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Supreme Court keeps 1978 industry test off new labour code
The Hindu··20 Aug
A nine-judge Supreme Court Bench held that the 1978 Bangalore Water Supply reading of industry will not anchor Section 2(p) of the Industrial Relations Code, 2020. Surya Kant said the Code must be read in its text and context. The 1978 triple test still governs pending disputes under the 1947 Act. The Code took effect on 21 November 2025.
Prism
What It Means For You
- If your industrial dispute was filed before 21 November 2025 under the 1947 Act, the court said Bangalore Water Supply still decides whether your workplace is an industry.
- Anyone whose case starts under the Industrial Relations Code will not be able to treat the 1978 triple test as the controlling definition of industry.
- If you work in a hospital, school or municipality that was pulled in by the 1978 ruling, that coverage continues for legacy cases but is not automatically carried into the new Code.
What's Happening
- The Constitution Bench was headed by Chief Justice Surya Kant; the majority on the Code point included Justices Sharma, Aradhe, Pancholi, Narasimha and Bagchi.
- Justice Nagarathna, in dissent on maintainability, said a wide definition was still needed after privatisation shifted workers from public to private employers.
- Justice Narasimha said an authoritative reading of old Section 2(j) had lost urgency once that provision was repealed with the Code's commencement.
What The 1978 Triple Test Did And Did Not Cover
- Bangalore Water Supply versus A Rajappa held that an organised activity with employer-employee cooperation producing goods or services to meet human wants was an industry, except core sovereign work such as defence, law and order and the judiciary.
- The 1982 amendment to the Industrial Disputes Act, which tried to narrow the definition, never came into force, which is why the 1978 test continued for decades.
- The majority refused to interpret Section 2(p) of the 2020 Code in this judgment, leaving that text to be read later on its own facts.
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