India's Top Court Upholds New 'Industry' Definition

The Supreme Court of India has upheld the definition of 'industry' as per the Industrial Relations Code, 2020, in a landmark decision made by a 6:3 majority. The nine-judge Constitution bench, headed by Chief Justice Surya Kant, clarified that the expansive definition of 'industry' under the Industrial Disputes Act, 1947, will not apply to the new code.

The Industrial Relations Code, 2020, has a different definition of 'industry' than the Industrial Disputes Act, 1947. The 1978 judgment, delivered in the Bangalore Water Supply and Sewerage Board case, introduced a 'triple test' to determine what constitutes an 'industry', which includes systematic activity, employer-employee cooperation, and production or distribution of goods and services.

The 'triple test' will continue to apply to pending cases under the Industrial Disputes Act, 1947. However, the Supreme Court's decision makes it clear that the Industrial Relations Code, 2020, will be interpreted independently of the 1978 judgment.

## What it means The Supreme Court's decision is significant as it clarifies the definition of 'industry' under the new code. The 1978 judgment had exempted only core sovereign activities, such as the judiciary, law and order, and defence, from the purview of Section 2(j) of the Industrial Disputes Act, 1947. The judgment had also included hospitals, educational institutions, and even municipalities as industries.

## Why it matters The stakes are high as the decision affects millions of employees working in various sectors, including hospitals, educational institutions, and government welfare departments. The Supreme Court's decision will have a significant impact on the interpretation of the Industrial Relations Code, 2020, and will provide clarity on what constitutes an 'industry' under the new code.

The decision will also have implications for pending cases under the Industrial Disputes Act, 1947, as the 'triple test' will continue to apply to these cases. However, the Supreme Court's decision makes it clear that the Industrial Relations Code, 2020, will have a distinct definition of 'industry', which will be interpreted independently of the 1978 judgment.

The Supreme Court's decision was made on August 20, 2026, and was headed by Chief Justice Surya Kant. The decision was made by a 6:3 majority, with the majority opinion clarifying that the 1978 judgment's interpretation would not affect or influence 'industry' in Section 2(p) of the IRC 2020.