PolityGS2+ GS3

Supreme Court rules 1978 industry definition inapplicable to Industrial Relations Code

The Hindu, Indian Express·2026-08-22

"Supreme Court rules 1978 industry definition inapplicable to Industrial Relations Code"

Prelims Facts

  • •Bangalore Water Supply and Sewerage Board v. R. Rajappa (1978): decided by a seven-judge Constitution Bench; introduced the 'triple test' for defining 'industry' under Section 2(j) of the Industrial Disputes Act, 1947.
  • •The Industrial Relations Code, 2020 replaced three laws: the Industrial Disputes Act, 1947; the Trade Unions Act, 1926; and the Industrial Employment (Standing Orders) Act, 1946.
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Key Terms

Triple Test

BWSSB 1978 criterion: systematic activity + employer-employee cooperation + production of goods/services satisfies 'industry'.

Industrial Relations Code, 2020

Consolidates IDA 1947, Trade Unions Act 1926, and Industrial Employment (Standing Orders) Act 1946 into one statute.

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Study Note

BackgroundCore Concept

Background

India's labour law framework was built over decades on a foundation of central legislation, the most important being the Industrial Disputes Act, 1947 (IDA). Section 2(j) of the IDA defined 'industry', and the scope of that definition determined which workers could access collective bargaining, raise industrial disputes, and seek protection against unfair dismissal. The definition was therefore not merely technical — it was a threshold question about which workers the law would protect at all.

In 1978, a seven-judge Constitution Bench delivered a landmark ruling in Bangalore Water Supply and Sewerage Board v. Rajappa (BWSSB). The bench introduced the 'triple test': an undertaking qualifies as an 'industry' if it involves (i) systematic or organised activity, (ii) organised through cooperation between employer and employee, and (iii) aimed at the production or distribution of goods or services to satisfy human wants. Crucially, profit motive was held irrelevant. This brought hospitals, universities, municipalities, and charitable institutions within the fold of 'industry'. Only core sovereign functions — defence, the judiciary, and law and order — were exempted. This interpretation governed Indian labour law for nearly five decades.

Between 2019 and 2020, Parliament enacted four Labour Codes to consolidate 29 central labour laws. The Industrial Relations Code, 2020 (IRC) replaced the IDA, the Trade Unions Act, 1926, and the Industrial Employment (Standing Orders) Act, 1946. The IRC came into force in November 2025. Its Section 2(p) defines 'industry' afresh, immediately raising the question of whether the expansive 1978 BWSSB interpretation carries over to the new Code.

The Topic Explained

The significance of the BWSSB triple test lay in its conceptual shift: it moved the focus away from the employer's identity or profit motive toward the nature of the activity being carried out. A hospital run by a charitable trust was still an 'industry' because it systematically organised labour to provide a service satisfying human needs. This approach dramatically widened the protective ambit of the IDA, extending collective bargaining rights and dispute resolution mechanisms to workers in sectors previously considered outside the industrial sphere.

The IRC's Section 2(p) contains explicit exclusions and a freshly worded definition, making it textually distinct from the IDA's Section 2(j). This distinction became the crux of the constitutional question: could a definition crafted under a repealed statute automatically govern interpretation under an entirely new legislative framework? …

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Related PYQs

2017GS1 Prelims

The Trade Disputes Act of 1929 provided for

Athe participation of workers in the management of industries.
Barbitrary powers to the management to quell industrial disputes.
Can intervention by the British Court in the event of a trade dispute.
Da system of tribunals and a ban on strikes.
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2017GS1 Prelims

Which principle among the following was added to the Directive Principles of State Policy by the 42nd Amendment to the Constitution?

AEqual pay for equal work for both men and women
BParticipation of workers in the management of industries
CRight to work, education and public assistance
DSecuring living wage and human conditions of work to workers
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2019GS1 Prelims

With reference to the Constitution of India, prohibitions or limitations or provisions contained in ordinary laws cannot act as prohibitions or limitations on the constitutional powers under Article 142. It could mean which one of the following?

AThe decisions taken by the Election Commission of India while discharging its duties cannot be challenged in any court of law.
BThe Supreme Court of India is not constrained in the exercise of its powers by laws made by the Parliament.
CIn the event of a grave financial crisis in the country, the President of India can declare Financial Emergency without the counsel from the Cabinet.
DState Legislatures cannot make laws on certain matters without the concurrence of Union Legislature.
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Practice MCQs

Politymedium

With reference to the 'triple test' laid down in Bangalore Water Supply and Sewerage Board v. R. Rajappa (1978), consider the following statements:

1.An organisation must have a profit motive to qualify as an 'industry' under the test.

2.The test requires a systematic or organised activity with an employer-employee relationship.

3.Production or distribution of goods or services for human wants is one of the three elements.

Which of the statements given above is/are correct?

A1 and 2 only
B2 and 3 only
C1 and 3 only
D1, 2 and 3
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Politymedium

Which of the following laws were replaced by the Industrial Relations Code, 2020?

1.The Industrial Disputes Act, 1947

2.The Trade Unions Act, 1926

3.The Factories Act, 1948

4.The Industrial Employment (Standing Orders) Act, 1946

Select the correct answer using the code given below:

A1, 2 and 4 only
B1, 3 and 4 only
C2, 3 and 4 only
D1, 2, 3 and 4
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Politymedium

Consider the following assertion and reason:

Assertion (A): The Supreme Court's nine-judge bench ruled that the 1978 BWSSB definition of 'industry' does not apply to the Industrial Relations Code, 2020.

Reason (R): The Industrial Relations Code, 2020 defines 'industry' under Section 2(p), which is a fresh statutory definition independent of the Industrial Disputes Act, 1947.

Which one of the following is correct in respect of the above?

ABoth A and R are true, and R is the correct explanation of A
BBoth A and R are true, but R is not the correct explanation of A
CA is true but R is false
DA is false but R is true
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Polityhard

Which of the following activities were brought within the definition of 'industry' by the Bangalore Water Supply and Sewerage Board v. R. Rajappa (1978) judgment?

1.Hospitals run by charitable trusts

2.Municipal corporations providing sanitation services

3.Core defence establishments of the Union Government

4.Educational institutions with employer-employee relationships

Select the correct answer using the code given below:

A1, 2 and 4 only
B2, 3 and 4 only
C1 and 4 only
D1, 2, 3 and 4
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