What counts as an "industry"? The Triple Test, the 2026 verdict and the new Code

A worker's rights turn on a single word: "industry". If the place where a person works counts as an industry, the Industrial Disputes Act, 1947 (and now the Industrial Relations Code, 2020) gives that worker a whole architecture of protection: recognised disputes, retrenchment safeguards and a forum to fight in. If it does not, the worker is outside the statute altogether. The Supreme Court spent nearly five decades arguing over what the word means, and on 20 August 2026 a nine-judge bench gave the question its most authoritative answer yet.

The word that decides a worker's rights

The Industrial Disputes Act, 1947 defines "industry" in section 2(j) as any business, trade, undertaking, manufacture or calling of employers, and any calling, service, employment, handicraft or industrial occupation or avocation of workmen. The definition is deliberately wide, and for decades courts read it wider still. The question that kept returning was whether the word covered the public sector's softer edges: hospitals, universities, research institutes, clubs and government departments that produce services rather than goods.

The Triple Test of 1978

The answer came from a seven-judge bench in Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978). The Court laid down the Triple Test: an activity is an industry if it is (i) systematic, (ii) organised by cooperation between employer and employee, and (iii) for the production or distribution of goods or services calculated to satisfy human wants and wishes. Where all three limbs are met, the activity is an industry, whatever its label.

The test swept in hospitals, universities, clubs, research institutes and most government undertakings, and it kept out only sovereign functions strictly so called, the inalienable functions of the state such as defence, the administration of justice and the making of laws. Everything else, the Court held, was industry if it passed the three limbs.

The 2026 verdict: Jai Bir Singh

The question was referred upwards because benches kept disagreeing on the test's reach. A five-judge bench referred the matter in 2005, and a seven-judge bench directed that a nine-judge bench hear it in 2017. The case itself arose from workers of the Uttar Pradesh Social Forestry Department. On 20 August 2026 the nine-judge bench delivered its verdict in Jai Bir Singh v. State of Uttar Pradesh (2026 INSC 897).

The verdict is fractured, with five separate opinions, but its core holdings are clear. First, the Triple Test continues to govern disputes pending under the Industrial Disputes Act, 1947: the 1978 judgment is not overruled for those cases. Second, the Industrial Relations Code, 2020 is to be read on its own terms: its definition of "industry" in section 2(p) is independent, and the 1978 judgment is not the sheet anchor for interpreting it. Third, the majority view refined the test by adding a "discernible commercial character" requirement and broadened the sovereign-function exemption.

1978 test vs the 2020 Code

Each row below is a testable difference.

The timeline: from 1947 to 2026

The story runs in a straight line. The Industrial Disputes Act, 1947 gave India its first statutory definition of industry. The Triple Test followed in 1978. The reference to a larger bench came in 2005, and the direction for a nine-judge bench in 2017. Parliament then enacted the Industrial Relations Code in 2020, brought it into force on 21 November 2025, and repealed the Industrial Disputes Act on 2 February 2026. The nine-judge verdict of 20 August 2026 closed the circle: the old test survives for the old disputes, and the new Code stands on its own.

Mains angle

Use this as a case study in judicial continuity versus legislative change. The Triple Test was a judge-made instrument that protected workers by reading the statute wide; the Code is Parliament rewriting the field. The dual-track outcome, old test for old disputes and a free-standing Code for new ones, is the Court's way of respecting both. The sovereign-function question is the fault line: how much of the state stands outside labour law, and who decides.

Key Terms

• Industry: any business, trade, undertaking, manufacture or calling of employers, and any calling, service, employment, handicraft or industrial occupation of workmen (ID Act, s.2(j))
• Triple Test: the 1978 three-limb test: systematic activity, organised by cooperation between employer and employee, for production or distribution of goods or services to satisfy human wants
• Bangalore Water Supply: the 1978 seven-judge bench ruling that laid down the Triple Test
• Jai Bir Singh: the 2026 nine-judge bench verdict (20 August 2026) on the meaning of industry
• Industrial Relations Code, 2020: the Code that consolidates industrial-relations law; in force 21 November 2025
• Sovereign function: the inalienable functions of the state, such as defence and the administration of justice, exempt from the definition of industry
• Discernible commercial character: the refinement added by the majority view in the 2026 verdict
• Industrial Disputes Act, 1947: the statute the Code replaced; repealed 2 February 2026
• Reference: a bench referring a question to a larger bench, here five judges to nine

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