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21 August 2026

Supreme Court ruling on 'industry' definition under Industrial Relations Code

This is a landmark nine-member Supreme Court Constitution Bench judgment that redefines the scope of 'industry' under the Industrial Relations Code, directly impacting labor laws and the interpretation of statutory definitions in the Indian economy.

2 min read Day 1 of 5 2 questions 1 prelims

Notes

  • A nine-member Supreme Court Bench ruled that the 1978 Bangalore Water Supply and Sewerage Board (BWSSB) judgment's definition of 'industry' does not apply to the Industrial Relations Code (IRC), 2020.
  • The 1978 judgment established a 'triple test' for 'industry': systematic/organised activity, employer-employee cooperation, and production of goods/services to satisfy human wants.
  • The 1978 verdict exempted only core sovereign functions (judiciary, defence, law and order) from the definition of 'industry' under the Industrial Disputes Act, 1947.
  • The majority opinion states that 'industry' under Section 2(p) of the IRC, which came into force in November 2025, must be interpreted on a 'clean slate' rather than being bound by the 1978 precedent.
  • Dissenting judges (Justices Nagarathna, Datta, and Bhuyan) argued that the reference against the 1978 verdict was unwarranted and that the broad definition is essential for protecting workers in a privatised economy.
  • The 'Dominant Nature Test' from the 1978 judgment was used to determine if an entity performing multiple activities qualifies as an 'industry'.

Part of a longer story

This is day 1 of 5 in Supreme Court ruling on 'industry' definition under Industrial Relations Code, which has been running since 21 August 2026. Reading it whole is usually worth more than reading today alone — the exam asks how something developed.

Questions

  1. Discuss the significance of the 'triple test' and the 'Dominant Nature Test' in defining the scope of 'industry' under Indian labour laws. How does the recent Supreme Court ruling regarding the Industrial Relations Code, 2020, impact this legal framework? 150 words
    Attempt this — 150 words in 8 min
    0 / 150 words 8:00
  2. The definition of 'industry' has been a cornerstone for ensuring labour rights and industrial peace in India. Critically examine the implications of moving away from the expansive interpretation established in the 1978 Bangalore Water Supply and Sewerage Board case in the context of the Industrial Relations Code, 2020. 250 words
    Attempt this — 250 words in 11 min
    0 / 250 words 11:00

Prelims

  1. Which of the following was NOT a component of the 'triple test' established in the 1978 Bangalore Water Supply and Sewerage Board v. R. Rajappa case?

Syllabus

Topics

Sources

250words.in · https://250words.in/daily/2026-08-21/supreme-court-ruling-on-industry-definition-under