A Nine-judge Bench of the Supreme Court on Thursday (August 20, 2026) held that the expansive definition of ‘industry’ under Section 2(j) of the Industrial Disputes Act, 1947 will not act as a sheet anchor or base for deciding what is ‘industry’ under the Industrial Relations Code 2020.
The 48-year-old verdict had exempted only core sovereign activities — such as the judiciary, law and order, and defence — from the purview of Section 2(j) in order to protect the state’s functional autonomy.
The judgment had introduced a triple test and included hospitals, educational institutions, and even municipalities as industries.
The ‘triple test’ principle enunciated by Justice Iyer in the 1978 seven-judge Bangalore Water Supply and Sewerage Board versus R. Rajappa had expansively interpreted ‘industry’ as an undertaking which conducts systematic activity, operates on the basis of employer-employee cooperation and deals in the production of goods and services to satisfy human wants.
The court, in a majority opinion, however, clarified that the 1978 judgment’s interpretation would not affect or influence ‘industry’ in Section 2(p) of the IRC 2020.
“The future of ‘industry’ in Section 2(p) of IRC is not burdened by the interpretation of 2(j) in Industrial Disputes Act,” Chief Justice Kant said.
