Definition of Industry

LABOUR LAW · INDUSTRIAL RELATIONS

What exactly is an “Industry”?

The answer has travelled from a short statutory definition in 1947, through the transformative Bangalore Water Supply decision of 1978, an unimplemented parliamentary amendment, and finally to Section 2(p) of the Industrial Relations Code, 2020 and the Supreme Court's nine-judge clarification in 2026.

Section 2(j) Triple Test Dominant Nature Section 2(p) 2026 INSC 897
THE OPENING QUESTION

A factory obviously looks like an industry. But what about a hospital, university, municipality, charitable trust or lawyer's office?

Labour law does not answer that question by looking at the signboard outside the building. It asks what activity is actually being carried on, how it is organised, who performs it and which statutory regime governs the dispute.

Why does this classification matter?
Because the classification determines whether the machinery of industrial-relations law can be invoked. But remember: establishing that the establishment is an industry does not automatically prove that every person working there is a worker or that every disagreement is an industrial dispute. These are separate statutory questions.
Evolution of the definition of industry in Indian labour law from 1947 to the 2026 Supreme Court decision
MASTER KEY OF LABOUR LAW

One definition determines the gateway to an entire statutory regime.

THE WHOLE STORY IN SIX DATES

See the evolution before studying the details

If this sequence is clear, the entire topic becomes much easier.

1947
STATUTORY TEXT

Industrial Disputes Act

Section 2(j) used broad expressions such as business, trade, undertaking, manufacture and calling.

1982
PASSED · NOT COMMENCED

Parliament responds

Parliament enacted a detailed replacement definition, but the new definition never became operative.

2005
DOUBTS REOPENED

Jai Bir Singh

A five-judge Bench questioned the breadth of Bangalore and sought reconsideration by a larger Bench.

2025
CURRENT LAW

Industrial Relations Code

Section 2(p) came into force on 21 November 2025.

2026
NINE-JUDGE CLARIFICATION

State of U.P. v. Jai Bir Singh

Old ID Act disputes remain governed by Bangalore. The new Code must be interpreted independently.

01
THE GATEWAY QUESTION

Why does the definition of “industry” matter so much?

Before applying industrial-relations protections, the legal system must first know whether the activity falls inside the statutory field.

KEY

The “master key” idea

The definition is jurisdictional in a practical sense. If the activity does not fall within the governing concept of industry, the special industrial-dispute framework may not be available.

Industry? → Worker? → Industrial dispute? → Statutory remedy
?
The wrong question:

“Does this place look like a factory?”

The better question:

“What organised activity is being carried on, through whose cooperation, for what output, and under which statutory regime?”

02
THE STATUTORY STARTING POINT

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

The original operative definition was surprisingly short. That brevity produced decades of litigation.

INDUSTRIAL DISPUTES ACT, 1947 2(j)

The definition had two sides

EMPLOYER SIDE
Business Trade Undertaking Manufacture Calling

These words described the activity from the employer's side.

WORKMEN SIDE
Calling Service Employment Handicraft Industrial occupation

The inclusive second limb looked at the occupational side of the workmen.

Important correction: The famous words “systematic activity + employer–employee cooperation + goods/services for human wants” were not the original operative wording of Section 2(j). They emerged through judicial interpretation and later legislative drafting.
1947 → 1978

The judicial pendulum

Before Bangalore Water Supply, Supreme Court decisions did not travel in one straight line.

1953

D.N. Banerji v. P.R. Mukherjee

Municipal activity could fall within “industry”. Governmental ownership was not by itself decisive.

BROADER READING
1960

Hospital Mazdoor Sabha

A government-run hospital was treated as an industry. Profit motive was not essential.

EXPANSION
1963

University of Delhi v. Ram Nath

Educational institutions were held outside the concept. The Court emphasised the distinctive nature of education.

RESTRICTION
1967

Madras Gymkhana Club

A members' club was held not to be an industry despite its organised activities and employees.

