“Industry” — Majority View/Ratio of the Nine-Judge Bench in State of Uttar Pradesh v. Jai Bir Singh.

S.Basavaraj. Senior Advocate. Bengaluru.

The judgment in State of Uttar Pradesh vs Jai Bir Singh (Civil Appeal 897/2002) was delivered by the Supreme Court on 20 August 2026. The majority judgment was delivered by Chief Justice Surya Kant, Justice Satish Chandra Sharma, Justice Alok Aradhe, Justice Vipul M Pancholi and Justice Pamidighantam Sri Narasimha. There is some question as to whether Justice Narasimha supported the view of the other four judges. I shall clarity this later.

BWSSB Judgement. We all know the earlier view of the Supreme Court in Bangalore Water Supply and Sewerage Board v. A. Rajappa, (1978) 2 SCC 213. (Hereinafter, BWSSB). The majority judgment in BWSSB adopted the Triple Test as the governing standard for determining whether a particular body or entity would fall within its ambit of ‘industry’.

The Triple Test requires the following to satisfy the definition of ‘industry’:

(i) a systematic and organised activity;

(ii) cooperation between the employer and employees in carrying out such activity; and

(iii) the production or distribution of goods or services intended to satisfy human wants and needs.

Though purely spiritual or religious activities fell outside the purview of ‘industry’, activities such as the large-scale preparation and distribution prasadam, were held to fall within the inclusive sweep of the definition of industry.

Profit motive or any gainful objective was held to be immaterial. and it was clarified that an enterprise could fall within the ambit of ‘industry’ irrespective of whether it operated in the public, joint, private, or any other sector.

The resultant position was that every organised activity with the elements of the Triple Test, though not strictly amounting to trade or business, would qualify as an ‘industry’.

Though sovereign functions were held to be outside the definition of ‘industry, it included welfare activities or economic ventures undertaken by the State or its instrumentalities. Moreover, units within the sovereign functions which satisfy the definition of ‘industry’ were held to fall within the ambit of ‘industry’.

1982 Amendment. An attempt was made by the Parliament in the year 1982 by way of the Industrial Disputes (Amendment) Act 46 of 1982, to amend the definition of ‘industry’. The amendment carved out exceptions, namely: (1) agricultural operations except those associated with industrial activity; (2) hospitals and dispensaries; (3) educational, scientific, research or training institutions; (4) institutions engaged in charitable, social or philanthropic service; (5) khadi or village industries; (6) activities of the Government relatable to its sovereign functions, including the departments dealing with defence research, atomic energy and space; (7) domestic service; (8) professions practised by an individual or body of individuals employing fewer than ten persons; and (9) cooperative societies, clubs or like bodies employing fewer than ten persons. However, the amended definition was never notified.

Reference. Cutting short the details, the Five Judge Bench in State of Uttar Pradesh v. Jai Bir Singh, (2005) 5 SCC 1 referred the matter a larger bench to decide the correctness of BWSSB. Ultimately, the matter was placed before a Nine Judge Bench in State of Uttar Pradesh vs Jai Bir Singh.

I R Code.In the meanwhile the Industrial Relations Code 2020 was brought into force on 21:11:2025, and on 2:2:2026, the Industrial Disputes Act was formally repealed.

Questions. The Nine Judge Bench formulated the following questions for consideration;

i. Whether the Triple Test, as laid down in Bangalore Water Supply is correct law;

ii. Whether the Industrial Disputes (Amendment) Act, 1982 and the Industrial Relations Code, 2020 (IR Code, 2020) have any legal impact upon the interpretation of “industry” as contained in the Principal Act;

iii. Whether the social welfare activities and schemes of Government Departments or their instrumentalities can be construed to be “industrial activities” for the purpose of Section 2(j); and

iv. What are the “sovereign functions” of the State that fall outside the purview of Section 2(j).

Four separate judgments rendered by;

1. Chief Justice Surya Kant for himself, Justice Satish Chandra Sharma, Justice Alok Aradhe and Justice Vipul M Pancholi.

2. Justice B V Nagarathna

3. Justice Pamidighantam Sri Narasimha

4. Justice Dipankar Datta for himself and Justice Ujjal Bhuyan

5. Justice Joymalya Bagchi

My effort, as aforesaid, is to find out the majority view/ratio of the judgment.

