What happened: Supreme Court re-set “industry” under IRC, 2020
A Supreme Court Constitution Bench held that the long-standing 1978 broad interpretation of the term “industry” will not automatically apply when deciding the scope of “industry” under the Industrial Relations Code (IRC), 2020. The Court said that “industry” under the IRC must be determined afresh from the IRC’s own text and context rather than importing the earlier meaning built under the older 1947 Industrial Disputes Act framework.
The Court’s majority view applied a clean-slate approach to definitional scope under the IRC. The Bench delivered the ruling even though judges differed on some issues within the Bench.
Background and earlier position: Rajappa-era 1978 “industry” expansion
Under the 1978 Rajappa-era approach, “industry” received an expansive reading that brought many workplaces within labour rights coverage. The approach relied on a broad “triple test” framework (a test involving three elements) to decide whether an activity qualifies as “industry.”
The 1978 approach generally included workplaces such as hospitals, educational institutions, and municipal bodies. It also exempted limited core sovereign functions to protect state autonomy, including the judiciary, law and order, defence, and similar areas.