RESTRICTION
1970

Safdarjung Hospital

The Court moved toward a more commercial/trade-analogy conception and narrowed the hospital approach.

FURTHER RETRENCHMENT
THE PROBLEM BY 1978

Similar institutions could receive very different answers depending upon which line of authority was followed.

A larger Bench was needed to bring conceptual order.

03
THE WATERSHED · 1978

Bangalore Water Supply & Sewerage Board v. A. Rajappa

A seven-judge Bench transformed the law by creating a functional framework rather than deciding industries by labels.

7 JUDGE BENCH
(1978) 2 SCC 213 · AIR 1978 SC 548

The central shift

Stop asking whether the institution is called a hospital, school, club, municipality or profession. Examine the nature and organisation of the activity.

LEADING OPINION Justice V.R. Krishna Iyer
THE CENTREPIECE

The Triple Test

A prima facie industry exists when these three elements come together.

1
A

Systematic Activity

The activity must be organised, structured and carried on in a regular manner rather than casually or accidentally.

Think: departments · schedules · organised operations
2
B

Employer–Employee Cooperation

The activity must involve organised cooperation between the employer and employees in carrying out the enterprise.

Think: management + organised labour
3
C

Goods or Services for Human Wants

The activity must produce or distribute goods or render services calculated to satisfy human wants and wishes, excluding wants that are merely spiritual or religious.

Think: material goods · useful services · public needs
System + Cooperation + Useful Output = Prima facie Industry
DO NOT GET DISTRACTED

What Bangalore said was generally irrelevant

×

Profit motive

An activity does not cease to be industrial merely because it is run on a no-profit basis.

×

Capital investment

Heavy capital investment is not an indispensable ingredient.

×

Public or private ownership

Government ownership does not automatically convert an otherwise industrial activity into a sovereign function.

×

Charitable label

Under the old Bangalore regime, charity alone was not an automatic immunity from industrial law.

FUNCTIONAL APPROACH

The decisive enquiry is into the nature of the activity, not merely the identity of the person or institution carrying it on.

01 What does the organisation actually do?
02 How is the work organised?
03 What role does organised labour play?
04 What goods or services emerge?
MIXED ORGANISATIONS

The Dominant Nature Test

What happens when a single institution performs both industrial and non-industrial activities?

RULE

Look at the predominant nature of the integrated undertaking.

Where several departments form one integrated organisation, the dominant character of the undertaking may colour the whole.

BUT

Severable units may be treated separately.

If a distinct unit performs an industrial activity and can genuinely be separated from the rest, it may receive independent treatment.

EXAMPLE

University + commercial printing unit

Ask whether the printing activity is merely integrated into the institution or is a substantial and severable undertaking operating in its own right.

IMPORTANT EXCEPTION

Sovereign functions

STATE

Bangalore did not treat every governmental activity as industrial. The exclusion was directed toward genuinely sovereign or inalienable functions of the State.

OUTSIDE Core sovereign functions

Classic examples include core administration of justice, defence and essential governmental authority.

NOT AUTOMATICALLY OUTSIDE Welfare and utility activities

A water board, transport undertaking or welfare department cannot escape the test merely by saying: “We are Government.”

WHERE BANGALORE BECAME RADICAL

Institutions traditionally thought to be “non-industrial”

H

Hospitals

Could qualify even without profit motive where the activity was systematically organised with salaried employees.

E

Educational institutions

Bangalore rejected the blanket exclusion of institutional education from the definition of industry.

C

Clubs

The label “members' club” was not enough to create automatic immunity if the functional test was otherwise satisfied.

P

Liberal professions

A large organised professional establishment could fall within the concept; a solitary practitioner with marginal assistance stood on a different footing.

R

Research bodies

Research did not receive a blanket exclusion merely because its end product was intellectual rather than a conventional commodity.

G

Government bodies

Economic or welfare activities could still qualify unless they genuinely fell within the sovereign-function exception.

A NUANCE STUDENTS OFTEN MISS

Bangalore did not simply say “charity = not industry”

Justice Krishna Iyer differentiated between different kinds of charitable activity.

