An expansive definition of the term ‘industry’ that has stood for close to five decades has survived a Supreme Court review, though the court has sought to add layers to its interpretation. The nine-judge bench delivered its judgement on August 20. What emerged from the 498-page judgement, uploaded later, was more complicated than the initial impression the verdict created.
The reference before the bench was whether the ‘triple test’ evolved in Bangalore Water-Supply & Sewerage Board (1978), which laid down what constitutes an ‘industry’ under the Industrial Disputes Act, 1947, remained valid. Justice V R Krishna Iyer’s three-fold test covered systematic activity, employer-employee cooperation, and the production or distribution of goods or services to satisfy human wants. The absence of a profit motive was irrelevant. The test thus brought hospitals, charitable institutions and public bodies within its sweep. The exemption covered sovereign functions such as the judiciary, law and order and defence.
Chief Justice Surya Kant, writing for himself and Justices Satish Chandra Sharma, Alok Aradhe and Vipul M Pancholi, proposed a reformulation of the test. He added a discernible commercial character resembling trade or business and sought to expand the exemptions for sovereign functions. But the reformulated test would operate prospectively and would not affect pending or decided cases under the repealed 1947 Act. He also made clear that the bench was not deciding the meaning of ‘industry’ under the Industrial Relations Code, 2020.
This is where the composition of the judgement matters. The Chief Justice and three other judges supported the reformulation. Justices B V Nagarathna, Dipankar Datta, Ujjal Bhuyan and Joymalya Bagchi opposed the need to alter the 1978 test, stressing its importance for workers amid changing economic conditions. Justice P S Narasimha, however, held that the exercise had become unnecessary because the 1947 Act had been repealed and the 2020 Code had not been examined.
The important point is that the broad definition has not simply disappeared. The 1978 triple test will continue to apply to pending cases under the repealed 1947 law. The reformulated test will apply only to cases arising after the judgement. The judgement, however, does not decide what constitutes an ‘industry’ under the 2020 Code. One may therefore wonder whether precious judicial time was spent on a reference that had, to a substantial extent, lost its practical force after the new labour code came into play.