New Delhi: 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refined the expansive test laid down nearly five decades ago to determine what constitutes an “industry” under the now-repealed Industrial Disputes Act, while unanimously protecting all pending disputes from the impact of the new formulation.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 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.
In his judgment, for himself and justices SC Sharma, Alok Aradhe and Vipul M Pancholi, the CJI held that the test evolved in Bangalore Water Supply required “refinement and reformulation”. “All matters presently pending under 1947 Act may be adjudicated in terms of the triple test,” the CJI said. He said that the court was refraining from commenting on the definition of “industry” under the new law. The previous interpretation, he said, could not be treated as a “sheet-anchor” for interpreting the definition under the new code. Justice BV Nagarathna said the reference itself was unnecessary and that the previous judgments could have been reconciled with Bangalore Water Supply. She held that the expansive definition of “industry” was imperative and that the triple test remained correct.
Key Legal Questions Arise from Industrial Definition Dispute
A nine-judge bench is currently reviewing significant legal questions surrounding the interpretation of Section 2(j) from the Bangalore Water Supply case. This dispute revolves around a three-fold test established by a previous seven-judge bench to define what constitutes an “industry.” The test emphasizes organized activities that involve cooperation between employers and employees, aimed at producing or distributing goods and services to meet human needs.
The bench is tasked with addressing whether the triple test was correctly formulated. Additionally, it will consider the implications of the unnotified Industrial Disputes (Amendment) Act, 1982, and the Industrial Relations Code, 2020, on this interpretation.
Moreover, the judges will examine whether social welfare activities conducted by government departments can be classified as “industrial activities,” and which state functions might be deemed sovereign and thus exempt from the provisions of Section 2(j).