1

Business earns profit → profit goes to charity

The charitable destination of the surplus does not alter the industrial character of the productive activity.

INDUSTRY
2

No profit → salaried workforce supplies goods/services

Employees still contribute labour in an organised employer–employee relationship.

INDUSTRY
3

Humanitarian mission → substantially volunteer driven

Where service is inspired by mission rather than an ordinary master–servant structure, the industrial character may disappear.

ORDINARILY OUTSIDE
Critical distinction: Bangalore's treatment described the law under the old Industrial Disputes Act. Do not automatically transfer every Bangalore category into the present Industrial Relations Code.
04
PARLIAMENT RESPONDS

The 1982 Amendment: enacted, but never brought into force

This is the bridge between Bangalore Water Supply and the modern statutory Code—and one of the most frequently misunderstood parts of the topic.

ACT 46 OF 1982

What Parliament attempted

Parliament enacted a much more detailed replacement for Section 2(j). Its structure adopted much of the language associated with systematic activity, employer–workman cooperation and the production, supply or distribution of goods and services.

Bangalore doctrine → Legislative response → Detailed definition + exclusions
NEVER COMMENCED

This proposed definition did not become operative law

Although Parliament enacted the replacement, commencement depended upon executive notification. The relevant definition was never brought into operation under the old Industrial Disputes Act.

Therefore: Never quote the 1982 formulation as though it were the operative Section 2(j) applicable between 1982 and 2025.
LEGISLATIVE DIRECTION

The proposed amendment expressly contemplated exclusions

Among its proposed exclusions were several areas that had generated controversy under Bangalore.

Hospitals / dispensaries Educational institutions Scientific / research bodies Charitable / social institutions Specified sovereign functions Domestic service Certain professional establishments Certain small clubs / cooperatives
Examination trap: Parliament's attempt to narrow and structure the field in 1982 is historically important, but because the amended definition was not commenced, Bangalore continued to dominate litigation under Section 2(j).
2005
THE QUESTION RETURNS

State of U.P. v. Jai Bir Singh — Five-Judge Bench

The Supreme Court expressed serious reservations about the extraordinary breadth of Bangalore Water Supply and considered whether the seven-judge precedent required reconsideration.

The matter ultimately travelled through larger-Bench proceedings and was eventually placed before nine judges.

05
THE PRESENT STATUTORY REGIME

Industrial Relations Code, 2020 — Section 2(p)

The Code came into force on 21 November 2025. We must now begin with Parliament's new statutory text rather than automatically beginning with Bangalore.

21 NOV 2025
CURRENT LAW

Industrial Relations Code, 2020 comes into force

The Code consolidates the industrial-relations framework and replaces the former Industrial Disputes Act regime.

2(p)
BREAK THE DEFINITION INTO ELEMENTS

Under the present Code, ask five questions

01

Is there a systematic activity?

The activity must have an organised and continuing character.

02

Is it carried on through employer–worker cooperation?

The definition expressly contemplates workers employed directly or through an agency, including contractors.

03

Are goods or services produced, supplied or distributed?

The statutory focus is on the functional output of the activity.

04

Does the output satisfy human wants or wishes?

Wants that are merely spiritual or religious in nature are expressly distinguished.

05

Does an express exclusion apply?

This is now critical because Parliament itself has written exclusions into the definition.

STATUTORILY IRRELEVANT

Two things do not decide the issue

Capital investment

The activity can fall within the definition whether or not capital has been invested.

Gain or profit motive

The definition does not depend upon the activity being carried on for profit.

EXPRESS STATUTORY EXCLUSIONS

Section 2(p) now tells us what Parliament wants kept outside

C

Charitable / social / philanthropic institutions

Institutions owned or managed by organisations wholly or substantially engaged in charitable, social or philanthropic service are expressly excluded.

S

Sovereign governmental functions

Activities relatable to sovereign functions are excluded, including specified Central Government activities concerning defence research, atomic energy and space.

