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The Supreme Court has in a recent ruling narrowed the definition of “industry” under the Industrial Disputes Act (IDA), 1947, dealing a significant blow to worker rights in the country. The ruling, delivered on August 20 by a nine-judge Constitution Bench headed by Chief Justice of India Surya Kant, has held there must be a “discernible commercial character” to an economic activity for employees to secure the protection of the IDA.

The ruling followed requests from Uttar Pradesh, Maharashtra and Punjab to review a seven-judge ruling from 1978 that had defined industry under Section 2(j) with a much broader sweep. The review petition followed the Industrial Relations Code (IRC) coming into force in November 2025 and replacing the IDA.

The majority on the Constitutional Bench led by Chief Justice of India Surya Kant, including Justices Satish Chandra Sharma, Alok Aradhe and Vipul M. Pancholi, agreed that the definition of industry under Section 2(p) of the IRC is not burdened by the existing (1978) interpretations of the repealed Section 2(j) of the IDA.

The verdict is, in fact, closer to a 4-4-1 split than a clear decision. Justice P.S. Narasimha clearly did not endorse the “commercial character” test on its own terms, his reasoning being that the question had become largely academic since the IDA itself stands repealed now.

Justice Joymalya Bagchi, on the other hand, went farther in the opposite direction. He agreed with Justices B.V. Nagarathna, Dipankar Datta and Ujjal Bhuyan that the 1978 test remains the correct interpretation of industry under the IDA. He joined the CJI’s opinion only on the narrower, practical question of how the new IRC should be read going forward – not on whether the old definition was wrong.

Also, Justice Nagarathna’s opinion, finding the reference against the 1978 verdict “unwarranted” and not maintainable, was seconded by Justices Datta and Bhuyan.

Therefore, four of nine judges affirmed that the 1978 test was correctly decided and needed no revision. At the same time, four judges said that “commercial character” would be treated as an essential element of industry.

Though no clear verdict came through, the majority of the bench agreed that the 1978 decision did not need to apply to industrial disputes arising in the future.

CJI Kant specifically stated that the 1978 judgment would not be regarded as the........

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