State Of U.P vs Jai Bir Singh

2026 INSC 897 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 897 / 2002

State of Uttar Pradesh …Appellant(s)

Versus

Jai Bir Singh …Respondent(s)

with

Civil Appeal No. 4646 / 2007

Civil Appeal No. 3647 / 2007

Special Leave Petition (Civil) No. 1112 / 2009

Civil Appeal No. 3920 / 2010

Civil Appeal No. 3119 / 2011

Civil Appeal No. 6114 / 2001

Civil Appeal No. 6108 / 2002

Civil Appeal No. 1276 / 2001

Civil Appeal No. 1279 / 2001

Civil Appeal No. 1278 / 2001

Civil Appeal No. 6471 / 2002

Civil Appeal No. 2506 / 2002

Civil Appeal No. 8597 / 2001

Civil Appeal No. 4569 / 2002

Civil Appeal No. 5101 / 2002

Civil Appeal No. 2409 / 2002

Special Leave Petition (Civil) No. 20982 / 2002

Civil Appeal Nos. 355-358 / 2003

Special Leave Petition (Civil) No. 14085 / 2004

Special Leave Petition (Civil) No. 11291 / 2004

Special Leave Petition (Civil) No. 14127 / 2004

Civil Appeal No. 7994 / 2004

Special Leave Petition (Civil) No. 4139 / 2005

Civil Appeal No. 1274 / 2007

Civil Appeal No. 1273 / 2007

Civil Appeal Nos. 1311-1312 / 2008

Special Leave Petition (Civil) No. 16301 / 2007

Special Leave Petition (Civil) No. 3107 / 2008

Special Leave Petition (Civil) No. 4327 / 2008

Special Leave Petition (Civil) No. 4329 / 2008

Special Leave Petition (Civil) No. 4328 / 2008

Civil Appeal No. 296 / 2008

Special Leave Petition (Civil) No. 16276 / 2008

Special Leave Petition (Civil) No. 17224 / 2008

Civil Appeal No. 5519 / 2012

Civil Appeal No. 5681 / 2010

Special Leave Petition (Civil)………CC No. 7990 / 2009

Civil Appeal No. 7757 / 2011

Civil Appeal No. 1131 / 2012

Civil Appeal Nos. 8149-8151 / 2012

Civil Appeal Nos. 4505-4506 / 2013

Civil Appeal Nos. 4507-4508 / 2013

Special Leave Petition (Civil) Nos. 12679-12682 / 2014

Special Leave Petition (Civil) No. 1857 / 2016

Special Leave Petition (Civil) No. 14156 / 2021

TABLE OF CONTENTS

A. Overture ..................................................................................... 7

B. Interpretational History of the ‘industry’ definition ..................... 10

B.1. Bangalore Water Supply (supra): A truly watershed moment .. 11

B.1.1. Reasons prompting reference to a larger Bench................ 14

B.1.2. Laying down the Triple Test ............................................. 15

B.1.3 Reading down ‘Undertaking’ ............................................. 17

B.1.4. The creation of the Dominant Nature Test ....................... 21

B.1.5. The Sovereign Functions Exception ................................. 21

B.2. The Pre-Bangalore Water Supply (supra) Jurisprudence ........ 23

B.2.1. Casting the Net Wide: The Early Expansion of the term

‘Industry’ .................................................................................. 23

B.2.2. The Turning of the Tide: The retrenchment of the expansive

approach .................................................................................. 27

B.3. The Post-Bangalore Water Supply (supra) jurisprudence ........ 31

B.3.1. The Initial Legislative Response ....................................... 32

B.3.2. The discord regarding the Sovereign Function Exception .. 33

B.3.3. The treatment and status of Research Institutions ........... 36

B.3.4 The calls for reconsideration of the decision in Bangalore

Water Supply (supra) .............................................................. 37

C. The Prefatory Question of Maintainability .................................. 42

C.1. Correctness of the manner in which Reference was made ...... 44

C.1.1. The framework governing Larger Bench References .......... 44

C.1.2. Testing the Reference on the anvil of Dawoodi Bohra (supra)

................................................................................................. 48

C.1.3. The Res Judicata conundrum? ........................................ 57

C.1.4. Stare Decisis and the doctrine of overruling ..................... 63

C.2. Treading the razor’s edge between technicality and quietus ... 66

D. Contentions of the Parties ......................................................... 67

D.1. Contentions on behalf of the Appellants ................................ 67

D.2. Contentions on behalf of the Respondents ............................. 71

D.3. Contentions on behalf of the Amicus Curiae .......................... 75

E. Issues for consideration ............................................................ 78

F. At the Heart of the Matter: What Constitutes an ‘Industry’? ....... 79

F.1. The meaning of ‘Industry’ as encapsulated in the ID Act ........ 82

F.2. The judicial interpretation accorded to ‘Industry’ ................... 90

F.3. The Ripple Effects of Bangalore Water Supply (supra) .......... 108

F.4. Manner in which the term ‘industry’ under Section 2(j) ought to

be interpreted ............................................................................ 111

F.4.1. The Noscitur a Sociis Principle ........................................ 112

F.4.2. A fresh look at the interpretative approach ..................... 117

F.4.3. Calibrating the Triple Test ............................................. 128

F.4.4. Reconsidering Institutional Categorisation ..................... 134

G. Legal impact of the Industrial Disputes (Amendment) Act, 1982

and the IR Code, 2020 .................................................................. 146

H. Conclusion .............................................................................. 148

JUDGEMENT

SURYA KANT, CJI. (on behalf of himself, Satish Chandra Sharma J., Alok Aradhe J. and Vipul M. Pancholi J.)

A. OVERTURE

1. The issue concerning the instant batch of appeals can be

consolidated into a singular judicial inquiry, namely, whether the

Social Forestry Department of the Appellant State, having been

created as a welfare-oriented initiative aimed at environmental

amelioration, falls within the ambit of the term ‘industry’ as defined

under Section 2(j) of the Industrial Disputes Act, 1947 (ID Act,

1947).

2. More pointedly, the legal issue, particularly the interpretive scope

of the abovementioned term ‘industry’, constitutes a question that

has persistently engaged the attention of this Court over an

extended temporal period. Indeed, it would not be inapt to

characterise this conundrum as a proverbial albatross fastened to

the Court’s metaphorical neck, continuing to demand judicial

clarification.

3. The question may appear at first blush disarmingly

straightforward; yet, upon closer scrutiny, it discloses a far more

intricate and layered inquiry. For decades, the manner of its

definition has, in tangible and determinative terms, governed which

entities fall within the statutory fold and, correspondingly, who may

legitimately invoke the rights and protections it confers.

4. It becomes necessary at this juncture to acknowledge that

subsequent legislative developments have altered the statutory

landscape. The provision whose interpretation has, for years on

end, engaged sustained judicial attention is no longer in force, and

this, in itself, presents an additional question warranting

adjudication. However, the present batch of petitions, having been

instituted prior to these legislative changes, does not fall within the

ambit of the regime now governing the field, namely the Industrial

Relations Code, 2020 (IR Code).

5. These developments, it must be noted, transpired after the

reference of the present matters to a Bench of Nine Judges, at a

time when the interpretive contours of Section 2(j) of the ID Act

continued to carry determinative significance. Yet, the considerable

passage of time, coupled with the intervening statutory

transformation, has resulted in a state of doctrinal and procedural

liminality. These appeals stand in a precarious interstice, being

neither governed by the new legislative framework nor conclusively

resolved under the erstwhile definition of ‘industry’ contained in

Section 2(j).

6. As the Court of last resort, we remain acutely conscious that the

interpretive exercise now being undertaken may not, in the

contemporary statutory context, yield consequences of far-reaching

practical application. Nonetheless, the discharge of this function is

neither optional nor contingent upon its immediate utility. It is a

responsibility that inheres in the judicial office, particularly where

a reference has been authoritatively made. The principle, long

embedded in our jurisprudential tradition, that justice must not

only be done but must manifestly be seen to be done, acquires

particular salience in such circumstances.

7. When a reference has been entrusted to this Court by learned

Judges, acting in view of the exigencies and uncertainties prevailing

at the relevant time, it would be neither institutionally appropriate

nor jurisprudentially sound to permit the matter to remain in

abeyance. To do so would, metaphorically speaking, be akin to

burying the body before conducting the post-mortem, leaving the

very cause of the controversy forever unexplored. To defer or deny

its resolution any further would be to countenance a state of

avoidable indeterminacy. It is, therefore, incumbent upon us to

finally adjudicate the issue and bring the matter to a reasoned and

authoritative quietus.

8. We have, therefore, endeavoured to discharge our constitutional

obligation by addressing the question referred to the Nine-Judge

Bench. The exercise of this jurisdiction is not discretionary in

character; it is anchored in the imperatives of the Constitution and

the foundational precepts of the Rule of Law. The Court cannot

resile from the performance of its duty merely because, in the

subjective estimation of the adjudicator, the issue may appear to

admit of gradations of importance.

9. The constitutional function entrusted to this Court admits of no

such artificial hierarchies. Once a question is validly referred, it

commands authoritative determination, and it would be contrary

to settled principle for the Court to decline adjudication on the

basis of perceived relative significance.

B. INTERPRETATIONAL HISTORY OF THE ‘INDUSTRY’ DEFINITION

10. In that view of the matter, before embarking upon an analysis of

the issues that presently fall for our consideration, it is imperative

to trace the trajectory traversed by this Court over time, and to

examine the manner in which the definition in question has evolved

through successive judicial pronouncements. A careful

engagement with this evolutionary process will furnish the

necessary analytical foundation and illuminate the interpretive

choices that now confront us, thereby enabling a more coherent

and methodical resolution of the questions at hand.

11. It is apposite at the outset to advert to the language employed in

Section 2(j) of the ID Act, according to which, “‘industry’ means any

business, trade, undertaking, manufacture or calling of employers

and includes any calling, service, employment, handicraft, or

industrial occupation or avocation of workmen.”

12. Section 2(j) defines ‘industry’ in a bifurcated manner, employing

two distinct yet complementary limbs. The first proceeds from the

standpoint of the employer and extends to “any business, trade,

undertaking, manufacture or calling of employers.” The second is

cast from the perspective of the workman and encompasses “any

calling, service, employment, handicraft, or industrial occupation or

avocation of workmen.” The phraseology employed is of the widest

amplitude, having been drawn in substantial measure from Section

4 of the Commonwealth Conciliation and Arbitration Act of

Australia, and has, in consequence, invited sustained judicial

engagement in the course of its interpretation.

B.1. Bangalore Water Supply (supra): A truly watershed moment

13. There can, of course, be no gainsaying that any meaningful

consideration of the definition of the term ‘industry’ must

necessarily entail an examination of the formulation articulated by

a Seven Judge Bench in Bangalore Water Supply and Sewerage

Board v. A. Rajappa.1

14. The controversy therein originally arose when certain employees of

the Bangalore Water Supply and Sewerage Board (Board) were

subjected to penalties in the form of fines for alleged misconduct.

Aggrieved thereby, they instituted proceedings before the Labour

Court under Section 33C (2) of the ID Act. In response, the Board

therein raised a preliminary objection to the maintainability of the

proceedings, contending that it was engaged in the discharge of

essentially ‘regal’ or governmental functions by providing basic civic

amenities to the public and, consequently, could not be regarded

as an ‘industry’ within the meaning of Section 2(j). It was argued

that, if the Board itself fell outside the ambit of the Act, the

employees could not claim the status of ‘workmen’ thereunder and,

correspondingly, the Labour Court would lack jurisdiction to

entertain or adjudicate their claims.

15. The dispute thereafter traversed first before the Karnataka High

Court and subsequently before this Court. By that stage, the

question concerning the meaning and scope of ‘industry’ under

Section 2(j) had already become the subject of substantial judicial

1 (1978) 2 SCC 213.

debate, with divergent strands of authority emerging from different

decisions of this Court. In light of this interpretative discordance

and the significance of the issues involved, the matter ultimately

came to be placed before a larger Bench for an authoritative

determination of the law.

16. It was in these circumstances that the judgment now universally

recognised as Bangalore Water Supply (supra) came to be

rendered, a decision that would sagaciously influence the course of

industrial jurisprudence in India and remain the focal point of

reference in debates concerning the meaning of the term ‘industry’

for decades thereafter.

17. To state briefly, in that decision, a majority of Five Judges, speaking

through the seminal exposition authored by Krishna Iyer, J. and

comprising himself, P.N. Bhagwati, J. and D.A. Desai, J., adopted

an expansive construction of the term by propounding what has

since come to be recognised as the ‘Triple Test’.

18. The leading judgment was accompanied by a concurring opinion

authored by M. H. Beg, C.J., together with a brief order delivered

by Y. V. Chandrachud, J. (as he then was), on behalf of himself,

Jaswant Singh, J. and V. D. Tulzapurkar, J., which was delivered

on 21.02.1978, clarifying that their detailed reasoning would

follow. Vide the main judgment, the learned concurring Judges

recorded their respectful agreement with the principal opinion

authored by Krishna Iyer, J., agreeing with the ultimate conclusion

that the matter ought to be dismissed, while observing that reasons

would be furnished subsequently to delineate the areas of

concurrence and divergence, if any, on the questions in controversy

addressed in the leading judgment.

19. Thereafter, on 07.04.1978, Y. V. Chandrachud J. (as he then was),

delivered his detailed reasons, while Jaswant Singh J., speaking for

himself and V. D. Tulzapurkar J., rendered a partly dissenting

opinion, thereby crystallising the effective majority of the judgment

at 5:2.

B.1.1. Reasons prompting reference to a larger Bench

20. The reference to a Bench of Seven Judges was itself occasioned, as

explained by Krishna Iyer, J., by “the urgent need for an

authoritative resolution of this confused position which has survived

indeed, has been accentuated by-the judgment of this six-member

bench in Safdarjung, if we may say so with deep respect, has led to

a reference to a larger bench of this diehard dispute as to what an

‘industry’ under Section 2(j) means.”

21. The respected Judge, speaking with his characteristic candour,

noted that the prevailing uncertainty had necessitated what had

become a persistent and intractable dispute as to the meaning of

industry under Section 2(j) of the ID Act.

22. There thus appears to have been no divergence of opinion among

the learned Judges on this aspect, namely, that the persistent

deviation in judicial interpretation ought to be clarified

immediately. It was also broadly acknowledged that, in an ideal

course, legislative intervention by Parliament, through an

appropriate amendment, would have been desirable to bring clarity

and resolution to the prevailing state of ambiguity.

B.1.2. Laying down the Triple Test

23. The majority, in the leading judgment, having undertaken an

exhaustive survey of the preceding authorities that had shaped the

interpretation of the expression ‘industry’, proceeded to articulate

the Triple Test as the governing standard for determining whether

a particular body or entity would fall within its ambit.

24. The Triple Test postulates the existence of: (i) a systematic and

organised activity; (ii) cooperation between employer and employee

in the conduct of such activity; and (iii) the production or

distribution of goods and services directed towards the satisfaction

of human wants and wishes. The formulation was consciously

designed to avoid an unduly restrictive construction and to capture

within its ambit a wide spectrum of organised economic and quasi-

economic undertakings.

25. It is of particular significance that, in explicating the element of

cooperation between employer and employee, the Court rejected the

necessity of establishing any direct or proximate nexus of a rigid

character, regarding such a requirement as illusory and

normatively untenable. Further, the phrase “goods and services

calculated to satisfy human wants and wishes” was construed in a

manner that excluded activities of a purely spiritual or religious

character, while encompassing material goods and services

intended to confer tangible, temporal benefit. Illustratively,

activities such as the large-scale preparation and distribution of

food, including prasad, were held to fall within the inclusive sweep

of the definition of industry.

26. The absence of a 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 emphasis,

therefore, was placed squarely on the functional character of the

activity, with the decisive inquiry centring on its nature,

particularly as manifested through the relationship of cooperation

between employer and employee.

27. The Triple Test appears to have secured broad acceptance among

all seven learned Judges, with the divergence being confined not to

its formulation, but to the manner and extent of its application.

Thus, while the foundational elements of the test were not in

serious dispute, differences arose as to the manner in which

particular factual settings ought to be treated. For instance,

Chandrachud J. (as he then was), agreed with the activity test but

highlighted that the determinative inquiry ought to instead be

based on “whether the activity, considered objectively, is organised

or arranged in a manner in which trade or business is normally

organised or arranged.”

28. Even in the dissenting opinion of Jaswant Singh J., for himself and

Tulzapurkar J., substantially accepted the three constituent

elements of the Triple Test, but proceeded to superimpose an

additional requirement. According to the learned Judges, the

activity in question must further be carried on “on commercial lines

by private entrepreneurs.”

B.1.3 Reading down ‘Undertaking’

29. An important facet of the decision in Bangalore Water Supply

(supra) lies in the illumination it provides on the scope and ambit

of the term ‘undertaking’. The leading opinion made it clear that

the construction of Section 2(j) of the ID Act could not be extended

to the point that it ‘skids into a domain too rarified to be realistic’.

Put in more lucid terms, while the provision was to be accorded a

broad and purposive interpretation, it was not to be so unbounded

as to assume an all-encompassing character that would

indiscriminately draw every conceivable activity within its sweep.

30. This ultimately resulted in the recognition of the second guideline

that:

“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, viz. the employer-employee basis, bears resemblance to what we find in trade or business. … All features, other than the methodology of carrying on the activity viz. in organizing the co-operation between employer and employee, may be dissimilar. It does not matter, if on the employment terms there is analogy.”

31. The logical corollary of this guideline was thus that any organised

activity satisfying the constituent elements of the Triple Test,

though not strictly amounting to trade or business, may

nevertheless qualify as an ‘industry’, provided that the essential

character of the activity, particularly the employer–employee

relationship, bears a discernible resemblance to that which

ordinarily obtains in trade or business. The consideration thus lies

in the manner in which the activity is organised, specifically the

structured cooperation between employer and employee.

32. The majority decision further emphasized that the application of

these guiding principles must not be curtailed by subjective

considerations, whether arising from ideological predilections,

institutional character, or perceived incongruity between the

nature of the activity and its economic consequences. The

interpretive exercise must remain faithful to the statutory purpose,

namely, the promotion of industrial peace and the orderly

regulation and resolution of disputes between employers and

workmen.

33. On this basis, it was made clear that a wide range of organised

activities, including professions, clubs, educational institutions,

cooperatives, research bodies, charitable undertakings, and other

analogous ventures, cannot be excluded from the ambit of Section

2(j) merely by reason of their form or avowed purpose, so long as

they satisfy the requirements of the Triple Test.

34. At the same time, a limited category of such institutions may stand

outside the definition where, applying the dominant nature test,

the activity is essentially carried on without the employment of a

substantive workforce, and only minimal or marginal engagement

of labour is involved. In such cases, the absence of a structured

employer–employee relationship of any real significance would

preclude their characterisation as an ‘industry’.

35. Thus, as a manner of illustration, the decision put forth that

institutions founded upon a fundamentally altruistic or

eleemosynary basis may fall outside the ambit of ‘industry’ in

narrowly circumscribed circumstances. Where the activity is

carried on predominantly by individuals who associate themselves

with the endeavour out of a sense of service, commitment to a

cause, or spiritual or ideological motivation, and who render their

services either gratuitously or for nominal honoraria, the essential

metric of an employer–employee relationship may be absent.

36. This would also encompass situations such as voluntary legal aid

initiatives, free medical services rendered by professionals in their

spare time, or institutions sustained by individuals working in

furtherance of a shared spiritual or charitable purpose. In such

cases, where services are provided free of charge or at nominal cost,

and those engaged are not employed on terms indicative of a

master–servant relationship, the organisation would not qualify as

an ‘industry’, notwithstanding the engagement of a limited number

of ancillary or technical staff.

37. This exemption, however, was confined to such genuinely

charitable or eleemosynary undertakings. It does not extend to

activities merely because they are animated by generosity,

compassion, or developmental objectives, where the organisational

structure otherwise satisfies the criteria of the statutory definition

or the Triple Test.

B.1.4. The creation of the Dominant Nature Test

38. Krishna Iyer J., in his lead judgment, further articulated what has

come to be recognised as the ‘dominant nature test’ in order to

address situations involving a composite or multifaceted

undertaking.

39. Where an organisation comprises a complex of activities, some of

which may, if viewed in isolation, fall outside the definition, while

others clearly fall within it, the determinative inquiry must centre

on the predominant character of the enterprise as a whole. If the

dominant nature of the activity, viewed in its integrated form,

satisfies the criteria of an ‘industry’, the entire undertaking would

ordinarily be so characterised, notwithstanding that certain

components or personnel may not independently meet the

statutory definition.

B.1.5. The Sovereign Functions Exception

40. The Court also clarified that the exemption carved out for sovereign

functions must be narrowly construed and confined to functions

strictly understood as sovereign in character. Welfare activities or

economic ventures undertaken by the State or its instrumentalities

do not, merely by reason of their governmental provenance, attract

such immunity.

41. Further, even within departments discharging sovereign functions,

distinct and severable units which independently satisfy the indicia

of an ‘industry’ may fall within the ambit of Section 2(j) of the ID

Act. Lastly, it was recognised that the Legislature, acting within its

constitutional competence, retains the authority to expressly

exclude categories of activities from the operation of the Act, even

if they would otherwise fall within its definitional scope. While this

is only a brief synopsis of the ratio in Bangalore Water Supply

(supra), the reasoning buttressing its findings has been dealt with

in greater detail in the later part of this judgment.

42. That being so, the decision in Bangalore Water Supply (supra)

was by no means the first occasion on which this Court undertook

an authoritative exposition of the term ‘industry’. The interpretive

enterprise predates that pronouncement and is marked by a series

of decisions that sought to delineate the contours of the definition

in varying factual settings. In order to bring analytical coherence to

this body of precedent, it is both convenient and conceptually

sound to classify the trajectory of the case law into two distinct

phases: first, the jurisprudence preceding Bangalore Water

Supply (supra); and second, the jurisprudence that has developed

in its aftermath.

B.2. The Pre-Bangalore Water Supply (supra) Jurisprudence

43. Prior to the authoritative pronouncement of Bangalore Water

Supply (supra), the construction of the provision ‘industry’

exhibited a marked oscillation between two competing interpretive

approaches. On the one hand, a liberal construction sought to

bring within its sweep a broad spectrum of organised activity; on

the other, a more restrictive approach endeavoured to confine its

application to undertakings of a predominantly commercial

character.

B.2.1. Casting the Net Wide: The Early Expansion of the term

‘Industry’

44. One of the earliest decisions in this line of authority is that of D.N.

Banerji v. P.R. Mukherjee,2 wherein a Five-Judge Bench held that

a municipal body could fall within the ambit of ‘industry’, and in

doing so articulated what has come to be described as the

‘analogous to trade or business’ test. The Court observed that it is

sufficient if the activity in question bears a functional resemblance

2 AIR 1953 SC 58.

to the carrying on of trade or business and is carried on through

cooperation between employers and employees.

45. This approach marked a deliberate departure from a narrow, profit-

centric understanding. It was held that an activity need not be

undertaken by a private enterprise, nor must it be strictly

commercial in character or profit-generating, in order to attract the

statutory definition. In a significant interpretive move, the Court

also rejected the contention that the expression ‘undertaking’ must

take its colour ejusdem generis from the preceding words ‘business,

trade, manufacture or calling’. Such a construction, it was

reasoned, would unduly constrict the scope of the provision and

render both the term ‘undertaking’ and the second limb of the

definition otiose.

46. The expression ‘undertaking’, within the meaning of Section 2(j),

was accordingly construed in expansive terms to denote any

business, work, or project that is undertaken as an enterprise, so

long as it is analogous in its organisation and operation to trade or

business.

47. Thereafter, the decision in State of Bombay v. Hospital Mazdoor

Sabha3 marked a significant stage in the evolution of the

3 AIR 1960 SC 610.

jurisprudence. In that case, a Three Judge Bench held that a

government-run hospital would fall within the ambit of an

‘industry’, while simultaneously refining the principles earlier

enunciated in D.N. Banerji (supra). It articulated a more

structured formulation of what would constitute an ‘undertaking’

within the meaning of Section 2(j). Accordingly, an activity would

so qualify where: (a) it is systematically or habitually undertaken;

(b) directed towards the production or distribution of goods, or the

rendering of material services to the community, whether in whole

or in part; (c) carried on with the assistance of employees; (d)

organised in a manner analogous to trade or business; and (e) not

of a casual character, nor undertaken for personal consumption or

pleasure. Significantly, the presence of a profit motive or the

investment of capital was held to be non-essential to the

characterisation.

48. This Court was, however, careful in emphasising that the

amplitude of the definition was not without limits. A principled line

of demarcation was recognised, excluding from its ambit activities

that are purely domestic, personal, or casual in nature.

49. Following closely on the heels of Hospital Mazdoor Sabha (supra)

was the judgment rendered in Corporation of the City of Nagpur

v. Its Employees,4 wherein a municipal corporation was construed

to be an ‘industry’ with two qualifications justifying such

categorisation. The first was a narrow sovereign function

exception, confined to the ‘primary and inalienable functions of a

constitutional government’, namely, the legislative power, the

administration of law, and the exercise of the judicial power; these

were held to remain excluded even when statutorily delegated to a

corporation. The second was the predominant function test for

composite departments, under which a department discharging

both industrial and non-industrial activities takes its character

from its predominant nature of function. On the anvil of that test,

the Octroi Department was held not to be an industry, whereas the

Fire Brigade service of a municipal committee was. Once again, it

was observed that neither investment of capital nor a profit motive

is a necessary element in the modern conception of industry, and

that monetary consideration for service is not an essential

characteristic of industry in a modern State.

