Supreme Court Modifies Definition of Industry Under Industrial Disputes Act

• A nine-judge bench of the Supreme Court has modified the definition of 'industry' under the Industrial Disputes Act, 1947.
• The modification comes after a five-to-four majority ruling that certain aspects of the triple test and guidelines require further refinement.
• The new definition will only apply prospectively, meaning that pending cases may be decided under the earlier definition.

A nine-judge bench of the Supreme Court, led by Chief Justice Surya Kant, has modified the definition of 'industry' under the Industrial Disputes Act, 1947. The modification comes after a five-to-four majority ruling that certain aspects of the triple test and guidelines formulated in the 1978 Bangalore Water Supply case require further refinement.

The court's decision is significant as it will only apply prospectively, meaning that pending cases may be decided under the earlier definition. This has important implications for clients involved in ongoing disputes or proceedings under the Industrial Disputes Act, 1947.

The Supreme Court's decision is a refinement of the triple test for defining industry, which was first established in the 1978 Bangalore Water Supply case. The triple test considers whether an activity is industrial in nature based on three criteria: (1) the organization or undertaking must be engaged in any economic activity relating to production, supply, or distribution of goods or services; (2) it must employ at least ten workers; and (3) it must have a minimum capital investment. The court's decision also takes into account the Centre's argument that social welfare schemes and governmental functions cannot be treated as 'industrial activity', even if they involve organizational or operational elements resembling commercial undertakings.

The Supreme Court has refrained from examining the new definition of 'industry' under the Industrial Relations Code, 2020. Instead, it has clarified that pending cases may be decided in accordance with the earlier definition.

The Supreme Court's decision is a significant development in the interpretation of the Industrial Disputes Act, 1947. The modification of the definition of 'industry' will have far-reaching implications for employers and employees alike. Lawyers should note that the new definition will only apply prospectively, and pending cases may be decided under the earlier definition. This means that clients involved in ongoing disputes or proceedings under the Industrial Disputes Act, 1947, may need to be advised on the potential implications of this change.

Lawyers should note that the new definition of 'industry' will only apply prospectively, and pending cases may be decided in accordance with the earlier definition. This means that clients involved in ongoing disputes or proceedings under the Industrial Disputes Act, 1947, may need to be advised on the potential implications of this change.

Source: Original reporting via LawBeat