D

Domestic service

Domestic service is expressly placed outside the statutory definition.

N

Other notified activities

Parliament has also empowered the Central Government to notify other activities for exclusion.

THE BIG DIFFERENCE

The Triple-Test style language survives, but the statutory exclusions now matter independently.

That is why a charitable hospital hypothetical cannot be answered today simply by repeating the 1978 conclusion.

2(r)
MIXED ESTABLISHMENTS UNDER THE NEW CODE

Section 2(r): severability and predominant activity

The Code separately defines an “industrial establishment or undertaking” and provides a statutory method for establishments carrying on several activities.

SEVERABLE UNIT

If an industrial unit can genuinely be separated from non-industrial units, it may be treated as a separate industrial establishment.

PREDOMINANT ACTIVITY

If the predominant activity is industrial and the other activities are inseparable or aid that predominant activity, the whole establishment may acquire that character.

Nuance: Do not mechanically say “Section 2(r) = Bangalore's Dominant Nature Test”. The ideas are related, but Section 2(r) is now an independent statutory rule under the Code and must be read on its own terms.
06
THE LATEST SUPREME COURT POSITION

State of U.P. v. Jai Bir Singh — Nine-Judge Bench

2026 INSC 897 · decided 20 August 2026. The judgment is much more nuanced than saying that “Bangalore was overruled” or that “the new definition was void”.

9 JUDGES
Civil Appeal No. 897/2002 with connected matters

Forty-eight years after Bangalore, what did the Court actually do?

By the time the reference was finally decided, the legal landscape had fundamentally changed: Section 2(j) had been repealed and Section 2(p) of the Industrial Relations Code was already in force.

WRONG

“The Supreme Court declared the new definition void.”

CORRECT

The Court did not invalidate Section 2(p) of the Industrial Relations Code.

THE MERITS WERE NOT A SIMPLE 5:4

Understanding the 4–4–1 structure

4
CJI SURYA KANT + 3 JUDGES

Refine the Triple Test

This opinion proposed that the relevant goods or services should possess a discernible commercial character analogous to trade or business, while still not making actual profit indispensable.

4
FOUR JUDGES

Bangalore's Triple Test remains correct

These judges defended the essential Bangalore framework and did not accept the proposed commercial-character reformulation.

1
JUSTICE P.S. NARASIMHA

Do not unsettle the old regime now

With Section 2(j) already repealed, it was unnecessary to create a new formulation merely for the remaining old-law disputes.

Very important: A separate 6:3 division concerned the validity / maintainability of the larger-Bench reference process. Do not mistake that 6:3 figure for a six-judge majority adopting a new definition of industry.
WHAT ACTUALLY MATTERS IN PRACTICE

Two legal lanes now exist

LANE A OLD ID ACT DISPUTE

Apply Bangalore Water Supply

Pending disputes governed by the repealed Industrial Disputes Act continue to be determined using the Section 2(j) jurisprudence of Bangalore Water Supply.

Pre-21 Nov 2025 dispute → Section 2(j) → Bangalore framework
LANE B NEW IR CODE DISPUTE

Begin with Section 2(p) itself

The new statutory definition is to be interpreted independently in accordance with its own language, exclusions, structure and contemporary industrial context.

New-code dispute → Section 2(p) → Independent interpretation
THE 2026 MESSAGE IN ONE SENTENCE

Bangalore remains the anchor for surviving old-ID-Act disputes, but it is not an automatic sheet anchor for interpreting Section 2(p) of the new Code.

07
CLASSROOM APPLICATION

Now classify the institution

Do not guess by intuition. First identify the applicable legal regime, then walk through the test.

THE SIX-GATE METHOD

Use this every time you see an “Is X an industry?” problem

1 REGIME

Old ID Act or current IR Code?

2 ACTIVITY

Is it systematic and organised?

3 COOPERATION

Employer + organised workers?

4 OUTPUT

Goods or services satisfying human wants?

5 EXCLUSION

Does an express statutory exclusion apply?

6 CLAIMANT

Is the person legally a worker and is there a dispute?