50. Soon after, the decision in Ahmedabad Textile Industry’s

Research Association v. State of Bombay,5 following the ratio

laid down in Hospital Mazdoor Sabha (supra), classified a

Research Association set up by the textile mills of Ahmedabad to

4 AIR 1960 SC 675 5 AIR 1961 SC 484.

be an ‘industry’. It founded its decision on the basis that: (i) the

activity of the research association had been systematically taken;

(ii) it rendered material services to a part of the community by

discovering manufacturing processes to improve efficiency and

reduce costs; and (iii) it was carried out with the help of technical

personnel. The Court further imbued that the association’s

activities did not have much in common with the activities of what

may be construed to be a purely educational institution, thereby

leaving the legal status of ordinary educational institutions open.

B.2.2. The Turning of the Tide: The retrenchment of the expansive

approach

51. In National Union of Commercial Employees v. M.R. Meher,6

this Court held a firm of solicitors not to be an ‘industry’, and

thereby inaugurated the restrictive turn, marking a turn in the tide.

The third prong of the working principle in Hospital Mazdoor

Sabha (supra) was qualified by the further requirement that the

cooperation between employer and employee must have a ‘direct’

nexus with the goods or services produced. To that end, the court

reasoned that a solicitor’s output depends on his personal

professional equipment, knowledge and efficiency; the clerical work

of his staff is incidental and has no direct or essential nexus with

6 AIR 1962 SC 1080.

the advice rendered to the client. On that reasoning, the learned

professions more generally were excluded from the definition.

52. In a similar vein, this Court in University of Delhi v. Ram Nath,7

held a university to not be an ‘industry’ within the bounds of

Section 2(j) of the ID Act. The work of imparting education was, the

Court observed, more of a ‘mission’ and a vocation than a

profession or trade or business. Moreover, it was held that the

majority of a university’s employees (the teachers) do not qualify as

‘workmen’ under the Act. The Court stated that its decision was not

to be understood as laying down a general proposition, but the

effect of the ruling was to take educational institutions as a class

out of Section 2(j).

53. Thereafter, in Madras Gymkhana Club Employees’ Union v.

Madras Gymkhana Club,8 a Three Judge Bench of this Court held

that a self-serving members’ club, albeit organised on a substantial

scale and comprising approximately 1,200 members with a fully

equipped catering department, would not fall within the ambit of

an “industry.” The Court proceeded on the basis that,

notwithstanding the provision of material services to a defined

7 AIR 1963 SC 1873. 8 AIR 1968 SC 554.

section of the community, such activities were not undertaken in

the course of trade or business, nor were they analogous thereto.

54. In arriving at the aforesaid conclusion, the Court declined to adopt

the formulation articulated in Hospital Mazdoor Sabha (supra),

particularly insofar as it introduced the criterion of whether the

activity in question could, in principle, be carried on by a private

individual. This qualification was regarded as conceptually

unsound, on the footing that there exist few, if any, activities

incapable of being undertaken by private enterprise. The

interpretive consequence of this approach was to accord primacy

to the first limb of the definition contained in Section 2(j), thereby

substantially attenuating the independent significance of the

second limb and narrowing the scope of the provision.

55. A similar view was then taken in Cricket Club of India v. Bombay

Labour Union,9 wherein the Cricket Club of India was held not to

be an industry.

56. Thereafter came the decision in Safdarjung Hospital v. Kuldip

Singh Sethi,10 which can be safely regarded as inscribing the high-

water mark of the restrictive approach. In that case, a Six-Judge

Bench of this Court expressly overruled the earlier decision in

9 AIR 1969 SC 276. 10 (1970) 1 SCC 735.

Hospital Mazdoor Sabha (supra) and significantly narrowed the

scope of the definition of ‘industry’. The Court was concerned with

three institutions: the Safdarjung Hospital, which operated as a

governmental department; the Tuberculosis Hospital, functioning

as a wholly charitable and research-oriented institution; and the

Kurji Holy Family Hospital, a charitable establishment expressly

precluded from generating profit. All three were held not to fall

within the ambit of an ‘industry’.

57. The central proposition articulated was that, although the presence

of a profit motive is not determinative, an activity must nonetheless

bear a close analogy to trade or business in a commercial sense in

order to qualify as an ‘industry’. It must be directed towards the

production of material goods or the provision of material services

possessing commercial value. In this context, ‘material services’

were understood to denote organised activities carried on through

the cooperation of employers and employees to provide the

community with the use of essential utilities, such as electricity,

water, transportation, postal services, and telecommunication.

This formulation imposed a distinctly higher threshold,

reintroducing, albeit in a nuanced form, a commercial character as

a limiting principle, and thereby consolidating the restrictive

trajectory in the interpretation of Section 2(j) of the ID Act.

58. The judicial path thus reveals that different Benches of this Court

adopted a multiplicity of distinct and, at times, divergent

approaches in determining whether particular institutions, such as

Hospitals, Clubs, Universities, and Governmental Departments,

would satisfy the substantive import of the definition of ‘industry’

under Section 2(j) of the ID Act.

B.3. The Post-Bangalore Water Supply (supra) jurisprudence

59. In the aftermath of the decision in Bangalore Water Supply

(supra), the jurisprudence appeared, for a time, to attain a measure

of doctrinal stability, if not complete finality. This interlude of

relative calm was, however, short-lived. Subsequent developments

once again unsettled the field and rekindled debate regarding the

correctness, scope, and continuing viability of the interpretation

accorded to the term ‘industry’.

60. These developments may, for analytical clarity, be organised into

four broad categories: (i), the initial legislative response; (ii), the

contestation surrounding the ambit of the sovereign functions

exception; (iii), the treatment and status of research institutions;

and (iv), the recurring judicial calls for a reconsideration of the

principles laid down in Bangalore Water Supply (supra) itself.

B.3.1. The Initial Legislative Response

61. The Parliament, by way of the Industrial Disputes (Amendment) Act

46 of 1982, amended Section 2(j). The amendment retained the core

of the Triple Test enunciated in Bangalore Water Supply (supra),

clarified that the employer-and-employee relationship includes

workmen employed through a contractor, though it carved out

exceptions, such as: (1) agricultural operations (save where

integrated 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.

62. Although the above-quoted amendment was passed on 21.08.1984,

the amended definition of ‘industry’ was never notified and thus the

amended provision did not see the light of day.

B.3.2. The discord regarding the Sovereign Function Exception

63. Subsequently, a phase of friction emerged in relation to the

exceptions carved out for sovereign functions as articulated in

Bangalore Water Supply (supra). This divergence was occasioned

by the coexistence of two distinct judicial approaches: one line of

authority adhered to the narrow construction adopted in

Bangalore Water Supply (supra), while another sought to expand

the contours of the exception, thereby enlarging the category of

activities insulated from the definition of ‘industry’.

64. To explicate, the narrow construction of the sovereign functions

exception found early articulation in Chief Conservator of Forests

v. Jagannath Maruti Kondhare,11 wherein a Three Judge Bench

held that the State’s Social Forestry Department would fall within

the ambit of an ‘industry’.

65. However, such divergence became manifest when a Two Judge

Bench, in Sub Divisional Inspector of Post, Vaikam v. Theyyam

Joseph,12 adopted a broader construction of the exemptions

provided to sovereign functions and held the Postal Department

would fall within the domain of welfare functions envisaged under

Part IV of the Constitution. Such functions, being sovereign in

11 (1996) 8 SCC 489. 12 (1996) 2 SCC 293.

character, were held to lie outside the ambit of an ‘industry’. This

line of reasoning was subsequently followed by another Two Judge

Bench in Bombay Telephone Canteen Employees’ Association

v. Union of India,13 wherein the departmental canteen attached to

the Prabhadevi Telephone Exchange was likewise held not to

constitute an ‘industry’.

66. Indeed, in the latter decision, the Court went on to observe that a

strict and unqualified application of the ratio laid down in

Bangalore Water Supply (supra) could potentially give rise to

consequences of a far-reaching and, perhaps, catastrophic nature.

67. However, this dissonance came to be resolved by a Three Judge

Bench in General Manager, Telecom v. A. Srinivasa Rao,14

which held that the Telecommunication Department of the Union

would fall within the ambit of an ‘industry’, having regard to the

fact that it was engaged in activities of a commercial character and

was not discharging functions of a sovereign nature.

68. In the course of its analysis, the Court unequivocally declined to

endorse the broader construction of the sovereign functions

exception. It observed that such an approach stood in direct

conflict with the binding authority of the Seven-Judge Bench

13 AIR 1997 SC 2817. 14 (1997) 8 SCC 767.

decision in Bangalore Water Supply (supra), which continued to

hold the field. The Court emphasised that it would be impermissible

for a Bench of lesser strength to either depart from or circumvent

a binding precedent of a larger Bench. The decisions in Theyyam

Joseph (supra) and Bombay Telephone Canteen (supra) were

accordingly held not to lay down the correct position in law.

69. The decision in Srinivasa Rao (supra) was subsequently followed

and reaffirmed firstly by a Two Judge Bench in All India Radio v.

Santosh Kumar,15 which held that All India Radio and

Doordarshan would qualify as ‘industries’. The reasoning assigned

was that the broadcasting of commercial advertisements for profit

could not be characterised as a purely sovereign function.

Similarly, in Agricultural Produce Market Committee v. Ashok

Harikuni,16 another Two Judge Bench held that a Market

Committee constituted under the Karnataka Agricultural Produce

Marketing (Regulation and Development) Act, 1966 would fall

within the ambit of an ‘industry’, noting that none of its functions

could be regarded as sovereign or inalienable, and that the

presence or absence of profit-making was not determinative.

15 (1998) 3 SCC 237. 16 (2000) 8 SCC 61.

70. What emerges from this line of authority is a consistent recognition

that merely because an activity is undertaken by the State, whether

in furtherance of welfare objectives or through departmental

organisation, does not, by itself, attract the sovereign functions

exception, particularly where such activity bears the indicia of

organised service or commercial engagement.

B.3.3. The treatment and status of Research Institutions

71. The expansive construction accorded to the term ‘industry’ in

Bangalore Water Supply (supra), particularly in its application

to research institutions, proved to be a significant point of inflection

in jurisprudence. The proposition that such bodies could, in

principle, fall within the statutory definition if they satisfied the

governing criteria introduced a degree of latitude that subsequently

invited reconsideration.

72. This came to the fore in the Two Judge Bench decision in Physical

Research Laboratory v. K.G. Sharma,17 where the Court held

that the Physical Research Laboratory would not constitute an

‘industry’. The determination rested on the footing that the

institution was engaged in pure research, discharging functions of

17 (1997) 4 SCC 257.

a governmental character, notwithstanding the fact that it

employed personnel in furtherance of its objectives.

73. The reasoning in Physical Research Laboratory (supra) thus

stood in discernible tension with the ratio of Bangalore Water

Supply (supra), and sought to be an early indication of the judicial

unease that began to surface with respect to the prevailing dictum.

B.3.4 The calls for reconsideration of the decision in Bangalore

Water Supply (supra)

74. A Two Judge Bench in Coir Board, Ernakulam v. Indira Devi

P.S,18 while adjudicating the question as to whether or not the Coir

Board constituted an industry, referred the decision in Bangalore

Water Supply (supra) for reconsideration by a larger bench,

pointing to the ‘damaging effect’ of the extended meaning given to

‘industry’ and dissenting from the view laid down in that case.

75. The Bench observed that the experience of the two decades since

Bangalore Water Supply (supra) had done more damage than

good, not merely to the organisations but also to the employees by

the curtailment of employment opportunities. It noted that the

elimination of the profit motive had caused a large number of

philanthropic and charitable activities to be unable to cope with

18 (1998) 3 SCC 259.

their requirements, with the consequence that welfare activities

were discontinued, the community was deprived of their benefit

and the employees of their livelihood. As to the Coir Board itself,

the Bench observed that its function was to promote the coir

industry, not to run one, and that it would not be an “industry” on

a predominant-purpose test, though it would have to be so

characterised on the sweeping test in Bangalore Water Supply

(supra).

76. Thereupon, a Three-Judge Bench of this Court, presided over by

the then Chief Justice, declined the reference on the basis that

Bangalore Water Supply (supra) did not require reconsideration

merely because of a reference made by a Two-Judge Bench, which

was bound by the larger bench.19

77. Nonetheless, Bangalore Water Supply (supra) was subsequently

referred for reconsideration to a larger Bench initially by a Three-

Judge Bench on 31.01.2001 in State of Uttar Pradesh v. Jai Bir

Singh.20 This reference was founded upon an apparent conflict in

precedent. On one hand, the Three-Judge Bench in Jagannath

Maruti Kondhare (supra) had taken an expansive view, holding

that a Social Forestry Department would fall within the ambit of an

19 Coir Board Ernakulum State of Kerala v. Indira Devi P.S. (II), (2000) 1 SCC 224. 20 (2005) 5 SCC 1.

‘industry’. On the other hand, the Two-Judge Bench in State of

Gujarat v. Pratamsingh Narsinh Parmar21 adopted a more

restrictive interpretation. The divergence between these decisions

necessitated authoritative clarification by a larger Bench.

78. The Five Judge Bench in State of Uttar Pradesh v. Jai Bir

Singh,22 while considering the issue, held that there were various

competing interests which would make it prudent to reconsider the

correctness of Bangalore Water Supply (supra) and refer it to a

larger bench. First, the decision in Bangalore Water Supply

(supra) was not unanimous; within the majority of five, three joined

in the opinion of Krishna Iyer J., while Beg C.J. and Chandrachud

J. (as he then was) wrote separately, with views partly different

from the other three. Second, the majority itself had recorded that

the definition clause was ‘so wide and vague that it is not

susceptible to a very definite and precise meaning’, and had

described its interpretation as tentative and temporary, till the

legislature stepped in. Third, the Act being social legislation, the

interests of employers, employees and the public, as the ultimate

beneficiaries of industrial activity, must be kept in view; a worker-

oriented approach unmindful of employer and public interest is

one-sided. Fourth, experience had shown that the majority view

21 (2001) 9 SCC 713. 22 (2005) 5 SCC 1.

had produced large awards of reinstatement and back-wages,

which compelled employers of moderate means to close down their

industries, harming employers, workers and the public alike. Fifth,

though the Act was amended in 1982, the amendment had

remained unenforced. Sixth, an over-expansive interpretation was

a deterrent to private enterprise in a country of scarce public

employment, and the engulfing of liberal professions (lawyers,

architects, doctors, chartered accountants) within the definition

was experienced as a hurdle; such professions require regulation,

but by separate legislation. Seventh, the concept of a sovereign

function ought not, in a constitutional democracy, be confined to

its traditional compass; rather it should comprehend the public

welfare activities which Government undertakes in discharge of its

constitutional obligations under Part IV, and such activities should

fall outside ‘industry’.

79. The cases were thus directed to be placed before the Chief Justice

of India for the constitution of a suitable larger bench. Thereupon,

on 02.01.2017, a Seven-Judge Bench led by the then Chief Justice

of India directed that a Nine-Judge Bench would hear the matter.

80. The matter was thereafter listed on 12.10.2023 for final hearing. In

that regard, this Court issued directions for the preparation of a

common compilation of pleadings, written submissions, documents

and precedents, to be filed on or before 20.11.2023. However, no

further progress ensued in the matter thereafter.

81. In the interregnum, the IR Code, 2020, was brought into force on

21.11.2025, and on 02.02.2026, the ID Act was formally repealed.

82. Subsequently, this Court, by order dated 16.02.2026, with a view

to bringing quietus to the instant controversy, framed the following

questions for consideration:

i. Whether the Triple Test, as laid down in Bangalore Water

Supply (supra), 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).

83. The matter was thereupon heard continuously on 17.03.2026,

18.03.2026 and 19.03.2026, and consequently reserved for

judgment.

C. THE PREFATORY QUESTION OF MAINTAINABILITY

84. The issue concerning the correctness of the reference itself was

neither considered germane nor framed as a question for

determination, as is evident from paragraph 82 above.

85. However, during the course of the hearing, learned senior

counsel(s) and counsel(s) appearing for the Respondent-workmen

raised a preliminary objection to the maintainability of the present

reference to a Nine-Judge Bench. It was submitted that the appeals

instituted by the State, its instrumentalities, and other employers

were liable to be rejected at the threshold on the ground of

maintainability. Consequently, according to the Respondents, this

Court was not required to venture into the merits of the controversy

or answer the questions formulated by the order dated 16.02.2026.

86. The Respondents further contended that, having held the field for

nearly five decades, the decision in Bangalore Water Supply

(supra) has attained a degree of jurisprudential stability that

squarely attracts the principle of stare decisis. It was submitted

that there exists no compelling necessity to reopen or reconsider

the interpretation adopted therein, and that the mere existence of

divergent judicial opinions or subsequent expressions of doubt

does not, by itself, constitute sufficient justification for a

comprehensive reappraisal of the correctness of the decision.

87. The Appellants, in response, supported the reference made to a

Nine Judge Bench vide judgments dated 05.05.2005 and

02.01.2017, contending that it was done as per procedure,

especially given that the Chief Justice of India had appropriately

constituted larger benches to deal with the issues raised.

88. Having regard to these rival asseverations, we deem it appropriate

to address this aspect, notwithstanding that no issue was framed

to this effect on 16.02.2026 nor intended to be considered as a

distinct issue. In view of the fact that several of the learned

counsels have engaged with it and have relied upon it as a basis to

decline the reference, it becomes necessary for us to examine the

matter and record our reasons as well.

89. We have thus given our thoughtful consideration to the preliminary

objection regarding the maintainability of the reference. We are,

however, unable to accept the same and are inclined to reject it at

the outset, inter alia, on two principal grounds, namely: (i) the

procedure adopted and the correctness of the reference; and (ii) the

broader considerations of institutional propriety that must

rationally govern the adjudication of such matters.

C.1. Correctness of the manner in which Reference was made

90. Before proceeding to examine the correctness of the instant

reference, it is necessary to advert to the general principles that

govern the manner in which a Bench of lesser strength may refer

questions for consideration by a larger Bench. The contours of this

procedural mechanism are neither uncertain nor obscure. There

exists a consistent line of authority that illuminates the governing

norms and provides a principled framework within which such

references are to be made and adjudicated.

C.1.1. The framework governing Larger Bench References

91. One need not set out on an odyssey to appreciate the governing

principle. It would suffice to advert to the seminal Constitution

Bench decision in Central Board of Dawoodi Bohra Community

v. State of Maharashtra,23 wherein the Court authoritatively and

conclusively settled the legal position governing references to a

larger Bench in the following explicit terms:

“12. (1) The law laid down by this Court in a decision delivered by a Bench of larger strength is binding on any subsequent Bench of lesser or co-equal strength.

23 (2005) 2 SCC 673.

(2) A Bench of lesser quorum cannot disagree or dissent from the view of the law taken by a Bench of larger quorum. In case of doubt all that the Bench of lesser quorum can do is to invite the attention of the Chief Justice and request for the matter being placed for hearing before a Bench of larger quorum than the Bench whose decision has come up for consideration. It will be open only for a Bench of co-equal strength to express an opinion doubting the correctness of the view taken by the earlier Bench of co-equal strength, whereupon the matter may be placed for hearing before a Bench consisting of a quorum larger than the one which pronounced the decision laying down the law the correctness of which is doubted. (3) The above rules are subject to two exceptions: (i) The abovesaid rules do not bind the discretion of the Chief Justice in whom vests the power of framing the roster and who can direct any particular matter to be placed for hearing before any particular Bench of any strength; and (ii) In spite of the rules laid down hereinabove, if the matter has already come up for hearing before a Bench of larger quorum and that Bench itself feels that the view of the law taken by a Bench of lesser quorum, which view is in doubt, needs correction or reconsideration then by way of exception (and not as a rule) and for reasons given by it, it may proceed to hear the case and examine the correctness of the previous decision in question dispensing with the need of a specific reference or the order of the Chief Justice constituting the Bench and such listing.” [Emphasis supplied]

92. What has been so cogently articulated in Dawoodi Bohra (supra),

and which continues to hold the field on the manner in which

references to a larger Bench are to be made, is sufficiently clear and

admits of no further elaboration. There is no gainsaying that

Dawoodi Bohra (supra) was occasioned by a series of instances

that struck at the very foundation of judicial propriety and

institutional discipline. The Five-Judge Bench therein sought to

clarify that any challenge to the decision rendered in Sardar

Syedna Taher Saifuddin Saheb vs The State of Bombay,24

which pertained to a case on excommunication, would have to be

heard by a Five-Judge or larger bench.

93. It was in that backdrop that the Constitution Bench therein

considered it necessary to formulate comprehensive principles

governing references to larger Benches, which in turn were firmly

anchored in the doctrines of precedent, judicial decorum, and

institutional discipline. In essence, the judgment reaffirmed that a

Bench of lesser strength cannot disregard or depart from the law

declared by a Bench of greater strength. If a smaller Bench

entertains doubts as to the correctness of a larger Bench decision,

the proper judicial course is not to overlook or sidestep the binding

precedent, but to refer the matter to the Chief Justice for

constitution of an appropriate larger Bench to authoritatively

consider the issue.

24 1962 AIR 853.

94. Indeed, one of us (Surya Kant, J. (as he then was)) relied upon

Dawoodi Bohra (supra) in his dissenting opinion in Aligarh

Muslim University v. Naresh Agarwal25 to reject the

maintainability of the reference therein. To elucidate, in Aligarh

Muslim University (supra), the issue concerned a Two-Judge

Bench, having expressed reservations regarding the correctness of

an earlier decision rendered by a Three-Judge Bench, directly

referred the matter for reconsideration by a Seven-Judge Bench.

This course of action was viewed, with the utmost respect, as

constituting a clear departure from the settled discipline governing

judicial precedents and the procedure for references.

95. In the dissenting opinion in Aligarh Muslim University (supra), it

was held that such a reference by a Two-Judge Bench directly to a

Seven-Judge Bench was not maintainable. It was observed that a

Bench of lesser strength could not, of its own accord, bypass the

established institutional procedure for constituting larger Benches.

96. There can thus be no doubt with respect to the robust foundations

upon which the principles illustrated in Dawoodi Bohra (supra)

are built.

25 (2025) 6 SCC 1.

C.1.2. Testing the Reference on the anvil of Dawoodi Bohra

(supra)

97. When one turns to the path traversed in the present matter before

it ultimately came to be placed before a Bench of Nine Judges, it

becomes evident that the reference has travelled through a long and

somewhat layered judicial course, engaging different Benches of

varying strength at multiple stages before culminating in the

present proceedings. The question that consequently arises is

whether this journey was undertaken in a manner consistent with

and known to established judicial discipline, or whether, at any

stage, procedural deviations or perhaps, to put it colloquially,

‘shortcuts’ were resorted to, that may be said to have contravened

the principles authoritatively enunciated in Dawoodi Bohra

(supra). In this regard, we propose to examine the course of referral

adopted at each stage of the proceedings and to assess whether the

procedure so employed by the respective Benches conforms to the

said underlying principles.

98. To begin with, the seeming tranquillity and clarity ushered in by

Bangalore Water Supply (supra) gradually began to exhibit

fissures owing to the divergence that emerged between the

decisions rendered by a Three-Judge Bench in Chief Conservator

of Forests (supra) and a Two-Judge Bench in Pratamsinh

Narsinh Parmar (supra), in the context of whether the Forest

Department of the State could be construed as an ‘industry’. While

the former held that the Social Forestry Department would fall

within the ambit of the definition notwithstanding its welfare-

oriented functions, the latter adopted a contrary position.

99. In view of this apparent discordance, a Bench of Three Judges while

dealing with a similar question of law in State of U.P. v. Jai Bir

Singh (I),26 considered it appropriate to observe that the issue as

to whether a governmental welfare scheme, such as the Social

Forestry Department, could be regarded as an ‘industry’ was a

question of considerable public importance warranting

consideration by a larger Bench. The matter was accordingly, vide

order dated 31.01.2002, directed to be placed before the then Chief

Justice of India for appropriate orders.

100. If one were then to examine the procedure adopted by the Three-

Judge Bench in Jai Bir Singh (I) (supra), it becomes apparent, at

the very threshold, that the Bench merely took cognisance of the

conflicting views expressed by Benches of Two and Three Judges,

as referred to in paragraph 98. In light of the fact that a

substantially similar issue had arisen for consideration before it,

coupled with the evident jurisprudential discordance, the Bench,

26 SLP (C) No. 10411/2001, Order dated 31.01.2002.

being of co-equal strength, was fully justified in expressing doubt

as to the correctness of the view taken by the Bench in Chief

Conservator of Forests (supra).

101. We may hasten to add that at that juncture, the correctness of

Bangalore Water Supply (supra), partially or in entirety, was not

the subject matter of consideration in Jai Bir Singh (I).

102. In all fairness, it was argued on behalf of the workmen that the

Three-Judge Bench in Jai Bir Singh (I) (supra) should have

adhered to the binding precedent established in Bangalore Water

Supply (supra), to determine that the Social Forestry Department

would fall within the scope of Section 2(j) of the ID Act. They

contended that, given the larger bench size in Bangalore Water

Supply (supra) compared to Jai Bir Singh (I) (supra), the former

constituted a binding precedent for the latter. However, we find no

merit in this submission.

103. We say so for the reason that Bangalore Water Supply (supra)

has not issued any comprehensive declaration that the Social

Forestry Department of any State or Union shall automatically be

regarded as an ‘industry’. Difficulties subsequently arose in

applying the test laid down in Bangalore Water Supply (supra),

particularly where a Three-Judge Bench interpreted the law in

support of its conclusion that the Social Forestry Department

qualifies as an ‘industry’, whereas a Two-Judge Bench arrived at a

different conclusion. Faced with this dilemma of diverging views,

particularly in re: the treatment of the Social Forestry Department,

the Three-Judge Bench in Jai Bir Singh (I) (supra) appropriately

referred the matter to a Five-Judge Bench.

