This article traces the Supreme Court’s decision in State of U.P. v. Jai Bir Singh, examining the evolution of “industry” under the Industrial Disputes Act and its implications under the Industrial Relations Code.
Introduction
Few definitional questions in Indian statutory law have occupied the Supreme Court for as long, or as persistently, as the meaning of the word “industry” under Section 2(j), Industrial Disputes Act, 1947 (ID Act). The question determines nothing less than the threshold access of an entire class of persons — workmen — to the protective and dispute-resolution machinery of the Act: conciliation, adjudication, reinstatement and compensation.
On 20 August 2026, a nine-Judge Bench of the Supreme Court of India, in State of U.P. v. Jai Bir Singh1, finally answered a reference that had lain pending, in one form or another, since 2001. The judgment runs to five separate opinions and traverses nearly 80 years of industrial law jurisprudence. Here an attempt has been made to trace that jurisprudential arc — from the enactment of the ID Act, through the landmark seven-Judge decision in Bangalore Water Supply & Sewerage Board v. A. Rajappa2, to the 2026 nine-Judge pronouncement and considers what the decision means for labour law practice now that the Industrial Relations Code, 2020 (IR Code) has replaced the ID Act.
The historical development of industrial legislation in India
The ID Act did not emerge in a vacuum. Industrial unrest in the early 20th century, and the experience of wartime industrial regulation under Rule 81-A, Defence of India Rules, 1942 (which introduced compulsory conciliation and adjudication of industrial disputes during the Second World War), demonstrated to the colonial and, later, the independent Indian state the necessity of a permanent statutory mechanism for the prevention and settlement of industrial disputes. The Trade Disputes Act, 1929 had provided an earlier, more limited framework of Conciliation Boards and courts of inquiry, but lacked binding adjudicatory teeth.
The ID Act replaced this earlier framework with a more elaborate architecture — works committees, conciliation officers and Boards, courts of inquiry, and, crucially, Labour Courts, Industrial Tribunals and National Tribunals empowered to adjudicate disputes and grant binding relief, including reinstatement and back wages. The Act’s protective machinery, however, is triggered only where an “industrial dispute” exists between an “industry” and its “workmen”. Section 2(j) accordingly defines “industry” in deliberately wide terms “any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen” language substantially drawn, as the 2026 judgment itself records, from Section 4, Australian Commonwealth Conciliation and Arbitration Act, 1904. It is this deliberately open-textured formula, applied over decades to an ever-expanding range of institutions; hospitals, universities, clubs, municipal corporations, research bodies and government departments that has generated the interpretive history traced below. Independent India’s most significant subsequent legislative intervention in this field is the enactment, decades later, of the four Labour Codes, of which the IR Code (in force from 21 November 2025, with the ID Act formally repealed with effect from 2 February 2026) directly supersedes the ID Act and recasts “industry” under its own Section 2(p).
The definition of “Industry” over the years: The pre-Bangalore water supply jurisprudence
Even before Bangalore Water Supply3, the Supreme Court oscillated between expansive and restrictive readings of Section 2(j).
A. Casting the net wide
In D.N. Banerji v. P.R. Mukherjee4, a five-Judge Bench held that a municipality could be an “industry”, propounding the “analogous to trade or business” test and rejecting an ejusdem generis reading of “undertaking”. State of Bombay v. Hospital Mazdoor Sabha5, extended this to a government hospital, laying down a fivefold test for an “undertaking” (systematic activity; production or distribution of goods or material services; employee assistance; organisation analogous to trade or business; and absence of a purely casual or personal character), while clarifying that neither profit motive nor capital investment was essential. Corpn. of the City of Nagpur v. Workmen6, brought a municipal corporation within the fold, subject to a narrow sovereign-function exception (confined to legislative, judicial and core administrative functions) and a “predominant function” test for composite departments. Ahmedabad Textile Industry’s Research Assn. v. State of Bombay7, extended the definition to a textile research association.
