SC upholds broad definition of industry, only for pending cases
India's Supreme Court has affirmed its 1978 'triple test' definition of 'industry,' which broadly includes any organization with an employee-employer relationship, such as government agencies, temples, hospitals, and NGOs, under the Industrial Disputes Act, 1947. However, the court clarified that this ruling applies exclusively to cases pending under the old Act, as the new Industrial Relations Code, 2020, came into effect in November 2025. The bench also stated this decision will not serve as a precedent for future challenges to the 2020 Code.
Why it matters
This ruling provides clarity and protection for workers in a wide range of organizations under older legislation, but its limited applicability to pending cases highlights the ongoing legal transition and potential for new interpretations under India's updated labor laws. It reflects the judiciary's role in balancing historical legal precedents with modern legislative changes.
NEW DELHI: A nine-judge Supreme Court bench on Thursday settled a decades-old debate over the appropriateness of its 1978 ruling giving an expansive definition to "industry" to protect workmen against arbitrary retrenchment, and said it would apply to all organisations, including govt public works agencies, temples, hospitals and NGOs, if there existed an employee-employer relationship under Industrial Disputes Act, 1947.A 9-judge bench of CJI Surya Kant, and Justices B V Nagarathna, P S Narasimha, D Datta, U Bhuyan, S C Sharma, J Bagchi, A Aradhe and V M Pancholi unanimously said that given the socio-economic condition of yester decades, the triple test laid down by a 7-judge bench in Bangalore Water Supply case - systematic activity, functional relationship between employer and employees and engagement of the enterprise in production or distribution of goods or services to satisfy human wants, needs and wishes, excluding purely spiritual or religious activities - for…
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