01
HOSPITAL

A charitable hospital

It provides free treatment, runs on donations and employs salaried doctors, nurses, technicians, clerks and support staff through an organised management structure.

Apply the law

Under Bangalore / old ID Act: absence of profit would not by itself exclude the hospital. An organised salaried undertaking rendering services could satisfy the Triple Test.

Under current Section 2(p): first examine the express exclusion concerning institutions owned or managed by organisations wholly or substantially engaged in charitable, social or philanthropic service.

SAME FACTS · DIFFERENT STATUTORY ERA · POSSIBLY DIFFERENT RESULT
02
PRIVATE HOSPITAL

A corporate multi-speciality hospital

It operates continuously through hundreds of employees and provides organised medical and diagnostic services for consideration.

Apply the law

The activity strongly presents the characteristics identified in Section 2(p): systematic organisation, employer-worker cooperation and provision of services satisfying human wants.

But always separately ask whether a particular claimant is a statutory worker and whether any specific exclusion applies.

03
PROFESSION

A lawyer with one clerk

A sole practitioner personally performs all legal work with assistance from one clerk who handles files and appointments.

Apply the law

Bangalore itself recognised the distinction between an organised professional establishment and a solitary professional practice with marginal employee engagement.

A single practitioner with isolated assistance was not the organised labour structure contemplated by the industrial concept.

04
PROFESSION

A 300-person law firm

It has lawyers, researchers, paralegals, librarians, clerks, IT staff, accounts, HR and administrative divisions functioning as an integrated organisation.

Apply the law

Under the Bangalore functional approach, a professional label could not itself immunise an organised undertaking from the definition.

Under the current Code, however, analyse Section 2(p) independently rather than simply declaring that Bangalore controls the result.

05
PUBLIC UTILITY

A municipal water-supply undertaking

Hundreds of employees operate treatment plants, pipelines, maintenance systems, billing and distribution networks.

Apply the law

Bangalore is the classic reminder that governmental ownership alone is not the test. Water and sewerage operations may possess the functional characteristics of industry.

Under Section 2(p), ask whether the activity is genuinely relatable to the statutory sovereign-function exclusion. Do not equate “Government” with “sovereign”.

06
MIXED ESTABLISHMENT

University + commercial printing division

A university maintains its educational departments but also operates a large printing division undertaking commercial work for external customers.

Apply the law

Under the old jurisprudence, examine the dominant nature and whether the industrial activity is severable.

Under the new Code, Section 2(r) expressly requires attention to severability and predominant activities in mixed establishments.

07
STATE FUNCTION

Police administration

Police personnel and administrative machinery perform core coercive law-and-order functions of the State.

Apply the law

This lies at the heart of the sovereign-function distinction. The present Code itself expressly excludes governmental activities relatable to sovereign functions.

08
RELIGIOUS ACTIVITY

A temple and its commercial guesthouse

The temple performs worship but also operates a separately managed, large paid guesthouse employing full-time hospitality staff.

Apply the law

Do not stop at the word “temple”. Merely spiritual or religious wants stand differently from organised material services.

The guesthouse raises a separate functional and severability enquiry. Under the current Code, the statutory text and any applicable organisational exclusion must be examined.

08
PUT THE ERAS SIDE BY SIDE

What changed—and what did not?

Point Original 1947 Act Bangalore 1978 1982 Amendment Current IRC 2026 SC position
Legal source Section 2(j) Judicial interpretation Act 46 of 1982 Section 2(p) 2026 INSC 897
Core language Business, trade, undertaking, manufacture, calling etc. Triple Test Detailed systematic-activity formulation Systematic activity + employer-worker cooperation + goods/services New Code must be read independently
Profit motive Judicially debated Not decisive Not decisive Expressly not decisive No contrary rule for current Code
Charitable bodies Uncertain No blanket exemption Proposed exclusion Express statutory exclusion of specified institutions Read Section 2(p), not Bangalore automatically
Sovereign functions Developed judicially Narrow exception Express treatment proposed Express statutory exclusion New Code controls future cases
Status Repealed Controls surviving old-law disputes Never commenced CURRENT LAW Old disputes → Bangalore
New disputes → Section 2(p)
09
HIGH-RETENTION REVISION

Remember the story—not isolated definitions

The chronology itself is the mnemonic.