104. It was only when Jai Bir Singh (I) (supra) came to be placed

before a bench of Five Judges that the said Bench observed that

the central issue concerned whether a governmental welfare

scheme fell within the scope. It may thus be observed that the

singular issue regarding whether the Social Forestry Department

was an industry or not was expanded by the Five-Judge Bench,

thereby broadening the scope of the issue, namely, as to whether

all such governmental welfare schemes would be classified as

industry or not within the meaning of Section 2(j) of the ID Act.

105. Additionally, Jai Bir Singh (I) (supra) did not itself purport to

depart from or overrule the ratio in Bangalore Water Supply

(supra), but merely directed that the matter be placed before the

Chief Justice of India for appropriate orders. Consequently,

notwithstanding that the decision in Dawoodi Bohra (supra) came

to be rendered subsequent to the order dated 31.01.2002 passed

in Jai Bir Singh (I) (supra), the procedure adopted cannot be said

to have departed from the generally prevailing norms of judicial

discipline and propriety.

106. This is what prompted the Five-Judge Bench in State of Uttar

Pradesh v. Jai Bir Singh (II)27 to observe that the judgment in

Bangalore Water Supply (supra) did not exhibit complete

unanimity in its reasoning. It further observed that certain portions

of the majority opinion appeared to suggest that the formulation

adopted therein was intended to operate as an interim judicial

arrangement until such time as Parliament enacted an appropriate

legislative amendment clarifying the scope and meaning of the term

‘industry’. Proceeding on that basis, the Bench expressed

reservations as to whether the majority opinion could, in all

respects, be treated as laying down a fully conclusive and binding

precedent.

107. Further, the Five-Judge Bench supplemented this line of

reasoning by expressing concern over the fact that the separate

opinions in Bangalore Water Supply (supra) had been delivered

by different learned Judges at different points in time, with the

majority opinion having preceded the dissenting opinions and,

27 (2005) 5 SCC 1.

therefore, having been rendered without the benefit of considering

the reasoning subsequently advanced therein.

108. In addition to these reservations, the Five-Judge Bench in Jai Bir

Singh (II) also articulated broader concerns regarding the

substantive approach adopted in Bangalore Water Supply

(supra). It observed that the decision appeared to proceed from an

unduly worker-centric perspective, without according sufficient

consideration to the competing public interest in safeguarding the

viability of industry and the legitimate concerns of employers. The

Bench further opined that, within the framework of a constitutional

democracy, the conception of ‘sovereign functions’ ought not to be

narrowly confined, particularly when the State undertakes a wide

range of welfare-oriented and value-generating activities in

furtherance of its constitutional obligations under Parts III and IV

of the Constitution.

109. Bearing these considerations in mind, the Five-Judge Bench

observed that there existed “compelling reasons more than

one….for making a reference on the interpretation of the

definition of ‘industry’ in Section 2(j) of the Act, to a larger

bench and for reconsideration by it, if necessary, of the

decision rendered in the case of Bangalore Water Supply

(supra).” Accordingly, it directed that the matters be placed before

the Chief Justice of India for the constitution of an appropriate

larger Bench to reconsider the judgment in Bangalore Water

Supply (supra).

110. Once again, irrespective of the ultimate correctness or persuasive

force of the reasons assigned by the Five-Judge Bench, the

significant point is that it unquestionably possessed the authority

to direct that the matter be placed before the Chief Justice of India

for the constitution of an appropriate larger Bench to reconsider

the decision in Bangalore Water Supply (supra). Indeed, not only

did the Five-Judge Bench faithfully follow it, but it has also made

express reference to the principles crystallised in Dawoodi Bohra

(supra).

111. There is, therefore, no occasion for us to doubt the procedural

propriety adopted by the Five-Judge Bench, particularly having

regard to the following circumstances: First, the Bench had

originally been constituted to resolve the divergence that had arisen

between Chief Conservator of Forests (supra) and Pratamsingh

Narsinh Parmar (supra) on the question concerning the status of

governmental welfare schemes under Section 2(j). Second, in the

course of undertaking that exercise, it traced the source of the

divergence to the interpretation of ‘industry’ adopted in Bangalore

Water Supply (supra) and furnished reasons for entertaining

doubts as to its correctness. Third, recognising that it was a Bench

of lesser numerical strength than the Seven Judge Bench in

Bangalore Water Supply (supra), it adhered to the discipline

mandated by Dawoodi Bohra (supra) and merely directed that the

matter be placed before the Chief Justice of India for the

constitution of a larger Bench.

112. Thereupon, pursuant to the reference made by the Five-Judge

Bench in Jai Bir Singh (II), the then Chief Justice of India

constituted a Bench of Seven Judges to consider the matter. Upon

an anxious consideration of the submissions advanced by the

parties, the Seven-Judge Bench vide its order dated 02.01.2017

observed that, having regard to the “serious and wide ranging

implications of the issues that fall for determination as also

the fact that serious doubts have been expressed in the

reference order about the correctness of the view taken in

Bangalore Water Supply’s case (supra), we are of the opinion

that these appeals need to be placed before a Bench

comprising Nine Judges to be constituted by the Chief

Justice.”

113. Accordingly, the papers were placed before the then Chief Justice

of India for the constitution of an appropriate Bench of Nine Judges

to answer the questions raised in the reference order rendered by

the Five-Judge Bench in Jai Bir Singh (II) (supra).

114. In this specific scenario, the Bench of Seven Judges observed that,

in view of the serious reservations expressed regarding the

correctness of Bangalore Water Supply (supra), the matter

warranted reconsideration by a larger Bench. The Bench

consequently directed that the papers be placed before the Chief

Justice of India for the constitution of a larger Bench. It is pertinent

to note that the Seven-Judge Bench, as well as the subsequently

constituted Nine-Judge Bench, were both presided over by the then

Chief Justice of India.

115. It needs no emphasis that under Order VI Rule 2 of the Supreme

Court Rules, 2013, the then Chief Justice of India was vested with

absolute power to constitute a larger bench for the hearing of the

matter upon reference. Even in the absence of a formal reference to

the larger bench by a smaller bench, the matter could thus be

placed before a bench of Five to Seven Judges or Seven to Nine

Judges by the Chief Justice of India in exercise of his plenary

power.

116. Viewed thus, the order of reference squarely satisfies the

principles governing judicial discipline and institutional propriety

as elucidated in Dawoodi Bohra (supra). There can, therefore, be

no legitimate doubt that the reference in hand has been made fully

in accordance with law and incorruptible adherence to the settled

norms regulating references to larger Benches.

C.1.3. The Res Judicata conundrum?

117. We may now deal with the objection raised by some of the learned

counsel(s) that the initial reference from Three Judge to Five Judge

Bench was barred by the principle of Res Judicata. The submission

is premised on the fact that earlier a Two-Judge Bench in Coir

Board, Ernakulam (I) (supra), sought reconsideration of

Bangalore Water Supply (supra) by a larger Bench. However,

such an opinion was turned down by a Bench of Three Judges,

according to whom the issue already stood concluded by a Seven-

Judge Bench in Bangalore Water Supply (supra). This opinion by

the Three-Judge Bench, according to the representatives of

workmen, constitutes res judicata.

118. Res judicata refers to the doctrine that issues and claims decided

between competing parties ought not to be re-adjudicated. While

this postulate finds legislative recognition in the context of civil

suits through Section 11 of the Code of Civil Procedure, 1908, this

Court has consistently recognised res judicata as a general

principle of jurisprudence, applicable to all kinds of disputes

adjudicated by different fora in India.28 It is also a settled position

that the principle would apply only when the ‘matter in issue’ in

the subject case is necessarily and substantially decided on a prior

occasion by a Court of competent jurisdiction. Here, the ‘matter in

issue’ comprises the rights and claims of the parties to the dispute,

originating from the specific cause(s) of action involved. In other

words, to successfully raise a plea of res judicata, the litigant must

demonstrate that the parties involved are the same, the rights and

entitlements claimed are the same and they arise from the same

cause of action, and that the previous Adjudicating Authority had

jurisdictional competence to decide the same.

119. These requirements inevitably lead to the conclusion that res

judicata would only apply to decisions made in personam, i.e., to

the rights and claims inter se the parties involved in the litigation.

The claim of right inherently depends upon the identification of

material facts and the application of relevant law thereto. This

would include questions of fact, while also involving determination

of questions of law. However, the determination made on the

question of law does not, in itself, constitute the decision on the

‘matter in issue’, which necessarily flows from the factual context

28 Raj Lakshmi Dasi v. Banamali Sen, (1952) 2 SCC 219.

of a cause of action and the specific claims in a case. 29 Rather, such

determination of law would amount only to a precedent in law. 30

120. In the present scenario and as already elucidated in the segment

titled “The Calls for Reconsideration of the Decision in Bangalore

Water Supply (supra),” the Two-Judge Bench in Coir Board,

Ernakulam (I) (supra) sought reconsideration of the interpretation

of ‘industry’ propounded in Bangalore Water Supply (supra).

While adjudicating upon the question whether the Coir Board

would fall within the ambit of Section 2(j), the Bench expressly

recorded its disagreement with the broad and expansive

construction accorded to the definition in Bangalore Water

Supply (supra).

121. The Bench went so far as to observe that the experience of the two

decades following Bangalore Water Supply (supra) had, in its

perception, produced consequences more detrimental than

beneficial, not only for institutions and organisations but also for

employees themselves, owing to the contraction of employment

opportunities. This conclusion was founded upon the view that the

elimination of the profit motive as a relevant consideration had

29 State (NCT of Delhi) v. BSK Realtors LLP, (2024) 7 SCC 370 (including 3 of us – Surya

Kant, J. (as he then was), Dipankar Datta, J. and Ujjal Bhuyan, J.). 30 Mathura Prasad Bajoo Jaiswal v. Dossibai N.B. Jeejeebhoy, (1970) 1 SCC 613; Malook

Singh v. State of Punjab, (2022) 17 SCC 765 (including one of us – B.V. Nagarathna, J.); State of Rajasthan v. Nemi Chand Mahela, (2019) 14 SCC 179.

rendered numerous philanthropic and charitable bodies incapable

of complying with the obligations arising under industrial law.

According to the Bench, this had led, in several instances, to the

discontinuation of welfare-oriented activities, thereby depriving

communities of their benefits and employees of their means of

livelihood.

122. In regard to categorising the Coir Board itself, the Two-Judge

Bench, having considered that the purpose of the Coir Board was

to improve the marketing of coir products and promote its exports

by maintaining show rooms and sales depots, held that it was not

an industry on a predominant purpose test, although it would have

been so characterised on the expansive test laid down in

Bangalore Water Supply (supra). Accordingly, a reference was

made to a larger bench by directing that the matter be placed before

the Chief Justice of India for consideration.

123. However, a subsequent Three-Judge Bench, presided over by the

then Chief Justice of India in Coir Board, Ernakulam (II) (supra),

declined the reference vide its order dated 10.11.1998, stating that

Bangalore Water Supply (supra) does not require reconsideration

on a reference made by a Two-Judge Bench, which is itself bound

by the larger Bench.

124. The course adopted in Coir Board, Ernakulam (I) and (II) (supra)

did not pass unnoticed and was expressly adverted to by the Five-

Judge Bench in Jai Bir Singh (II). However, there existed nothing

in law that precluded the Constitution Bench in Jai Bir Singh (II),

which had itself been independently constituted to resolve a

distinct divergence arising from the interpretation of ‘industry’ in

Bangalore Water Supply (supra), from examining the matter on

its own footing. The proceedings in Jai Bir Singh (II) (supra)

cannot, by any stretch, be regarded as a mere continuation of what

had earlier commenced in Coir Board.

125. Although both lines of authority ultimately converged upon

concerns relating to the consequences and practical implications of

the expansive definition adopted in Bangalore Water Supply

(supra), the foundations upon which such concerns were raised

remained materially distinct.

126. Consequently, the refusal by the Three-Judge Bench in Coir

Board (II) (supra) to reconsider Bangalore Water Supply (supra)

cannot be construed as exerting any binding or preclusive effect

upon the Five-Judge Bench in Jai Bir Singh (II), which had been

constituted in the context of an altogether different jurisprudential

conflict.

127. There can be no occasion to invoke the doctrine of res judicata in

the present context. To hold otherwise would run counter to the

well-settled principles governing judicial precedents, references,

and the exercise of constitutional adjudicatory power, as

consistently recognised in a catena of decisions of this Court. The

doctrine, conceived to lend finality to inter partes adjudication,

cannot be transposed indiscriminately into a setting involving the

determination of pure questions of law by Benches of varying

strength.

128. Indeed, any such approach would also militate against the

principle of ‘fundamental determination’, which has been aptly

elucidated by this Court in Yadaiah and another v. State of

Telangana and others,31 wherein this principle was explained in

the following terms:

45. The effective test to distinguish between a fundamental or collateral determination is hinged on the inquiry of whether the concerned determination was so vital to the decision that without which the decision itself cannot stand independently. Any determination, despite being deliberate or formal, cannot give rise to applicat ion of the doctrine of res judicata if they are not fundamental in nature. [Emphasis supplied]

31 2023 INSC 664.

C.1.4. Stare Decisis and the Doctrine of Overruling

129. A passing reference, as already iterated above, was also made to

the applicability of the doctrine of stare decisis, to buttress the

contention that the instant reference is not maintainable. To briefly

address this assertion, the doctrine of stare decisis is a

jurisprudential tenet that underpins consistency in judicial

decisions. While many foreign jurisdictions may apply it as an

unwritten norm, the Constitution of India embodies it within Article

141, postulating that the law laid down by this Court must be

binding in nature. It, thus, follows that when this Court passes

judgments, there is some finality in the declaration of law made

therein.

130. Be that as it may, this Court has unequivocally held that the

doctrine of stare decisis does not imply that a judicial decision, once

rendered by this Court, is binding for eternity and cannot be

subjected to reconsideration by this Court.32 No historic precedent,

however widely used, can be said to have supplied an unalterable

decision on the interpretation of law.

131. A judicial pronouncement, although made with the binding force

of this Court, may be required to be recalled, overturned, or

32Sajjan Singh v. State of Rajasthan, 1964 SCC OnLine SC 25; S. Nagaraj v. State of Karnataka, 1993 Supp (4) SCC 595.

modified due to extraordinary, compelling circumstances. In some

cases, such modification has been occasioned due to temporal

changes in the social structure and realities of this Country,

whereby existing law is framed into the newer contexts. 33 In other

cases, erroneous interpretation of statute has been rectified by

larger benches of this Court, invoking the inherent power of this

Court to review its own decisions. 34 However, the reiteration of this

exception to the traditions of precedent is consistent with the

doctrine of stare decisis. As long as the reconsideration is reasoned

and within the norms of judicial procedure, the doctrine of stare

decisis and the precedential value of the previous decision does not

prevent this Court from assessing the correctness of its prior

decisions.

132. In this light and on an application of this principle to the present

context, there can be no question of any impermissible overlap, nor

can it be contended that the issue concerning the reconsideration

of Bangalore Water Supply (supra) was conclusively addressed

by Coir Board (II) (supra) so as to operate as a bar to the reference

made in Jai Bir Singh (II) (supra).

33 Supreme Court Advocates-on-Record Assn. v. Union of India, (1993) 4 SCC 441. 34 Bengal Immunity Co. Ltd. v. State of Bihar, (1955) 1 SCC 763.

133. The two proceedings represented distinct and independent lines

of inquiry, each arising from separate jurisprudential concerns,

albeit converging upon the common legal question concerning the

scope of the term ‘industry’ under Section 2(j) of the ID Act. The

mere existence of such convergence cannot justify the conclusion

that the outcome of one proceeding necessarily foreclosed or

exhausted the jurisdictional basis for the other. To hold otherwise

would be to conflate distinct references founded upon different

causes of judicial doubt and directed towards the resolution of

different controversies.

134. In any case, the Five-Judge Bench in Jai Bir Singh (II), being of

superior numerical strength, was not bound by any finding or

opinion expressed by the Three-Judge Bench in Coir Board (II).

135. Accordingly, the decision in Coir Board (II) (supra) cannot be

construed as constituting a definitive impediment to the reference

subsequently made in Jai Bir Singh (II) (supra), nor as depriving

the latter Bench of the authority to entertain and examine the

questions that arose before it. Therefore, we find no infirmity in the

manner in which the present matter came to be referred to a Nine-

Judge Bench.

C.2. Treading the razor’s edge between technicality and quietus

136. While this conclusion on maintainability necessarily places us at

variance with the views that the reference is fundamentally

misconceived and not in conformity with the procedure

contemplated by law, we are unable, for the reasons already

recorded, to subscribe to that view.

137. Having held that the present reference is neither barred by res

judicata or stare decisis nor does it lack maintainability, we also

find that there exists a broader institutional consideration that

merits articulation. Not every question that reaches a Bench of

such exceptional strength is best left unanswered, particularly

where it concerns an issue that has occupied judicial attention for

decades and has generated substantial uncertainty.

138. In that light, it would be somewhat incongruous if a reference that

has traversed multiple Benches over a considerable period of time,

and which now stands before a Bench of Nine Judges, were to be

terminated solely on the basis of procedural objections of a

technical character. Such considerations undoubtedly have their

place and must be respected; however, they ought not to become a

convenient fig leaf cover behind which the Court declines to engage

with a question whose resolution has long awaited authoritative

determination. Where the occasion presents itself to settle an issue

of recurring importance and bring certainty to the law, institutional

prudence may sometimes favour a decision on the merits rather

than a retreat into procedural abstention.

139. It is therefore our solemn duty, especially keeping the

extraordinary passage of time in view and the considerable

expenditure of judicial effort across successive Benches, not to

retract from our institutional responsibility that accompanies the

exercise of our constitutional jurisdiction.

140. We now proceed to examine the substantive questions that arise

for consideration and to set out, in a structured and systematic

manner, our views and conclusions thereon.

D. CONTENTIONS OF THE PARTIES

141. Prior to entering into the substantive merits of the controversy, it

would be apposite to first delineate the principal submissions

advanced by the parties.

D.1. Contentions on behalf of the Appellants

142. We have heard Mr. R. Venkataramani, learned Advocate General

for India, Mr. K.M. Nataraj, learned Additional Solicitor General of

India, Mr. Shadan Farasat and Mr. Sridhar Potaraju, learned

Additional Advocates General, and Mr. Shekhar Naphade and Mr.

Sanjay Hegde, learned Senior Counsel appeared on behalf of the Union of India, and the various States and other entities. Mr.

Jaideep Gupta, learned Senior Counsel, and Mr. Saket Sikri, Mr.

Anand Verma, and Mr. Krishna Kumar, learned Counsel,

represented the other Appellants and Intervenors supporting the

Appellants. Mr. Alok Sangwan, learned Senior Additional Advocate

General appeared for the State of Haryana. The principal

submissions canvassed by them before this Court are as follows:

a. There is a pressing need to reinterpret Section 2(j), since it

must draw its meaning from modern Constitutional realities

and India’s position as a welfare state. In this sense, the ID Act

must be interpreted by balancing the interests of the employee

and the employer, without permitting either side to dominate

the other;

b. This Court in Bangalore Water Supply (supra) has kept in

sight the objectives of worker protection to interpret Section

2(j). It would not be proper to base the interpretation on such

considerations de hors the textual contents of the provision.

Furthermore, Bangalore Water Supply (supra) went beyond

filling the legislative gaps, amounting to judicial rewriting of

the provisions. Hence, the interpretation in Bangalore Water

Supply (supra) warrants reconsideration;

c. The key factor that ought to govern what is included in

‘industry’ is whether the activity, at its core, involves

commercial objectives, in line with trade and business.

Reliance in this regard has been placed on Safdarjung

Hospital (supra) to submit that the entity must have a

commercial or an analogous objective, notwithstanding the

existence of a profit motive. Applying the principle of noscitur

a sociis, it was urged that the intention of the Legislature was

not to include all activities, but only those collectively falling

within the import of “business, trade, undertaking,

manufacture or calling of employers”;

d. The scope of the Triple Test established in Krishna Iyer, J.’s

erudite opinion in Bangalore Water Supply (supra) is very

expansive, having the potential to include various essentially

non-industrial activities like charity, public research, and

government welfare activities. The breadth of the Triple Test is

required to be restricted, keeping in mind the over-inclusion.

Alternatively, exceptions must be introduced to address the

issues raised in the application of Bangalore Water Supply

(supra) in the facts of particular cases;

e. The understanding of ‘sovereign functions’ as made out in

Bangalore Water Supply (supra) is based on foreign

jurisprudence and does not properly reflect the duty-bound

role played by the State under the Constitution of India.

Activities like forestry, irrigation, education, etc., which are

undertaken in light of Part IV of the Constitution or as a

statutory duty, do not involve any commercial or commerce-

like objectives and ought not to be included within the

definition of ‘industry’. This is especially so because of the

growing welfare legislation and regulatory activities, which are

not intended to be included within the scope of ‘industry’;

f. In the context of Universities, the functions performed by such

institutions are to confer degrees and diplomas. It is,

essentially, a function emanating from the State’s role,

involving a regulatory scheme through the University Grants

Commission. The undertaking of teaching is also an

intellectual and enlightening exercise, not comparable to

material services. Thus, the engagement of a University in

enabling education and conferring degrees inherently indicates

the functions performed by a State, not a commercial activity

commensurate to be included within ‘industry’; and

g. With reference to temples and private charitable institutions,

the law laid down in Bangalore Water Supply (supra) would

also include temples and charitable organisations within

‘industry’ only because of ‘systematic activity involving an

employer and employee cooperation’, without taking into

account the inherent dissonance between the spiritual and

philanthropic nature of the establishment and the commercial

underpinnings of the ID Act. The test gives no impetus to the

predominant nature of the activities undertaken and only

pertains to the relationship between the workmen and the

employer.

D.2. Contentions on behalf of the Respondents

143. Per contra, Ms. Indira Jaising, Mr. Bharat Sangal, Mr. C.U. Singh,

Mr. Vijay Hansaria, Mr. Gopal Sankarnarayanan, Mr. PV

Surendranath, Ms. Jayana Kothari, Mr. K.S. Chauhan, learned

Senior Counsel, and Mr. Ashok Kumar, Mr. Shivam Singh, Ms.

Sangeeta Bharti, and Ms. Nidhi, learned Counsel, represented the

Respondent-workmen and the Intervenors supporting the

Respondents. In a nutshell, they opposed the reference and argued

that the majority opinion in Bangalore Water Supply (supra) is

good law:

a. The decision in Bangalore Water Supply (supra) was

rendered by a bench of seven Judges. It is irrelevant whether

the bench was unanimous or split in its views. The view of the

majority shall carry the weight of the entire bench and has to

be treated as a decision of Seven Judges.

b. It must be kept in mind that the Five Judge bench, vide Jai

Bir Singh (II) (supra), has only questioned the formulation of

the interpretative test for ‘industry’, not the principles

underlying Bangalore Water Supply (supra).

c. The ID Act is inherently a beneficial legislation. This Court in

Bangalore Water Supply (supra) rightly applied the usual

principles of statutory interpretation which would be used for

a beneficial legislation.

d. By adopting an expansive and inclusive approach to

interpreting the expression of ‘industry’, the Seven-Judge

Bench has ensured that benefits available to workmen under

the ID Act, such as job security and remedy of reinstatement,

are available to all workmen. If the definition of ‘industry’ is

narrowed or the exceptions to it are expanded, many workmen

therein would be deprived of a welfare legislation, the

protection of which the Civil Court would not be able to extend

to them.

e. The core determinative factor to identify an ‘industry’ is the

character of the activity. The nature of the entity carrying out

such activity or the motive behind the same is irrelevant. This

is well discernible from Chandrachud, J.’s (as he then was)

separate concurring opinion in Bangalore Water Supply

(supra).

f. The words in Section 2(j) cannot be understood through their

‘common sense’ meaning. It is a settled principle of statutory

interpretation that words must be treated as deliberate and

technical so as to derive character from the preceding and

succeeding expressions. The definition of ‘industry’ will thus

draw its colour from the other provisions of the ID Act.

g. As long as the functions carried out by the workmen are

similar and are performed in a similarly structured

environment, there is no rhyme or reason to discriminate

among workmen on the basis that the enterprise is charitable,

governmental, or religious rather than commercial. Similarly,

if the decision in Safdarjung Hospital (supra) is to be

accepted, the statutory protection envisaged under the ID Act

for not only the workers but also the employers and the

common public, would only be available in private hospitals,

not government or charitable healthcare institutions. While

welfare activities, especially those which draw inspiration from

Part IV of our Constitution, are aimed at protecting and

uplifting weaker sections of society, they cannot be allowed to

lead to the deprivation of employment rights of another section

of society.

h. There cannot be an absolute bar on governmental activities

from being included within ‘industry’. The ID Act expressly

recognises ‘public utility services’ under Section 2(n).

i. Since the policy of liberalisation, privatisation, and

globalisation has been effected in 1991, many spheres which

were earlier restricted to government entities have now been

opened to the private sector. In such circumstances, the

government cannot claim that these activities, irrespective of

whether performed by a private entity or the government, fall

beyond the realm of ‘industry’.

j. While certain activities performed by the government bear the

hallmarks of a sovereign function, such other activities which

do not pertain to the sovereign function must be severed from

such function and still ensure the benefit of the ID Act to the

workmen. In the context of the Sovereign Mint, for example, a

workman not concerned with minting of coins need not be

excluded from the protections under the ID Act and the test of

dominant nature ought to be applied in such cases.

D.3. Contentions on behalf of the Amicus Curiae

144. Mr. Jamshed P. Cama and Mr. Parthasarathi Sengupta, Senior

Advocates, were requested to assist this Court as Amici Curiae.

They graciously agreed and enlightened us exponentially, although

their positions on the issues at hand differed substantially.