B. The turning of the tide
The expansive trend met resistance. National Union of Commercial Employees v. M.R. Meher8, excluded a firm of solicitors, introducing a requirement of a “direct” nexus between employer-employee cooperation and the service rendered, and thereby excluding the learned professions generally. University of Delhi v. Ram Nath9, took universities outside Section 2(j), characterising teaching as a “mission” rather than a trade, business or calling, and holding that most university employees (teachers) were not “workmen”. Madras Gymkhana Club Employees Union v. Gymkhana Club10, and Cricket Club of India Ltd. v. Bombay Labour Union11, excluded self-serving members’ clubs, notably declining to adopt the Hospital Mazdoor Sabha criterion of whether an activity could, in principle, be carried on by a private individual. The restrictive trend reached its high-water mark in Safdarjung Hospital v. Kuldip Singh Sethi12, where a six-Judge Bench expressly overruled Hospital Mazdoor Sabha and held that even a hospital; whether governmental, charitable or research-oriented, required a close, commercial-style analogy to trade or business, and that “material services” meant organised provision of essential utilities such as electricity, water, transport, post and telecommunications.
By the early 1970s, therefore, this court’s own decisions on hospitals, universities, clubs and government departments stood in genuine and acknowledged tension — the very confusion that necessitated a reference to a seven-Judge Bench.
Bangalore Water Supply & Sewerage Board v. A. Rajappa: The watershed
The reference arose out of proceedings under Section 33-C(2), ID Act by employees penalised for misconduct, where the Board contended it discharged “regal” functions and was therefore not an “industry”. The resulting decision Bangalore Water Supply13, was rendered by seven Judges, with a majority of five (Krishna Iyer, J., writing for himself, Bhagwati and Desai, JJ., and separately for Beg, CJ) against a partly dissenting opinion of Jaswant Singh, J. (for himself and Tulzapurkar, J.) yielding an effective 5:2 majority.
A. The triple test
Krishna Iyer, J.’s leading opinion formulated what is now known as the “triple test”: an “industry” exists wherever there is 1) systematic and organised activity; 2) cooperation between employer and employee (without any requirement of a rigid, direct nexus); and 3) production or distribution of goods or services calculated to satisfy human wants and wishes (excluding purely spiritual or religious activity, but including the material distribution even of, illustratively, prasad). Profit motive and the public, private or joint character of the enterprise were held to be irrelevant.
B. Reading down “undertaking”, the dominant nature test, and the sovereign function exception
The court read “undertaking” down to avoid it becoming a “domain too rarified to be realistic”, carving out a narrow exemption for genuinely eleemosynary or charitable activity conducted through volunteers rather than an employer-employee relationship (for instance, gratuitous legal aid or medical camps). Where an enterprise comprised a complex of activities, some qualifying and some not, the “dominant nature test” directed that the enterprise be classified by its predominant character as a whole. And the sovereign function exception was confined narrowly to the “primary and inalienable functions of constitutional government”; legislative, judicial and core administrative functions, with welfare and economic activity of the State expressly excluded from the immunity, and severable industrial units within an otherwise sovereign department remaining independently covered.
Notably, all seven Judges broadly accepted the triple test’s constituent elements; the divergence lay chiefly in its application Chandrachud, J. (as he then was) emphasised whether the activity was objectively organised the way trade or business is ordinarily organised, while Jaswant Singh and Tulzapurkar, JJ., while accepting the three elements, would have additionally required the activity to be carried on “on commercial lines by private entrepreneurs”.
The post-Bangalore water supply turbulence
A. The aborted legislative response
Parliament responded through the Industrial Disputes (Amendment) Act, 1982, which retained the triple test’s core but carved out express statutory exclusions for agriculture, hospitals and dispensaries, educational/scientific/research/training institutions, charitable and philanthropic institutions, khadi and village industries, sovereign functions (including defence research, atomic energy and space), domestic service, small professional establishments, and small cooperative societies/clubs. Passed on 21 August 1984, this amendment was, however, never brought into force by notification and remains a dead letter to this day, over four decades later.
B. Discord over the sovereign function exception and research institutions
Post-1978 case law split over how narrowly the sovereign function exception ought to be read. Chief Conservator of Forests v. Jagannath Maruti Kondhare14, adhered to the narrow Bangalore Water Supply15 construction and held a State Social Forestry Department to be an “industry”. By contrast, Sub-Divisional Inspector of Post, Vaikam v. Theyyam Joseph16, and Bombay Telephone Canteen Employees’ Assn. v. Union of India17 took a broader view of welfare functions performed under Part IV of the Constitution, going so far as to warn that unqualified application of Bangalore Water Supply could have “catastrophic” consequences. This divergence was resolved, in favour of the narrower reading, by a three-Judge Bench in General Manager, Telecom v. A. Srinivasa Rao18.
