The Supreme Court will on Thursday deliver its verdict on one of the most consequential questions in labour jurisprudence – what constitutes an “industry” under the Industrial Disputes Act, as a nine-judge Constitution bench considers whether to retain, modify or overturn the expansive test laid down by a seven-judge bench nearly five decades ago.
Governments and employers have, over the years, criticised the interpretation, arguing that the judgment blurred the distinction between genuinely industrial activities and sovereign, welfare or public functions performed by the State. The judgment in State of Uttar Pradesh Vs Jai Bir Singh comes after the nine-judge bench, headed by Chief Justice of India Surya Kant, concluded its hearing on March 19 on a reference that could redraw the boundaries of industrial law and determine the extent to which employees of educational institutions, charitable organisations, research bodies and government departments can invoke the machinery of industrial dispute resolution. The question eventually reached a seven-judge bench, which in 2017 considered whether the 1978 verdict required reconsideration and referred the issue to a larger bench. The nine-judge bench was subsequently called upon to decide whether the Bangalore Water Supply test represents the correct interpretation of the law; whether the Industrial Disputes (Amendment) Act, 1982, which was never notified, has any bearing on the issue; and whether the subsequent Industrial Relations Code, 2020 alters the legal position.
At the heart of the dispute is the 1978 judgment in Bangalore Water Supply & Sewerage Board Vs A Rajappa, in which a seven-judge bench gave the word “industry” occurring in Section 2(j) of the Industrial Disputes Act a wide interpretation. The court evolved what came to be known as the “triple test”: an activity would ordinarily fall within the definition if it involved a systematic and organised activity, cooperation between employer and employee, and production or distribution of goods or services to satisfy human wants and wishes. Another significant question before the court is whether social welfare activities undertaken by government departments can be treated as “industrial activities” under the Act.
