No clear majority? The puzzle in SC's new 'Industry' test
New Delhi, Aug. 24 -- The Supreme Court's nine-judge Constitution Bench judgement on what constitutes an "industry" under the Industrial Disputes Act, 1947, raises an important question that the judgment itself does not answer with sufficient clarity: does the Chief Justice of India's reformulation of the 1978 Bangalore Water Supply test command a majority of the nine-judge bench?
The operative portion, read 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 majority on the need to refine the law. But the judgment released subsequently reveals a more complicated picture.
The CJI's opinion is expressly authored "on behalf of himself, and justices Sharma, Aradhe and Pancholi" - making four judges.
The detailed judgment released a day later however depicts that Justice Narasimha does not actually concur with the CJI's reformulation. His opinion describes and engages with the CJI's proposed approach, but ultimately says that the reference need not be answered on merits because the Industrial Disputes Act has been repealed and replaced by the Industrial Relations Code.
He expressly favours allowing pending disputes to continue under Bangalore Water Supply rather than creating a new test for them.
That leaves the judgment with an unusual numerical problem: four judges favour the CJI's reformulation; four reject it; and the tie-breaker judge does not answer the substantive question. The judgment does not expressly explain how this translates into a majority holding on the new test.
The CJI's opinion represents a substantial departure from the expansive approach in Bangalore Water Supply & Sewerage Board Vs A Rajappa, the 1978 seven-judge judgment that evolved the "triple test".
The new approach retains the basic ingredients of organised activity and employer-employee cooperation, but gives greater prominence to the nature and character of the activity and its commercial character. The CJI's opinion says that the nature of the activity and employer-employee cooperation have to be examined together and that commercial character cannot simply be disregarded.
The judgment also makes clear that the absence of a profit motive does not automatically take an activity outside the definition. What matters is whether the activity bears the indicia of an organised economic enterprise.
The CJI's judgement says the reformulated principles will not disturb cases that have already attained finality or proceedings presently pending before courts and tribunals. Such matters are to continue under the Bangalore Water Supply test.
That may ultimately require clarification because a nine-judge Constitution Bench was convened precisely to bring certainty to an area of law that had remained unsettled for decades. Instead, on the most fundamental question of the new test's majority status, the judgment leaves the arithmetic- and consequently the precise precedential status of the CJI's reformulation....
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