145. Mr. Cama’s submissions focussed on the textual framework of

Section 2(j) and submitted that the identification of an ‘industry’

can only be from the nature and motive behind the activities

undertaken. He urged that:

a. The Triple Test, as laid down in Bangalore Water Supply

(supra), is expansive because of its focus on the employer-

employee relationship, without any attention towards the

nature of activity being undertaken. It does not take into

account the actual text of the provision and is guided by the

purported intention of the ID Act.

b. The import of the word ‘undertaking’ has to be derived from

the context of “business, trade, undertaking, manufacture or

calling of employers.” Anything can be an undertaking, but

only the undertakings having some commercial underpinnings

would amount to ‘industry’.

c. An industry would, as such, necessarily involve some

semblance of commercial activity. Mere charitable distribution

of goods and services or operation of a club for its members

would not amount to an industry. The majority opinion in

Bangalore Water Supply (supra), would permit such

undertakings to be included within ‘industry’, solely based on

the employment of workmen to facilitate a non-industrial

activity. The existence of an employee-employer relationship

has no bearing on whether the activity amounts to an industry

or not.

d. In this context, the interpretation of Section 2(j) must involve

an appraisal of the character and intention behind the activity

involved, especially in the context of fully altruistic charities

and government welfare activities. An intention of revenue

and/or profit must belie an industrial activity.

e. Once the nature of activity is considered, the character of the

employer becomes irrelevant. The government can also be

running an industry, but not all government undertakings will

have industrial features.

146. Mr. Sengupta, on the other hand, called attention towards the

perspective of the worker to make out a case that the motive behind

the activity should not be the determinative factor and vehemently

submitted that:

a. The ID Act as a whole consistently recognises that the

government can and does operate industries.

b. The coverage under the ID Act is not replaceable by granting

remedies before other fora. The Industrial Tribunals and

Labour Courts are sui generis Authorities and their powers in

respect of employers as well as workmen cannot be available

to any coordinate authority.

c. The intention of the ID Act being to promote industrial

harmony and workman upliftment, the interpretation of

Section 2(j) thereof must be guided by these principles.

d. The core identification factor for an industry is the economic

relationship between the employee and the employer. So long

as such relationship exists, there is no change in the labour

expended by the employee, irrespective of whether the

employer was motivated by generosity/philanthropy or by

commercial gain. There would, thus, be no reason for

distinguishing the coverage by the ID Act on the basis of

underlying intention behind the activity.

e. The decision in Bangalore Water Supply (supra) was

rendered by a Bench of Seven Judges. It is irrelevant whether

the bench was unanimous or split in its views. The view of the

majority shall carry the weight of the entire bench and has to

be treated as a decision of Seven Judges.

E. ISSUES FOR CONSIDERATION

147. This Court, by its order dated 16.02.2026, crystallised the

controversy by formulating four questions for consideration, with a

view to securing a final and authoritative resolution of the issues

arising in the present reference (see paragraph 82 where these

questions have been reproduced).

148. Upon a perusal of the questions so framed, it appears to us that

the principal analysis on the merits may proceed by addressing

Issue Nos. 1, 3, and 4 conjointly. These questions, though

differently worded, substantially converge upon the broader inquiry

concerning the meaning and scope of the term ‘industry’ under

Section 2(j) of the ID Act, and the nature of the activities and

entities that may legitimately fall within its ambit.

149. Issue No. 2, on the other hand, stands on a somewhat distinct

footing and may appropriately be dealt with separately at a later

stage. This is because both the Industrial Disputes (Amendment)

Act, 1982 and the IR Code, 2020, represent subsequent legislative

developments, the relevance and effect of which necessarily depend

upon the conclusions reached on the antecedent questions relating

to the interpretation of Section 2(j). Their consideration would,

therefore, be more appropriately undertaken after the foundational

questions arising under Issue Nos. 1, 3, and 4 have been

addressed.

F. AT THE HEART OF THE MATTER: WHAT CONSTITUTES AN ‘INDUSTRY’?

150. As we embark on an analysis of the merits, it would be apposite

to set out the statutory provision that lies at the nucleus of the

present controversy and has, over the decades, generated such

sustained judicial debate. Section 2(j) defines ‘industry’ to mean

‘any business, trade, undertaking, manufacture or calling or

employers and includes any calling, service, employment,

handicraft, or industrial occupation of avocation of

workmen’.

151. What becomes perceptibly obvious from the above definition is

that the ID Act does not leave the term ‘industry’ rigid or undefined.

On the contrary, it is an inclusive clause enshrined within Section

2(j) that furnishes an express catalogue of activities, each of which

constitutes an ‘industry’. The difficulty, therefore, has never lain in

the absence of a definition; rather it is in determining the true scope

and reach of the one that the Legislature intended to enact.

152. The controversy arises when one is confronted with the task of

discerning which activities or nature thereof fall within the embrace

of the definition and which stand beyond its limits. The language

employed in Section 2(j) is cast in terms of considerable breadth,

lending itself to competing interpretive possibilities. The central

inquiry, therefore, is not whether ‘industry’ has been defined, but

how that definition is to be understood and applied. Is it to receive

a broad and expansive construction, or a more confined and

restrictive one? Is the statutory scheme to be understood as

implicitly requiring identifiable categories of inclusion and

exclusion? Is the focus to be upon the organisation as an integrated

whole, or upon its constituent units viewed in isolation? These are

the questions that have persistently engaged judicial attention and

have shaped the evolution of the jurisprudence on Section 2(j).

153. All the questions subsumed within Issue Nos. 1, 3, and 4 are, in

essence, ancillary to the central task of ascertaining the true

meaning, scope, and import of the definition of ‘industry’ under

Section 2(j). They represent different facets of the same overarching

inquiry and ultimately converge upon the interpretive exercise that

lies at the heart of the present reference. This necessarily entails

an examination of the construction adopted in Bangalore Water

Supply (supra), the question whether social welfare and public-

oriented organisations fall within the ambit of the definition, and

the extent to which the ‘sovereign functions’ exception operates to

exclude certain entities or activities from its reach. Each of these

issues is not an end in itself, but rather a constituent element in

the broader endeavour of determining what the term ‘industry’ was

intended to encompass.

154. Our analysis shall, therefore, proceed along four broad and

interconnected lines of inquiry. First, we shall examine the true

meaning and import of the language employed in Section 2(j),

viewed in the context of the ID Act as an integrated statutory

scheme. Second, we shall undertake a close examination of the

ratio laid down in Bangalore Water Supply (supra), with

particular emphasis on the formulation and underlying rationale of

the Triple Test. Third, we shall consider the practical and

jurisprudential consequences that have flowed from the application

of the Triple Test over the years. Fourth, on the basis of the

foregoing analysis, we shall determine whether there ought to be a

change in the manner in which Section 2(j) is construed and

applied.

F.1. The meaning of ‘Industry’ as encapsulated in the ID Act

155. It may be seen from the definition of ‘industry’ in Section 2(j) that

the term means:

a. Any business, trade, undertaking, manufacture or calling of

employers;

b. And it includes any calling, service, employment, handicraft or

industrial occupation;

c. Or avocation of workmen.

156. The inclusion of the term ‘includes’ further characterises the

definition as exhaustive; therefore, an activity, regardless of its not

being explicitly listed within the definition, but it otherwise satisfies

the criteria of an industrial activity, shall also be considered as

industry.

157. Further, the provision appears to define a seemingly

straightforward concept. However, upon closer examination, it

becomes apparent that the definition is itself constructed through

a constellation of broad and inherently elastic expressions, many

of which are capable of admitting multiple shades of meaning and

consequently invite further interpretive inquiry.

158. Expressions such as “business,” “trade,” “undertaking,” “calling,”

“service,” “employment,” and “industrial occupation” are not terms

of narrow or technical import. Read literally, and in isolation, they

are capable of encompassing an extraordinarily wide spectrum of

human activity. Be that as it may, a proper understanding of the

definition necessarily requires a closer examination of the content

and connotation of these constituent expressions.

159. Indeed, the terms are not mere surplusage. Each appears to have

been deliberately chosen to capture a distinct facet of organised

human endeavour, and it is through their collective interplay,

rather than through any one expression in isolation, that the true

legislative conception of ‘industry’ emerges. An inquiry into their

meaning is, therefore, not an exercise in semantics alone, but an

indispensable step in understanding the expanse, limits, and

underlying purpose of Section 2(j). Accordingly, we have taken the

opportunity to individually delineate the meaning of each of these

terms as follows:

a. The expression ‘business’, though not defined in the ID Act, is

one of considerable breadth. Its expansive character is evident

from the definition contained in Section 2(13) of the Income-

tax Act, 1961, which defines it to mean “any trade, commerce

or manufacture, or any adventure or concern in the nature of

trade, commerce or manufacture.” This broad character is

further evidenced by the manner in which its meaning has

been expounded in the Oxford English Dictionary, wherein the

term business means: (i) a person’s regular occupation; (ii)

commercial activity; (iii) a commercial organization; (iv) work

to be done or matters to be attended to; and (v) a person’s

concern.

b. The term trade, similarly, is a fairly wide term with a capacious

connotation and has been defined in Black’s Law Dictionary as

“the act or business of exchanging commodities by barter; or the

business of buying and selling for money; traffic; barter.” Trade,

too, has been broadly interpreted to refer to any organised,

continuous activity of either buying, selling or exchanging

goods and services with a profit motive in mind and

encompasses a spectrum of commercial endeavours.

c. Next, the word ‘undertaking’ has been mentioned in multiple

Statutes including Section 2(35) of the Income Tax Act, 2025,

where it has been defined as “any part of an undertaking, or a

unit or division of an undertaking or a business activity taken

as a whole, but does not include individual assets or liabilities

or any combination thereof not constituting a business activity”.

It has further been clarified by this Court to mean “a going

concern with all its rights, liabilities and assets as distinct from

the various rights and assets which compose it… is an amalgam

of all ingredients of property and are not capable of being

dismembered. That would destroy the essence and innate

character of the undertaking. In reality, the undertaking is a

complete and complex weft and the various types of business

and assets are threads which cannot be taken apart from the

weft.”35

d. The expressions ‘manufacture’, ‘calling of employers’, and

‘calling’ are likewise couched in broad and open-textured

language. While ‘manufacture’ is generally understood to refer

to the process of producing, making, or transforming goods

into a commercially recognisable form, the remaining

expressions are far less precise and are capable of embracing

a diverse range of activities. The term ‘calling’ ordinarily

denotes an occupation, vocation, pursuit, or line of endeavour

to which a person devotes their labour, skill, or attention.

Similarly, the expression ‘calling of employers’ is not confined

to any particular category of enterprise and may extend to a

wide spectrum of undertakings, professions, occupations, and

organised activities pursued by employers.

35 Rustom Cavasjee Cooper v. Union of India, AIR 1970 SC 564.

e. The phrases ‘service’, ‘employment’, ‘handicraft’, and

‘industrial occupation’ are, likewise, terms of broad import,

each capable of encompassing a wide range of human activity.

None of these formulations is inherently self-limiting, nor do

they possess a singular or narrowly confined meaning. ‘Service’

is perhaps among the most expansive of these terms,

potentially extending to any organised activity undertaken for

the benefit of another. ‘Employment’ is equally broad, denoting

the engagement of labour or skill in the performance of a task,

occupation, or vocation. ‘Handicraft’ traditionally refers to

activities involving manual skill or craftsmanship, while

‘industrial occupation’ is capable of embracing a diverse

spectrum of occupations connected with productive or

organised economic activity. Viewed either individually or

collectively, these expressions are sufficiently capacious to

encompass an extensive variety of undertakings.

f. The diction ‘industrial occupation’, as its very wording

suggests, appears at first glance to be largely self-explanatory.

It ordinarily connotes an occupation, vocation, or line of work

connected with an industrial activity or undertaking. Yet the

term does little to dispel the ambiguity that surrounds the

definition as a whole. Rather, it risks reintroducing the very

question that it seeks to answer.

g. Finally, one arrives at the expression ‘avocation of workmen’.

The term ‘avocation’, in its ordinary and colloquial sense, is

capable of referring to an occupation, pursuit, or activity to

which an individual devotes time and effort. Since the term

‘workman’ has been defined in Section 2(s) of the ID Act itself,

there is little need to resort to external aids of interpretation.

The said term provides that a workman “means any person

(including an apprentice) employed in any industry to do any

manual, unskilled, skilled, technical, operational, clerical or

supervisory work for hire or reward, whether the terms of

employment be express or implied, and for the purposes of any

proceeding under this Act in relation to an industrial dispute,

includes any such person who has been dismissed, discharged

or retrenched in connection with, or as a consequence of, that

dispute, or whose dismissal, discharge or retrenchment has led

to that dispute, but does not include any such person—

(i) who is subject to the Air Force Act, 1950 (45 of 1950), or the

Army Act, 1950 (46 of 1950), or the Navy Act, 1957 (62 of 1957);

or

(ii) who is employed in the police service or as an officer or other

employee of a prison; or

(iii) who is employed mainly in a managerial or administrative

capacity; or

(iv) who, being employed in a supervisory capacity, draws

wages exceeding 3 [ten thousand rupees] per mensem or

exercises, either by the nature of the duties attached to the office

or by reason of the powers vested in him, functions mainly of a

managerial nature.”

160. The foregoing examination of the constituent expressions

employed in Section 2(j) read with Section 2(s) does little to resolve

the interpretive dilemma before us. If anything, it serves to reinforce

the conclusion that the statutory definition is cast in language of

exceptional width and that the individual terms comprising it are

themselves marked by a considerable degree of elasticity. Their

dissection aids in understanding the textual components of the

provision, but offers limited guidance in identifying the principled

boundaries of what the Legislature intended the term ‘industry’ to

encompass.

161. The exercise further reveals that the definition, viewed in isolation,

is incapable of administering a complete answer to the question(s)

before us. The dimensions of the language employed are such that

the provision does not, by itself, provide a clear mechanism for

distinguishing activities that fall within its ambit from those that

lie beyond it.

162. Viewed in this manner, the definition seemingly possesses an

almost boundless amplitude, which is capable of bringing within

its fold nearly every organised human activity. If one were to adopt

a purely literal construction and focus solely on the words

employed in Section 2(j), it may plausibly be argued that entities

ranging from a solitary street vendor selling fruits and vegetables

to sprawling multinational corporations would all fall within the

compass of an ‘industry’.

163. Yet, such a construction would carry the provision far beyond the

realm of plausibility. Statutory interpretation does not proceed on

the assumption that Parliament legislates in terms so sweeping as

to obliterate all meaningful distinctions between vastly different

forms of economic and social activities. If a definition is construed

with such extraordinary elasticity, on its literal interpretation, it

would risk rendering the concept of ‘industry’ virtually limitless

and, in the process, depriving the provision of any coherent

boundaries. It is difficult to conceive that the legislative intent was

to cast the net so wide as to encompass every conceivable organised

activity without regard to its nature, purpose, or context. The

definition undoubtedly does not intend to create unmanageable

situations.

164. It is in this context that it becomes necessary to turn to the

construction adopted by this Court in various decisions, including

in Bangalore Water Supply (supra). An examination of those

formulations and the rationale supplanting them is therefore the

logical next step in our analysis.

F.2. The judicial interpretation accorded to ‘Industry’

165. Of course, this exercise of closely examining the expressions

employed in Section 2(j) and culling out their contextual meaning

was undertaken with considerable depth and rigour in Bangalore

Water Supply (supra). The interpretation accorded to the term

‘industry’ under Section 2(j) by the Seven-Judge Bench in

Bangalore Water Supply (supra) has already been examined in

considerable detail in the segment titled “Bangalore Water Supply

(supra): A Truly Watershed Moment.” That being so, it is equally

important to appreciate the considerations that informed the

Court’s reasoning, which ultimately led to the formulation of the

ratio and the Triple Test.

166. To properly understand the decision in Bangalore Water Supply

(supra), one must begin with the factual controversy that

confronted the Bench. The principal question was not an abstract

inquiry into the meaning of the term ‘industry’, but whether a

statutory body engaged in providing essential public amenities and

discharging functions traditionally associated with governmental

responsibility could nevertheless fall within the ambit of Section

2(j). More specifically, the Court was required to determine whether

such activities, notwithstanding their public character and their

connection with the discharge of civic obligations, were to be

regarded as lying outside the definition on the footing that they

partook of a governmental or regal character.

167. Indeed, the judgment opens with the concurring opinion of Beg,

C.J., who embarked upon much the same exercise that presently

confronts us, namely, an examination of the language employed in

Section 2(j) and an inquiry into whether the assortment of

expressions comprising the definition could, by themselves, furnish

a satisfactory understanding of what Parliament intended by the

term ‘industry’. Despite this industrious exercise, Beg, C.J.

ultimately arrived at a conclusion not dissimilar to the one that

emerges from our own examination.

168. However, Krishna Iyer, J. dealt with it in far greater detail in his

majority opinion, wherein he has taken a ‘panoramic view of the

statute and its jurisprudential bearings’. In that endeavour, he

sought to examine the contextual import of expressions such as

‘trade’, ‘business’, and ‘undertaking’, not as isolated terms, but as

constituent elements of a composite statutory scheme intended to

regulate industrial relations in a welfare State.

169. In ensuring that he went beyond the mere semantics, considerable

reliance was placed upon earlier authorities, particularly the

decision in D. N. Banerji v. P. R. Mukherjee,36 which had, decades

earlier, laid the foundations for a broader understanding of the

term ‘industry’. Drawing upon this jurisprudential lineage, the

learned Judge proceeded on the premise that the Industrial

Disputes Act is fundamentally a piece of social welfare legislation

enacted with the object of securing industrial peace and protecting

labour. Consequently, according to this line of reasoning, any

interpretive exercise under the Act ought to remain informed by,

and aligned with, its welfare-oriented and worker-protective

character.

170. This nuanced and purposive analysis ultimately culminated in

several landmark interpretive conclusions. Among the most

36 1953 AIR 58.

significant was the treatment of the word ‘undertaking’, which was

held not to be a term of unbounded amplitude. It was observed

that, even upon applying the principle of noscitur a sociis as a

commonsense guide to construction, the meaning of ‘undertaking’

could not be divorced from the company it keeps, namely,

expressions such as ‘business’, ‘trade’, ‘manufacture’, and ‘calling’.

171. Accordingly, ‘undertaking’ was understood as being subject to a

contextual limitation, such that it would conform to the restrictive

characteristics shared by the associated terms appearing both

before and after it in the definition of ‘industry’ under Section 2(j).

The Seven Judge Bench thus rejected an interpretation that would

permit the aforesaid term to assume an unrestricted or all-

encompassing meaning divorced from its statutory setting.

172. Equally, the Court emphasised that the ID Act, being a social

welfare legislation, ought to be construed in harmony with the

constitutional vision embodied in Part IV of the Constitution.

173. Drawing sustenance from the ratio in Banerji (supra), the

approach adopted in Bangalore Water Supply (supra),

particularly in the lead decision authored by Krishna Iyer, J.,

gradually crystallised around the centrality of the employer-

employee relationship. The emphasis shifted from the intrinsic

nature of the activity undertaken by an enterprise to the

organisational structure through which such activity was carried

on and, more particularly, to the existence of systematic

cooperation between employer and employee.

174. Proceeding on this footing, the judgment took the view that the

concept of ‘industry’ was not to be confined within the conventional

boundaries of trade or commerce as ordinarily understood. Rather,

it was conceived as a term of considerably wider import, one whose

reach extended beyond the narrow confines of commercial

enterprise. The expressions ‘trade’ and ‘business’, though forming

part of the statutory definition, were not regarded as limiting the

amplitude of the term ‘industry’, but merely as illustrative of the

broad range of activities that could fall within its ambit.

175. The consequence of this approach was that factors such as the

absence of capital investment, profit motive, or commercial gain

were held not to be determinative of the inquiry. It was reasoned

that an activity may still constitute an ‘industry’ notwithstanding

that it is undertaken on charitable or philanthropic lines, provided

that the essential indicia of organised activity and employer-

employee cooperation are present. In similar terms, educational,

vocational, and cultural institutions were held not only to bear an

intimate nexus with industrial activity but also to fall squarely

within the ambit of ‘industry’. Indeed, the majority opinion went so

far as to proclaim that ‘education is the nidus of industrialization

and itself is industry’.

176. A considerable degree of reliance also appears to have been placed

upon the interpretation of the term ‘industry’ undertaken by this

Court in Nagpur Corporation (supra) and Hospital Mazdoor

Sabha (supra), with these decisions serving to fill the interstitial

gaps left by Banerji (supra). Both these decisions followed Banerji

(supra) in reiterating that the principle of noscitur a sociis ought

not to be applied so rigidly as to restrict or circumscribe the

magnitude of the term ‘industry’.

177. These decisions assume added significance, particularly since the

same Bench that decided Hospital Mazdoor Sabha (supra)

subsequently also resolved Nagpur Corporation (supra), wherein

it grappled with the question whether ‘sovereign functions’ fall

within the ambit of Section 2(j) and sought to delineate the litmus

test for determining which governmental activities may stand

excluded from the bounds of ‘industry’.

178. In Hospital Mazdoor Sabha (supra), this Court was called upon

to determine whether a government-run hospital, established to

provide medical relief to the public and also discharging substantial

educational and training functions, could be brought within the

ambit of ‘industry’. The Court then broadly defined ‘industry’

saying:

“Thus the manner in which the activity in question is organised or arranged, the condition of the co-operation between employer and the employee necessary for its success and its object to render material service to the community can be regarded as some of the features which are distinctive of activities to which s. 2(j) applies.” [Emphasis supplied]

179. This Court thus declined to extend the exemption accorded to

‘sovereign’ or ‘regal functions’ under Section 2(j) to the myriad

welfare activities undertaken by the State in discharge of its

obligations as a welfare State. It clarified that only those functions

which are primary, inalienable, and inherently governmental in

character may properly be described as ‘sovereign’ or ‘regal

functions’ for excluding from the definition of ‘industry’. In light of

this understanding, the Court finally held that the subject hospital,

notwithstanding its welfare-oriented objective, would nonetheless

constitute an ‘industry’.

180. The contours of what constitutes an ‘industry’, as well as the

limits of the sovereign or regal functions exception, were further

refined in Nagpur Corporation (supra), wherein a Three-Judge

Bench formulated the following broad guidelines:

“31. The result of the discussion may be summarized thus : (1) The definition of "industry" in the Act is very comprehensive. It is in two parts : One part defines it from the standpoint of the employer and the other from the standpoint of the employee. If an activity falls under either part of the definition, it will be an industry within the meaning of the Act. (2) The history of Industrial disputes and the legislation recognizes the basic concept that the activity shall be an organized one and not that which pertains to private or personal employment. (3) The regal functions described as primary and inalienable functions of State though statutorily delegated to a corporation are necessarily excluded from the purview of the definition. Such regal functions shall be confined to legislative power, administration of law and judicial power. (4) If a service rendered by an individual or a private person would be an industry, it would equally be an industry in the hands of a corporation. (5) If a service rendered by a corporation is an industry, the employees in the departments connected with that service, whether financial, administrative or executive, would be entitled to the benefits of the Act. (6) If a department of a municipality discharges many functions, some pertaining to industry as defined in the Act and other non-industrial activities, the predominant functions of the department shall be the criterion for the purposes of the Act.”

181. However, it appears that the Bench in Bangalore Water Supply

(supra), while substantially endorsing the reasoning in both these

decisions, departed from the caution sounded in Hospital

Mazdoor Sabha (supra) that some line must be drawn with

respect to the inclusion of ‘service’ within the wide sweep of

‘industry’, and that limiting principles were necessary to prevent

the definition from assuming boundless amplitude.

182. This concern appears to have found some resolution in the

Solicitors Case (supra), wherein this Court postulated that ‘the

distinguishing feature of an industry is that for the

production of goods or for the rendering of service,

cooperation between capital and labour or between the

employer and his employees must be direct and must be

essential’. Applying this test, the Court held that a liberal

profession such as that of an attorney could not have been intended

by the Legislature to be encapsulated within the definition of

‘industry’ under Section 2(j).

183. The exclusion of liberal professions from the ambit of ‘industry’

was similarly echoed in Secretary, Madras Gymkhana Club

Employees’ Union v. Management of the Gymkhana Club,37

though the reasoning adopted therein was somewhat different. The

Court examined the definition through the prism of the employer’s

occupation, proceeding on the footing that if the employer’s activity

constituted an ‘industry’, those employed in aid thereof would

ordinarily be workmen for the purposes of the Act. This

interpretative exercise was found to be broadly consonant with the

analysis undertaken by the majority in Bangalore Water Supply

(supra), which proceeded on the premise that ‘efficient collectivity

37 (1968) 1 SCR 742.

is the essence of professional success’ to hold that liberal

professions cannot seek exclusion from the operation of the ID Act.

184. Having sealed the fate of liberal professions, the majority in

Bangalore Water Supply (supra) turned its attention to the

status of Education and Educational Institutions under the ID Act.

As already noted, the majority opinion unequivocally went on to

hold that education could constitute an ‘industry’. This conclusion

was founded, first, on the premise that the predominant nature of

the activity is determinative and that imparting education

constitutes a service rendered to the community. Second, it was

observed that educational institutions, particularly universities,

engage in several other activities which are demonstrably industrial

in character and, though ancillary to the principal educational

enterprise, are capable of severance and independent

consideration. Consequently, the decision in University of Delhi

(supra) was held to be wrongly decided.

185. The majority thereafter examined whether Charitable Institutions

are capable of constituting an ‘industry’. In addressing this issue,

the majority adopted a tripartite classification of charitable

undertakings, delineating the circumstances in which such

institutions would, or would not, fall within the ambit of Section

2(j):

“The first is one where the enterprise, like any other, yields profits but they are siphoned off for altruistic objects. The second is one where the institution makes no profit but hires the services of employees as in other like businesses but the goods and services, which are the output, are made available, at low or no cost, to the indigent needy who are priced out of the market. The third is where the establishment is oriented on a humane mission fulfilled by man who work, not because they are paid wages, but because they share the passion for the cause and derive job satisfaction from their contribution.”