Judgement of the Chief Justice Surya Kant for himself, Justice Satish Chandra Sharma, Justice Alok Aradhe and Justice Vipul M Pancholi. (CJI Judgment)

In paragraph 198 the CJI judgment takes note of “the era of liberalisation, privatisation, and globalisation that has fundamentally altered the manner in which enterprises are structured, managed, and operated. It notes that the distinction between public and private economic activity has become increasingly nuanced, while the organisational forms through which services are delivered have grown considerably more complex.”

Paragraph 199 offers the strong reasons for the clear departure from BWSSB. The para reads “The role of the State in the economy, too, has undergone a marked transformation. Activities once predominantly undertaken by the State and its instrumentalities have, in several sectors, been transferred to private participation through disinvestment and privatisation. At the same time, the State has increasingly confined itself to functions that are constitutional, regulatory, and governance-oriented in character. In this changed economic milieu, often dictated by the operation of market forces and private enterprise, the assumptions that informed industrial relations jurisprudence in the decades immediately following Independence and during the period in which Bangalore Water Supply (supra) was decided can in no circumstances align seamlessly with synchronic realities”

Departure from BWSSB. In paragraph 220 the CJI Judgment categorically disapproves BWSSB when it says; “With great respect, we are unable to persuade ourselves to accept either the reasoning behind this approach or the consequences that flow from it. In our considered opinion, the test, as formulated in Bangalore Water Supply (supra), introduces an undue degree of subjectivity and open-endedness into the inquiry, owing both to its structure and to the foundational assumptions upon which it rests.”

The reasons for the departure from BWSSB are given in paragraphs 221 to 245.

Findings of the CJI judgment.

Para 265. (i) Governmental functions governed by distinct constitutional or statutory frameworks, including those falling within the ambit of Articles 310 and 311 of the Constitution, stand on a separate footing and are ordinarily outside the operation of the Industrial Disputes Act.

(ii) Public utility services, which the Act itself expressly contemplates and regulates, are, by virtue of the legislative scheme, amenable to its operation. On both counts BWSSB judgment is approved.

(iii) BWSSB judgment including every governmental entity, enterprise, or undertaking within the ambit of the definition of ‘industry’ is not correct.

Para 271. Every activity undertaken in the discharge of constitutional, welfare, or public obligations cannot be drawn within the same net.

Reformulation. In paragraph 274, the CJI judgment ‘hypothetically’ reformulates the Triple Test and the accompanying guidelines. The new Tests are;

I. “Industry” under Section 2(j) will be defined as:

(a) Where there exists:

(i) a systematic activity;

(ii) organised through cooperation between employer and employee; and

(iii) the production, distribution, or provision of goods or services possessing a discernible commercial character that is analogous to trade or business and calculated to satisfy material human wants and wishes (as distinguished from activities that are purely spiritual or religious in nature, though not excluding the provision of material goods or services merely because they are associated with a religious objective), a prima facie presumption shall arise that the undertaking constitutes an ‘industry’ within the meaning of Section 2(j).

(b) Absence of profit motive or gainful objective is irrelevant, be the venture in the public, joint, private, or any other sector.

(c) The true focus is functional and the decisive test is the nature of the activity and the existence of employer employee relations.

(d) If the organisation is a trade or business, it does not cease to be one merely because philanthropy animates the undertaking in its official documentation but on enquiry it is found otherwise.

II. Although section 2(j) uses words of the widest amplitude in its two limbs, their meaning cannot be magnified to overreach itself.

(a) “Undertaking” must suffer a contextual and associational shrinkage as explained in Banerji and in this judgment; so also, service, calling and the like. This yields the inference that all organized activity possessing the triple elements in I, although not trade or business, may still be ’industry’ provided the nature of the activity taken together with the employer-employee basis bears resemblance to what we find in trade or business. This takes into the fold of ’industry’ undertakings, callings and services, adventures’ analogous to the carrying on of trade or business’. All features, other than the methodology of carrying on the activity viz. in organizing the cooperation between employer and employee, may be dissimilar. It does not, matter, if on the employment terms there is analogy.

III. Application of these guidelines should not stop short of their logical reach by invocation of creeds, cults or inner sense of incongruity or outer sense of motivation for or resultant of the economic operations. The ideology of the Act being industrial peace, regulation and resolution of industrial disputes between employer and workmen, the range of this statutory ideology must inform the reach of the statutory definition. Nothing less, nothing more.

