'Risks weakening worker safeguards': Congress on Supreme Court's recent industry definition judgement

New Delhi: The Congress on Saturday expressed concern over a Supreme Court ruling that stated that its 1978 worker-friendly interpretation of the term "industry" will not apply to fresh cases under the Industrial Relations Code of 2020, and said any move to narrow or distance the law from the broad definition of "industry" risks weakening worker safeguards.

Congress general secretary in charge of communications, Jairam Ramesh, claimed that the Modi government's Industrial Relations Code, 2020, "significantly weakens essential safeguards for our workers".

Read more: SC modifies 1978 ‘triple test’ for deciding what qualifies as an ‘industry’


Against this backdrop, a narrow majority of the Supreme Court, in State of Uttar Pradesh versus Jai Bir Singh delivered on August 20, 2026, has "hypothesised" a reformulation of the Triple Test laid down in its earlier landmark February 1978 verdict in the Bangalore Water Supply and Sewerage Board versus A Rajappa case, Ramesh said on X.

The importance of how "industry" is interpreted lies in the legal reality of who qualifies as a workman and, consequently, who receives the protections of labour law, he said.

"In the 1978 Bangalore Water Supply case, the Supreme Court identified three elements that ordinarily characterise an industry: a systematic activity; cooperation between employer and employee; and production or distribution of goods or services calculated to satisfy human wants and wishes, excluding purely spiritual or religious services," he said.

Read more: Lok Sabha clears Industrial Relations Code (Amendment) Bill, 2026

It also held that the absence of profit motive is irrelevant, and activities carried out by charitable institutions or public bodies may still fall within the definition, Ramesh pointed out.

The only exemption was core sovereign activities - such as the judiciary, law and order and defence, he said.

"For nearly five decades, this Triple Test provided a broad and settled framework for determining what constitutes an 'industry' under the erstwhile Industrial Disputes Act, 1947, as amended from time to time, bringing a wide range of workers within the protection of labour law," he said.

The 2026 majority judgment narrows this approach in two important ways by requiring an activity to have a "discernible commercial character" resembling trade or business - an additional requirement not found in the earlier test; and by broadening the scope of the sovereign-function exemption, potentially placing a wider range of government activities outside the definition of "industry", Ramesh said.

The Supreme Court has clarified that this reformulation will not disturb concluded or pending proceedings under the erstwhile Industrial Disputes Act, as amended from time to time, and will not govern interpretation of the new Industrial Relations Code, he said.

But leaving this "hypothesis" on the record creates an interpretive vacuum that could open a Pandora's Box of litigation and uncertainty, particularly before labour courts and industrial tribunals, Ramesh said.

This leaves space for a narrower definition to take hold in practice, especially when the Industrial Relations Code already empowers the Central government to exclude further categories of establishments from its ambit, he argued.

"Justice B V Nagarathna's dissent is, as always, courageous, clear and compelling. She has held that the Triple Test in the Bangalore Water Supply case required no reconsideration and, in the interest of judicial certainty, cautioned against unsettling settled law," the Congress leader said.

She also rightly observed that established jurisprudence under the old law may inform interpretation of the new Code, rather than the new Code being used to reopen settled law under the old Act, Ramesh said.

The August 2026 majority judgment is concerning because it injects uncertainty into labour relations at a time when clarity is essential for industrial peace, he said

"In an open economy with increasing private delivery of services, any move to narrow or distance the law from the broad definition of 'industry' risks weakening worker safeguards precisely when they are needed most," Ramesh said.

In a significant verdict, the Supreme Court on Thursday held that its 48-year-old expansive worker-friendly interpretation of the term "industry" will not apply to fresh cases under the Industrial Relations Code of 2020.

Pronouncing the verdict, CJI Surya Kant made clear that the "triple test", evolved in the 1978 judgement by Justice V R Krishna Iyer, to ascertain what constitutes an "industry" will remain valid.

He also said the "triple test" has been refined in the instant judgement, but this can't be used in pending or decided cases under the now-repealed Industrial Disputes (ID) Act, 1947.

The majority verdict also made clear that it has not gone into the 2020 Code.

"The future of 'industry' in Section 2(p) of the 2020 Code is not burdened by the interpretation of 2(j) in the Industrial Disputes Act of 1947," the CJI said.

"Consequently, any pending proceedings before the courts, tribunals, labour authorities or any fora under the 1947 Act should be decided as per the interpretation of Section 2(j) in the Bangalore Water Supply and Sewerage Board (1978) judgment," the CJI said.

Justice Narasimha agreed with the CJI and said an authoritative interpretation of section 2(j) had lost its relevance as the new Code has come into being.

Disagreeing with the majority view, Justice Nagarathna said the reference made to a nine-judge bench against the 1978 verdict was unwarranted and not maintainable.

In her dissent, she highlighted India's shifting industrial landscape from state-owned enterprises to an era of privatisation, liberalisation and globalisation.

"Liberalisation and privatisation were meant for the welfare of the people of India. Liberalisation, privatisation, globalisation were embraced by the Indian economy with a view to privatise state-sponsored and managed industries by handing over these entities, goods and services to private hands," Justice Nagarathna said.

Justice Dipankar Datta, who wrote the judgement for himself, and Justice Ujjal Bhuyan concurred with Justice Nagarathna that the 1978 verdict did not require any reconsideration.