Nine Judges on “Industry”: Supreme Court Revisits Bangalore Water Supply, Keeps the Triple Test for Pending Cases

In 1978, Bangalore Water Supply gave “industry” its famously expansive reach: through Justice Krishna Iyer's triple test — systematic activity, cooperation between employer and employee, and production or distribution of goods and services calculated to satisfy human wants — hospitals, educational institutions, charities and clubs were drawn into the Industrial Disputes Act, with profit motive declared irrelevant. In 2005, a five-judge bench in Jai Bir Singh doubted that breadth and referred the question to a larger bench.

The reference waited two decades. A nine-judge bench under Chief Justice Surya Kant heard it at length, reserved judgment in March 2026, and delivered its opinions on 20 August 2026.

The Key Question Before the Court

Does the expansive definition of “industry” in Bangalore Water Supply remain correct — and if not, what replaces it, and from when?

Five Opinions, One Practical Answer

The bench divided into several opinions. The Chief Justice, writing for himself and Justices Sharma, Aradhe and Pancholi, reformulated the triple test — most notably by requiring that the goods or services produced possess a discernible commercial character analogous to trade or business and satisfy material human wants, and by moderating the special emphasis hitherto placed on the employer–employee relationship. The 1978 position that absence of profit motive is irrelevant was expressly retained in its existing form. The plurality was careful about the status of its view, describing it as its considered opinion on the proper interpretation of Section 2(j), operating prospectively.

Justice Datta, writing for himself and Justice Bhuyan, held the reference not maintainable and Bangalore Water Supply correct on the merits, observing that the exercise served no practical, jurisprudential or doctrinal purpose; Justice Nagarathna likewise found revisiting the definition unnecessary. Justice Narasimha held the reference maintainable but reopening unwarranted, the 1947 Act having since been repealed by the new labour-code regime; Justice Bagchi, also finding the reference maintainable, affirmed Bangalore Water Supply.

What Governs Now

For practice, the convergence matters more than the division: matters pending before courts, tribunals and labour authorities under the Industrial Disputes Act are to be decided on the Bangalore Water Supply triple test, and judgments, settlements and determinations that have attained finality stay undisturbed. The plurality's reformulated test looks only forward, and only to Section 2(j) of the 1947 Act: the definition of “industry” in the Industrial Relations Code, 2020, the Court clarified, must be interpreted on its own text and in its own context.

What the Court Actually Held

• Pending Industrial Disputes Act proceedings continue to be governed by the Bangalore Water Supply triple test.
• A four-judge plurality reformulated the test — requiring a discernible commercial character analogous to trade or business, while expressly retaining the irrelevance of profit motive — with prospective effect only; concluded matters are not reopened.
• Five judges, across four separate opinions, would not disturb Bangalore Water Supply; two of them (Justices Datta and Bhuyan) held the reference itself not maintainable.
• The ruling has no bearing on the definition of “industry” under the Industrial Relations Code, 2020.

Why This Judgment Matters

• It closes the longest-running definitional question in Indian labour law — a reference pending since 2005 over a definition from 1978.
• Workers and employers get certainty: no retrospective upheaval of decided or pending cases.
• The plurality's commercial-character element signals a narrower future for Section 2(j) — but only prospectively, and only while the 1947 Act's cases last (the Act stands repealed from 21 November 2025).
• The real battleground shifts to the Industrial Relations Code, 2020, which the Court pointedly left to its own text.

What Should Advocates Take Away From the Judgment?

For Workmen and Unions

• In every pending ID Act dispute, Bangalore Water Supply remains the governing test — resist any attempt to apply the reformulated elements retrospectively.

For Employers and Managements

• For prospective Section 2(j) questions, brief the plurality's discernible-commercial-character element; for Code-era disputes, build the argument on the Code's own definition, not on either line of this judgment.

Key Takeaways

Frequently Asked Questions

No. Pending and concluded matters remain governed by it, several judges expressly affirmed it, and the plurality's reformulation operates only prospectively under the 1947 Act.

The plurality required that the goods or services produced possess a discernible commercial character analogous to trade or business, satisfying material human wants, and moderated the emphasis on the employer–employee relationship — while expressly retaining the 1978 position that absence of profit motive is irrelevant — for future cases under Section 2(j).

No. The Court clarified that the definition of “industry” in the Industrial Relations Code, 2020 must be interpreted on its own text and in its own context alone.

Conclusion