Nine-Judge Bench Refines 'Industry' Test 5:4, but Keeps Bangalore Water Supply Rule for All Pending ID Act Cases

Labour & Employment Law

Statutory Interpretation

The Supreme Court's nine-judge Bench revisited the long-running definition-of-'industry' controversy under Section 2(j) of the Industrial Disputes Act, 1947. A 5:4 aggregate majority favoured refining aspects of the 1978 Bangalore Water Supply triple test, yet the Court preserved that older test for every pending legacy dispute and left the Industrial Relations Code, 2020 to independent interpretation.

CASE DETAILS

BENCH

Coram: Chief Justice Surya Kant, Justice B.V. Nagarathna, Justice Pamidighantam Sri Narasimha, Justice Dipankar Datta, Justice Ujjal Bhuyan, Justice Satish Chandra Sharma, Justice Joymalya Bagchi, Justice Alok Aradhe, Justice Vipul M. Pancholi. Opinion authored by: Chief Justice Surya Kant, Justice B.V. Nagarathna, Justice Pamidighantam Sri Narasimha, Justice Dipankar Datta, Justice Joymalya Bagchi.

WHAT THE SUPREME COURT HELD

• By a 5:4 majority in the aggregate, the nine-judge Bench concluded that aspects of the 1978 Bangalore Water Supply triple test warranted refinement, with the principal opinion introducing discernible commercial character analogous to trade or business into its hypothetical reformulation. [1] [6] [7] [8] (paras Surya Kant CJI para 287(ii), Narasimha J para 18; PDF pp. 149, 150, 151, 323)
• The reformulation does not displace the governing rule for any pending proceeding under the repealed Industrial Disputes Act, 1947: those matters are to continue to be adjudicated under the Bangalore Water Supply triple test. [1] [6] [7] (paras Surya Kant CJI para 287(iii), Narasimha J para 27(iv)-(vi), Datta and Bhuyan JJ paras 78-80, Bagchi J para 125(VII); PDF pp. 152, 328, 329, 403, 404, 489)
• Final judgments, awards, settlements and determinations under the old regime are not to be reopened because of the reformulation. [1] (paras Surya Kant CJI para 287(iv); PDF pp. 153)
• The Court did not decide the meaning of 'industry' under the Industrial Relations Code, 2020; the new Code is to be interpreted independently on its own text and context. [1] [6] [7] [8] (paras Surya Kant CJI paras 287(v)-(vi), 288, Narasimha J para 27(v), Bagchi J para 125(VII); PDF pp. 153, 154, 328, 489)
• A 6:3 majority in the aggregate treated the larger-bench reference as valid or maintainable, although three judges considered the reference unnecessary or uncalled for. [1] [7] (paras Surya Kant CJI para 287(i), Narasimha J para 27(i)-(ii), Bagchi J para 125(I), Nagarathna J para 21(A), Datta and Bhuyan JJ paras 76, 80; PDF pp. 149, 327, 485, 302, 403, 404)

BACKGROUND

• The core controversy arose from whether the State of Uttar Pradesh's Social Forestry Department, a welfare-oriented environmental initiative, fell within Section 2(j) of the Industrial Disputes Act, 1947. [1] (paras Surya Kant CJI para 1; PDF pp. 7)
• The dispute became a vehicle for reconsidering the breadth of the expression 'industry' after decades of conflicting applications of the Bangalore Water Supply decision to government, welfare, charitable, educational, research and other institutions. [1] (paras Surya Kant CJI paras 63-78; PDF pp. 33, 34, 35, 36, 37, 38, 39)
• The controlling 1978 Bangalore Water Supply decision had adopted a broad triple test centred on systematic activity, employer-employee cooperation and production or distribution of goods or services calculated to satisfy human wants and wishes, while treating profit motive as irrelevant. [1] (paras Surya Kant CJI paras 17, 22-24; PDF pp. 13, 15, 16)

Procedural history

• A three-judge Bench referred the Bangalore Water Supply question for reconsideration after perceiving tension between decisions concerning Social Forestry and Forest Department activities. [1] (paras Surya Kant CJI para 77; PDF pp. 38, 39)
• A five-judge Bench in State of Uttar Pradesh v. Jai Bir Singh considered the competing interests sufficiently serious to warrant reconsideration by a larger Bench. [1] (paras Surya Kant CJI para 78; PDF pp. 39, 40)
• On 2 January 2017, a seven-judge Bench directed that a nine-judge Bench hear the matter. [1] (paras Surya Kant CJI para 79; PDF pp. 40)
• On 16 February 2026 the Court framed four substantive questions, and the nine-judge Bench heard the batch continuously on 17, 18 and 19 March 2026 before reserving judgment. [1] [2] (paras Surya Kant CJI paras 82-83; PDF pp. 41, 42)