(a) The consequences are (i) professions, (ii) clubs (iii) educational institutions (iv) cooperatives, (v) research institutes (vi) charitable projects and (vii) other kindred adventures, if they fulfil the triple tests listed in I, cannot be exempted from the scope of section 2(j).

IV. The dominant nature test:

(a) Where a complex of activities, some of which qualify for exemption, others not, involves employees on the total undertaking, some of whom Are not ’workmen’ as in the University of Delhi case or some departments are not ’productive of goods and services if isolated, even then, the predominant nature of the services and the integrated nature of the departments as explained in the Corporation of Nagpur, will be the true test. The whole undertaking will be ‘industry’ although those who are not ’workmen’ by definition may not benefit by the status.

(b) Notwithstanding the previous clauses, sovereign functions may qualify for exemption, not the welfare activities of economic adventures undertaken by Government or statutory bodies.

(c) Even in departments discharging sovereign functions if there are units which are industries and they are substantially severable, then they can be considered to come within sec. 2(j).

(d) Constitutionally and competently enacted legislative provisions may well remove from the scope of the Act categories which otherwise may be covered thereby.

Prospective operation. Paragraph 278 of the CJI judgment clarifies that the “present interpretation and modifications shall thus operate only prospectively in that sense and shall not reopen, disturb, or otherwise affect proceedings that have attained finality, or that presently remain pending. Judgments, awards, settlements, and determinations that are no longer subject to challenge shall remain undisturbed, notwithstanding the reformulation of the test set out in this judgment. The same also applies to proceedings, appeals and other hearings that are presently in the process of being adjudicated by various fora.”

IR Code. Paragraph 280 of the CJI judgment leaves the IR Code to be interpreted on its own terms having regard to its text, scheme, and object.

BWSSB – not the sheet anchor to interpret IR Code. Paragraph 281. “Any issue arising under the IR Code shall necessarily fall to be determined on the basis of its own text, scheme, object, and legislative framework, uninfluenced by the reformulation of the Triple Test undertaken in the present judgment.”

Conclusions. The CJI Judgment. Para 287

i. The present reference has been validly made and rightly entertained. No legitimate doubt can be cast upon its maintainability, and the reference is accordingly answered on the merits.

ii. Certain aspects of the Triple Test and the accompanying guidelines formulated in BWSSB would have been more appropriately structured, hypothetically speaking (extracted above)

Whether Justice Narasimha concurs with CJI Judgment?. I will not deal with the entire text of Justice Narasimha judgment. The conclusions are extracted below.

“Paragraph 27. In conclusion, the questions referred for consideration of this bench are answered as follows:

i. The procedure by which the ratio in Bangalore Water Supply (supra) has been referred for reconsideration to a bench of nine judges is valid.

ii. The endeavour of various decisions of the Court after Bangalore Water Supply (supra), leading to the Reference by Jai Bir Singh to bring about certainty about what ‘industry’ entails, is justified. The Reference can be answered on merits.

iii. While an authoritative interpretation of the definition “Industry” was compelling at the time of the Reference, such a determination has now become unnecessary, with the repeal of the said provision with effect from 21.11.2025.

iv. With the advent of the Industrial Relations Code, 2020, with effect from 21.11.2025, the ratio in Bangalore Water Supply (supra) is now confined to cases arising under the repealed Act. It is prudent to dispose of the pending cases on the basis of the ratio laid down in Bangalore Water Supply (supra) without attempting to create a third set of principles applicable only to pending cases.

v. It is important to ensure that the future interpretation of the definition of ‘Industry’ under Section 2(p) of the Industrial Relations Code, 2020, is not burdened by the existing interpretations based on the repealed Section 2(j) of the Industrial Disputes Act, 1947. The Industrial Relations Code, 2020, should be interpreted on its own text and in its context alone.

vi. Further, if the Nine-Judge Bench modifies and restricts the ratio laid down in Bangalore Water Supply (supra), it will have the serious effect of excluding certain entities from the fold of the “Industry” as defined under Section 2(j) of the repealed Act. This will have the consequence of excluding long-pending disputes from the regulatory regime of the Industrial Disputes Act, 1947, and the parties will be relegated to remedies before the Civil Court. It is therefore necessary to dispose of the disputes arising under the repealed Act on the basis of the ratio laid down in Bangalore Water Supply (supra).”

