Supreme Court upholds 1978 ‘industry’ test for old disputes

The Supreme Court on August 20 delivered a landmark verdict on the legal definition of 'industry' in Indian labour law. A nine-judge Constitution Bench ruled that the broad 1978 interpretation from the Bangalore Water Supply case will continue to apply to unresolved disputes under the old Industrial Disputes Act, 1947. The judgement clarifies that new cases will be governed by the definition under the Industrial Relations Code, 2020.

The 1978 triple test defined an industry as any systematic activity involving employer-worker cooperation to produce goods or services. The new Code retains this broad concept but explicitly excludes charitable institutions, domestic service, and sovereign government functions. The verdict separates the two legal regimes, providing legal continuity for legacy disputes while allowing the new Code to develop its own meaning of 'industry'.

Legal experts say the ruling reduces uncertainty for businesses dealing with old cases, while new enterprises will operate under the Code's clearer boundaries. The judgement is seen as balancing worker protection with the need for economic flexibility and simpler compliance.