Welfare State or Industrial Actor?: Supreme court revisits four-decade-old definition of ‘industry’
As appellants conclude submissions, the nine-judge bench grapples with whether the landmark 1978 ruling has stretched the definition of ‘industry’ beyond its intended boundaries.
Tanishka Shah
18 March 2026
TODAY, in a batch of cases concerning the interpretation of ‘industry’ under Section 2(j) of the Industrial Disputes Act, 1947 (‘IDA’), appellants, including the Union of India represented by Attorney General (‘AG’) R. Venkataramani (who argued yesterday), along with various state governments, public institutions, and private parties, concluded their submissions before a nine-judge Constitution Bench of the Supreme Court, led by Chief Justice (‘CJI’) Surya Kant. The AG broadly argued that while the ‘triple test’ laid down in Bangalore Water Supply v. R. Rajappa (1978) remains doctrinally sound, its overly expansive application has led to unintended consequences.
The matter is being heard by the Bench comprising CJI Kant, along with Justices B.V. Nagarathna, P.S. Narasimha, Dipankar Datta, Ujjal Bhuyan, Satish Chandra Sharma, Joymalya Bagchi, Alok Aradhe, and Vipul M. Pancholi, before whom the Respondents have now commenced their arguments.
Attorney General R. Venkataramani, appearing for the Union of India, did not seek to displace the ‘triple test’ evolved in Bangalore Water Supply but to discipline its application.
Background of the case
At the heart of the dispute is the Court's reconsideration of ‘industry,’ a term of significant consequence under the ID Act, which governs wages, working conditions, dispute resolution, and protections against unfair labour practices. Its classification determines both the applicability of these protections and who constitutes a ‘workman’.
The case stems from uncertainty following Bangalore Water Supply, where a seven-judge bench led by Justice V.R. Krishna Iyer expanded the term to cover any systematic activity organised through employer-employee cooperation for the production or distribution of goods or services satisfying human needs. The bench's ‘triple test’ which included systematic activity, employer-employee cooperation, and production of goods or services, rendered profit motive irrelevant. It brought hospitals, educational institutions, and government departments within labour law's ambit, subject only to a narrow ‘sovereign functions’ exclusion.
Over time, this wide interpretation led to conflicting judicial outcomes. For instance, in Chief Conservator of Forests v. Jagannath Maruti Kondhare (1995), a three-judge bench held that the social forestry department was an industry, whereas in State of Gujarat v. Pratamsingh Narsinh Parmar (2001), a two-judge bench held otherwise. This inconsistency, coupled with the fact that the Industrial Disputes (Amendment) Act, 1982 intended to narrow the definition, was never brought into force, deepened the ambiguity.