ISSUES BEFORE THE COURT

• Whether the triple test laid down in Bangalore Water Supply is correct law. [1] (paras Surya Kant CJI para 82(i); PDF pp. 41)
• Whether the Industrial Disputes (Amendment) Act, 1982 and the Industrial Relations Code, 2020 affect interpretation of 'industry' in the Industrial Disputes Act, 1947. [1] (paras Surya Kant CJI para 82(ii); PDF pp. 41)
• Whether social-welfare activities and schemes of government departments or instrumentalities can constitute industrial activities under Section 2(j). [1] (paras Surya Kant CJI para 82(iii); PDF pp. 41)
• Which sovereign functions of the State fall outside Section 2(j). [1] (paras Surya Kant CJI para 82(iv); PDF pp. 41)
• As a threshold question raised during hearing, whether the reference to a nine-judge Bench was itself maintainable under larger-bench discipline and stare decisis. [1] (paras Surya Kant CJI paras 84-90; PDF pp. 42, 43, 44)

PARTIES’ ARGUMENTS

COURT'S ANALYSIS AND REASONING

Reference maintainability and larger-bench discipline

• The plurality applied the larger-bench principles associated with Central Board of Dawoodi Bohra Community and held that the reference route was valid; Narasimha J and Bagchi J also accepted validity, producing a 6:3 aggregate majority on maintainability. [1] [7] (paras Surya Kant CJI paras 91-112, 287(i), Narasimha J para 27(i)-(ii), Bagchi J para 125(I); PDF pp. 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 149, 327, 485)
• Nagarathna J and Datta and Bhuyan JJ considered the reference unnecessary because Bangalore Water Supply had stood for nearly half a century and the perceived conflict in the later Social Forestry cases did not justify reopening it. [1] (paras Nagarathna J para 21(A)-(B), Datta and Bhuyan JJ paras 75-80; PDF pp. 302, 303, 304, 305, 306, 307, 308, 309, 310, 311, 402, 403, 404)

Text, purpose and the meaning of 'industry' under Section 2(j)

• The plurality treated the statutory wording as broad but not limitless and used contextual interpretation, including noscitur a sociis, to read 'undertaking', 'service' and related terms in association with trade and business. [1] (paras Surya Kant CJI paras 150-224; PDF pp. 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117)
• The plurality rejected both a pure profit-motive test and an unbounded employer-employee test, focusing instead on the character of the activity and whether it resembles trade or business in a discernibly commercial sense. [1] (paras Surya Kant CJI paras 225-259, 287(ii); PDF pp. 117, 118, 119, 120, 121, 122, 123, 124, 125, 126, 127, 128, 129, 130, 131, 132, 133, 134, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 150, 151)

Refinement of the Bangalore Water Supply framework

• The plurality's hypothetical reformulation retains systematic activity and employer-employee cooperation but adds production, distribution or provision of goods or services possessing discernible commercial character analogous to trade or business. [1] (paras Surya Kant CJI para 287(ii)(I); PDF pp. 150)
• It retains the dominant-nature test, allows substantially severable industrial units within sovereign departments to be treated separately, and distinguishes true sovereign functions from welfare-oriented economic ventures. [1] (paras Surya Kant CJI para 287(ii)(IV); PDF pp. 151, 152)
• Narasimha J reasoned that the triple test could be calibrated with commerciality as the primary test and a substance-over-form inquiry, but concluded that a new operative standard was unnecessary after repeal for legacy disputes. [1] (paras Narasimha J paras 18-19, 27(iii)-(vi); PDF pp. 323, 324, 328, 329)

Effect of repeal, the 1982 amendment and the Industrial Relations Code, 2020

• The unnotified 1982 amendment did not become the operative definition governing the legacy disputes, and the Court declined to use it as a basis for rewriting Section 2(j) in these cases. [1] (paras Surya Kant CJI paras 276-284, Bagchi J para 125(V); PDF pp. 145, 146, 147, 148, 485, 486, 487, 488)
• Across the opinions, the justices converged on the proposition that the Industrial Relations Code, 2020 must be construed independently rather than by mechanically importing the Bangalore Water Supply ratio. [1] [4] (paras Surya Kant CJI paras 287(v)-(vi), 288, Narasimha J para 27(v), Datta and Bhuyan JJ para 79, Bagchi J para 125(VII); PDF pp. 153, 154, 328, 404, 489)
• Bagchi J additionally relied on Section 6 of the General Clauses Act to explain why accrued rights, liabilities and pending proceedings under the repealed law should not be disturbed by the new definition. [1] [5] (paras Bagchi J para 125(V); PDF pp. 488)