C. The calls for reconsideration
Doubt about Bangalore Water Supply‘s continuing wisdom crystallised in Coir Board, Ernakulam v. Indira Devi P.S.19, where a two-Judge Bench, considering the Coir Board, referred the correctness of Bangalore Water Supply itself for reconsideration, observing that two decades of experience had shown the expansive definition had curtailed employment opportunities and disabled charitable activity from coping with its statutory burden. A three-Judge Bench declined this particular reference as procedurally incompetent (a smaller Bench being bound by the larger). Reconsideration was, however, ultimately triggered by an apparent conflict between the three-Judge Bench in Jagannath Maruti Kondhare (expansive) and the two-Judge Bench in State of Gujarat v. Pratamsingh Narsinh Parmar20 (restrictive) — a conflict a three-Judge Bench identified on 31 January 2001 in Jai Bir Singh21.
The manner in which the reference came to be made
The procedural pedigree of the 2026 decision is unusually long and is itself a subject of extended discussion (and disagreement) in the separate opinions.
31 January 2001: A three-Judge Bench in Jai Bir Singh identifies the conflict between Jagannath Maruti Kondhare and Pratamsingh Narsinh Parmar and refers the correctness of Bangalore Water Supply for reconsideration by a larger Bench.
5 May 2005: A five-Judge Bench in State of U.P. v. Jai Bir Singh22, holds that reconsideration is warranted, giving seven principal reasons: the lack of unanimity within the Bangalore Water Supply23 majority itself; the majority’s own acknowledgment that the definition was “wide and vague” and its interpretation “tentative and temporary” pending legislative intervention; the need to balance employer, employee and public interest rather than a purely worker-oriented approach; the practical burden of large reinstatement/back-wage awards on employers of moderate means; the non-notification of the 1982 Amendment; the deterrence to private enterprise and the awkward inclusion of liberal professions; and the argument that the sovereign function exception ought to extend to Part IV welfare activity.
2 January 2017: A seven-Judge Bench, led by the then Chief Justice, directs that the matter be heard by a Bench of nine Judges.
During the course of the hearing, the maintainability of the reference itself was challenged by counsel for the respondent-workmen, who invoked Bangalore Water Supply‘s near half-century of settled application and the doctrine of stare decisis. The majority (Surya Kant, CJI, writing for himself, Satish Chandra Sharma, Alok Aradhe and Vipul M. Pancholi, JJ.) rejected this objection, applying the Constitution Bench framework in Central Board of Dawoodi Bohra Community v. State of Maharashtra24 (which holds, inter alia, that a Bench of lesser strength cannot dissent from a decision of larger or co-equal strength but may only refer the matter to a Bench of at least equal strength), and held that the successive references of 2001, 2005 and 2017 satisfied that framework and were validly made. Notably, however, several of the separate opinions discussed below took the contrary view that the reference, however validly constituted procedurally, ought not to have been answered on the merits at this late and post-repeal stage.
The decision of the nine-Judge Bench (2026 INSC 897)
Five separate opinions were delivered, disposing of the batch of appeals unanimously in result but disagreeing sharply on reasoning.
A. The lead opinion: Surya Kant, CJI (for himself, Satish Chandra Sharma, Alok Aradhe and Vipul M. Pancholi, JJ.)
The plurality of four, in an opinion running the full length of the primary judgment (paras 1—290), undertook the exhaustive historical review summarised above, upheld the maintainability of the reference, and proceeded to answer it on the merits. Rather than overruling Bangalore Water Supply25, the majority held that “certain aspects of the Triple Test… were susceptible to further refinement”, and set out, expressly on a “hypothetical” basis, how the triple test “would have been more appropriately structured”. The reformulation retains the essential threefold structure (systematic activity; employer-employee cooperation; production or provision of goods or services of a discernible commercial character, analogous to trade or business, calculated to satisfy material human wants) while emphasising a “contextual and associational shrinkage” of the word “undertaking”, preserving the dominant nature test, and confirming that sovereign functions (narrowly construed) remain exempt while severable industrial units within sovereign departments do not.
Crucially, the majority opinion was explicit that this reformulation is obiter in effect: it “do[es] not propose… to disturb the application of the Triple Test to proceedings that remain pending”, which continue to be governed by the unmodified Bangalore Water Supply ratio; it operates, if at all, only prospectively and expressly does not extend to interpretation of the IR Code, which “must be interpreted on its own terms” and for which Bangalore Water Supply “shall not be regarded as the sheet anchor”. It also declined to pronounce on the validity or effect of the never-notified 1982 Amendment, holding the exercise “wholly academic”.
