Supreme Court Excludes Industrial Relations Code 2020 from Review of Landmark 1978 'Industry' Definition
Contents4
Hindustan Times - India · 18 Mar 2026 · 2 min read
Prelims · Polity Mains · GS2 Polity and constitution High relevance
The Supreme Court's nine-judge bench declined to examine the definition of 'industry' under the Industrial Relations Code 2020 while reviewing the 1978 Bangalore Water Supply case, focusing instead on constitutional interpretation of the repealed Industrial Disputes Act 1947.
Key points
Nine-judge Constitution Bench led by CJI Surya Kant is reviewing the 1978 Bangalore Water Supply vs. A. Rajappa judgment that expansively defined 'industry' under Section 2(j) of the Industrial Disputes Act 1947.
The Court clarified it won't consider the Industrial Relations Code 2020 (enforced November 2025) which carves out exceptions for charitable institutions, sovereign functions, and domestic services from the 'industry' definition.
Attorney General R Venkataramani argued subsequent laws like the 2020 Code should inform interpretation of the 1947 Act, but the bench maintained strict focus on constitutional adjudication of the original provision.
[GS2-Polity] This connects to judicial interpretation of labor laws under Entry 22 of Concurrent List, highlighting tensions between judicial activism and legislative intent in social welfare legislation.
The 1978 judgment established a triple test for 'industry': systematic activity, employer-employee cooperation, and goods/services production - expanding coverage to hospitals and universities.
Justice Nagarathna raised post-1991 LPG reforms as context, questioning whether definitions should balance worker protection with economic liberalization needs.
Justice Narasimha criticized the 1947 Act's 'open-ended' drafting of 'industry' as causing decades of litigation, demonstrating how poor legislative drafting burdens judiciary.
[GS3-Economy] The case reflects India's transition from welfare-state labor jurisprudence to market-oriented reforms, with implications for ease of doing business and labor flexibility.
Way Forward: Parliament should enact clear, contemporary definitions of 'industry' aligned with economic realities; establish specialized labor courts for faster dispute resolution; and implement sunset clauses for outdated labor laws to force periodic legislative review.
Key terms
- Industrial Relations Code 2020
- One of four labor codes consolidating 29 central labor laws, it replaced the Industrial Disputes Act 1947. Defines 'industry' with three exceptions (charitable work, sovereign functions, domestic service), representing a policy shift toward labor market flexibility while retaining worker protections. UPSC relevance lies in understanding labor law reforms and Center-State dynamics under Concurrent List.
- Bangalore Water Supply vs. A. Rajappa (1978)
- Landmark seven-judge SC judgment that expansively interpreted 'industry' under Section 2(j) of Industrial Disputes Act 1947 to include hospitals, educational institutions and charities. Established the 'triple test' definition. Significant for UPSC as it demonstrates judicial activism in labor rights and constitutional interpretation of social welfare legislation.
- Article 246 with Seventh Schedule
- Constitutional provision dividing legislative powers between Union and States via Union, State and Concurrent Lists. Labor laws fall under Entry 22 of Concurrent List, making this case relevant for UPSC's federalism and Center-State relations questions, especially regarding parliamentary power to override judicial interpretations.
- Directive Principles of State Policy
- Part IV of Constitution (Articles 36-51) guiding state policy. CJI referenced these while distinguishing sovereign functions from industrial activities. UPSC relevance: Balancing Fundamental Rights with DPSPs in labor jurisprudence, especially Article 43 (living wage) and 43A (worker participation in management).
Practice question
Critically analyze the implications of the Supreme Court's decision to exclude the Industrial Relations Code 2020 from its review of the 'industry' definition under the Industrial Disputes Act 1947. (250 words, 15 marks)
GS2 15 marks 250 words Mains
Key terms to include: Industrial Relations Code 2020 Bangalore Water Supply vs. A. Rajappa (1978) Directive Principles of State Policy Article 246 Concurrent List Judicial activism Labor jurisprudence Economic liberalization
Answer framework
Introduction
Briefly introduce the context of the Supreme Court's review of the 1978 Bangalore Water Supply case and its decision to exclude the Industrial Relations Code 2020 from consideration.
Judicial Restraint vs. Legislative Intent
The Court's focus on constitutional interpretation of the 1947 Act rather than the 2020 Code highlights judicial restraint.
Tension between judicial activism (1978 judgment) and legislative intent (2020 Code) in defining 'industry'.
Impact on Labor Jurisprudence
The 1978 judgment's expansive definition of 'industry' versus the 2020 Code's narrower exceptions.
Implications for worker protections and labor rights under the Directive Principles of State Policy.
Economic and Policy Considerations
Balancing worker protection with economic liberalization and ease of doing business.
The need for clear legislative definitions to reduce litigation and align with contemporary economic realities.
Federalism and Concurrent List
Center-State dynamics under Entry 22 of the Concurrent List.
Parliament's power to override judicial interpretations through new legislation.
Conclusion
Suggest a way forward, emphasizing the need for clear legislative definitions, specialized labor courts, and periodic review of labor laws to balance worker rights and economic growth.
Fact check
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