Supreme Court modifies 1978 triple test for defining industry under labour law

A nine-judge Constitution Bench of the Supreme Court on August 20, 2026, modified aspects of the 1978 "triple test" used to decide what qualifies as an industry under Section 2(j) of the Industrial Disputes Act, 1947. The decision was delivered 5-4, with Chief Justice of India Surya Kant writing for the majority.

The court held that certain elements of the earlier ruling required clearer articulation to better reflect the scope of the provision. The reformulated test will apply only prospectively. Pending cases under the 1947 Act may still be decided under the original Bangalore Water Supply and Sewerage Board framework.

The 1978 judgment had treated systematic activity organised on the basis of employer-employee cooperation and aimed at production of goods or services as an industry. It excluded only core sovereign functions such as defence, law and order, and the judiciary. Hospitals, educational institutions and municipalities were brought within the definition.

The majority made clear that the expansive reading of Section 2(j) does not automatically govern the definition of industry under Section 2(p) of the Industrial Relations Code, 2020. The future interpretation of the new code remains open and is not bound by the 1978 approach.

The ruling preserves labour protections already in place for disputes still governed by the repealed statute. It draws a clean line between the old and new labour regimes without reopening decided cases.

The reference had been pending before the Constitution Bench. The judgment leaves room for the legislature and future benches to shape the meaning of industry under the 2020 Code according to its own text and purpose.