B. Nagarathna, J. (separate opinion)
Nagarathna, J., took the most emphatic position against reopening Bangalore Water Supply at all. In her view, the 2001 reference rested on a misconceived premise — the supposed conflict between Jagannath Maruti Kondhare26 (a three-Judge Bench) and Pratamsingh Narsinh Parmar27 (a two-Judge Bench) did not, properly analysed, dilute the ratio of Bangalore Water Supply‘s28 majority. She held that the reference to the nine-Judge Bench was, strictly, unnecessary, and further gave 10 independent reasons why it need not be answered at this juncture even if validly made — among them, the repeal of the ID Act and enactment of the IR Code with its own Section 2(p) definition; the broad five-Judge consensus underlying Bangalore Water Supply itself; the risk that any pronouncement on Bangalore Water Supply would inevitably cast its shadow over the fresh IR Code definition; the fact that the 1982 Amendment Bill remains unnotified over four decades later and must be taken as Parliament’s implicit acquiescence in Bangalore Water Supply; and the changed economic landscape following the 1991 liberalisation reforms. On her analysis, Bangalore Water Supply “does not call for any interference or modification”.
C. Narasimha, J. (separate opinion)
Narasimha, J., agreed that the reference was procedurally valid and, at the time it was made, that an authoritative determination was genuinely called for memorably observing that Section 2(j), “read literally, is wide enough to describe a factory and a family kitchen in the same breath”. However, he held that the repeal of the ID Act (with effect from 21 November 2025) has since rendered a fresh authoritative interpretation of Section 2(j) unnecessary as a matter of continuing utility. He would dispose of all pending ID Act matters strictly by applying the unmodified Bangalore Water Supply ratio declining to fashion “a third set of principles applicable only to pending cases” — and held that the interpretation of “industry” under Section 2(p), IR Code must proceed independently, unburdened by inherited ID Act jurisprudence, so as not to relegate large numbers of workmen to civil suits.
D. Dipankar Datta, J. (for himself and Ujjal Bhuyan, J.)
Writing for himself and Bhuyan, Dipankar Datta, JJ., went furthest in endorsing Bangalore Water Supply29 as it stands, holding that Krishna Iyer, J.’s, interpretation (concurred in by Beg, CJ and Chandrachud, J.) “correctly interprets ‘industry’” and requires no reconsideration. Invoking Krishna Iyer, J.’s, own observation in Bangalore Water Supply (para 145) that the ruling was intended as an interim judicial formulation pending legislative intervention, this opinion held that more than four decades of executive inertia and consistent application had converted that “transient” arrangement into settled, institutional law that finality and stare decisis now protect. The opinion expressly rejects the reference holding it “not necessary” and serving “no practical, jurisprudential or doctrinal purpose” and directs that pending ID Act matters proceed on the pre-existing Bangalore Water Supply ratio, leaving any constitutional challenge to the IR Code definition entirely untouched.
E. Joymalya Bagchi, J. (separate opinion)
Bagchi, J., in a further separate opinion, substantially aligned with the outcome favoured by Nagarathna and Dipankar Datta, JJ. He emphasised that charitable, religious and educational undertakings are to be assessed by the character of the employer-employee relationship, not by the benevolence of their stated object; that the never-notified 1982 Amendment cannot be used to judicially redraft the Bangalore Water Supply ratio, particularly given Section 6, General Clauses Act, 1897, which preserves rights and liabilities under a repealed enactment; that sovereign immunity from industrial law cannot be stretched to cover ordinary welfare activity absent an equally efficacious alternative remedy; and that stare decisis counsels retention of a rule that has governed “legacy” ID Act litigation for decades, since overruling it now would “unsettle rights and proceedings doing more harm than good”. He agreed that the IR Code‘s own definition must be independently interpreted going forward.
Analysis: Likely impact on labour law jurisprudence in the era of the Labour Codes
A. A judgment of largely symbolic and prospective character for pending ID Act matters
The single most important practical point to grasp about Jai Bir Singh30 (2026) is that, on the operative question of what governs the roughly forty connected appeals and, by extension, other pending ID Act litigation, there is near-total convergence across all nine Judges. The triple test reformulated by the majority is expressly confined to a “hypothetical” exercise that does not disturb pending proceedings; the other five Judges (Nagarathna, Narasimha, Dipankar Datta, Bhuyan and Bagchi, JJ.) go further and hold that no reformulation was warranted at all. The upshot, for practitioners with matters presently before Labour Courts, Industrial Tribunals or High Courts under the (now repealed) ID Act, is that the classical Bangalore Water Supply31 triple test — unaltered — continues to apply, without disturbance to judgments, awards or settlements that have already attained finality.