186. Having laid out this trichotomy of Charitable Institutions, the

majority opined that the determination of whether such an

institution constitutes an ‘industry’ depends broadly on two

considerations: first, whether there exists cooperation between

employers and employees in the production or supply of goods or

services; and second, the extent to which charity permeates the

quasi-business character of the activity.

187. In this regard, the first category of charitable institutions was held

to constitute an ‘industry’, since such institutions engage in the

production or supply of goods or services with an eye on profit. The

second category was likewise held to be within the scope of

‘industry’, the Court observing that the charitable object of the

enterprise makes little difference to a workman who contributes

labour in return for wages in much the same manner as in a

commercial undertaking. It was only the third category that was

held to stand exempt from the aegis of ‘industry’, there being no

real economic relationship or employer-employee nexus, thereby

placing such institutions outside the ambit of Section 2(j).

188. A similar exercise was undertaken to ascertain the status of

‘Research Institutions’ and whether research activity involves the

requisite cooperation between employer and employee. The

majority answered the question in the affirmative, proceeding on

the footing that the institution itself constitutes the employer, while

scientists, para-scientists, and other personnel function as

employees. Their discoveries and research, it was observed, are

capable of being translated into intangible goods and valuable

services for which there exists a market, particularly in the case of

technological inventions and innovations that may be patented and

commercially exploited. Accordingly, it was concluded that

research institutions, notwithstanding the absence of a profit

motive, are capable of constituting an ‘industry’.

189. Next was the question of whether ‘Clubs’ are industries. At this

juncture, the majority once again reiterated its principle that any

area where a dichotomy between employer and workmen could

exist would be an industry and thus, clubs also would be no

exception to this rule. The only exception that could however be

carved out would be in the case of dominantly self serving clubs,

wherein the central thrust of the club itself has a dominant self

service mechanism, with only a modicum of employees at the

periphery. Resultantly, the decisions in Madras Gymkhana Club

(supra) and Cricket Club of India (supra) were held to be wrongly

decided.

190. The same reasoning was extended to ‘Cooperative Societies’. The

Court observed that where the activity partakes of the nature of

trade and is carried on through employer-employee cooperation,

such societies would constitute an ‘industry’. Since member-

workers are generally paid wages and may raise disputes

concerning service conditions against the society, the latter

assumes the position of employer and the workers occupy the

position of employees, thereby attracting Section 2(j).

191. Having examined each of these categories in turn, the Court

ultimately distilled its reasoning into the formulation of the Triple

Test:

“I. ’Industry’, as defined in Sec, 2 (j) and explained by Banerji, has a wide import. (a) Where (i) systematic activity, (ii) organized by cooperation between employer and employee, (the direct and substantial element is chimerical) (iii) 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 geared to, celestial bliss e.g. making, on a large scale, prasad or food), prima facie, there is an ’industry’ in that enterprise.

(b) Absence of profit motive or gainful objective is irrelevant, be the venture in the public, joint private or other sector. (c) The true focus is functional and the decisive test is the nature of the activity with special emphasis on the employer-employee relations. (d) If the Organisation is a trade or business, it does not cease to, be one because of philanthropy animating the undertaking. II. Although sec. 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 (supra), although not trade or business, may still be ’industry’ (provided the nature of the activity, viz. 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 adventure ’analogous to the carrying on of trade or business’. All features, other than the methodology of carrying on the activity viz. in organizing the co-operation between employer and employee may be dissimilar. It does not matter, if off 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 other 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 (iiia) co-operatives, (iv) research institutes (v) charitable projects and (vi) other kindred adventures, if they fulfil the triple tests listed in I (supra), cannot be exempted from the scope of sec. 2 (j).

(b) A restricted category of professions, clubs, cooperatives and even Gurukuls and little research labs, may qualify for exemption if 283 in simple ventures substantially and going by the dominant nature criterion substantively, in single simple ventures, no employees are entertained but in minimal matters, marginal employees are hired without destroying the nonemployee character of the unit. (c) If in a pious or altruistic mission many employ themselves, free or for small honoraria, or likely return mainly by sharing in the purpose or cause, such as lawyers volunteering to run a free legal services clinic or doctors serving in their spare hours in a free medical centre or ashramites working at the bidding of the holiness, divinity or like central personality and the services are supplied free or at nominal cost and those who serve are not engaged for remuneration or on the basis of master and servant, relationship, then, the institution is not an industry even if stray servants, manual or technical, are hired. Such eleemosynary or like undertakings alone are exempt-not other generosity, compassion, developmental passion or project.

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 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, strictly understood, alone qualify for exemption, not the welfare activities or 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) Constitutional and competently enacted legislative provisions may well remove from the scope of the Act categories which otherwise may be covered thereby.”

192. Consequently, the decisions in Safdarjung Hospital (supra),

Solicitors’ Case (supra), Madras Gymkhana Club (supra), Delhi

University (supra), and other cognate rulings came to be

overruled, while the principles enunciated in Hospital Mazdoor

Sabha (supra) were substantially restored and reaffirmed.

193. As already noticed, while Beg, C.J. concurred with the majority

opinion, Chandrachud, J. (as he then was) penned a separate

concurring opinion that largely echoed the reasoning of the

majority. The learned Judge was, however, emphatic in observing

that considerations of motive have no bearing on the determination

of whether an undertaking constitutes an ‘industry’, a proposition

that applies with equal force to factors such as profit motive, capital

investment, or pecuniary gain.

194. However, Jaswant Singh, J., writing on behalf of himself and

Tulzapurkar, J., parted ways with the majority on both its

reasoning and its treatment of the principle of noscitur a sociis. In

their view, discarding that principle had led to an interpretation of

‘industry’ of excessive range, bringing within its fold charitable

institutions, schools, universities, and research laboratories. The

learned Judges instead advocated a more restrictive construction,

observing that the definition ought to be confined to activities

“systematically or habitually undertaken on commercial lines

by private entrepreneurs with the cooperation of employees

for the production or distribution of goods or for the rendering

of material services to the community at large or a section

thereof.”

195. Be that as it may, there can be no gainsaying that Bangalore

Water Supply (supra), has held the field for more than four

decades, despite its correctness having come under the clouds

hardly within twenty years of its pronouncement. No doubt, the

judgment is the product of a painstaking and deeply deliberative

exercise, where every word and provision was dissected and

interpreted in an attempt to ascertain the true meaning of ‘industry’

under Section 2(j). The result was a seminal decision which has

come to occupy a distinguished place in our industrial

jurisprudence, authored by some of the most eminent jurists to

have adorned this Court, whose scholarship and mastery of the law

are reflected throughout its pages.

196. We may, however, with utmost respect and considerable

reluctance, hasten to add that Bangalore Water Supply (supra)

has survived in its entirety not merely because it represents a

visionary judicial approach, but also because of institutional

realities. Its status as a decision rendered by a Bench of Seven

learned Judges undoubtedly accorded it formidable precedential

force. Equally, although the correctness of the decision stood

referred to a Nine-Judge Bench, that reference remained unheard

for decades. Whether by reason of institutional priorities,

administrative exigencies, or other circumstances, the

consequence was that the opportunity for authoritative

reconsideration never materialised until the present proceedings.

197. Over time, however, as circumstances evolved and the currents of

industrial jurisprudence continued to shift, a degree of excoriation

began to emerge in relation to the construction of the Triple Test,

the ratio laid down in Bangalore Water Supply (supra), and, more

generally, the expansive sweep accorded to the definition of

‘industry’ coupled with the narrow channel of exceptions carved out

therefrom. What had once proclaimed itself to be a settled course

increasingly came to be questioned as the river of the law flowed

into newer terrains and even newer landscapes.

F.3. The Ripple Effects of Bangalore Water Supply (supra)

198. The decades following Bangalore Water Supply (supra) have

witnessed profound changes in India’s economic and regulatory

landscape. The era of liberalisation, privatisation, and globalisation

has fundamentally altered the manner in which enterprises are

structured, managed, and operated. 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.

199. 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.

200. In contemporary India, virtually every organised activity,

irrespective of its scale or objective, possesses some degree of

institutional structure. Whether it be a small family-run enterprise,

a large commercial undertaking, a charitable organisation, a

shelter for the destitute, or a community-based welfare institution,

the realities of modern governance, regulation, and compliance

require varying levels of organisation, record-keeping, and

administrative management. If the Triple Test is applied in its

broadest possible form, the consequence may well be that an

extraordinarily wide range of activities become susceptible to

classification as an ‘industry’.

201. It is difficult to accept that Parliament intended such an all-

encompassing result. The breadth of the interpretation risks

drawing within the fold of Section 2(j) not just large commercial

enterprises, but also modest undertakings, social initiatives,

charitable institutions, and small-scale economic activities that

operate with limited resources and personnel. While such an

approach undoubtedly advances the protective objectives of labour

welfare legislation, the inquiry cannot be one-sided. The law must

remain cognisant of the realities of a modern and enterprising

economy, in which countless individuals seek to establish small

businesses, social enterprises, charitable ventures, and community

institutions.

202. The concern, therefore, is not whether workers ought to be

protected, for they must always be protected, but whether the

existing formulation of the Triple Test has expanded to a point

where it risks encompassing activities that Parliament never

intended to characterise as ‘industry’. If every organised endeavour

involving a modicum of employer-employee cooperation is brought

within Section 2(j), difficult questions inevitably arise as to where

the line is to be drawn. For example, we could scarcely describe the

proprietor of a neighbourhood kiosk as an industrialist, just as we

could not characterise the heads of large manufacturing

enterprises and commercial conglomerates as mere shopkeepers.

To do so would ignore the obvious distinction in both scale and

character of the activities undertaken.

203. It is therefore imperative to reconsider whether the Triple Test, in

its present form, requires a more carefully calibrated application so

as to preserve the balance between labour welfare and the

legitimate functioning of small enterprises, charitable institutions,

and community-oriented activities.

F.4. Manner in which the term ‘industry’ under Section 2(j) ought

to be interpreted

204. We are conscious of the fact that the above illustrated

considerations by themselves can hardly furnish a sufficient basis

to doubt the correctness of a decision rendered by a Seven-Judge

Bench of this Court. The stature of the precedent demands a far

more exacting inquiry. However, having been constituted as a

Bench of larger strength to examine its continued correctness, it is

our earnest duty to scrutinise the legal foundations upon which the

decision rests and to ascertain whether its reasoning continues to

withstand scrutiny.

205. The majority opinion in Bangalore Water Supply (supra) itself

opens with the observation that “the rather zigzag course of the

landmark cases and the tangled web of judicial thought have

perplexed one branch of Industrial Law, resulting from the

obfuscation of the basic concept of ‘industry’ under the

Industrial Disputes Act, 1947.” On this much, there can be little

disagreement. The question of what constitutes an ‘industry’,

despite its apparent simplicity, has engaged and divided judicial

opinion for decades.

206. It may well have been expected that Bangalore Water Supply

(supra), rendered after an exhaustive consideration of the law,

would bring a measure of finality and be the silver bullet to this

long-standing controversy. Yet the very fact that a series of doubts

have repeatedly resurfaced for the last thirty years as to the

amplitude and application of the principles laid down therein,

sufficiently demonstrates that the debate was not laid entirely to

rest and any such proclamation is a mere overestimation.

F.4.1. The Noscitur a Sociis Principle

207. A substantial part of the majority opinion rested upon its

interpretation of the definition contained in Section 2(j). In the

process, it formulated the Triple Test, a framework that is arguably

more elaborate and comprehensive than the statutory definition

itself, while consciously declining to apply the principle of noscitur

a sociis as an aid to interpretation.

208. Before we advert to the correctness of that view, it is necessary to

briefly examine the principle of Noscitur a Sociis. To begin with,

every word has two meanings: (i) Denotation - the literal or actual

meaning of the word, and (ii) Connotation - the contextual meaning

derived from the word's association with surrounding words. The

principle of Noscitur a Sociis uses both these meanings to interpret

statutory language. It is a secondary rule of statutory

interpretation. The Latin expression derives from ‘noscitur’ (to

know), ‘a’ (with), and ‘sociis’ (associates), meaning ‘it is known by

its associates!’

209. The rule of construction Noscitur a Sociis means “the meaning of a

word is to be judged by the company it keeps.” It is a legitimate rule

of construction to construe words in an Act of Parliament with

reference to words found in immediate connection with them.

210. It must be borne in mind that Noscitur a Sociis is merely a rule of

construction and cannot prevail in cases where it is clear that wider

words have been deliberately used in order to make the scope of

the defined word correspondingly wider. It is only when the

intention of the legislature in associating wider words with words

of narrower significance is doubtful, or otherwise not clear, that the

present rule of construction can be usefully applied.

211. In Hospital Mazdoor Sabha (supra), the principle of Noscitur a

Sociis was explained in the following terms: “when two or more

words which are susceptible of analogous meaning are

coupled together, they are understood to be used in their

cognate sense. They take their colour from each other, that

is, the more general is restricted to a sense analogous to a

less general. (sic)”

212. A further reference was made to Words and Phrases (Vol. XIV,

P.207), which defined the expression in the following terms:

“Associated words take their meaning from one another under the doctrine of noscitur a sociis, the philosophy of which is that the meaning of a doubtful word may be ascertained by reference to the meaning of words associated with it; such doctrine is broader than the maxim Ejusdem Generis.”

213. This Court in Hospital Mazdoor Sabha (supra) placed reliance

on the English case of Glasgow v. Glasgow Tramway and

Omnibus Co. Ltd.,38 to emphasise that Noscitur a Sociis is merely

a rule of construction and cannot prevail where it is evident that

the Legislature has deliberately employed words of wide import in

order to correspondingly broaden the scope of the expression being

defined. The rule, as explained in Glasgow (supra), is attracted

only where the legislative intention behind the use of wider words

alongside words of narrower significance becomes doubtful or is

otherwise unclear. Similarly, it may be invoked where the meaning

of the broader expression itself admits of uncertainty. Where,

however, the legislative purpose underlying the use of words of wide

amplitude is clear and unambiguous, the rule has no application

and cannot be pressed into service to cut down the natural meaning

of the statutory text.

38 Glasgow v. Glasgow Tramway and Omnibus Co. Ltd., 1898 A. C. 631.

214. In essence, both Hospital Mazdoor Sabha (supra) and

Bangalore Water Supply (supra) proceeded on the footing that

the principle of noscitur a sociis had little application in the

interpretation of Section 2(j). The underlying rationale was that the

ID Act is a piece of beneficial social welfare legislation, enacted to

protect the interests of workers and to further the constitutional

vision of a welfare State, particularly as reflected in Part IV of the

Constitution. In such a context, it was considered inappropriate to

employ a rule of construction that would unduly curtail the

expansiveness of the statutory definition.

215. Consequently, after undertaking an exhaustive examination of the

language of Section 2(j), the Court concluded that while

expressions such as ‘undertaking’ must be understood in their

proper statutory context and not in their widest conceivable sense,

the term ‘industry’ itself was intended to receive a broad and

expansive construction. It was this interpretive approach that

ultimately culminated in the formulation of the Triple Test and the

wide amplitude accorded to the definition under Bangalore Water

Supply (supra).

216. In our considered view, and we say so with due circumspection,

the reasoning underpinning this conclusion is not entirely free from

difficulty. By doing away with the Noscitur a Sociis rule, the

legislative intent appears to have been construed by Bangalore

Water Supply (supra) in a manner that accords an exceptionally

broad meaning to the term ‘industry’, while at the same time

substantially severing it from its traditional commercial and

economic connotations. Whether the text and scheme of the Act

genuinely support such a departure is an issue that requires

careful examination.

217. A perusal of the Preamble, the Short Title, and the scheme of the

ID Act indicates that the enactment was designed to provide a

framework for the investigation and settlement of industrial

disputes. The statute thereafter proceeds to regulate matters

concerning industrial relations, including retrenchment, lay-offs,

compensation, and other protections afforded to workmen engaged

in such enterprises.

218. Perhaps the principal difficulty with the interpretation adopted in

Bangalore Water Supply (supra) lies in the extraordinary

broadness of its reach. We say so because the expulsion of the

Noscitur a Sociis rule of construction appears to have had the

cascading effect of substantially diminishing the relevance of the

nature and character of the activity undertaken. In its place, the

inquiry came to be centred almost exclusively upon the existence

of an employer-employee relationship, which emerged as the focal,

if not decisive factor in determining whether a particular entity or

undertaking constitutes an ‘industry’.

219. The consequence of this shift is that the focus moves away from

what the enterprise does and towards how it is organised. As a

result, activities that are fundamentally distinct in purpose,

character, and function may nevertheless be brought within the

same statutory fold merely because they involve a structured

relationship between employers and employees. It is this

displacement of the nature of activity from the centre of inquiry

that, in our considered view, gives rise to much of the difficulty that

has subsequently shrouded the application of the Triple Test.

F.4.2. A fresh look at the interpretative approach

220. 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.

221. Nor is this conclusion founded solely upon our own analysis of the

law. The practical consequences of the expansive construction

adopted in Bangalore Water Supply (supra) are equally apparent.

Courts across the country have continued to grapple with litigation

concerning the scope of the definition of ‘industry’, and the

controversy has remained far from settled despite the authoritative

pronouncement of a Seven-Judge Bench.

222. As already noticed, the persistence of this debate is reflected in

the fact that, on more than one occasion, this Court has considered

it necessary to revisit the correctness of Bangalore Water Supply

(supra) through references to larger Benches. Such repeated calls

for reconsideration do not arise in the ordinary course. They are

often indicative of a deeper jurisprudential unease, where

subsequent experience reveals difficulties in application, competing

strands of reasoning emerge, or substantial doubts are expressed

regarding the continued soundness of the principles laid down. The

history of the present reference is itself demonstrative of that

reality.

223. In our respectful view, the interpretation adopted in Bangalore

Water Supply (supra) has carried the definition of ‘industry’ far

beyond its natural statutory boundaries. The cumulative effect of

the reasoning employed therein has been the emergence of a

concept considerably wider than the one the language of the statute

intended. Indeed, it may be said that the decision has fashioned an

interpretive construct that operates in a manner not readily

discernible from the text itself.

224. At this juncture, it is therefore apposite to recall the observation

of Lord Denning, extracted by Beg, C.J. at the commencement of

his concurring opinion.:

"When a defect appears a judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament and then he must supplement the written words so as to give ’force and life’ to the intention of legislature. A judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out? He must then do as they would have done. A judge must not alter the material of which the Act is woven, but he can and should iron out the creases".

225. We wholeheartedly subscribe to the concern reflected in the

foregoing observation. There can be no quarrel that Bangalore

Water Supply (supra) is a work of immense scholarship, marked

by a painstaking examination of the text, history, and purpose of

the ID Act. Yet, with equal respect to the learned Judges who

authored the majority opinion, we are more than certain that the

decision, in its anxiety to expand the protective reach of the

legislation, ventured beyond the confines of interpretation and

entered territory more appropriately reserved for legislative policy.

226. The difficulty does not lie in the formulation of the Triple Test

itself, which remains a useful and largely workable indicator for

determining whether a particular undertaking bears the

characteristics of an ‘industry’. Rather, it is the cumulative effect of

the reasoning to draw within the fold of Section 2(j) an ever-

expanding range of activities, institutions, and undertakings, many

of which bear only a tenuous connection to what would ordinarily

be understood as ‘industrial activity’.

227. In our considered view, it is difficult to attribute to the Legislature

an intention that every organised venture, enterprise, institution,

or activity involving some degree of employer-employee cooperation

should lock, stock and barrel stand encompassed within a single

statutory definition. Such an interpretation risks extending the

reach of the Act beyond the purpose for which it was enacted,

namely, to provide a framework for the regulation and resolution of

industrial disputes and allied matters arising in the context of

industrial employment.

228. Be that as it may, Bangalore Water Supply (supra) has managed

to hold the field for nearly five decades and has become deeply

embedded in the fabric of our industrial jurisprudence, regardless

of the persistent doubts questioning its correctness.

Considerations of certainty, stability, and institutional continuity

therefore counsel against any wholesale departure from the

framework that it has established. Our endeavour is not to unsettle

settled positions, nor to fundamentally reconstruct the

jurisprudence that has developed around Section 2(j), for that

would be akin to throwing the baby out with the bathwater.

229. Rather, our objective is a more modest one: to address the

difficulties that have emerged in the application of the decision and

to ensure that future adjudication under the ID Act proceeds in a

manner consistent with established principles of statutory

interpretation and legal coherence. We are not called upon to

reinvent the wheel; nor is there any occasion to discard the Triple

Test in its entirety. The task before us is one of calibration rather

than reconstruction. Against that backdrop, our endeavour is

confined to examining whether certain components of the

framework laid down in Bangalore Water Supply (supra) could

have benefitted from some refinement.

230. To our mind, the aspect that calls for the greatest degree of

calibration is whether commercial character should be restored as

a relevant consideration in the application of the Triple Test. Such

a consideration may operate as a principled sieve, separating those

undertakings that truly partake of the nature of an ‘industry’ from

those which, despite exhibiting some degree of organisational

structure and employer-employee cooperation, were never intended

to be brought within the ambit of Section 2(j).

231. In this regard, we turn to the operative portion of Safdarjung

Hospital (supra), which emphasised the meaning of ‘material

services’, and observed as follows:

What is meant by 'material services' needs some explanation too. Material services are not services which depend wholly or largely upon the contribution of professional knowledge, skill or dexterity for the production of a result. Such services being given individually and by individuals are services no doubt but not material services. Even an establishment where many such operate cannot be said to convert their professional services into material services. Material services involve an activity carried on through co- operation between employers and employees to provide the community with the use of something such as electric power, water, transportation, mail delivery, telephones and the like. In providing these services there may be employment of trained men and even professional men, but the emphasis is not on what these men do but upon the productivity of a service organised as an industry and commercially valuable. Thus the services of professional men involving benefit to individuals according to their needs, such as doctors, teachers, lawyers, solicitors etc. are easily distinguishable from an activity such as transport service. The latter is of a commercial character in which something is brought into existence quite apart from the benefit to particular individuals. It is the production of this something which is described as the production of material services. …….. It, therefore, follows that before an industrial dispute can be raised between employers and their employees or between employers and employers or between employees and employees in relation to the employment or non-employment or the terms of

employment or with the conditions of labour of any person, there must be first established a relationship of employers and employees associating together, the former following a trade, business, manufacture, undertaking or calling of employers in the production of material goods and material services and the latter following any calling, service, employment, handicraft, or industrial occupation or avocation of workmen in aid of the employers' enterprise. It is not necessary that there must be a profit motive but the enterprise must be analogous to trade or business in a commercial sense. [Emphasis supplied]

232. The rationale set out above, in our humble opinion, accords more

closely with both the text and structure of the statute. Industrial

activity cannot be wholly divorced from its commercial character.

We say so because we are unable to agree with the majority in

Bangalore Water Supply (supra) insofar as it declined to apply

the principle of Noscitur a Sociis on the basis of what was perceived

to be the broader legislative objective underlying the enactment.

233. When these expressions are read together, they appear to convey

a common thread: that an ‘industry’ is an undertaking carried on

in an organised and systematic manner, involving cooperation

between employers and employees, and rooted in an activity

possessing some degree of commercial or economic character. It is

difficult for us to subscribe to the proposition that the commercial

nature of the activity is wholly irrelevant to the inquiry and may be

disregarded altogether.

234. At the same time, we consider it necessary to clarify that we are

in agreement with the majority opinion in Bangalore Water

Supply (supra) to the extent that the presence or absence of a

profit motive ought not to be determinative. An activity may possess

a commercial character without necessarily being animated by the

pursuit of profit. The inquiry, therefore, is not whether the

undertaking seeks to maximise gain, but whether the nature of the

activity undertaken bears the indicia of an organised economic or

commercial enterprise.

235. If commercial character is to be recognised as a relevant

consideration in determining what constitutes an ‘industry’, the

converse must necessarily follow. Activities that lack any

discernible commercial or economic character, and which are

neither undertaken in pursuit of commercial objectives nor bear

any meaningful analogy to trade, business, or economic enterprise,

would ordinarily fall outside the ambit of the definition contained

in Section 2(j).

236. This is not to suggest that every undertaking must be profit-driven

or commercially successful in order to qualify as an ‘industry’.

Rather, the inquiry is directed towards the nature and character of

the activity itself. Where an activity is wholly divorced from

commercial or economic enterprise and cannot reasonably be

analogised to trade, business, or kindred undertakings, we would

be hard pressed to justify its inclusion within the statutory

conception of ‘industry’.

237. Equally, we find no basis to conclude that according a limited role

to commercial character within the framework of the Triple Test

would in any manner undermine the beneficial object of the

legislation. The introduction of such a consideration does not

denude workmen of statutory protection, nor does it dilute the

welfare orientation of the ID Act. Rather, it serves to ensure that

the definition of ‘industry’ remains tethered to the nature of the

activity undertaken, thereby preventing the concept from

expanding beyond its intended statutory bounds.

238. While the welfare character of the ID Act is beyond dispute, that

consideration alone cannot justify disregarding a settled principle

of statutory construction where the language of the provision

reasonably admits of its application.

239. It is our considered opinion that some distinction based upon the

commercial character of the activity is both necessary and

unavoidable. The boundaries of the concept of ‘industry’ are already

sufficiently diffuse; it would be neither prudent nor doctrinally

sound to render them altogether indistinguishable. The modern

landscape presents a host of entities that may outwardly share

organisational structures and employer-employee relationships,

yet differ fundamentally in their purpose, character, and mode of

operation.

