Supreme Court upholds its landmark 1978 Bangalore Water Supply judgment about definition of ‘industry’

The Supreme Court has confirmed its landmark 1978 Bangalore Water Supply judgment, specifically the definition of 'industry' under Section 2(j) of the Industrial Disputes Act. However, this ruling will not address future disputes; instead, they will be handled under the new Industrial Relations Code, 2020. The nine-judge Constitutional Bench, led by Chief Justice Surya Kant, delivered the decision with a 6:3 majority.

While acknowledging that certain aspects of the original Triple Test ruling might need fine-tuning, the court affirmed that the basic framework established in 1978 remained robust over time. The court emphasized that pending disputes should continue under the existing framework, while any new disputes would fall under the Industrial Relations Code, 2020, which must be interpreted according to its own text.

Justice BV Nagarathna dissented, arguing that it wasn't necessary to revisit the interpretation of Section 2(j) after nearly five decades, and she warned that reopening settled positions could create uncertainty in pending industrial disputes. The court also ruled that government departments could not be excluded from being classified as 'industry' simply because they perform statutory functions; rather, the nature of the activity is more important than who performs it.

Justice Nagarathna affirmed that the Dominant Nature Test, as established in the Bangalore Water Supply judgment, remained legally correct.