Though the judgment of Justice Narasimha does not categorically say that it concurs with CJI judgment, sub-paragraph (iv) gives such an indication. This is my understanding. The words in sub-para (iv) that “with the advent of the Industrial Relations Code, 2020, with effect from 21.11.2025, the ratio in Bangalore Water Supply is now confined to cases arising under the repealed Act” can be construed as a concurring view of Justice Narasimha with CJI judgment.

Views of Justice B V Nagaratha on BWSSB. Paragraph 21 (B) (e) “Any pronouncement on the correctness or otherwise of the judgment of this Court in Bangalore Water Supply would definitely cast its shadow on the definition of “industry” under Section 2(p) of the IR Code and for this reason also, the judgment in Bangalore Water Supply does not require reconsideration.

Paragraph 21 C. the majority judgments of the seven-Judge Bench (in BWSSB) is good law and therefore, binding.

Views of Justice Dipankar Datta and Justice Ujjal Bhuyan. Paragraph 80. The judgment rejects the reference and holds that the term “industry” as interpreted and explained in BWSSB requires no reconsideration.

Views of Justice Joymalya Bagchi. Paragraph 125.

1. Overruling BWSSB would unsettle rights and proceedings doing more harm than good.

2. The ratio in BWSSB would remain restricted to the proceedings pending under the repealed law.

3. The provisions of the new law, i.e. IR Code shall be independently interpreted.

Analysis. There is a strong argument that the CJI’s “commercial-character formulation” is not a binding five-judge majority ratio replacing BWSSB and that the operative position is that BWSSB continues to govern legacy proceedings under the Industrial Disputes Act, while the Industrial Relations Code must be interpreted independently.

This is because Justices B.V. Nagarathna, Dipankar Datta, Ujjal Bhuyan and Joymalya Bagchi expressly upheld BWSSB and Justice Narasimha considered reconsideration unnecessary and held that pending cases should continue under BWSSB.

My view (subject to the contrary views). Though the judgment of Justice Narasimha does not categorically say that it concurs with CJI judgment, sub-paragraph (iv) gives such an indication. This is my understanding. The words in sub-para (iv) that “with the advent of the Industrial Relations Code, 2020, with effect from 21.11.2025, the ratio in Bangalore Water Supply is now confined to cases arising under the repealed Act” can be construed as a concurring view of Justice Narasimha with CJI judgment.

Conclusion. If the CJI judgment is considered as a majority judgment the following is the ratio of the majority judgment.

BWSSB vs Majority judgment

BWSSB - Systematic activity  

Nine Judges Bench - Substantially unchanged.

BWSSB - Activity organised through cooperation between employer and employee.

Nine Judges Bench - Substantially unchanged.

BWSSB - Production or distribution of goods or services calculated to satisfy human wants and wishes.

Nine Judges Bench - Goods or services must additionally possess a discernible commercial character analogous to trade or business and satisfy material human wants and wishes.

BWSSB on Trade/business analogy. It is sufficient if the method of organising employer–employee cooperation resembled trade or business; other features could be dissimilar.

Nine Judges Bench - The activity itself, considered together with the employer–employee relationship, must resemble trade or business.

BWSSB on employer employee relationship Received “special emphasis” and was virtually the central determinant.

Nine Judges Bench - Remains necessary, but is no longer the sole or predominant determinant; the nature and character of the activity are equally important.

BWSSB - profit motive irrelevant.

Nine Judges Bench – Substantially unchanged.

BWSSB on Charitable or welfare purpose - Generally irrelevant if the triple test is satisfied.

Nine Judges Bench - The actual commercial or economic character must be examined; (see possessing a discernible commercial character that is analogous to trade or business) a purely welfare, educational, charitable or humanitarian activity may fall outside the definition.

BWSSB. Government activity - All except strictly sovereign functions could ordinarily fall within “industry”.

Nine Judges Bench. A governmental activity is not an industry merely because it is organised and employs workers; its commercial or trade-like character must independently be established.

BWSSB. Dominant-nature test - Predominant and integrated nature of the undertaking governs.

Nine Judges Bench - Substantially retained.

If the CJI Judgment is not a majority view, the stalemate continues.

The Indian Judiciary shall continue to be decisively indecisive !