The Industry Definition Supreme Court ruling has produced a fractured 4-4-1 outcome on the meaning of “industry” under Section 2(j) of the Industrial Disputes Act, 1947. The nine-judge Bench delivered different views on the 1978 Bangalore Water Supply precedent.
The case, State of U.P. v. Jai Bir Singh, involved the continued validity of the landmark judgment. Four judges supported a new test proposed by Chief Justice of India Surya Kant. Four judges upheld the existing interpretation. Justice P.S. Narasimha reached the same practical result on a different ground.
CJI Surya Kant Proposes a New Test
CJI Surya Kant authored the lead opinion for four judges. He held that the triple test from Bangalore Water Supply had expanded the meaning of “industry” beyond the natural scope of Section 2(j).
The CJI proposed a refined three-part test:
- The activity must remain systematic and organized.
- Employers and employees must cooperate.
- The activity must produce, distribute, or provide goods or services with a discernible commercial character.
The third requirement marks the key change. The enterprise must show a commercial character similar to trade or business.
The plurality clarified that profit does not need to be the main objective. However, the commercial nature of the activity cannot become irrelevant.
The opinion also stated that State activities involving sovereign and constitutional duties do not automatically qualify as industries. The new test will operate prospectively.
Four Judges Uphold Bangalore Water Supply
Four judges disagreed with the proposed reformulation. Justice B.V. Nagarathna, Justice Dipankar Datta, Justice Ujjal Bhuyan, and Justice Joymalya Bagchi maintained that the 1978 precedent remains correct.
They supported the established triple test from Bangalore Water Supply. That test considers systematic activity, employer-employee cooperation, and the production or distribution of goods and services to satisfy human needs.
Justice Nagarathna relied on stare decisis and the legislative history of Section 2(j). She noted that Parliament amended the provision in 1982 to narrow its scope. However, the executive never brought that amendment into force.
She held that the court should not rewrite the statutory definition because the executive failed to notify the amendment.
Repeal of Industrial Disputes Act Creates Another View
Justice P.S. Narasimha took a different approach. He agreed that the Bangalore Water Supply precedent should not be disturbed. However, he found that the reference had become academic.
The Industrial Disputes Act, 1947 was repealed on November 21, 2025. The Industrial Relations Code, 2020 replaced it and introduced a new definition of “industry” under Section 2(p).
Justice Narasimha therefore concluded that the nine-judge reference no longer required the court to reconsider the old statutory definition.
No Clear Majority for the New Test
The Industry Definition Supreme Court judgment does not establish a majority supporting CJI Surya Kant’s reformulated test. Four judges supported the new approach, while four retained the Bangalore Water Supply interpretation. The ninth judge reached the outcome on the ground that the reference had become infructuous.
The fractured verdict therefore leaves the legal position without a majority-backed new test under the repealed Industrial Disputes Act.
