Supreme Court upholds definition of ‘industry’ as per Industrial Relations Code, 2020
The Supreme Court of India has ruled that the expansive definition of 'industry' from a 1978 judgment will not apply to the Industrial Relations Code of 2020. This decision clarifies that future industrial disputes will be governed by the new code rather than the previous legal precedents.
Why it matters
This ruling provides legal certainty for businesses and employees regarding the scope of labor laws and the definition of industrial entities in India.
A Nine-judge Bench of the Supreme Court on Thursday (August 20, 2026) held that the expansive definition of ‘industry’ under Section 2(j) of the Industrial Disputes Act, 1947 will not act as a sheet anchor or base for deciding what is ‘industry’ under the Industrial Relations Code 2020.
The Bench said the expansive interpretation of ‘industry’ given in the the 1978 judgment authored by J. Krishna Iyer would operate in pending industrial disputes prior to Industrial Relations Code 2020.
The 48-year-old verdict had exempted only core sovereign activities — such as the judiciary, law and order, and defence — from the purview of Section 2(j) in order to protect the state’s functional autonomy.
The judgment had introduced a triple test and included hospitals, educational institutions, and even municipalities as industries.
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