Transitory provision allowing existing tribunals to function during transition to new Code is not "manifestly arbitrary."

The appellants challenged a Single Judge’s judgment which upheld the constitutionality of the Industrial Relations Code (Amendment) Act, 2026 (Act No. 1 of 2026).

Specifically, they challenged Section 104(1A) of the Industrial Relations Code, 2020 (“the Code”), which was introduced via the 2026 Amendment. This provision allows existing Labor Courts and Tribunals constituted under the repealed Industrial Disputes Act, 1947, to continue adjudicating cases until new Tribunals under the Code become fully functional.

The appellants contended that since the 1947 Act was repealed, the old forums lost their legal sanctity and that the provision conflicted with the mandatory transfer requirements under Sections 44(7) and 51(1) of the Code.

The Court primarily applied the principle of "manifest arbitrariness" as established by the Hon'ble Supreme Court in Shayara Bano v. Union of India (2017), which dictates that a statute can be struck down under Article 14 only if it is shockingly or manifestly arbitrary.

The Court also invoked the doctrine of "Pith and Substance" to determine legislative competence and the validity of transitory provisions in the context of statutory transitions.

Furthermore, the court interpreted Section 104(1A) as a non-obstante transitory clause designed to prevent a vacuum in judicial administration during the implementation of new legislation.

The Court reasoned that Section 104(1A) is a necessary transitory mechanism designed to prevent a "cryonic freeze" of the labor adjudication system.

It rejected the argument of "manifest arbitrariness," noting that the provision ensures continuity of justice for litigants while the new Tribunals—currently under the purview of the Supreme Court for constitution—are being established.

Regarding the alleged conflict with Sections 44(7) and 51(1) of the Code, the Court held that these sections provide for the transfer of cases once the new Tribunals are constituted; however, the transitory provision specifically governs the interim period to prevent a total cessation of judicial functions.

Since the legislature possessed the competence to enact the amendment and the provision served a rational objective of protecting the interests of litigants, no constitutional infirmity was found.

The existing Tribunals and Authorities under the repealed Acts are legally permitted to continue their functions until the new Authorities under the Code become functional to avoid prejudice to claimants.

The High Court dismissed the appeal and upheld the judgment of the Single Judge. No order as to costs.