By a 6:3 majority, the nine-judge Bench examined the correctness of the expansive interpretation accorded to Section 2(j) of the Industrial Disputes Act in the 1978 decision. While the majority found that certain facets of the celebrated “triple test” required refinement, it declined to unsettle disputes already pending before courts, tribunals, labour authorities and other adjudicatory forums.
The Bench, headed by Chief Justice of India Surya Kant, clarified that the newly reformulated principles would operate prospectively. Consequently, matters arising under the Industrial Disputes Act and presently awaiting adjudication will continue to be decided in accordance with the legal framework enunciated in Bangalore Water Supply.
The 1978 ruling had adopted an expansive understanding of “industry”, holding that an organised and systematic activity involving cooperation between employer and employee for the production or distribution of goods or services could fall within the statutory definition, irrespective of whether the undertaking pursued a profit-making objective.
The majority observed that although aspects of the test formulated in Bangalore Water Supply were amenable to doctrinal refinement, its essential framework had endured over time. It therefore considered it appropriate, in the interest of employers, workmen, industrial activity and the broader economy, that pending disputes should not be subjected to a fresh and distinct legal regime midway through adjudication.
The Court also underscored that its present interpretation was confined to the Industrial Disputes Act, 1947. The ruling would not govern the Industrial Relations Code, 2020, which has replaced the earlier statutory framework.
Justice P.S. Narasimha, while holding the reference to be maintainable, took the view that a fresh authoritative determination had become largely unnecessary in light of the repeal of the relevant provision following the coming into force of the Industrial Relations Code. He nevertheless favoured disposal of pending disputes on the basis of the ratio laid down in Bangalore Water Supply, rather than the creation of a separate set of principles exclusively for such cases.
A dissenting view was taken by Justices B.V. Nagarathna, Dipankar Datta and Ujjal Bhuyan on the question of maintainability. Justice Datta, speaking for himself and Justice Bhuyan, held that the earlier reference itself was not maintainable and maintained that the tests evolved in Bangalore Water Supply correctly reflected the law.
The reference stemmed from longstanding doubts over whether the broad construction placed upon the expression “industry” nearly five decades ago required reconsideration. The Supreme Court was also called upon to examine the treatment of welfare activities, governmental functions and the scope of the exclusion traditionally associated with sovereign functions.
With the majority preserving the applicability of the Bangalore Water Supply framework to pending matters, the judgment ensures continuity for industrial disputes instituted under the repealed legislation, while simultaneously recasting the interpretative approach for the future statutory landscape.
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