240. Healthcare, for instance, provides a useful illustration. Today,

healthcare services are delivered through a wide spectrum of

institutions, ranging from large corporate hospital chains and

specialised diagnostic centres operating on commercial lines, to

charitable hospitals and welfare-oriented medical establishments

that primarily serve those unable to afford treatment. There are

even Government Hospitals, some of which were established pre-

Independence, with no discernible profit motive. To treat all such

institutions identically merely because they satisfy the formal

requirements of employer-employee cooperation would be to

overlook the significant differences in the nature and objectives of

their activities.

241. Such an approach, in our considered view, is liable to occasion

serious disservice to society at large. To take but one illustration, if

a charitable or government hospital is constrained, in matters of

engagement, retrenchment, or workforce management, to apply

rigid industrial principles without due regard to the specialised

nature of healthcare delivery, the consequences may well be

detrimental to the very public interest the institution exists to

serve. The engagement of an X-ray technician, a laboratory

technician, or a nursing officer cannot always be reduced to a

purely mechanical application of principles such as ‘last come, first

go’, where considerations of merit, expertise, and continuity of

patient care may assume overriding significance.

242. The same may be said of Research Institutions. While some

undertake research with a view towards commercial exploitation,

patent generation, and market participation, others engage in

research principally for educational, academic, charitable,

scientific or public welfare purposes.

243. The point is not that charitable or welfare-oriented activities

should automatically stand excluded from the ambit of the Act.

Rather, it is that the nature and character of the activity

undertaken is extremely relevant to the inquiry. A framework that

fails to distinguish between activities carried on predominantly

along commercial lines and those pursued primarily for public

welfare, educational, charitable, or humanitarian purposes risks

collapsing fundamentally different undertakings into a single

category. We are of the clear view that the consideration of

commercial character assumes significance, serving as an

important indicator in determining whether an undertaking truly

partakes of the nature of an ‘industry’ within the meaning of

Section 2(j).

244. The same holds true in the context of governmental entities

discharging sovereign or regal functions. Without delving too deeply

into that aspect, we believe that no straitjacket formula can be

devised which either excludes all such entities from the ambit of

‘industry’ or, conversely, brings every governmental activity within

its fold. The functions performed by the State today are far too

varied and nuanced to permit such a simplistic categorisation.

245. In the same breath, we do not propose to repeat the very error

that, in our respectful view, has contributed to the present difficulty

by prescribing exhaustive categories, rigid exemptions, or inflexible

criteria. The inquiry necessarily involves an evaluation of the

nature, purpose, and character of the activity in question and is

therefore incapable of being reduced to a mechanical formula.

Ultimately, the determination ought to be undertaken on a case-to-

case basis, having regard to the totality of the circumstances and

the principles set out.

F.4.3. Calibrating the Triple Test

246. In light of the foregoing discussion, we have undertaken a careful

examination of each constituent element of the Triple Test and

identified certain limited aspects which, in our considered view,

might have served the law better had they formed part of the

framework from the outset. These observations are no more than a

reflection of our own reading of Section 2(j), informed by its text,

scheme, and underlying semantics. Our endeavour is not to

reconstruct the jurisprudence, but merely to refine it in those

limited respects where we perceive a divergence in our

understanding of the scope and contours of the definition of

‘industry’, while preserving the essential framework that has

governed the field for decades.

247. The Triple Test, per our careful consideration, should have been

reformulated in the following terms:

“(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).”

248. The next component of the Triple Test, pertaining to the

irrelevance of profit motive, is retained in its existing form.

Accordingly, it would continue to read as follows: “(b) Absence of

profit motive or gainful objective is irrelevant, be the venture

in the public, joint, private, or any other sector.” We see no

reason to depart from this aspect of the formulation, for the

presence or absence of profit motive does not, by itself, furnish a

reliable indicator of whether an undertaking constitutes an

‘industry’. In our view, the focus must remain on the nature and

character of the activity undertaken, rather than any surplus that

may or may not be generated.

249. Insofar as the third component of the test is concerned, we are of

the view that the special emphasis hitherto placed upon the

existence of an employer-employee relationship requires

moderation. While such a relationship undoubtedly remains an

important indicator, it cannot be elevated to the status of the sole

or predominant determinant. The inquiry must instead proceed on

a conjunctive basis, taking into account both the nature and

character of the activity undertaken as well as the existence of

organised employer-employee cooperation. It is only through a

consideration of both these elements in tandem that a principled

determination may be made as to whether an undertaking

constitutes an ‘industry’ within the meaning of Section 2(j).

Accordingly, this portion of the test could have been considered in

the following terms:

“(c) The true focus is functional and the decisive test is the nature of the activity and the existence of employer-employee relations.” [Emphasis supplied]

250. While the following aspect may have diminished significance in

view of the role now accorded to commercial character within the

inquiry, it nevertheless serves as a useful clarification. The mere

prescription of charitable, philanthropic, or benevolent motives

cannot alter the essential character of an undertaking that is

otherwise commercial in nature. It would thus be in line with our

sensibilities to suitably modify this proposition in the following

terms: “(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.”

251. We now turn to another important facet of the decision, namely

the reading down of the expression ‘undertaking’, as enshrined in

the second guideline. At first blush, we do not perceive any

fundamental difficulty in retaining this aspect of the reasoning

assigned in Bangalore Water Supply (supra). However, we find

that, once again, it could have certainly been enriched with some

clarification and recalibration.

252. In our respectful view, the travail lies in the manner in which the

majority opinion appears, at certain points, to conflate the nature

of the activity undertaken with the existence of employer-employee

relations, or at the very least to accord the latter such

predominance that the former recedes into the background. This,

in our opinion, is the principal source of much of the confusion in

the application of the Triple Test.

253. The nature and character of the activity on the one hand, and the

existence of organised employer-employee cooperation on the other,

are distinct considerations serving different purposes within the

inquiry. While both are relevant, neither can be collapsed into the

other. Rather, they operate as independent yet complementary

pillars supporting the determinative scaffolding of whether a

particular undertaking constitutes an ‘industry’. To treat them as

interchangeable is akin to saying that apples and oranges are the

same fruit. It overlooks the separate function that each performs in

the analysis and risks reducing a multi-faceted inquiry into a

single-factor test. Accordingly, it is our view that this portion

perhaps could have been recorded in the following manner:

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 (supra), 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.

254. The effect of this clarification is that the expression ‘undertaking’

continues to retain a broad sweep and is capable of encompassing

a wide variety of activities. The mere fact that an activity may

qualify as an undertaking, however, does not inexorably lead to the

conclusion that it constitutes an ‘industry’. Such an activity must

still satisfy the requirements of the reformulated Triple Test. Once

these principles are recognised, we do not consider it necessary to

delve any further into the meaning of the term ‘undertaking’. The

safeguards against over-inclusion are already embedded within the

reformulated test itself, which provides the necessary framework

for determining, on a case-by-case basis, whether a particular

‘undertaking’ falls within the ambit of Section 2(j).

F.4.4. Reconsidering Institutional Categorisation

255. We now approach a somewhat more contentious aspect of the

decision, namely the treatment accorded to specific categories of

institutions and the application of the guidelines to them. Once

again, we are of the view that while certain portions of this segment

may be retained, others nonetheless warrant reconsideration.

256. We say so because a substantial period of time has elapsed since

the pronouncement of Bangalore Water Supply (supra), and the

institutional and economic landscape has undergone profound

transformation in the intervening decades. The difficulty with

highly specific illustrations and categorical classifications is that

they have been products of the circumstances prevailing at a

particular point in time. What may once have served as a useful

guide risks becoming an inflexible rule when applied to

contemporary realities.

257. Entities today are increasingly multifaceted and frequently

undertake a diverse range of functions that cannot readily be

reduced to a single label or category. A university may engage in

research, consultancy, technology transfer, and commercial

collaboration; a hospital may combine charitable healthcare with

highly specialised commercial services; and a research institution

may simultaneously pursue academic, public welfare, and market-

oriented objectives. In such circumstances, an approach that

proceeds primarily by reference to predetermined categories risks

pigeonholing institutions without adequately examining the true

nature and dominant character of the activity undertaken.

258. It may have thus been sufficient to have only postulated Guideline

III(a), while omitting Guidelines III(b) and III(c). In our considered

view, the illustrations and narrowly tailored exceptions contained

therein have, over time, contributed to the very difficulties that

have beset the application of the definition. By carving out specific

categories and prescribing highly particularised exemptions, they

risk transforming what ought to be a principled inquiry into an

exercise in classification.

259. We believe that the strength of a legal test lies in its ability to

withstand application across a range of factual scenarios without

the need for exhaustive elaboration or an ever-expanding catalogue

of inclusions and exclusions. A test that requires a growing list of

illustrations, qualifications, and exceptions to sustain itself is, in

our view, a test that risks obscuring rather than clarifying the

inquiry. The law ought not to descend into an exercise of

prescribing, in advance, what must or must not constitute an

‘industry’. Such determinations are best left to the application of

the governing principles to the facts and circumstances of each

case.

260. It is in this spirit that we deemed fit that the limited purpose of

the third guideline could have been put forth in the following terms:

“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 (supra), cannot be exempted from the scope of section 2(j).”

261. Finally, insofar as the final guideline pertaining to the dominant

nature test is concerned, we consider it necessary to clarify the

scope and contours of the sovereign functions exception. In

Bangalore Water Supply (supra), the exemption accorded to

sovereign functions was construed in a markedly narrow manner.

The principal rationale advanced was that the State, in the modern

welfare era, had entered a multitude of fields traditionally

associated with industry and commerce, and that it would therefore

be inappropriate to exclude governmental undertakings merely

because they were carried on by the State or its instrumentalities.

262. The majority accordingly reasoned that only those functions

which are governed by distinct constitutional or statutory regimes,

such as the service conditions of civil servants protected under

Articles 310 and 311 of the Constitution, ought, strictly speaking,

to stand outside the ambit of the definition of ‘industry’. It was

further observed that several public utility services performed by

governmental agencies and statutory corporations are themselves

treated by the ID Act as falling within the industrial sphere.

Consequently, where the relationship between the State and its

employees is not regulated by a separate constitutional or statutory

framework, no compelling reason was perceived to artificially

exclude such activities from the operation of the ID Act merely

because they are undertaken by the State.

263. It was on this reasoning that the sovereign functions exception

came to be confined to a narrow category of activities, with the

overwhelming majority of governmental functions remaining

subject to examination under the broader framework of the Act.

264. In our assessment, this aspect too warrants a measure of

recalibration, or perhaps more accurately, simplification.

Experience has shown that excessive elaboration often carries with

it the unintended consequence of constraining rather than

clarifying. In the quest to define every conceivable category and

exception, one risks making the camel pass through the eye of the

needle.

265. We are, however, entirely ad idem on two aspects of the reasoning

in Bangalore Water Supply (supra). First, 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.

Second, 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, we find no reason to

depart from the position adopted therein.

266. Where we part ways with the reasoning in Bangalore Water

Supply (supra) is in the suggestion that, save for these narrowly

circumscribed exceptions, virtually every governmental entity,

enterprise, or undertaking must necessarily fall within the ambit of

the definition of ‘industry’. In our respectful view, such an approach

once again risks extending the concept beyond its natural limits

and drawing within its sweep a host of activities that may bear little

resemblance to what Parliament intended to regulate under the ID

Act.

267. The mere fact that an activity is undertaken by the State and does

not fall squarely within the traditional understanding of a sovereign

function cannot, by itself, compel the conclusion that it constitutes

an ‘industry’. To adopt such a position would be to presume

inclusion as the rule and exclusion as the rarest of exceptions,

thereby enlarging the definition in a manner that is neither

mandated by the statutory text nor required by principle.

268. The State today undertakes a vast array of functions in

furtherance of the Fundamental Rights guaranteed under Part III

of the Constitution and the Directive Principles embodied in Part

IV. It would be difficult to accept the proposition that every such

undertaking, merely by virtue of being organised and involving

employer-employee cooperation, must necessarily be characterised

as an ‘industry’. Many governmental activities are undertaken

primarily to discharge constitutional obligations, advance public

welfare, or fulfil social objectives, and may not possess the

commercial or economic character contemplated by the

reformulated Triple Test.

269. Equally, the realities of the contemporary economic landscape

cannot be ignored. With the increasing participation of private

actors in sectors once dominated by the State, the range of

governmental activities carried on predominantly along commercial

lines has diminished considerably. The activities undertaken by the

State that are truly analogous to trade, business, or economic

enterprise would undoubtedly fall for consideration under the

reformulated test and, where its requirements are satisfied, would

be amenable to the operation of the ID Act. However, it does not

follow that every activity undertaken in the discharge of

constitutional, welfare, or public obligations must necessarily be

drawn within the same net.

270. The distinction, in our view, lies not in the identity of the actor,

but in the nature and character of the activity itself. It is that

inquiry, rather than any presumption of universal inclusion, that

must govern the application of Section 2(j).

271. In our view, governmental undertakings, no less than private

entities or those that were delineated in Guideline III, must thus be

assessed on the touchstone of the reformulated test. The inquiry

remains one of substance rather than form. It is the nature and

character of the activity undertaken, viewed in conjunction with the

other indicia set out herein, that must guide the determination,

rather than any presumption that all governmental activity is

destined to fall within the broad sweep of ‘industry’.

272. Insofar as the remaining facets of the dominant nature test

formulated in Bangalore Water Supply (supra) are concerned, we

find no reason to depart from such interpretation. It is entirely

conceivable that a single undertaking may engage in a complex

array of activities, some of which may point towards inclusion

within the ambit of ‘industry’, while others may suggest the

contrary. In such circumstances, it remains necessary to look

beyond form and examine the true character of the enterprise as a

whole.

273. The dominant nature test continues to provide a useful analytical

tool for this purpose, enabling the Court to ascertain the principal

character of the undertaking and determine whether any

exemption is warranted or whether, notwithstanding the presence

of ancillary or incidental activities of a different character, the entity

as a whole would continue to constitute an ‘industry’ for the

purposes of the ID Act. We therefore see no occasion to disturb this

specific aspect of the framework laid down in Bangalore Water

Supply (supra). This particular guideline therefore warranted no

particular change and would continue to read thus:

“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.”

274. Accordingly, when our interpretative permutations and

combinations are read in conjunction with the modifications and

clarifications set out hereinabove, the Triple Test and the

accompanying guidelines would hypothetically stand reformulated

and read as follows:

“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 (supra), 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 (supra), 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.

275. It is pertinent to clarify at this juncture that the foregoing is only

a hypothesis, and we do not propose, at this stage, to disturb the

application of the Triple Test to proceedings that remain pending.

To do so would risk creating new and unnecessary distinctions

between similarly situated parties, and consequently generate

entirely new classes of ‘haves’ and ‘have-nots’. Our decision is

informed not only by the possibility of creating such an artificial

and narrowly defined class by retrospectively altering the manner

in which the Triple Test is to be applied, but also by the fact that

Section 2(j) of the ID Act is no longer in operation and has since

been succeeded by the legislative framework contained in the

Industrial Relations Code.

276. It goes without saying that we are not in complete agreement with

the ratio laid down in Bangalore Water Supply (supra). Had we

been in complete agreement, there would have been little reason for

us to undertake the detailed examination of its reasoning,

formulations, and constituent elements that has occupied the

preceding pages. Our endeavour has instead been to identify, with

the benefit of hindsight and experience, those aspects which may

merit refinement, without unsettling the legal position governing

matters that have already entered the judicial stream.

277. In similar vein, we do not consider it either necessary or desirable

to revisit the factual conclusions reached in each of the numerous

decisions that have applied Bangalore Water Supply (supra) over

the last several decades. To embark upon a case-by-case

reassessment of whether a particular institution was correctly

classified as an ‘industry’ would be an exercise of little practical

utility and would serve only to unsettle a substantial body of

jurisprudence that has long since attained finality. Judicial

correction must be tempered by judicial restraint, particularly

where settled rights and obligations have crystallised over time.

278. 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.

G. LEGAL IMPACT OF THE INDUSTRIAL DISPUTES (AMENDMENT) ACT, 1982

AND THE IR CODE, 2020

279. We also do not propose to enter into an examination of the

definition of ‘industry’ as it presently exists under the IR Code.

Submissions were advanced before us to the effect that the

definition contained therein draws inspiration from, or

substantially reflects, the principles embodied in the Triple Test. Be

that as it may, we consider it neither necessary nor appropriate to

express any opinion on that aspect.

280. The IR Code is an independent legislative enactment and must be

interpreted on its own terms, having regard to its text, scheme, and

object. Nothing stated in this judgment should therefore be

construed as an expression of opinion on the validity,

interpretation, scope, or constitutional legitimacy of any provision

contained therein.

281. It follows, therefore, that in view of the clarification and

reformulation of the principles laid down in Bangalore Water

Supply (supra), the said decision shall not be regarded as the sheet

anchor for the interpretation of the IR Code or any of its provisions,

should such a question arise in the future. 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.

282. Insofar as the Industrial Disputes (Amendment) Act, 1982 is

concerned, it is an undisputed position that the amendment was

never brought into force. In the absence of a notification

effectuating its commencement, the amendment never acquired

operative legal effect and therefore does not govern the controversy

before us.

283. Consequently, it is neither necessary nor appropriate for this

Court to examine its correctness, applicability, wisdom, or potential

impact. Any such exercise would be wholly academic and would

travel beyond the scope of the issues that arise for determination

in the present reference. We accordingly refrain from expressing

any opinion on the merits or consequences of the said amendment.

284. Our observations are confined exclusively to the interpretation of

Section 2(j) of the ID Act and the jurisprudence that has evolved

around the Triple Test as formulated in Bangalore Water Supply

(supra). Any questions arising under the IR Code are left open for

determination in an appropriate case.

H. CONCLUSION

285. As we conclude this judgment, we return to the metaphor that

formed the overture to this journey: the albatross around the

mariner’s neck. The controversy surrounding the definition of

‘industry’ has, for many years, weighed heavily upon this branch of

industrial jurisprudence, resurfacing time and again despite

repeated attempts at resolution. It is our sincere hope that the

present judgment finally lifts that burden and permits the law to

move forward unencumbered.

286. The voyage, however, has not been a short one. Having called at

many ports and traversed long stretches of uncertain and often

mist-laden waters, this Court has repeatedly been required to

navigate competing currents of thought in its search for a

principled and workable understanding of Section 2(j). As that

journey now draws to a close, it is our earnest hope that the present

adjudication serves as a reliable beacon for courts and tribunals at

various levels, bringing a greater measure of coherence, certainty,

and finality to a question that has engaged judicial attention for

decades.

287. Before parting with the matter, we consider it appropriate to

briefly recapitulate the principal conclusions that emerge from the

foregoing analysis:

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. In our considered view, certain aspects of the Triple Test and

the accompanying guidelines formulated in Bangalore

Water Supply (supra) were susceptible to further

refinement. While the essential framework laid down therein

has stood the test of time, we are of the opinion that some of

its constituent elements could have been articulated

differently in that judgment so as to better reflect the scope

and contours of Section 2(j). Accordingly, in our view, the

Triple Test would have been more appropriately structured,

hypothetically speaking, in the following terms:

“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 (supra), 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 (supra), 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.

iii. In view of the foregoing, the reformulated Triple Test

articulated in this judgment is to be understood as no more

than our considered opinion on the proper interpretation of

Section 2(j) of the Industrial Disputes Act, 1947. It is not

intended to displace the governing legal position in respect of

pending proceedings. Consequently, all matters presently

pending before courts, tribunals, labour authorities, or other

fora under the Industrial Disputes Act may be adjudicated in

accordance with the Triple Test laid down in Bangalore

Water Supply (supra).

iv. The present clarification shall operate prospectively in that

sense and shall not reopen, disturb, or otherwise affect

proceedings that have attained finality. 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;

v. We refrain from entering into an examination of the definition

of ‘industry’ as it presently exists under the IR Code or the

Industrial Disputes (Amendment) Act, 1982; and

vi. In view of the opinion expressed herein and the hypothetical

reformulation of the principles laid down in Bangalore

Water Supply (supra), the said decision shall not be

regarded as the sheet anchor for the interpretation of the IR

Code or any of its provisions, should such a question arise in

the future.

288. We further clarify that the present judgment is confined to

disputes arising under the ID Act and the interpretation of Section

2(j) thereof. Nothing contained herein shall be construed as

governing disputes arising under any other enactment, nor shall

these observations be treated as determinative of questions that fall

to be decided under a different statutory framework.

289. Ordered accordingly. Pending interlocutory applications, if any,

stand disposed of in the above terms.

290. There shall be no order as to costs.

…………………………..………CJI. [SURYA KANT]

…………………………..………… J. [SATISH CHANDRA SHARMA]

…………………………..………… J. [ALOK ARADHE]

…………………………..………… J. [VIPUL M. PANCHOLI]

NEW DELHI DATED: 20.08.2026

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.897 OF 2002

STATE OF U.P. … APPELLANT

VERSUS

JAI BIR SINGH … RESPONDENT

WITH CIVIL APPEAL NO.1276 OF 2001 CIVIL APPEAL NO.1278 OF 2001 CIVIL APPEAL NO.1279 OF 2001 CIVIL APPEAL NO.6114 OF 2001 CIVIL APPEAL NO.8597 OF 2001 CIVIL APPEAL NO.2409 OF 2002 CIVIL APPEAL NO.2506 OF 2002 CIVIL APPEAL NO.4569 OF 2002 CIVIL APPEAL NO.5101 OF 2002 CIVIL APPEAL NO.6108 OF 2002 CIVIL APPEAL NO.6471 OF 2002 SLP(C) NO.20982 OF 2002 CIVIL APPEAL NOS.355-358 OF 2003 CIVIL APPEAL NO.7994 OF 2004 SLP(C) NO.11291 OF 2004 SLP(C) NO.14085 OF 2004 SLP(C) NO.14127 OF 2004

1 SLP(C) NO.4139 OF 2005 CIVIL APPEAL NO.1273 OF 2007 CIVIL APPEAL NO.1274 OF 2007 CIVIL APPEAL NO.3647 OF 2007 CIVIL APPEAL NO.4646 OF 2007 SLP(C) NO.16301 OF 2007 CIVIL APPEAL NO.296 OF 2008 CIVIL APPEAL NOS.1311-1312 OF 2008 SLP(C) NO.3107 OF 2008 SLP(C) NO.4327 OF 2008 SLP(C) NO.4328 OF 2008 SLP(C) NO.4329 OF 2008 SLP(C) NO.16276 OF 2008 SLP(C) NO.17224 OF 2008 SLP(C) ... CC NO.7990 OF 2009 SLP(C) NO.1112 OF 2009 CIVIL APPEAL NO.3920 OF 2010 CIVIL APPEAL NO.5681 OF 2010 CIVIL APPEAL NO.3119 OF 2011 CIVIL APPEAL NO.7757 OF 2011 CIVIL APPEAL NO.1131 OF 2012 CIVIL APPEAL NO.5519 OF 2012 CIVIL APPEAL NOS.8149-8151 OF 2012 CIVIL APPEAL NOS.4505-4506 OF 2013 CIVIL APPEAL NOS.4507-4508 OF 2013 SLP(C) NOS.12679-12682 OF 2014

2 SLP(C) NO.1857 OF 2016 SLP(C) NO.14156 OF 2021

INDEX

Reframed Questions: ...................................................................................... 5 Definition of “Industry”: ................................................................................ 7 Submissions: .................................................................................................. 15 Whether reconsideration of Bangalore Water Supply is necessary?: .. 37 “From 1950 to 1991: Planned economy to Liberalisation, Privatisation and Globalisation (“LPG”): ........................................................................... 48 Industrial Policies from 1951 onwards: A Bird’s eye view: ................... 61 Bangalore Water Supply:............................................................................. 65 Opinion of Krishna Iyer, J. (for himself, Bhagwati and Desai, JJ.): ............. 67 Opinion of Beg, C.J.: ........................................................................................... 78 Opinion of Chandrachud, C.J.: .......................................................................... 83 Opinion of Jaswant Singh, J. (on behalf of himself and Tulzapurkar, J.): . 92

Analysis of the Opinions in Bangalore Water Supply: ............................ 95 “Triple Test”: ................................................................................................. 95 Overruling of Safdarjung Hospital: ........................................................... 97 Solicitors’ Case: ........................................................................................... 100 Gymkhana Club:........................................................................................... 103 Why did Bangalore Water Supply Overrule Both Cases?: ..................... 108 Further Analysis: ......................................................................................... 117 Application of the ratio of Bangalore Water Supply and reference to a larger Bench: ................................................................................................ 130 Why an expansive definition of “Industry” is necessary ?: .................. 137 Any other issue(s) that may arise during the course of hearing before the nine-Judge Bench: ................................................................................. 143 SUMMARY OF CONCLUSIONS: ..................................................................... 147

3 OPINION

NAGARATHNA, J.

I have perused the erudite opinions of learned Chief Justice

Surya Kant and learned Brothers Narasimha, Dipankar Datta and

Joymalya Bagchi, JJ. However, I have authored a separate opinion

indicating as to why reconsideration of the judgment of this Court

in Bangalore Water Supply & Sewerage Board vs. A. Rajappa,

AIR 1978 SC 548 (“Bangalore Water Supply”) is not warranted.

I have also stated that the reference made by a five-Judge Bench

of this Court in State of U.P. vs. Jai Bir Singh, (2005) 5 SCC 1,

(“Jai Bir Singh”) was unnecessary.

Nevertheless, I have analysed the judgment of this Court in

Bangalore Water Supply and have concluded that the same does

not call for any interference or modification. Accordingly, I have

answered the questions referred to this nine-Judge Bench.