Legacy proceedings and stare decisis

• Despite disagreement over whether Bangalore Water Supply should be reformulated, every opinion preserved the 1978 triple test for proceedings still pending under the repealed Industrial Disputes Act. [1] [6] [7] [8] (paras Surya Kant CJI para 287(iii)-(iv), Narasimha J para 27(iv)-(vi), Datta and Bhuyan JJ paras 78-80, Bagchi J para 125(VI)-(VII), Nagarathna J para 21(B); PDF pp. 152, 153, 328, 329, 403, 404, 489, 303, 304, 305, 306, 307, 308, 309, 310, 311)
• This common ground avoids forcing long-pending parties out of the industrial-dispute regime and avoids unsettling decisions that have attained finality. [1] (paras Surya Kant CJI para 287(iv), Narasimha J paras 25-27, Bagchi J para 125(VI); PDF pp. 153, 327, 328, 329, 488, 489)

Separate opinions and the aggregate result

• Nagarathna J concluded that Bangalore Water Supply remained good law and did not require reconsideration, while Datta and Bhuyan JJ likewise rejected the reference and defended the existing triple test. [1] (paras Nagarathna J para 21, Datta and Bhuyan JJ paras 74-80; PDF pp. 301, 302, 303, 304, 305, 306, 307, 308, 309, 310, 311, 401, 402, 403, 404)
• Bagchi J accepted the validity of the reference but expressly declined to join the reformulation, holding the existing triple test faithful to the beneficial statute and retaining it for legacy proceedings. [1] (paras Bagchi J para 125(I)-(VII); PDF pp. 485, 486, 487, 488, 489)

RATIO DECIDENDI

• For pending proceedings governed by the repealed Industrial Disputes Act, 1947, the definition of 'industry' continues to be applied through the Bangalore Water Supply triple test; the 2026 reformulation does not displace that governing rule in those cases. [1] [6] [7] [8] (paras Surya Kant CJI para 287(iii)-(iv), Narasimha J para 27(iv)-(vi), Datta and Bhuyan JJ para 78, Bagchi J para 125(VII); PDF pp. 152, 153, 328, 329, 403, 489)
• The meaning of 'industry' under Section 2(p) of the Industrial Relations Code, 2020 is not controlled by Bangalore Water Supply or by the 2026 hypothetical reformulation and must be interpreted independently when squarely in issue. [1] [4] (paras Surya Kant CJI paras 287(v)-(vi), 288, Narasimha J para 27(v), Bagchi J para 125(VII); PDF pp. 153, 154, 328, 489)
• On the reference procedure, a 6:3 majority accepted that the nine-judge Bench could validly entertain and answer the reference. [1] [7] (paras Surya Kant CJI para 287(i), Narasimha J para 27(i)-(ii), Bagchi J para 125(I); PDF pp. 149, 327, 485)

OBITER / IMPORTANT CASE-SPECIFIC OBSERVATIONS

The plurality's commercial-character formulation was expressly framed as a considered, hypothetical refinement without operative displacement of the law governing pending legacy cases; it is therefore separated from the binding directions that actually govern those cases.

• The plurality's detailed commercial-character reformulation was expressly described as a considered, hypothetical statement of how Section 2(j) could have been structured and was denied operative effect over the pending legacy cases. [1] (paras Surya Kant CJI para 287(ii)-(iii); PDF pp. 149, 150, 151, 152)
• The plurality observed that legislative bodies remain competent to exclude categories that would otherwise fall within a statutory definition of industry. [1] (paras Surya Kant CJI para 287(ii)(IV)(d); PDF pp. 152)

