Definition of ‘Industry’ Judgement

Transcript:

What exactly is an “industry” under Indian labour law? For nearly 50 years, the answer has come from the Supreme Court’s 1978 judgement in Bangalore Water Supply v A. Rajappa. The judgement laid down the “Triple Test”: an industry should involve systematic activity, organised through cooperation between employer and employee, for the production, distribution or provision of goods or services.

The scope of this definition remained contested. Do charitable institutions qualify as industries? Can government welfare activities be treated as industrial activities? And what are the State’s “sovereign functions” that fall outside the definition? A nine-Judge Constitution Bench considered the 1978 judgement and the Triple Test.

In August 2026, the Constitution Bench delivered its verdict. The judges differed on whether the Triple Test should be reformulated. 

Chief Justice Surya Kant, joined by three other judges, held that the essential framework of the Triple Test had stood the test of time, but proposed refining it to require goods or services possessing a “discernible commercial character”. Justice B.V. Nagarathna held that the existing test did not require modification. Justice Dipankar Datta, writing for himself and Justice Ujjal Bhuyan, held that the Triple Test was the correct law. Justice Joymalya Bagchi too disagreed with reformulating the Triple Test. Justice P.S. Narasimha did not enter into the merits, holding that after the repeal of Section 2(j) of the Industrial Disputes Act, 1947, there was no need to formulate a new authoritative interpretation of the repealed provision.

The repeal of Section 2(j) also meant that the Court had to consider what would happen to disputes arising under the old law. The Bench unanimously held that pending disputes under the Industrial Disputes Act will continue to be decided according to the 1978 holding.

The 489-page judgement contains five opinions. Our judgement summary explains the decision, while our judgement matrix sets out each judge’s position on five key issues.

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