1.1 What is the meaning and interpretation to be given to the

expression “industry” in Section 2(j) of the Industrial Disputes Act,

1947 (hereinafter referred to as “I.D. Act” for the sake of

convenience)? This question has resurfaced after a seven-Judge

4 Bench answered it in the case of Bangalore Water Supply nearly

half a century ago. At this stage itself, I observe that Section

2(j) of the ID Act cannot be interpretated from the prism of

Section 2(p) of the IR Code on “hypothetical basis”.

Reframed Questions:

1.2 In State of U.P. vs. Jai Bir Singh, (2005) 5 SCC 1, (“Jai Bir

Singh”), a five-Judge Bench of this Court referred for

reconsideration the judgment of this Court rendered by a seven-

Judge Bench in Bangalore Water Supply. This judgment

concerned the interpretation of the expression “industry” as

defined in Section 2(j) of the I.D. Act. Consequently, a seven-Judge

Bench was constituted and by order dated 02.01.2017, the matter

was referred to a nine-Judge Bench. That is how this Bench of nine

Judges has been constituted. By order dated 16.02.2026, the

following four questions have been reframed for the consideration

of the nine-Judge Bench:

“(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

5 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? (iv) Any other issue(s) that may arise during the course of hearing before the Nine-Judge Bench.”

1.3 The reason for the reference was a perceived conflict between

two decisions of this Court in Chief Conservator of Forests vs.

Jagannath Maruti Kondhare, (1996) 2 SCC 293 (“Jagannath

Kondhare”) (three-Judge Bench) and State of Gujarat vs.

Pratamsingh Narsinh Parmar, (2001) 9 SCC 713

(“Pratamsingh Parmar”) (two-Judge Bench). The question before

both the aforesaid Benches was, whether Social Forestry activities

of the State, through a welfare scheme undertaken for the

improvement of the environment, would be covered within the

scope and ambit of the definition of “industry” under Section 2(j) of

the I.D. Act. In Jagannath Kondhare, the three-Judge Bench held

that the Social Forestry Department was covered within the

6 definition of “industry” as interpreted by this Court in Bangalore

Water Supply, whereas in Pratamsingh Parmar, the two-Judge

Bench held that the Social Forestry Department did not come

within the ambit of the definition of “industry”.

1.4 Further, different views were expressed with regard to the

understanding of the decision of the seven-Judge Bench in

Bangalore Water Supply. Therefore, the matter was referred to a

five-Judge Bench in Jai Bir Singh and pursuant to the order dated

05.05.2005, Bangalore Water Supply was referred to a larger

Bench of seven Judges and thereafter, this nine-Judge Bench was

constituted.

Definition of “Industry”:

1.5 The centre of controversy in these cases is the interpretation

to be given to the expression “industry” in Section 2(j) of the I.D.

Act. For immediate reference, the said definition is extracted as

under:

“2. Definitions.—In this Act, unless there is anything repugnant in the subject or context,— xxx (j) “industry” means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen;” (underlining by us)

7 1.6 The aforesaid definition represents a two-fold perspective:

from the point of view of an employer, it means any business, trade,

undertaking, manufacture or calling of employers. The use of the

expression “means” implies that it is exhaustive. From the point of

view of an employee or the workman, the expression “industry”

includes any calling, service, employment, handicraft, or industrial

occupation or avocation of workmen. The use of the expression

“includes any” implies that from the workman’s point of view, the

expression “industry” is not an exhaustive definition but an

expansive one. The two limbs of the definition are connected by the

word “and”.

1.7 Business, trade, undertaking and manufacture are relatable

to employers’ enterprises in the aforesaid forms wherein there is

employment of workmen. It could also be a calling of the employers

relatable to a service and not necessarily production of goods.

Therefore, production or manufacture of goods or making available

various kinds of services is “industry” from the employers’ point of

view.

1.8 Similarly, from the workmen’s point of view, when they are

engaged in any service, employment, calling or any handicraft,

8 industrial occupation or avocation, they would be working in an

“industry”. But, the interpretation of the word “industry” must be

wholesome and realistic and not in an abstract or from a doctrinal

perspective.

1.9 Having regard to the objects and purposes of the I.D. Act, the

definition of “industry” in Section 2 of the I.D. Act has to be

interpreted in a broad and comprehensive manner and not in a

narrow and myopic way. This is because the I.D. Act is essentially

a social welfare legislation for the protection of workmen as well as

for the protection of those who run the “industry”. Hence, what is

the meaning to be ascribed to the word “industry” is of vital

significance while implementing the I.D. Act and its provisions.

1.10 Section 2(j) was substituted by Section 2(c) of the Industrial

Disputes (Amendment) Act, 1982. This was nearly four years after

the judgment in Bangalore Water Supply was pronounced.

However, the said amendment was not notified and therefore not

enforced. By the said amendment made to the I.D. Act, the

definition of “industry” was sought to be amended in the following

terms:

9 “(j) “industry” means any systematic activity carried on by co-operation between an employer and his workmen (whether such workmen are employed by such employer directly or by or through any agency, including a contractor) for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature), whether or not,— (i) any capital has been invested for the purpose of carrying on such activity; or (ii) such activity is carried on with a motive to make any gain or profit, and includes— (a) any activity of the Dock Labour Board established under section 5A of the Dock Workers (Regulation of Employment) Act, 1948 (9 of 1948); (b) any activity relating to the promotion of sales or business or both carried on by an establishment, but does not include— (1) any agricultural operation except where such agricultural operation is carried on in an integrated manner with any other activity (being any such activity as is referred to in the foregoing provisions of this clause) and such other activity is the predominant one. Explanation:—For the purposes of this sub- clause, “agricultural operation” does not include any activity carried on in a plantation as defined in clause (f) of section 2 of the Plantations Labour Act, 1951 (69 of 1951); or (2) hospitals or dispensaries; or (3) educational, scientific, research or training institutions; or (4) institutions owned or managed by organisations wholly or substantially engaged in any charitable, social or philanthropic service; or

10 (5) khadi or village industries; or (6) any activity of the Government relatable to the sovereign functions of the Government including all the activities carried on by the departments of the Central Government dealing with defence research, atomic energy and space; or (7) any domestic service; or (8) any activity, being a profession practised by an individual or body of individuals, if the number of persons employed by the individual or body of individuals in relation to such profession is less than ten; or (9) any activity, being an activity carried on by a co-operative society or a club or any other like body of individuals, if the number of persons employed by the co-operative society, club or other like body of individuals in relation to such activity is less than ten.” (underlining by us)

As the said definition had not yet been enforced, a five-Judge

Bench of this Court in Jai Bir Singh thought it necessary to refer

the matter to a larger Bench.

1.11 It is also necessary to take note of the fact that recently, the

Parliament has enacted the Industrial Relations Code, 2020 (“IR

Code”, for the sake of convenience), wherein Section 2(p) defines

the word “industry” as under:

11 “2. Definitions. — In this Code, unless the context otherwise requires, — xxx (p) “industry” means any systematic activity carried on by co-operation between an employer and worker (whether such worker is employed by such employer directly or by or through any agency, including a contractor) for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature), whether or not,— (i) any capital has been invested for the purpose of carrying on such activity; or (ii) such activity is carried on with a motive to make any gain or profit, but does not include — (i) institutions owned or managed by organisations wholly or substantially engaged in any charitable, social or philanthropic service; or (ii) any activity of the appropriate Government relatable to the sovereign functions of the appropriate Government including all the activities carried on by the departments of the Central Government dealing with defence research, atomic energy and space; or (iii) any domestic service; or (iv) any other activity as may be notified by the Central Government;” (underlining by us)

1.12 In the case of Coir Board, Ernakulam, Cochin vs. Indira

Devi P.S., (1998) 3 SCC 259, (“Coir Board”) the question was, as

to whether, the appellant-Coir Board, Ernakulam Cochin, that had

12 been established under the Coir Industry Act, 1953 (for short,

“1953 Act”) was an “industry” or not, to determine the applicability

of Chapter V-A of the I.D. Act. A perusal of the Statement of

Objects and Reasons of the said 1953 Act revealed that the

functions of the Board under Section 10 included promotion of the

exports of coir products; regulating the production of husks; coir

yarn and coir products; encouraging and assisting scientific,

technological and economic research into the coir industry;

collecting relevant statistics; fixing standards and inspecting coir

products; improving the marketing of coconut husk and coir

products; setting up or assisting in the setting up of marketplaces

for coir products; ensuring remunerative returns for coir products;

promoting cooperative organisation among producers of coir

products; licensing of spaces to store and sell the coir products;

advising on matters relating to the coir industry and other ancillary

matters as may be prescribed. It was noted that the Coir Board

maintained showrooms and sales depots for the purpose of

marketing of coir products and contained samples of coir products

for potential manufacturers/merchants to consider. Certain

temporary clerks and typists who had been employed by the Coir

13 Board were discharged. They alleged wrongful termination that was

not in accordance with the provisions of the I.D. Act. The two-

Judge Bench of this Court, as opposed to applying the test laid

down by the seven-Judge Bench of this Court in Bangalore Water

Supply, which was binding on it, to the given factual matrix

instead proceeded to note the existence of prevailing uncertainty in

the application of the said test for over two decades, making a re-

examination of Bangalore Water Supply necessary. It was then

directed that the matter be placed before the Hon’ble Chief Justice

to determine if a larger Bench was to be constituted to reconsider

the decision of this Court in Bangalore Water Supply. In my

view, such a reference was entirely unwarranted and unnecessary.

1.13 Subsequently, a three-Judge Bench of this Court in Coir

Board, Ernakulam, Kerala State vs. Indira Devai P.S, (2000)

1 SCC 224 (“Coir Board-II”) rightly held that the judgement in

Bangalore Water Supply did not require any reconsideration on

a reference made by a two-Judge Bench of this Court, which was

bound to follow it having regard to the facts of the case.

14 Submissions:

2. We have heard learned Attorney General Sri R.

Venkataramani, learned ASG and learned senior counsel

appearing for the respective States contending the necessity of

reconsidering the judgment of this Court in Bangalore Water

Supply. We have also heard learned senior counsel Ms. Indira

Jaising, Sri Chander Uday Singh as well as other counsel who have

contended that the said judgment would not call for any

reconsideration at this point of time. We have also heard learned

senior counsel and amicus curiae Sri Partha Sarathi Sengupta and

Sri J.P. Cama who have made their submissions which are

diametrically opposed to each other.

2.1 On behalf of the Union of India, learned Attorney General for

India submitted that to determine what constitutes “industry”

under Section 2(j) of the I.D. Act, one has to explain the meaning

of all the terms in the definition, such as “business”, “trade”,

“manufacture”, etc. Thus, it becomes important to gather

principles common to all such terms and activities. The principles

and tests (including the “triple test”) expounded in paragraphs 140

and 141 of Bangalore Water Supply is thus an expression of

15 factors and attributes that are common to all these activities. These

principles and tests do not seem to suffer from any inconsistencies

or fallacies.

2.2 Section 2(j) of the I.D. Act does not by itself provide any

guidance as to how inclusions or exclusions within the provision

must be considered. In this sense, Section 2(j) was a skeletal

statutory provision leaving it open to contextual interpretation by

the judiciary. In Bangalore Water Supply, the Supreme Court

gave such an exposition of the meaning of “industry” in its

understanding of what the object and purpose of the I.D. Act is.

2.3 Therefore, it was submitted that the principles laid down in

Bangalore Water Supply are not in conflict, or inconsistent, with

the definition of “industry” in Section 2(j) under a social justice

premise underlying the I.D. Act. The “triple test” is good law.

However, simultaneously, the definition of “industry” under the

1982 Amendment may be used as an interpretative tool to

circumscribe an overbroad application of the “triple test”. This

Amendment may be used in interpreting cases pending or filed as

on 21.11.2025, after which the IR Code shall apply.

16 2.4 With regard to the exclusion of sovereign functions of the

State, learned Attorney General submitted that the nature of

sovereign functions is inherently linked to the evolving role of the

State. While activities that were once sovereign in nature could

move to the realm of private enterprise, newer forms of

governmental responsibility could also emerge due to

technological, economic or institutional developments.

2.5 However, it was submitted that an indiscriminate

application of the “triple test” to sovereign/government functions

has led to an over broad interpretation of “industry” that blurs the

distinction between commercial activities and constitutionally

mandated sovereign functions. Social welfare programmes are

undertaken in discharge of the State’s constitutional and sovereign

obligations to promote public welfare and socio-economic

development. Therefore, they differ fundamentally from economic

undertakings engaged in trade, business or the commercial

production of goods and services.

2.6 It was contended that in the 1982 Amendment to the I.D.

Act, as well as the IR Code, the legislative policy indicated is an

intention to exclude welfare and sovereign governmental functions

17 from the scope of the definition of “industry”. Therefore, such

activities must remain outside the scope of “industry” even under

the original definition under the I.D. Act.

2.7 It was submitted that some functions are inherently and

inalienably sovereign, namely (i) defense of the nation; (ii)

maintenance of public order; (iii) administration of justice; (iv)

legislative and policy-making authority; (v) citizenship and

naturalisation; (vi) passports and visas; and (vii) core regulatory

and coercive powers of the State, which may relate to public

purpose or common good fields. All governance functions are all

public purpose functions. Beyond these categories, the

classification of sovereign and governmental functions is to be

contextually determined.

2.8 It was submitted that the Executive is better-positioned to

make an initial determination of whether the State considers

functions to be sovereign or of a public purpose. Judicial review

would be available to make sure that this determination is not

arbitrary or violative of constitutional provisions or principles.

However, it was submitted that judicial review should not extend

to constructing an exhaustive definition of sovereign functions.

18 2.9 Learned Attorney General further contended that it is

important to have an element of ‘severability’ in assessing

sovereign functions, i.e., that there may be activities in furtherance

of State policy that do not themselves carry a sovereign function

element. However, severability must not be applied in an overbroad

manner, which would lead to an artificial fragmentation of

governmental functions. This might restrict the State’s ability to

implement welfare programmes. It was urged that the Court must

accord importance to the functional identity of an organisation or

enterprise to determine whether it is performing a sovereign

function.

2.10 Learned Additional Solicitor General (ASG) Sri KM Nataraj,

appearing on behalf of the State of Uttar Pradesh, submitted that

the Parliament had made an attempt through the Industrial

Disputes (Amendment) Act, 1982 to redefine the expression

“industry” so as to remove the ambiguities that arose on account

of the expansive interpretation given to the term in Bangalore

Water Supply. This indicates a legislative intent to restrict a

broad interpretation of “industry”. It was submitted that this

amendment may be relied upon as an interpretive aid to adopt a

19 purposive construction that restricts government departments

performing sovereign functions from being brought within the

purview of “industry”.

2.11 It was further submitted by learned ASG that the IR Code

removes interpretational ambiguities through its definition of

“industry” under Section 2(p). One of the exceptions provided in

this definition is for activities “relatable to the sovereign functions

of the appropriate Government”. The phrase “relatable to” expands

the scope of the exception to include activities that bear a nexus

with sovereign functions. The exclusion is not only of primary or

inalienable sovereign functions. The definition also excludes

institutions owned or managed by organisations wholly or

substantially engaged in a charitable, social or philanthropic

service. It further excludes domestic services from the purview of

“industry”, and also allows the Central Government to notify

additional activities that may be excluded from the ambit of

“industry”. This provides flexibility to exclude certain sectors or

activities from the ambit of regulation.

2.12 Learned ASG submitted that the British-colonial concept of

‘sovereign function’ viewed the State as an authority responsible

20 for maintaining order, administering justice and protecting

territorial integrity. Under this framework, welfare activities like

education, healthcare and social security were not under the ambit

of government functions. However, learned ASG submitted that

this understanding is at odds with India being a welfare State in

which the State is enjoined to perform various functions in the

fields of education, healthcare, social welfare, etc. in accordance

with the Directive Principles of State Policy in Part IV of the

Constitution of India. It was submitted that wherever the

government undertakes public welfare activities in discharge of its

Constitutional obligations under Part IV, such activities must be

treated as “sovereign functions” and must thus be outside the

purview of the definition of “industry”.

2.13 Learned ASG contended that public employment under the

Government is governed by a distinct legal framework.

Recruitment, service conditions, as well as safeguards against

arbitrary dismissal, removal or reduction in rank, are governed by

Articles 309 and 311 of the Constitution. In addition to these

provisions, Parliament has enacted specific statutes such as the

Administrative Tribunals Act, 1985. It provides a structured legal

21 mechanism for service disputes involving government employees.

Therefore, it was submitted that even if sovereign functions are

excluded from the ambit of the I.D. Act, government employees

remain protected through Constitutional and statutory

mechanisms.

2.14 Learned ASG argued that treating government

departments and welfare institutions as “industry” would have

negative consequences, such as making essential public services

subject to strikes and bargaining conflicts. Further, the services of

government employees would be governed by mechanisms under

the I.D. Act, which are incompatible with Constitutional service

protections.

2.15 In sum, learned ASG submitted that the IR Code must be

viewed as a clarificatory and remedial legislation, which reflects the

deliberate intention of Parliament to restrict the expansive

definition of “industry” adopted in Bangalore Water Supply and

to exclude sovereign functions including statutory obligations and

welfare responsibilities of the State from the ambit of the I.D. Act.

2.16 Sri Sanjay Hegde, learned senior counsel appearing on

behalf of the State of Karnataka at the outset submitted that an

22 expansive definition of the term “industry” would include the

activities of Government departments which would result in

entities that could never have been covered by the I.D. Act now

being covered by its broad sweep. Therefore, by applying the

principle of noscitur a sociis, the words “industry” and

“undertaking” must be read in the context of the words that appear

alongside them, namely “trade, business and manufacture or

calling”.

2.17 It was contended that the decision of six Judges of this

Court in the case of Management of Safdarjung Hospital, New

Delhi vs. Kuldip Singh Sethi, AIR 1970 SC 1407 (“Safdarjung

Hospital”) is right. That the said decision rightly interpreted the

phrase “industry” based on a sound analysis of the text of the

definition under Section 2(j) of the I.D. Act.

2.18 Further, the sovereign function exception to the definition

of the term “industry” as laid down by the majority in Bangalore

Water Supply is too limited, as the Government undertakes a wide

variety of activities such as regulation and planning that may

include acts such as laying down a road or acquiring property. That

acts such as these cannot be termed an “industry” when performed

23 by the Government, even if they may constitute an “industry”

otherwise.

2.19 Sri Shadan Farasat, learned senior counsel appearing on

behalf of the State of Punjab submitted that the “triple test” as laid

down in the case of Bangalore Water Supply is too expansive.

That the overbreadth of the judgment can be corrected by including

the existence of a commercial objective as well as that of physical

or manual labour, as opposed to intellectual services, as

prerequisites in the “triple test” to consider an activity to be an

“industry” within the meaning of Section 2(j) of the I.D. Act.

2.20 That various other categories of employees already receive

protection under various specific statutory frameworks with

distinct modes of grievance redressal, thereby rendering an

expansive definition of the term “industry” under the I.D. Act

unnecessary.

2.21 Learned senior counsel Sri J.P. Cama, amicus curiae, invited

our attention to the definition of “industry” under Section 2(j) of the

I.D. Act, submitting that the definition comprised two parts: the

first, in the context of employers and the second, in the context of

workmen. In D.N. Banerji vs. P.R. Mukherjee, AIR 1953 SC 58

24 (“Banerji”), this Court held that the length and breadth of the

definition was reinforced by the second part. Subsequently,

learned amicus curiae drew our attention to the definition of

“industrial dispute” under Section 2(k) of the I.D. Act, submitting

that it encompasses disputes between employers and employers,

employers and workmen or between workmen and workmen. In

sum, it was argued that the I.D. Act covers a dispute between

workmen inter se as much as it means a dispute between workmen

and employers.

2.22 With respect to charitable organisations, learned amicus

curiae submitted that pure and simple charities, such as the

government supplying free education, is not “industry”. However,

any charitable institution which contains an employer-employee

relationship is otherwise covered by the definition of “industry”. It

was contended that what is relevant is “what” the activity

performed is, rather than “who” performs the activity.

2.23 With respect to the exclusion of “regal functions”, learned

amicus curiae submitted that the element of regality itself does not

lead to a complete ouster. There might be elements of regal or

sovereign functions that are ‘industrial’. If so, then it is possible to

25 conclude that these elements are also included within the purview

of “industry”. However, in cases concerning the Defence, which is

governed by a dedicated separate law, i.e., the Armed Forces

Tribunal Act, 2007, the I.D. Act would not apply.

2.24 With respect to the “triple test” propounded by Krishna Iyer,

J. in Bangalore Water Supply, learned amicus curiae disagreed

with the principle that an employer-employee relationship is a

determinative factor. This is because even an altruistic

establishment which is clearly outside the purview of “industry”,

may have an employer-employee relationship. Instead, learned

amicus curiae submitted that the test must be two-fold,

corresponding to the separate parts of the definition of “industry”;

first, the entity must be an “industry” in the sense of the terms

used in Section 2(j), i.e., business, trade, manufacture,

undertaking or calling of employers and second, the people

employed therein must be ‘workmen’ in order to fall under the

second part of Section 2(j) of the I.D. Act. These two elements – the

‘management’ and ‘labour’ elements must co-exist. An entity that

is a ‘business’, but whose employees are not ‘workmen’ (for

26 instance, if they are sales representatives) is not an “industry”, and

vice-versa.

2.25 Learned amicus curiae contended that not every “employee”

is a ‘workman’. To be a ‘workman’ under Section 2(s) of the I.D.

Act, an employee must be engaged in at least one of the specific

categories of labour mentioned in the definition – manual,

unskilled, skilled, technical, operational, clerical or supervisory

work. In this vein, learned amicus curiae submitted that Sections

2(j) and 2(s) must coalesce. Mere employer-employee relations are

insufficient, since they exist even in non-industrial or altruistic

entities.

2.26 Learned amicus curiae contended that Krishna Iyer, J. was

not right in holding that profit motive is an irrelevant consideration

in determining whether an entity is an “industry”. Per contra, he

submitted that profit motive is a sine-qua-non for the existence of

a business, trade, etc., which are the terms under the definition of

“industry”. In this vein, learned amicus curiae contended that to be

an “industry”, an entity must fall under one of the categories

specified in the definition, i.e., business, trade, undertaking, etc.

In this regard, the doctrine of ejusdem generis would apply in

27 determining whether an entity is an “industry” in the context of the

terms specified in Section 2(j). In sum, it was submitted that

Krishna Iyer, J. erred insofar as the “triple-test” would include

activities that are not in the nature of a trade or business, such as

clubs and research institutions. The crux of the test cannot be the

existence of an employer-employee relationship, since that would

be over inclusive.

2.27 With respect to social welfare activities and schemes

undertaken by government departments, learned amicus curiae

submitted that if the intention is to make money and pay the people

concerned, it is an “industry”. However, if it is done altruistically

and without any element of financial intention or profit, then it is

not an “industry”.

2.28 Learned senior counsel, Ms. Indira Jaising, on behalf of the

Respondents at the outset submitted that there was no need to

reconsider the judgment of this Court in the case of Bangalore

Water Supply and that the reference ought to be rejected. This is

because there is no conflict between the judgments of the three-

Judge Bench of this Court in Jagannath Kondhare and the two-

Judge Bench of this Court in Pratamsingh Parmar, as the latter

28 was confined to the facts of the case and it was further held therein

that no contention had been raised that the concerned entity was

an “industry”.

2.29 It was contended that the judgment of this Court in the case

of Bangalore Water Supply was a judgement of seven Judges of

this Court, notwithstanding the dissents of Jaswant Singh and

Tulzapurkar JJ. In this context, reliance was placed on the

judgment of this Court in the case of Trimurthi Fragrances

Private Ltd. vs. Government of NCT of Delhi, (2024) 20 SCC

709 (“Trimurthi Fragrances”).

2.30 It was further submitted that there was no basis to

reconsider the decision in the case of Bangalore Water Supply

given that all future cases would be determined by the newly

enacted IR Code. That owing to the non-enforcement of the 1982

Amendment of the I.D. Act, the interpretation in the case of

Bangalore Water Supply is the authoritative position of law that

cannot now be challenged.

2.31 It was urged that the definition of the term “industry” in

the case of Bangalore Water Supply is well-founded and based

on the classical principles of interpretation of statutes, particularly

29 beneficial statutes. These principles are to consider the plain

meaning of the section, to look at the object of the I.D. Act, read

the Preamble to the Constitution, to see how the I.D. Act achieves

that object and to interpret the words according to those principles.

2.32 It was submitted that the definition of the term “industry”

as propounded in the case of Bangalore Water Supply serves the

purpose of providing workmen with a means to address their

grievances in relation to the conditions of their employment and

assail unfair treatment. That it serves the purpose of providing a

grievance redressal mechanism for swathes of employees who

otherwise do not have any form of remedy. This is because filing a

civil suit is not a suitable substitute to the remedies available

under the provisions of the I.D. Act, as a civil court can only order

that sufficient damages must be paid to the workman in question

and cannot award reliefs such as reinstatement.

2.33 As regards the sovereign function exception, it was

contended that only those inalienable functions which could not be

subject to judicial review would be narrowly excepted. That this

could not extend to all the welfare activities of the State.

30 2.34 That in the case of charitable purposes, the exclusion of

profit motive as a determinative criterion in the definition of the

term “industry” under Section 2(p) of the IR Code, evinced the

Parliament’s acquiescence to the judgment in the case of

Bangalore Water Supply. That upon the application of the “triple

test”, if an entity was found to be an “industry”, its involvement in

charitable or social welfare activities would not be a reason to

exclude the entity from the applicability of the definition.

2.35 That the Liberalisation, Privatisation and Globalisation (LPG)

policy adopted by the State has resulted in the strategic

disinvestment of the Government from many sectors, thereby

opening these up to the private sector. In this context, the need for

an expansive definition of the term “industry” so as to encapsulate

those who would be affected by such acts of privatisation and

concomitantly, would be without remedies that they were earlier

entitled to, was emphasised.