FINAL RULING AND DIRECTIONS

• The reference is answered in accordance with the opinions of the nine-judge Bench and the aggregate majority positions. [1] (paras Surya Kant CJI paras 287-289; PDF pp. 149, 150, 151, 152, 153, 154)
• All matters presently pending under the Industrial Disputes Act, 1947 are to be adjudicated under the Bangalore Water Supply triple test rather than the 2026 reformulation. [1] (paras Surya Kant CJI para 287(iii), Narasimha J para 27(iv)-(vi), Datta and Bhuyan JJ para 78, Bagchi J para 125(VII); PDF pp. 152, 328, 329, 403, 489)
• Proceedings and determinations that have attained finality are not to be reopened or disturbed because of the reformulation. [1] (paras Surya Kant CJI para 287(iv); PDF pp. 153)
• Nothing in the judgment is to be treated as deciding the interpretation of 'industry' under the Industrial Relations Code, 2020 or a different statutory framework. [1] (paras Surya Kant CJI paras 287(v)-(vi), 288; PDF pp. 153, 154)
• Pending interlocutory applications are disposed of in the stated terms. [1] (paras Surya Kant CJI para 289; PDF pp. 154)
• There is no order as to costs. [1] (paras Surya Kant CJI para 290; PDF pp. 154)

STATUTES INVOLVED

KEY PRECEDENTS AND THEIR TREATMENT

LEGAL SIGNIFICANCE

• The judgment resolves, for legacy litigation, a reference that had remained pending for roughly two decades and confirms that the 1978 test continues to govern all still-pending disputes under the repealed Industrial Disputes Act. [1] [7] (paras Surya Kant CJI paras 287-288, Narasimha J para 27, Datta and Bhuyan JJ paras 78-80, Bagchi J para 125; PDF pp. 149, 150, 151, 152, 153, 154, 327, 328, 329, 403, 404, 485, 486, 487, 488, 489)
• At the same time, the 5:4 aggregate majority's refinement signals a more text- and commercial-character-focused understanding of the old Section 2(j), but the Court deliberately prevented that reasoning from destabilising the remaining old-Act docket. [1] [6] [7] [8] (paras Surya Kant CJI para 287(ii)-(iv), Narasimha J paras 18, 27; PDF pp. 149, 150, 151, 152, 153, 323, 327, 328, 329)
• The Court insulated the Industrial Relations Code, 2020 from automatic carry-over of the 1978 jurisprudence, preserving a clean interpretive question for future litigation under Section 2(p). [1] [4] (paras Surya Kant CJI paras 287(v)-(vi), 288, Narasimha J para 27(v), Bagchi J para 125(VII); PDF pp. 153, 154, 328, 489)

PRACTICAL IMPACT — EDITORIAL ANALYSIS

• Courts, labour courts and tribunals handling a still-pending dispute under the repealed Industrial Disputes Act should continue applying Bangalore Water Supply rather than substituting the 2026 commercial-character formulation. [1] (paras Surya Kant CJI para 287(iii); PDF pp. 152)
• Employers and workers litigating under the Industrial Relations Code, 2020 should not assume that either Bangalore Water Supply or the 2026 hypothetical reformulation automatically determines Section 2(p); the new definition requires its own statutory analysis. [1] [4] (paras Surya Kant CJI paras 287(v)-(vi), 288; PDF pp. 153, 154)
• Finalised awards and settlements under the old Act are protected from being reopened merely because the nine-judge Bench revisited the doctrinal formulation. [1] (paras Surya Kant CJI para 287(iv); PDF pp. 153)

SOURCE CITATIONS & ILI-STYLE BIBLIOGRAPHY

[1] State of Uttar Pradesh v. Jai Bir Singh, 2026 INSC 897 (SC). Open source ↗

[2] State of U.P. v. Jai Bir Singh, C.A. No. 897/2002, Record of Proceedings dated 18 Mar. 2026 (SC). Open source ↗

[3] The Industrial Disputes Act, 1947, No. 14 of 1947 (India).

[4] The Industrial Relations Code, 2020, No. 35 of 2020 (India).

[5] The General Clauses Act, 1897, No. 10 of 1897 (India).

[6] Gursimran Kaur Bakshi, “'Industry' Definition Given In Bangalore Water Supply Case Must Govern Pending Cases Under ID Act 1947 : Supreme Court 9-Judge Bench,” LiveLaw, 20 Aug. 2026. Open source ↗

[7] Supreme Court Observer, “Definition of ‘Industry’ — State of Uttar Pradesh v Jai Bir Singh,” updated 20 Aug. 2026. Open source ↗

[8] Bar & Bench, “'Industry' definition: Supreme Court 9-judge Bench modifies triple test of 1978 BWSSB verdict,” 20 Aug. 2026. Open source ↗

EDITORIAL NOTE