Supreme Court 9-Judge Bench To Pronounce Judgment Tomorrow On Correctness Of 'Industry' Definition
Gursimran Kaur Bakshi
19 Aug 2026 7:57 PM IST
The Supreme Court will tomorrow pronounce its judgment on reconsideration of the expansive definition of "industry" given in Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978).
A bench headed by Chief Justice of India Surya Kant and comprising Justices BV Nagarathna, PS Narasimha, Dipankar Datta, Ujjal Bhuyan, Satish Chandra Sharma, Joymalya Bagchi, Alok Aradhe and Vipul M Pancholi heard on the limited issue of whether the Bangalore Water Supply judgment was rightly decided and reserved for judgment on March 19.
The Constitution Bench was examining whether the broad interpretation of “industry” adopted in the 1978 judgment authored by Justice VR Krishna Iyer requires reconsideration.
In the Bangalore Water Supply case, a seven-judge bench had laid down a sweeping interpretation of the term “industry” under the Industrial Disputes Act, 1947. The Court held that any systematic activity organised by cooperation between employer and employee for the production or distribution of goods and services could fall within the definition of industry, even if the organisation was not engaged in profit-making.
The triple tests for 'industry', as laid out in the said judgment, are :
(1)There must be an organised and systematic activity,
(2) by cooperation between employer and employee (the direct and substantial element is chimerical), and
(3) for the production and/or distribution of goods and services calculated to satisfy human wants and wishes (not spiritual or religious), but inclusive of material things or services for celestial bliss
In the order passed on February 16, the three-bench led by CJI observed that the following issues broadly emerge :
(i) Whether the test laid down in paragraphs 140 to 144 in the opinion rendered by Hon'ble Mr. Justice V.R. Krishna Iyer in Bangalore Water Supply and Sewerage Board's case (supra) to determine if an undertaking or enterprise falls within the definition of “industry” lays down correct law? And whether the Industrial Disputes (Amendment) Act, 1982 (which seemingly did not come into force) and the Industrial Relations Code, 2020 (with effect from 21.11.2025) have any legal impact on the interpretation of the expression “industry” as contained in the principal Act?
(ii) Whether social welfare activities and schemes or other enterprises undertaken by the Government Departments or their instrumentalities can be construed to be “industrial activities” for the purpose of Section 2(j) of the ID Act?
(iii) What State activities will be covered by the expression “sovereign function”, and whether such activities will fall outside the purview of Section 2(j) of the ID Act?
The reference arises out of a 2002 appeal. In 2005, a five-judge bench, headed by Justice N.Santosh Hegde, referred the Bangalore Water supply case to a larger bench, in State of Uttar Pradaesh v. Jai Bir Singh. In 2017, a 7-judge bench referred the matter to a 9-judge bench, since Bangalore Water supply case was rendered by a 7-judge bench.
Case Details : STATE OF U.P. Vs JAI BIR SINGH | C.A. No. 897/2002
