The Supreme Court’s nine-judge Structure Bench judgment on what constitutes an “trade” underneath the Industrial Disputes Act, 1947, raises an essential query that the judgment itself doesn’t reply with ample readability: does the Chief Justice of India’s reformulation of the 1978 Bangalore Water Provide take a look at command a majority of the nine-judge bench?
The operative portion, learn out on August 20, was understood as a 5:4 verdict, with CJI Surya Kant and justices Satish Chandra Sharma, Alok Aradhe, Vipul M Pancholi and PS Narasimha forming the bulk on the necessity to refine the regulation. However the judgment launched subsequently reveals a extra difficult image.
The CJI’s opinion is expressly authored “on behalf of himself, and justices Sharma, Aradhe and Pancholi” – making 4 judges.
The detailed judgment launched a day later nevertheless depicts that Justice Narasimha doesn’t really concur with the CJI’s reformulation. His opinion describes and engages with the CJI’s proposed method, however in the end says that the reference needn’t be answered on deserves as a result of the Industrial Disputes Act has been repealed and changed by the Industrial Relations Code. He expressly favours permitting pending disputes to proceed underneath Bangalore Water Provide reasonably than creating a brand new take a look at for them.
That leaves the judgment with an uncommon numerical drawback: 4 judges favour the CJI’s reformulation; 4 reject it; and the tie-breaker choose doesn’t reply the substantive query. The judgment doesn’t expressly clarify how this interprets right into a majority holding on the brand new take a look at.
CJI’s formulation has 4 clear supporters, not 5
The CJI’s opinion represents a considerable departure from the expansive method in Bangalore Water Provide & Sewerage Board Vs A Rajappa, the 1978 seven-judge judgment that advanced the “triple take a look at”.
The brand new method retains the fundamental components of organised exercise and employer-employee cooperation, however offers better prominence to the character and character of the exercise and its industrial character. The CJI’s opinion says that the character of the exercise and employer-employee cooperation need to be examined collectively and that industrial character can’t merely be disregarded.
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The judgment additionally makes clear that the absence of a revenue motive doesn’t routinely take an exercise exterior the definition. What issues is whether or not the exercise bears the indicia of an organised financial or industrial enterprise. Actions wholly divorced from industrial or financial character would ordinarily fall exterior Part 2(j).
That is plainly a brand new formulation, supposed to recalibrate the 1978 take a look at.
However the opinion is explicitly a four-judge opinion. There isn’t a indication in its opening that Justice Narasimha is becoming a member of it on this substantive query.
That distinction issues as a result of the 4 different judges are unequivocal in rejecting the reformulation.
Justices BV Nagarathna and Dipankar Datta maintain that Bangalore Water Provide accurately laid down the regulation. Justice Joymalya Bagchi expressly says he agrees with Justices Nagarathna and Datta that the triple take a look at continues to find out the scope of “trade”. The end result, subsequently, shouldn’t be neatly a 5:4 division on the substantive query.
Justice Narasimha’s take
Justice Narasimha’s opinion is the essential piece in understanding the paradox. He recognises that the reference was justified when it was made. He additionally data the CJI’s proposed shift in direction of the character of the exercise and industrial character. Certainly, he says the CJI has prompt that industrial exercise can’t be wholly divorced from industrial character and that the triple take a look at may very well be “calibrated”, introducing commerciality as the first take a look at.
However that’s not the identical as saying he accepts the CJI’s new take a look at.
Quite the opposite, Justice Narasimha’s decisive conclusion is that the reference not must be answered as a result of the statutory provision underneath scrutiny has ceased to exist. The Industrial Disputes Act was repealed with impact from November 21, 2025, and the Industrial Relations Code got here into drive instead.
His conclusion is especially important, because it indicated that Bangalore Water Supply ought to proceed to control pending disputes underneath the repealed regulation, reasonably than the court docket creating “a 3rd set of rules” relevant solely to these circumstances. He says the brand new Code have to be interpreted independently.
Justice Narasimha goes even additional in his criticism of the necessity for reformulation. He notes that if the nine-judge bench itself declares that its new interpretation of Part 2(j) may have no bearing on Part 2(p) of the brand new Code, then the train of reformulating the previous take a look at turns into largely tutorial.
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So the place does Justice Narasimha stand? He agrees with the CJI on the validity of the reference and the remedy of the previous and new legal guidelines, however doesn’t clearly be a part of the CJI in holding that Bangalore Water Provide requires substantive reformulation.
That’s the reason merely including Justice Narasimha to the CJI’s four-judge opinion and calling the end result “5:4” is tough to reconcile with the textual content of the judgment.
4 judges expressly reject the brand new take a look at
On the opposite facet, justices Nagarathna, Datta, Bhuyan and Bagchi are considerably aligned in preserving the 1978 place.
Justice Nagarathna says Bangalore Water Provide doesn’t require interference or modification and considers the reference itself pointless.
Justice Bagchi is much more express. He agrees with the CJI and Narasimha that the reference was validly made, however says he’s unable to agree with the CJI’s reformulation of the triple take a look at and as a substitute concurs with Justices Nagarathna and Datta that the unique take a look at accurately determines the scope of “trade”.
This creates the central paradox. There’s, nevertheless, appreciable settlement on the sensible consequence.
What survives, what stays unclear
The CJI’s judgment says the reformulated rules won’t disturb circumstances which have already attained finality or proceedings presently pending earlier than courts and tribunals. Such issues are to proceed underneath the Bangalore Water Provide take a look at.
The bench can also be unanimous that the Industrial Relations Code, 2020 have to be interpreted independently. The CJI expressly says Bangalore Water Provide can’t be handled because the “sheet anchor” for deciphering the brand new Code and leaves all questions underneath the brand new regime open.
That provides the judgment sensible stability regardless of its inside numerical ambiguity. However the bigger jurisprudential query stays.
If the CJI’s reformulation is meant to be the authoritative new interpretation of Part 2(j), the place is the fifth choose who provides the bulk? Justice Narasimha’s opinion doesn’t clearly present that vote. He describes the CJI’s reasoning however in the end declines to reply the reference on deserves and favours retaining Bangalore Water Provide for pending circumstances.
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The judgment subsequently produces a curious end result: a four-judge opinion reformulating the regulation, 4 judges rejecting that reformulation, and one choose declining to reply the substantive query as a result of the statute has been repealed.
Which will in the end require clarification as a result of a nine-judge Structure Bench was convened exactly to carry certainty to an space of regulation that had remained unsettled for many years. As a substitute, on essentially the most elementary query of the brand new take a look at’s majority standing, the judgment leaves the arithmetic- and consequently the exact precedential standing of the CJI’s reformulation — lower than clear.