47 TEXT

Broad original Section 2(j)

→
78 TEST

Bangalore Triple Test

→
82 ATTEMPT

Amendment enacted, not commenced

→
05 DOUBT

Jai Bir Singh reference

→
25 CODE

Section 2(p) comes into force

→
26 CLARIFY

Nine-judge Supreme Court

THE EXAM FORMULA

47 Text → 78 Test → 82 Attempt → 05 Doubt → 25 Code → 26 Clarify

Q1

Was the Triple Test written in the original Section 2(j)?

Answer

No. The original operative Section 2(j) used the shorter business/trade/undertaking formulation. The Triple Test is associated with Bangalore Water Supply.

Q2

Did the 1982 replacement definition become effective?

Answer

No. It was enacted but the relevant replacement definition was never brought into force.

Q3

Is profit necessary for an activity to be an industry?

Answer

No. Bangalore treated profit motive as irrelevant, and the present Section 2(p) expressly says profit motive is not decisive.

Q4

Is every government department outside “industry”?

Answer

No. Government ownership and sovereign function are not synonyms. Under the present Code, examine whether the particular activity is relatable to the express sovereign-function exclusion.

Q5

Did the nine-judge Bench overrule Bangalore in 2026?

Answer

No simple majority replaced Bangalore with the CJI's proposed commercial-character test. Bangalore remains applicable to surviving old-ID-Act disputes.

Q6

Does Bangalore automatically interpret Section 2(p)?

Answer

No. The nine-judge decision made clear that the Industrial Relations Code is to receive an independent interpretation based on its own statutory language.

FINAL TAKEAWAY

“Industry” is not a label. It is a legal classification.

The correct answer depends upon the statutory era, the nature of the activity, organised employer–worker cooperation, the goods or services produced, and any express statutory exclusion.

ASK IN THIS ORDER
  1. Which law governs the dispute?
  2. What is the real activity?
  3. Is there systematic organisation?
  4. Is there employer–worker cooperation?
  5. What goods or services emerge?
  6. Does an exclusion apply?
  7. Is the claimant separately a statutory worker?
PRIMARY AUTHORITIES & KEY CASES

Authorities discussed in this lecture

01 Industrial Disputes Act, 1947 Former Section 2(j)
02 D.N. Banerji v. P.R. Mukherjee AIR 1953 SC 58
03 State of Bombay v. Hospital Mazdoor Sabha AIR 1960 SC 610
04 University of Delhi v. Ram Nath AIR 1963 SC 1873
05 Secretary, Madras Gymkhana Club Employees' Union AIR 1968 SC 554
06 Management of Safdarjung Hospital v. K.S. Sethi AIR 1970 SC 1407
07 Bangalore Water Supply & Sewerage Board v. A. Rajappa (1978) 2 SCC 213 · AIR 1978 SC 548
08 Industrial Disputes (Amendment) Act, 1982 Act 46 of 1982 · replacement definition never commenced
09 State of U.P. v. Jai Bir Singh (2005) 5 SCC 1
10 Industrial Relations Code, 2020 Sections 2(p), 2(r) · effective 21 November 2025
11 S.O. 5320(E) 21 November 2025 · commencement notification
12 State of U.P. v. Jai Bir Singh 2026 INSC 897 · Nine-Judge Bench · 20 August 2026
CLASS PRESENTATION

Definition of Industry

LL.B. 3 Years · Third Semester
Dr Babasaheb Ambedkar School of Law

Chirag Vora Roll No. 22
Rajnish Agrawal Roll No. 82
Sandip Maheshvari Ram Roll No. 94
Shubham Ambre Roll No. 106
Suhas Namdev Chakre Roll No. 109