Justice Nagarathna’s dissent warns of tearing the frayed safety net of labour law
A nine-judge Constitution Bench of the Supreme Court delivered its judgment in State of Uttar Pradesh v. Jai Bir Singh on the meaning of "industry" under Section 2(j) of the (now-repealed) Industrial Disputes Act, 1947
By a 5:4 majority, the Bench held that parts of the "triple test" laid down in the 1978 Bangalore Water Supply and Sewerage Board v. A. Rajappa judgment require refinement, introducing an additional requirement of a "discernible commercial character" for an activity to qualify as an industry
The Court clarified that the reformulated test will apply only prospectively — pending disputes under the repealed Industrial Disputes Act will continue to be decided using the original 1978 triple test
Justice B.V. Nagarathna dissented, holding that the reference to a larger bench was itself unwarranted and not maintainable, and cautioned that narrowing the definition risks weakening protections built into the pre-existing legal framework as the economy shifts toward privatisation and globalisation
Commentary following the ruling flagged concerns that a narrower "industry" definition could create uncertainty for industrial relations and reduce the scope of workers covered by dispute-resolution machinery going forward
Section 2(j), Industrial Disputes Act, 1947 — Definition of "Industry"
Section 2(j) of the Industrial Disputes Act, 1947 defined "industry" broadly as "any business, trade, undertaking, manufacture or calling of employers" and "any calling, service, employment, handicraft, or industrial occupation or avocation of workmen." This single definitional clause determined which establishments' employees could access the Act's dispute-resolution machinery — conciliation, Labour Courts, and Industrial Tribunals.
Key Details
- The Industrial Disputes Act, 1947 was the principal statute governing industrial dispute resolution in India for over seven decades
- It stood repealed with effect from November 21, 2025, when the four new labour codes — including the Industrial Relations Code, 2020 — came into force, subsuming the ID Act, the Trade Unions Act, 1926, and the Industrial Employment (Standing Orders) Act, 1946
- Despite the repeal, the Supreme Court proceeded to settle the interpretive question because a large number of disputes initiated under the old Act remain pending in courts and tribunals
The judgment interprets a provision that is now technically repealed, but its interpretation continues to govern how "industry" is understood for both pending cases and, going forward, for interpreting analogous language carried into the Industrial Relations Code, 2020.
Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978) — The "Triple Test"
This 1978 judgment of a seven-judge Bench of the Supreme Court (AIR 1978 SC 548) is the foundational precedent on the meaning of "industry." It replaced earlier, narrower readings with a broad "triple test" that brought a wide range of establishments — including hospitals, educational institutions, and certain government departments performing non-sovereign functions — within the protective ambit of industrial law.
Key Details
- The triple test asks whether there is (i) systematic activity, (ii) organised by cooperation between employer and employee, (iii) for the production or distribution of goods or services calculated to satisfy human wants and wishes — irrespective of profit motive
- The 1978 ruling was authored primarily by Justice V.R. Krishna Iyer and significantly expanded worker coverage compared to earlier case law
- The reference that led to the present nine-judge ruling originated in State of U.P. v. Jai Bir Singh, first referred for reconsideration by a five-judge Bench in 2005, and escalated to a nine-judge Bench by a seven-judge Bench in 2017 — a nearly two-decade-long pendency before final resolution in August 2026
The August 2026 verdict is a direct sequel to this precedent — the very "triple test" it modifies is the 1978 formula, and the case had been in the pipeline for over 20 years before being finally decided.
Judicial Discipline — Larger Benches and Prospective Overruling
Under Supreme Court practice, the ratio of a decision by a Bench of a given size can only be reconsidered or overruled by a Bench of at least equal, and ordinarily larger, strength — a rule of judicial discipline rather than an explicit constitutional mandate (distinct from Article 145(3), which merely requires a minimum of five judges for cases involving a substantial question of constitutional interpretation). Because the 1978 triple test was laid down by a seven-judge Bench, only a Bench of eight or more judges could revisit it — hence the escalation to nine judges.
Key Details
- The doctrine of "prospective overruling" — where a court changes the law but applies the new rule only to future cases, leaving past and pending matters governed by the old rule — was first applied in Indian constitutional law in I.C. Golak Nath v. State of Punjab (1967)
- The nine-judge Bench in this case expressly adopted a prospective approach: pending Industrial Disputes Act cases continue under the 1978 test, while the refined test applies only going forward
- This approach seeks to balance legal certainty (not disturbing settled and pending disputes) against the Court's stated need to update the interpretive framework for a changed economic context
The Court's decision to apply its refinement only prospectively — rather than retrospectively unsettling decades of pending litigation — is itself a significant procedural holding with implications for how future Constitution Bench reconsiderations are structured.
Dissent and the Debate on Worker Protection under Liberalisation
Justice Nagarathna's dissenting opinion argued that the reference to a larger Bench was procedurally unwarranted, and separately cautioned that India's shift toward privatisation and globalisation should not be used to justify narrowing worker protections, framing liberalisation as a means to public welfare rather than a ground to dilute pre-existing worker safeguards.
Key Details
- The dissent's institutional argument (that the reference itself lacked maintainability) is a separate legal question from the substantive one (whether the triple test needed modification) — the Bench divided 5:4 on the substantive question
- The concern raised is that adding a "commercial character" requirement could exclude establishments such as certain charitable, educational, or welfare-oriented bodies that previously qualified as "industry" under the wider 1978 test
- This debate mirrors a recurring theme in Indian labour jurisprudence: balancing employer flexibility/ease of business against worker access to statutory dispute-resolution forums
The dissent frames the core Mains-relevant tension in this case — the trade-off between a modernised, business-friendly definition of "industry" and the risk of shrinking the pool of workers with access to institutional labour dispute mechanisms.
- Case: State of Uttar Pradesh v. Jai Bir Singh — nine-judge Constitution Bench of the Supreme Court
- Verdict split: 5:4 majority in favour of refining the "triple test"
- Original precedent modified: Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978), AIR 1978 SC 548, decided by a seven-judge Bench
- Statutory provision interpreted: Section 2(j), Industrial Disputes Act, 1947 (repealed with effect from November 21, 2025)
- Reference history: first referred for reconsideration by a five-judge Bench in 2005; escalated to a nine-judge Bench by a seven-judge Bench in 2017
- New test applies prospectively only; pending Industrial Disputes Act cases continue to be governed by the 1978 triple test
- Industrial Disputes Act, 1947 replaced by the Industrial Relations Code, 2020, in force since November 21, 2025