Prelims: Current events of national and international relations | Polity
Why in News?
A 9-judge Constitution Bench of the Supreme Court recently examined the meaning of “industry” under labour law.
Background – The issue arose from the landmark Bangalore Water Supply and Sewerage Board v. R. Rajappa (1978) judgment.
SC Observation – The 1978 interpretation under the Industrial Disputes Act, 1947 cannot automatically be applied to the new Industrial Relations Code (IRC), 2020.
Background of Bangalore Water Supply Case, 1978
The judgment gave a broad and inclusive meaning to the term “industry”. It introduced the famous Triple Test –
Activity should be systematic and organised.
It should involve employer–employee cooperation.
It should produce goods or services to satisfy human wants and needs.
Included in definition – several institutions such as hospitals, educational institutions and municipalities within the ambit of “industry”.
Excluded in definition – Core sovereign functions such as defence, judiciary and law-and-order functions were generally excluded.
Introduced Dominant Nature Test Where an organisation performs multiple or integrated activities, the dominant nature of its activities can be considered to determine whether it qualifies as an industry.
Recent Supreme Court Verdict
Under Section 2(p) of the Industrial Relations Code, 2020, “industry” will be interpreted afresh.
The 1978 judgment will not serve as the foundation for interpreting the term under the new Code.
The ruling creates a distinction between
Old disputes where 1978 interpretation applies
Future disputes under IRC where fresh interpretation applies.
A Judge stressed that an inclusive definition is important for protecting workers’ rights, particularly after privatisation and liberalisation.
