services, regardless of profit motive. TUCI president Fredy K. Thazhath said the verdict slashes labour protections and endangers industrial peace.