B. The reformulated triple test as non-binding guidance
The reformulation of the triple test, emphasising a “contextual and associational shrinkage” of “undertaking” and refining the articulation (though not the substance) of the dominant nature and sovereign function principles is nonetheless likely to be cited in future commentary and, cautiously, in future litigation, notwithstanding its self-declared hypothetical status. Practitioners should note, however, that four opinions of the nine expressly decline to endorse it, and that its own authors disclaim any binding effect on IR Code interpretation. Its long-term influence will depend on whether future Benches treat it as persuasive obiter or, as several of the separate opinions would prefer, disregard it altogether as an unnecessary answer to what had, by 2026, become a largely academic reference.
C. The real centre of gravity shifts to Section 2(p), IR Code
Every opinion in Jai Bir Singh (2026) is unanimous on one forward-looking point: the interpretation of “industry” under Section 2(p), IR Code must be undertaken independently, on the IR Code‘s own text, scheme and object, without treating Bangalore Water Supply (whether in its original or reformulated form) as a “sheet anchor”. This is, arguably, the most consequential holding of the case for the future of Indian labour law. It means that the extensive body of case law built around Section 2(j) over nearly 80 years on hospitals, universities, clubs, research institutions, municipal corporations, and the sovereign function exception does not automatically carry over to the IR Code. Employers and trade unions litigating the threshold coverage of the IR Code will need to construct fresh interpretive arguments keyed to Section 2(p)‘s specific language, informed by, but not bound by, the pre-2026 jurisprudence. This creates both an opportunity and a considerable measure of near-term uncertainty, since the Supreme Court has, in effect, declined this occasion to pre-empt IR Code litigation and has left the field open for a fresh round of interpretive contest before the Labour Courts, Industrial Tribunals reconstituted under the Code, High Courts, and eventually the Supreme Court itself.
D. Legacy of the never-notified 1982 Amendment
The decision also draws a firm line under the Industrial Disputes (Amendment) Act, 1982, confirming across multiple opinions that a parliamentary amendment which is never notified acquires no operative legal effect and cannot be judicially invoked, whether to narrow Bangalore Water Supply or otherwise. This reaffirms settled constitutional principle regarding the separation of enactment from commencement and forecloses any future argument that the unnotified 1982 exclusions (for hospitals, educational institutions, research bodies, charities, etc.) inform the interpretation of either the ID Act or the IR Code.
E. Key takeaways
For matters filed or arising under the erstwhile ID Act and presently pending: continue to argue coverage strictly on the unmodified Bangalore Water Supply triple test, dominant nature test and narrow sovereign function exception; the 2026 reformulation, being expressly non-binding on pending matters, should not be relied upon to either expand or contract an existing claim. For matters arising under the IR Code: treat Section 2(p) as an interpretive blank slate, to be argued on first principles of statutory construction, viz.; text, context, object and the noscitur a sociis principle discussed at length in the 2026 judgment’s historical review — while drawing selectively, and only as persuasive material, on the accumulated pre-2026 case law on hospitals, universities, research institutions, clubs and government departments.
Conclusion
The majority opinion in Jai Bir Singh32 (2026) opens with the image of the albatross around the mariner’s neck, the decades-old burden of an unresolved definitional controversy. Whether that burden has truly been “lifted”, as the majority opinion hopes, is debatable: five of the nine Judges would have preferred not to answer the reference on the merits at all, and even the majority’s own reformulation is confined to hypothetical, prospective effect. What the judgment does achieve, with unusual clarity, is a formal closing of the chapter on Section 2(j), ID Act; pending matters will be finally disposed of under the settled Bangalore Water Supply33 triple test and an equally clear signal that the interpretive battles of the next several decades will be fought not over Section 2(j), but over Section 2(p), IR Code, on a comparatively blank interpretive slate. For labour law practitioners, the immediate task is finishing yesterday’s litigation under yesterday’s law; the larger task, only just beginning, is building tomorrow’s jurisprudence under the new Labour Codes.
*Advocate, Chamber No. 23 R. K. Garg Chamber Block, Supreme Court of India. Author can be reached at: a.arindammukherjee@gmail.com.