In today’s Finshots, we tell you why the Supreme Court is revisiting the definition of ‘industry’.

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Now, on to today’s story.

The Story

The late 1970s India was different from what it is today. Files used to travel slowly across wooden and cast iron desks. Government offices hummed with ceiling fans and paperwork. The state wasn’t just a regulator back then. It ran banks, built roads, supplied water, and staffed hospitals. And for many, a government job wasn’t just employment; it was stability, identity, and a quiet promise of security.

But beneath all that, there was an invisible shift taking place.

A ‘worker’ wasn’t limited to a factory or shop floor. They were showing up in classrooms and public hospitals. And as this new kind of workforce grew, so did a simple but unsettling question: if you worked for a public service, were you still part of an “industry”?

At least that was the question that came at the doorstep of the Bangalore Water Supply and Sewage Board (BWSSB) back in 1978. A group of employees weren’t happy about the Board taking fines from them for alleged misconduct. They believed that such workplace decisions were unfair. So they ended up demanding the same rights as factory workers. They wanted the right to raise disputes and not be fired without cause. Put simply, they wanted to be classified as “workmen” under the Industrial Disputes Act, 1947.

But before they could even be heard, they ran into a more fundamental roadblock. The Board pushed back, arguing that none of this applied because it wasn’t an “industry” to begin with.

Because under the 1947 Act, an “industry” is defined as “any business, trade, undertaking, manufacture or calling of employers, and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen”.

If that seems complicated, just understand that the Board first argued it isn’t a business or trade at all, but a statutory authority created under the Bangalore Water Supply & Sewerage Act to provide essential civic services, i.e., water and sewerage, to the city. So, that itself meant it shouldn’t be classified as an “industry”.

And second, that its activities are non-profit, welfare-oriented public functions, quite different from private-sector manufacturing or commercial enterprises. Which meant that public utilities like this were never intended to be treated as “industries”.

As you can imagine, workers weren’t thrilled, and this culminated into a court case famously known as Bangalore Water Supply and Sewerage Board v. R. Rajappa. And to settle it, the Court came up with what became known as the Triple Test. It said that to resolve such disputes, you simply had to ask three questions:

First, was the activity systematic and organised — not casual, not a one-off, but continuous? 

Second, did it involve cooperation between an employer and employees? 

Third, did it produce goods or services meant to satisfy human needs? 

If the answer to all three was yes, it was an industry. Profit and motive didn't matter. Whether the employer was a private company or the government didn't matter. The only thing that mattered was the nature of the work itself.

So, a water board could be an industry. And so could a hospital. A university. A research institute. A club. A government department. Even a religious body, such as a temple.

You could say this decision single-handedly erased the boundary between welfare and commerce. Even Parliament, watching from the sidelines, once tried to change it by passing an amendment in 1982. This amendment specifically excluded several categories of activities, including hospitals, educational institutions, and sovereign government functions. But it was never really enforced, and was then quietly left that way.

So yeah, this is the definition that shaped Indian labour law for nearly five decades. Entire sectors adjusted to it, building themselves around it.

Now you’re probably wondering, okay, what happens if all of these establishments are included in the definition of an “industry”? What’s the problem?

Well, to understand that, let’s look at a real-life example. In 1996, a three-judge bench applied the 1978 test to the Maharashtra state government’s social forestry department and held that it, too, was an industry. But in 2001, a different two-judge bench looked at a similar question in Gujarat and reached the opposite conclusion. It felt that the state’s forest department wasn’t an industry, but a welfare scheme.

Same law. Same test. Opposite answers.

And this led to widespread confusion. Labour courts and high courts across India were reading the 1978 judgment and reaching different conclusions depending on which part of it they emphasised and where their instincts told them the line should be drawn.

In 2005, a five-judge Constitution Bench described the situation plainly. The 1978 judgment, it said, had produced a “docket explosion” or just too many cases in labour courts simply because no one was really sure what counted as an “industry”. And uncertainty ends up hurting those who can least afford legal battles the most.

Not just that. In cases where the broader definition of “industry” was upheld, and organisations like hospitals or government departments were treated as industries, it simply made way for more strikes and lockouts in essential services like healthcare, education, and water. This risked disrupting core public functions and gave unions a sort of unfair leverage.

The question then moved to a five-judge bench in 2005 in a case called State of UP vs Jai Bir Singh, where, again, they were essentially circling the same issue. The bench then asked for the case to be referred to a larger bench and then again a larger bench. And that’s how it finally reached a nine-judge bench of the Supreme Court of India on the morning of March 17, 2026 — 48 years after the original judgment!

What followed wasn’t just a ruling on one dispute. The Supreme Court stepped back and asked a much larger question — what exactly counts as an “industry” in the first place?

The bench faced questions that would have been familiar to the seven judges of 1978: was the Triple Test still the right law? Could social welfare activities run by the government count as “industry”? Where, exactly, did sovereign functions end and industrial activity begin?

The arguments on the first day showed both how much, and how little, had changed. The Attorney General (the government’s chief legal advisor) warned that a definition this broad comes with real costs and that treating almost every organised activity as an “industry” could discourage investment and strain non-commercial sectors. On the other side, workers’ counsel argued that narrowing the definition now would take away protections from people in hospitals, universities, and public bodies who have relied on them for nearly half a century.

But that wasn’t the only complication. In 2020, Parliament passed a new Industrial Relations Code, which came into force in November 2025, replacing the Industrial Disputes Act. This meant that the law the workers had relied on no longer existed. Yet the bench made it clear that it was there to interpret the old law, not the new one.

But here’s another question that lingered in the background: if Parliament had already moved on, what exactly was the Court being asked to settle?

By now, the workers who first brought these claims are long gone. The Board has changed. Even the law they relied on has disappeared. And still, the question they set in motion refuses to go away, i.e., who counts?

Back in 1978, the Court looked at a country full of people working in hospitals, schools, and government offices and, in effect, said: we see you. You are part of industry. This law is yours too.

But today, the judges are looking at a very different India. And whether they see things the same way or choose to draw the line elsewhere remains to be seen. Because the Supreme Court just finished hearing all the arguments yesterday and has decided to deliver its decision a little later after internal discussion.

Until then… if someone asks you what an “industry” is, you’ll have to send them back to how the courts defined it in 1978.

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