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A nine-judge Constitution Bench of the Supreme Court delivered judgment on 20 August 2026 on the meaning of 'industry' under Section 2(j) of the Industrial Disputes Act, 1947.
By a 5:4 majority the Bench held that the classic 'triple test' laid down in Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978) requires further refinement.
By a separate 6:3 majority the Bench held that the reference seeking reconsideration of the 1978 judgment was validly made and maintainable.
The reformulated test will operate prospectively; pending disputes under the Industrial Disputes Act, 1947 will continue to be decided on the original 1978 definition.
The Court held that the 1978 interpretation will not govern the term 'industry' under the Industrial Relations Code, 2020.
In the 1978 Bangalore Water Supply judgment the Supreme Court held that an activity is an 'industry' under Section 2(j) if three conditions are met: there is systematic activity, it is carried on through cooperation between employer and employee, and it is for the production or distribution of goods and services calculated to satisfy human wants and wishes. The test deliberately looked at the nature of the activity rather than at who was carrying it on or whether profit was involved, which is why hospitals, educational institutions, charities and many government departments were pulled within the definition. That breadth is the reason the judgment has been contested for nearly five decades: the wider the definition of industry, the wider the reach of labour protections, tribunals and the machinery for adjudicating industrial disputes.
Simple Analogy: Think of Section 2(j) as the doorway into the labour-law building. The triple test decides who is let in. Widen the door and hospitals, colleges and charities walk in alongside factories; narrow it and they are left outside both the protections and the tribunals.
The Industrial Disputes Act is enacted; Section 2(j) defines 'industry'.
A seven-judge bench in Bangalore Water Supply and Sewerage Board v. A. Rajappa lays down the triple test, giving 'industry' its widest reading.
Parliament amends the definition in Section 2(j) in response to the judicial call for clarity, but the amendment is not brought into force.
In State of U.P. v. Jai Bir Singh a five-judge Constitution Bench refers the question to a larger bench, holding that reconsidering a seven-judge decision needs a bench larger than seven.
Parliament enacts the Industrial Relations Code, consolidating the Industrial Disputes Act, 1947, the Trade Unions Act, 1926, and the Industrial Employment (Standing Orders) Act, 1946.
The nine-judge bench reserves judgment after three days of continuous arguments.
The Bench delivers a 5:4 judgment refining the triple test, to operate prospectively.
Defines 'industry'; the provision directly at issue before the nine-judge bench.
The central law governing investigation and settlement of industrial disputes, layoffs, retrenchment and closure.
One of the four labour codes; it consolidates the Industrial Disputes Act, 1947, the Trade Unions Act, 1926, and the Industrial Employment (Standing Orders) Act, 1946.
Provides that a case involving a substantial question of law as to the interpretation of the Constitution is decided by a bench of at least five judges; still larger benches are constituted to reconsider earlier precedents.
Makes the law declared by the Supreme Court binding on all courts in India, which is why the strength of the bench laying down a rule matters so much.
Code on Wages, 2019; Industrial Relations Code, 2020; Code on Social Security, 2020; and Occupational Safety, Health and Working Conditions Code, 2020 replaced twenty-nine central labour laws.
A larger bench is needed to overrule a smaller one, which is why a seven-judge decision of 1978 required nine judges to revisit.
The technique of applying a new judicial rule only to future cases, used here to protect pending disputes.
One of the persistent difficulties with the 1978 test was how to treat departments discharging sovereign functions of the State.
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The 1978 standard: systematic activity, cooperation between employer and employee, and production or distribution of goods and services to satisfy human wants.
Application of a new judicial rule only to future cases, leaving past and pending matters governed by the earlier rule.
A Supreme Court bench of five or more judges, constituted for substantial questions of constitutional interpretation or to reconsider earlier precedents.
The procedure by which a smaller bench sends a question to a larger bench for authoritative determination.