New code voids 1978 definition of ‘industry’: SC

21 AUGUST 2026

What does the word “industry” mean under the new Industrial Relations Code (IRC), 2020, which came into force in November 2025?

Earlier position — Bangalore Water Supply case, 1978

In Bangalore Water Supply and Sewerage Board v. R. Rajappa (1978), a 7-judge Constitution Bench gave a wide meaning to “industry”.
It introduced the famous Triple Test:
1. Activity is systematic/organised.
2. There is employer–employee cooperation.
3. Goods or services are produced to satisfy human wants.
Therefore, institutions such as hospitals, educational institutions and municipalities could fall within the definition of industry.
This gave many workers access to labour protections, industrial disputes mechanisms and collective bargaining.
Core sovereign functions such as defence, judiciary and law-and-order functions were excluded.

What the 2026 Supreme Court verdict says

A 9-judge Constitution Bench has held that the 1978 interpretation will not automatically carry over to the new IRC.

The IRC defines “industry” under Section 2(p).
The old Industrial Disputes Act defined it under Section 2(j).
The Court’s majority said that Section 2(p) of the IRC must be interpreted independently.
In the words of CJI Surya Kant, the future interpretation of “industry” under the IRC is not “burdened” by the 1978 interpretation.
This does NOT mean the 1978 judgment has been cancelled altogether.
For disputes that arose under the old Industrial Disputes Act, 1947, the Bangalore Water Supply judgment continues to govern pending proceedings.

Division within the 9-judge Bench

Majority: CJI Surya Kant, Justices Satish Chandra Sharma, Alok Aradhe, Vipul M. Pancholi, P.S. Narasimha and Joymalya Bagchi.

➡️ They held that the new IRC’s definition should not simply inherit the 1978 interpretation.

Separate view: Justice B.V. Nagarathna, joined by Justices Dipankar Datta and Ujjal Bhuyan, considered the reference against the 1978 judgment unwarranted.

➡️ They favoured retaining the inclusive interpretation because it provides stronger protection for workers.

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