2.36 It was vehemently contended that the judgment of this Court

in the case of Bangalore Water Supply is necessary to ensure the

possibility of access to justice to all categories of employees,

31 including those who are not covered by either the Constitution or

specific statutes.

2.37 Learned senior counsel for the intervenor – New Trade

Union Initiative in I.A No.4/2016 in Civil Appeal No.897/2002, Sri

Chander Uday Singh, reiterating some of the contentions raised by

Ms. Indira Jaising, at the outset submitted that the judgment of

this Court in the case of Bangalore Water Supply has held the

field for over forty-eight years and that the reference to a nine-

Judge Bench of this Court was entirely unwarranted. That on the

basis of the said decision, a large number of matters have been

decided and have attained finality. That it is well-established that

the reopening and reconsideration of otherwise validly decided

cases must be desisted from, except in rare cases of manifest errors

or inconsistencies.

2.38 It was submitted that reasons such as the judgment of this

Court in Bangalore Water Supply and its interpretation of the

I.D. Act being too “worker-oriented” resulting in “industrial

hazards” for those engaged in private enterprise do not pass muster

as reasons to revisit a validly decided decision of this Court.

32 2.39 It was contended that there was unanimity as on the date

of pronouncement of the said judgment among the seven Judges

of this Court that the appeal should be dismissed. That all the

seven Judges of this Court further signed the said order. It was

only a desire to record some areas of convergence and divergence

that caused Chandrachud C.J., Jaswant Singh and Tulzapurkar

JJ. to indicate that they would do so later. That the mere factum

of there being subsequently written opinions, wherein there were

some disagreements with parts of the opinion of Krishna Iyer, J.,

do not on their own indicate a lack of a clear majority.

2.40 It was submitted that there was no conflict between the

decisions of a three-Judge Bench of this Court in the case of

Jagannath Kondhare and a two-Judge Bench of this Court in

Pratamsingh Parmar which could have led the five-Judge Bench

to refer the reconsideration of the judgment in Bangalore Water

Supply to a larger Bench in Jai Bir Singh.

2.41 Learned senior counsel Sri Vijay Hansaria, on behalf of the

respondent in Civil Appeal No.358 of 2003, submitted that the

“triple test” laid down in paragraph 140 of Bangalore Water

Supply expresses characteristics that are inherent, essential and

33 necessary for any business, trade, undertaking, manufacture or

calling of employers mentioned in Section 2(j) of the I.D. Act.

Therefore, the judgment in Bangalore Water Supply does not

travel beyond the legislative wording or intent.

2.42 Learned senior counsel further submitted that Bangalore

Water Supply does not require reconsideration due to the

principle of ‘stare decisis’. It was contended that binding

precedents may only be reconsidered in narrow circumstances, i.e.,

clear and compelling reasons, manifest incorrectness, erroneous

beyond all reasonable doubt, etc., and that no such circumstance

arises with regard to the judgment in Bangalore Water Supply.

It was urged that after the enforcement of the IR Code on

21.11.2025, any interpretation of Section 2(j) of the I.D. Act would

only have a bearing on pending litigation and a restrictive

interpretation would affect the vested rights of workmen.

2.43 Learned senior counsel Gopal Sankaranarayanan, on behalf

of the All India Trade Union Congress, adopted the arguments of

learned senior counsel Ms. Indira Jaising and Mr. Chander Uday

Singh. However, he also specifically submitted that the following

approach may be adopted in considering whether an activity is

34 “industry” within the meaning of Section 2(j) of the I.D. Act – (i) to

examine only the activity to see whether it comes within the words

“undertaking”, ”calling” or “avocation”, which are the widest

phrases in the provision; (ii) to ignore who is carrying out the

activity concerned; and (iii) to ignore the motive behind the activity

as long as it is legal, since a charitable activity cannot be

unregulated. In this sense, it was contended that it is the judgment

of Chandrachud, C.J. that provides the most logical and consistent

approach to interpreting the definition of “industry” in Section 2(j)

of the I.D. Act.

2.44 Learned senior counsel further contended that with the

repeal of the I.D. Act and enactment of the IR Code, any answer to

the reference would be largely academic, since most legacy cases

have already been answered by applying Krishna Iyer, J.’s

judgment in Bangalore Water Supply and therefore any change

in the interpretation of the definition of “industry” under the

repealed I.D. Act cannot be to the disadvantage of the workmen.

2.45 It was also submitted that the distinction between

governmental/non-governmental or sovereign/non-sovereign is

entirely artificial and irrelevant. The objective of regulating the

35 relationship between employers and workers is to ensure

harmonious cooperation, which is critical even in entities

performing sovereign functions. Further, if such entities are not

included within the ambit of “industry”, there would be no

alternative remedies or equivalent mechanisms for resolving the

grievances of the workers, which was in fact why the 1982

Amendment was not enforced by the Central Government.

2.46 Learned senior counsel Sri Partha Sarathi Sengupta, who

has rendered his assistance as an amicus curiae in this matter

submitted that the test laid down in the case of Bangalore Water

Supply should continue to be applied, considering that the said

case has held the field for about half a century. In this context,

reliance was placed on the judgment of this Court in the case of

Gujarat Steel Tubes Ltd. vs. Gujarat Steel Tubes Mazdoor

Sabha, (1980) 2 SCC 593, (“Gujarat Steel Tubes Ltd.”).

2.47 That as the Industrial Disputes (Amendment) Act, 1982 has

not been brought into effect, it cannot in any way supersede or

affect the interpretation of Section 2(j) of the I.D. Act as propounded

in the case of Bangalore Water Supply. Also, the IR Code cannot

36 have any effect on the definition contained in the I.D. Act, as the

said Code can only have a prospective effect.

2.48 It was further contended that the definition of the term

“industry” as laid down in the case of Bangalore Water Supply is

in line with the Preambular values contained in the Constitution.

Whether reconsideration of Bangalore Water Supply is necessary?:

3. At the outset, I state that at this point of time, the present

reference would not call for a reconsideration of the judgment in

Bangalore Water Supply for the following reasons:

Firstly, the I.D. Act has been repealed w.e.f. 21.11.2025.

Therefore, the definition of “industry” as per Section 2(j) of the

repealed I.D. Act would be applicable only to those cases which are

pending either before the Labour Courts, Industrial Tribunals,

High Courts or this Court, or those which may arise up to the said

date. Depending upon the nature of the activity, the decision as to

whether the activity would fall within the scope and ambit of the

definition of “industry” under Section 2(j) of the I.D. Act would have

to be taken and each case would depend on the facts and

circumstances on which it is premised.

37 Secondly, on the repeal of the I.D. Act, a new enactment by

way of the IR Code has now been enforced with effect from

21.11.2025. Section 2(p) of the IR Code contains the definition of

“industry” and the same has been extracted earlier. On a

comparison of the definition of “industry” as found in the I.D. Act

(since repealed) and the definition of “industry” under the IR Code,

we find that there are certain distinctions as well as commonalities.

However, we are not required to opine on the definition of

“industry” under Section 2(p) of the IR Code so as to interpret

Section 2(j) of the I.D. Act and to reconsider the judgment of this

Court in Bangalore Water Supply.

Thirdly, the judgment of the seven-Judge Bench in

Bangalore Water Supply has held the field for nearly half a

century (forty-eight years). The Tribunals and Courts have been

deciding disputes on the touchstone of the said judgment. The new

law containing a new definition cannot at all influence the

interpretation of the repealed definition of “industry” or for that

matter be a reason for a reconsideration of the judgment of this

Court in Bangalore Water Supply.

38 The doctrine of stare decisis meaning literally “to stand by

decided cases” is a cornerstone of legal systems. It requires courts

to follow prior judicial decisions when the same points of law arise

in future cases.

Bangalore Water Supply is not an isolated case. It has

become the foundation upon which both public and private actors

have structured their conduct for about five decades.

Administrative frameworks, commercial arrangements, and

individual rights have all taken form in accordance with the

understanding Bangalore Water Supply provides. Over the

years, this reliance has only deepened and spread, giving rise to a

web of settled expectations that now permeate the legal and

practical order. This is evidenced by the fact that the judgment has

been cited in at least 84 Supreme Court cases. Of these, 31 clearly

follow Bangalore Water Supply in a labour dispute, 20 follow it

in the context of principles of statutory interpretation, 10

distinguish it on facts, 18 refer to it in varying contexts while not

substantially engaging with it but approvingly citing it, and only 5

appear to doubt its correctness. Of these five, one (Bombay

Telephone Canteen Employees’ Association vs. Union of India,

39 (1997) 6 SCC 723, (“Bombay Telephone Canteen Employees’

Association”) has been overruled; one (Coir Board), made a

reference for reconsideration which was later declined; two are the

orders passed in the present proceedings, and the last one

(Physical Research Laboratory vs. K.G. Sharma, (1997) 4 SCC

257), (“Physical Research Laboratory”) notes that Bangalore

Water Supply is not exhaustive law on the question of sovereign

functions. Therefore, Bangalore Water Supply is woven into the

warp and weft of labour law. To disturb Bangalore Water Supply

now would neither advance the law nor serve any prospective

purpose. It would merely reopen settled questions within a

framework that the Legislature itself has chosen to leave behind.

In these circumstances, fidelity to stare decisis is not an adherence

to the past for its own sake, but a practical and principled

recognition that continuity, in this case, is itself justice.

Fourthly, any challenge to the definition of “industry” under

the IR Code has to be dealt with on its own merits and on the basis

of commonality with the repealed definition and on the basis of the

judgment of this Court in Bangalore Water Supply only to the

extent it is applicable to the definition of “industry” under the IR

40 Code. Therefore at this stage, the judgment of this Court in

Bangalore Water Supply need not be interfered with.

Fifthly, this nine-Judge Bench has been called upon to

reconsider the dictum of Bangalore Water Supply rendered by a

seven-Judge Bench containing four separate opinions but with a

broadly concurring majority. The said reconsideration would be

only for the purpose of deciding the cases which are pending before

various fora, i.e., the legacy cases inasmuch as the I.D. Act has

itself been repealed. When once the Act has been repealed and has

been substituted by a new enactment, it would not be necessary or

prudent for this nine-Judge Bench to pronounce on the

correctness or otherwise of the judgment of this Court in

Bangalore Water Supply which is a seven-Judge Bench decision,

only for the purpose of reconsidering the definition of “industry”

under Section 2(j) of the I.D. Act which has since been repealed. In

other words, assuming for the sake of argument that the reference

is answered to hold that Bangalore Water Supply has not been

correctly decided in as much as the ratio is not correct, it would be

applicable only to the pending cases as the definition in the

repealed I.D. Act and its interpretation may not be useful once the

41 pending cases are decided. This is because the definition of

“industry” in Section 2(p) of the IR Code has to be interpreted on

its own text and context.

The question, therefore, is not whether, Bangalore Water

Supply should continue to regulate future conduct because that

function has already been overtaken by the IR Code. The only

question is if Bangalore Water Supply should be unsettled for

the limited class of disputes to which it still applies. It is in this

altered context that the rationale for overruling Bangalore Water

Supply is further weakened. The usual justification for departing

from precedent, namely, the need to correct the law going forward,

has little purchase where the old governing law (in this case, the

ID Act) has itself been superseded by a new law (in this case, the

IR Code). As such, any reconsideration of Bangalore Water

Supply would operate almost entirely retrospectively, unsettling

rights and liabilities that arose under the ID Act regime which is

no longer in force.

I find that in the above circumstances, it would be appropriate

on our part to not interfere with the dictum in Bangalore Water

Supply and instead, leave it to the Labour Courts, Tribunals, High

42 Courts and, where cases are pending before this Court, to be

decided on the basis of the said judgment as applicable to the facts

and circumstances of each case and without being influenced by

the definition of “industry” under Section 2(p) of the IR Code.

Sixthly, I find that 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. Rather, we find that

it would be appropriate for the IR Code to be interpreted having

regard to the wording of Section 2(p) therein which defines

“industry”. The new definition of “industry” in Section 2(p) of the

IR Code cannot result in a reconsideration of the judgment of this

Court in Bangalore Water Supply so as to tailor an interpretation

to suit the definition of “industry” under the Section 2(p) of the IR

Code. I also wish to add the caveat that I have not said anything

on the definition of “industry” under Section 2(p) of the IR Code.

Seventhly, I am also of the view that the interpretation of the

definition of “industry” under Section 2(j) of the I.D. Act in

Bangalore Water Supply has held the field for almost half a

43 century (48 years) since the year 1978. Any reconsideration of the

said dictum at this stage when the definition of “industry” is at the

cusp of being in a new avatar under Section 2(p) of the IR Code

would only unsettle the law applicable under Section 2(j) of the I.D.

Act to the pending cases. Such a situation may result in remand of

cases to the original forum for a reconsideration of the applicability

of the I.D. Act to the pending disputes and consequently result in

fresh revisions, etc., to the higher forum only on the aspect of the

application of the interpretation to be given to Section 2(j) of the

repealed I.D. Act. This would not be in the interest of the parties

engaged in industrial disputes under the repealed I.D. Act as delay,

costs and uncertainty, owing to the reconsideration of the

judgment in Bangalore Water Supply, are not in the interest of

any party or industrial peace. Therefore, only the question of

application of the said interpretation to pending cases would not

entail a reconsideration of the said dictum, particularly having

regard to the fact that the definition of “industry” in Section 2(j) of

the I.D. Act itself is no longer on the statute book and has been

repealed w.e.f. 21.11.2025 and the IR Code has been enforced.

Why should this larger bench of nine Judges embark upon an

44 exercise of interpreting the definition of “industry” under Section

2(j) of the I.D. Act which itself has been repealed? I am of the view

that the entire exercise is now rendered wholly academic and for

this reason also, the reference need not be answered.

Eighthly, there is one more aspect to be taken note of. When

the definition of “industry” was interpreted under Section 2(j) of the

I.D. Act, there were a considerable number of activities which were

undertaken by the Central or State Governments but were not

sovereign functions stricto sensu. On the other hand,

Chandrachud, C.J. in his opinion has expressed that although

running a mint is an activity which is solely within the realm of the

Central Government and is a sovereign function, nevertheless it

would fall within the definition of “industry” under Section 2(j) of

the I.D. Act. This means that many activities of the Central or State

Governments which are in the nature of welfare activities or

activities being carried out in a commercial sense or even with or

without profit motives have also been included in the definition of

“industry” under Section 2(j) of the I.D. Act, and only certain

activities which are stricto sensu sovereign functions of the State

have been excluded. Therefore, merely because certain activities

45 are being performed by the State does not mean that they are ipso

facto to be excluded from the reach of the said definition. This

would be contrary to the object and purpose of the I.D. Act.

Ninthly, if the Parliament had indeed wanted a different

interpretation than the one offered by this Court in Bangalore

Water Supply, it could have inserted/substituted a new provision

or amended the existing one, to such effect. Keeping precisely this

in mind, the Parliament passed the Industrial Disputes

(Amendment) Bill, 1982, which sought to enact a restrictive

definition of industry, one excluding nine categories of

establishment that would otherwise qualify as “industry” under the

‘triple test’ laid down in Bangalore Water Supply. Yet, even after

the passage of the Bill, it was not notified and the ‘triple test’ laid

down in Bangalore Water Supply has effectively remained

untouched. This, by itself, should be taken to mean that

Bangalore Water Supply and the interpretation of “industry”

taken therein had the implicit approval of the Executive and the

Parliament. I say so for two reasons: first, a law that remains

unnotified is, in effect, inchoate. It is, at best, an expression of

legislative intent that has not ripened into operative command.

46 Until such time as it is brought into force, it lacks the capacity to

displace the earlier law declared by this Court. The field, therefore,

continues to be governed by the binding pronouncement of the

Court in Bangalore Water Supply which remains the only

effective statement of law on the point till such time. Second, the

Executive, having consciously refrained from notifying the

enactment, must be taken to have acquiesced to the continuance

of the judicial determination in Bangalore Water Supply. The

power to bring a statute into force is not incidental to its passage.

It is a distinct and separate power. It is for that reason statutes

are often brought into force on a date appointed by the Executive,

to allow, for example, the creation of subordinate legislation or

administrative preparedness. The Parliament has also not debated

about the amendment not being enforced all these decades.

Therefore, where such power to notify is not exercised, the

resulting inaction reflects a deliberate decision to allow the status

quo to endure.

Tenthly, in Bangalore Water Supply, this Court considered

a variety of activities in the backdrop of the state of the economy,

the mood of the nation and the object and purpose of the I.D. Act,

47 which has been discussed above. Moreover, a watershed moment

in the Indian economy was in the year 1991, when the Union

Government headed by the then Prime Minister Sri P.V. Narasimha

Rao initiated a slew of reforms in the economy and in the

administration so as to bring about Liberalisation, Privatisation

and Globalisation (LPG). This could be aptly discussed at this

stage. This is relevant because many of the activities earlier

performed by the State/Central Governments have since been

privatised and private players by themselves or by a public-private

partnership arrangement have been carrying on a variety of

developmental and welfare projects/schemes/ programmes. These

activities in the hands of, inter alia, private parties, would employ

employees/workmen and their interests have to be protected under

the I.D. Act by giving the meaning to the word “industry” as

interpreted in the judgment of this Court in Bangalore Water

Supply. Therefore, for this reason also, the said judgment cannot

be watered down to the detriment of the employees/workmen.

“From 1950 to 1991: Planned economy to Liberalisation, Privatisation and Globalisation (“LPG”): 4. Like many countries attaining liberation from colonial rule,

the immediate task before independent India was to alleviate its

48 population from poverty and systematically organise its economy.

To that end, India adopted a mixed economy model wherein both

public and private sectors could coexist. Turning to command

economies, the Indian State sought to triumph over inter-regional

disparities in resources and development through economic

planning, an approach that had proven successful in command

economies to bring sustained transformation of resources and

implementation of plans in national interest rather than inefficient

allocation of resources.

4.1 Buttressed by the Bombay Plan, proposed by influential

industrialists, the Industrial Policy Resolution of 1948 and the

over-expansive vision of the State shared by nearly every political

party, the early years of the Indian Government saw it play a

dominant role in the setting up of heavy enterprises, thereby being

a controller of the economy and resources. Consequently, the

market was not merely strongly regulated but also led by the public

sector, which manifested as State interventions and regulations

with the aim of protecting indigenous industries.

4.2 With that insight, the Planning Commission was set up in

the year 1950 to oversee the entire range of planning, including

49 resource allocation, implementation and appraisal of five-year

plans under the leadership of the first Prime Minister Jawaharlal

Nehru. In 1951, deterred by the significant loss of foreign reserves

on food imports, India’s First Five-Year Plan focused on agriculture

and irrigation to boost farm output. Some scholars tout this as a

success as the economy grew at 3.6%, instead of the target of 2.1%.

Soon thereafter, the Second Plan, launched in 1956, saw deficit

financing as an acceptable tool for much needed rapid

industrialisation and self-reliance focusing on heavy industries

and capital goods. Coupled with the Industrial Policy Resolution of

1956, the Second Plan initiated the development of the public

sector and ushered in the Licence Raj. The resolution, adopted by

the Parliament in 1956, enumerated as a national objective the

establishment of a socialistic pattern of society and categorised

industries into three groups:

- Schedule A: Industries which were to be exclusively in the

public sector. These were industries of basic and strategic

importance;

- Schedule B: Industries that were to be progressively State

owned and the State would generally set up new enterprises

50 but in which private enterprise would only be expected to

supplement the State effort; and

- Schedule C: All the remaining industries, and their future

development was, in general, left to the initiative and

development of the private sector. However, it was left open to

the State and the private sector was still subject to the Licence

Raj.

4.3 This over-expansion of State control enabled it to undertake

large-scale projects without either reliance on, negotiations with,

or even competition from, the private sector. The construction of

the Bhakra-Nangal Dam, Hirakund Dam, etc., as well as steel

plants in Rourkela, Bhillai and Durgapur were touted by the State

as new “temples of a modern India”.

4.4 However, the substantial peril of curbing the invisible hand

of the economy and enterprising spirit of the private sector was that

the economic policy restricted India to the earmarked industries

and ignored new technologies, innovations and domains that,

though transforming, were not in the horizons of the bureaucracy.

On the other hand, funds were also substantially reallocated away

from agriculture, thereby causing food shortages and a spike in

51 inflation. Furthermore, the State was forced to import foodgrains

which depleted foreign exchange reserves.

4.5 Under the leadership of Prime Minister Lal Bahadur Shastri,

the Indian Government was convinced that in the domain of

agriculture, it needed to loosen its tight strings on centralised

planning and price controls and instead focus on technological

development. With India transforming into a food-sufficient and

self-reliant entity after the Green Revolution and introduction of

the Minimum Support Price regime, the role of the Planning

Commission was trimmed.

4.6 In the second half of the 1960s, the severe drought of 1965

increased food grain imports and consequently exacerbated the

balance of payments crisis. To counter the same, in June 1966, the

Union Government devalued the Indian rupee by a sharp 57%,

thereby accelerating inflation although it was aimed at boosting

exports.

4.7 Monumentally, to expand the sources of credit and monitor

the banking system as per the control of the Government’s

planning and economic policy, the Government nationalised

fourteen private banks on 20.07.1969. It was thought that the aim

52 of financial inclusion and ready access to credit for small

agriculturalists could be achieved by State control of the banking

system. Agnostic of immediate profit motive and credit-worthiness,

Banks operated and expanded to the ‘un-banked’. However, in due

course, it has been observed that limited competition and poor

credit assessment severely hampered the efficiency and health of

the banking system.

4.8 Around the 1980s, there was a rising realisation of the harm

from protectionist policies and the merits of a market-led economy.

Therefore, the Sixth Five-Year Plan marked the beginning of

economic liberalisation in India and outlined a series of measures

aimed at boosting the economy’s competitiveness. Notable steps

included removal of large-scale price controls; reductions in import

duties and the beginning of the end of the Licence Raj. In the

following years, large-scale efforts were undertaken to usher in

information technology and telecom revolutions in the country

along with promoting exports and the utility of foreign investment

and capital goods.

4.9 The political economy of the country from the 1950s till the

late 1980s had made it apparent that the underlying political

53 current and rhetoric of an idyllic but industrial society based on a

socialistic pattern had been failing to deliver on the hopes of a

modern lifestyle and Indians’ entrepreneurial spirit. This is despite

the five technological missions initiated in the mid-1980s. It is not

uncertain that the deficit spending of the 1980s led by high

external debt, double-digit inflation, short-term debt reaching

147% of foreign exchange reserves, etc., led to a macroeconomic

crisis that India found itself in at the end of the 1980s. In this

backdrop, amidst a series of negotiations and policy reforms, Prime

Minister P.V. Narasimha Rao spoke to the nation on 09.07.1991 of

the impending need to bring in far-reaching changes and reforms

that would bolster the economy and take it to a modern globalised

world. Recounting the difficulties, he said:

“…For the last eighteen months, there has been paralysis on the economic front. The last two governments postponed taking vital decisions. The fiscal position was allowed to deteriorate. The balance-of-payment crisis became unmanageable. Non-resident Indians and foreign leaders became more and more reluctant to lend money to India. Consequently, India’s external reserves declined steeply, and we had no foreign exchange to import even such essential commodities as diesel, kerosene, edible oil, and fertiliser. The net result was that when we came to power, we found the financial position of the country in a terrible mess. …”

54 4.10 The New Industrial Policy of 1991 put an end to the

shackles that bound the Indian industry into inefficiency and non-

competitiveness. While the opening up of the economy was

gradual, the Monopolies and Restrictive Trade Practices Act, 1969

was diluted, allowing market players to scale up without

government approval and automatic approvals for Foreign Direct

Investment (FDI) with majority holding and qualifiable foreign

technological agreements were assured along with many other

solutions. One of the many recognisable inflection points in India

was the Budget Speech of 1991 delivered by India’s then Finance

Minister, Dr. Manmohan Singh on 24.07.1991 who later became

the Prime Minister of India, who, whilst paraphrasing Victor Hugo

said, “No power on earth can stop an idea whose time has come”.

4.11 The reforms that were to follow have been colloquially

termed as Liberalisation, Privatisation and Globalisation (LPG). In

practice, the country saw the dismantling of the Licence Raj, some

years later an active disinvestment framework and quite openly, an

expression of willingness to let globalised market forces signal

directions to the economy.

55 4.12 Having seen India’s potential and political commitment to a

modern market economy, the International Monetary Fund (IMF)

provided assistance leading to macroeconomic stabilisation. In the

years since, several policies such as import liberalisation,

unrestricted FDI inflows in some sectors, tax exemptions,

promotion of exports, etc., have been adopted, which would have

seemed antithetical to the very idea and core of the Indian economy

to the most earnest well-wishers of India only two decades prior

thereto.

4.13 While the status of health or inequity indicators is not being

used as an aid for constitutional interpretation, we must also note

that the Liberalisation, Privatisation and Globalisation Policy (“LPG

policy” of 1991) can also be credited for providing the much needed

impetus to the Central and State Governments for fulfilling several

goals set out in the Directive Principles of State Policy which had

earlier been difficult to achieve.

4.14 The golden thread throughout India’s economic history

post-independence has been to focus on a transformative socio-

economic growth of the people of India by way of experimentation

through various plans, projects and pipe dreams. The mid-1980s

56 was a turning point when the need for innovation, modernisation

and concomitant avenues for development through five major

technology reforms ushered in the Reforms of 1991 as the country

faced shortages in foreign exchange reserves and there was a crisis

in balance of payments. There has been no looking back since then

including ushering in various schemes/programmes for the welfare

of the people which earlier had not really percolated to deserving

and eligible citizens.

4.15 It is in the period between the late 1960s and early 1980s

that this Court gleaned the thrust to the economic policies of the

State and sought to provide a judicial imprimatur for the success