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SC modifies 1978 ‘triple test’ for industry

By Sohail Khan 21 August 2026, 12:03 am

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Business News›News›India›SC modifies 1978 ‘triple test’ for deciding what qualifies as an ‘industry’

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SC modifies 1978 ‘triple test’ for deciding what qualifies as an ‘industry’

Synopsis

A nine-judge Supreme Court bench on Thursday, in a 5-4 majority verdict, modified parts of the “triple test” laid down nearly five decades ago to determine what constitutes an “industry” under the Industrial Disputes Act, 1947. The reformulated test will apply prospectively, while pending cases can continue under the earlier definition.

Judgement — The Supreme Court has prospectively modified the 1978 “triple test” for determining what qualifies as an “industry” under the Industrial Disputes Act, while allowing pending cases to follow the earlier definition. (This is a representative image.)

New Delhi: A nine-member Supreme Court bench in a majority verdict on Thursday modified parts of the "triple test" standard set by a seven-judge bench nearly 50 years ago to define what qualified as an "industry" under the Industrial Disputes Act, 1947.

In a 5-4 decision, the bench held that certain aspects and the accompanying guidelines needed further refinement even though the essential framework laid down by the 1978 ruling stood the test of time.

Five judges, including Chief Justice of India Surya Kant, said they felt that some of the elements of the earlier ruling could have been articulated differently so as to better reflect the scope and contours of Section 2(j) of the 1947 Act that defined the term "industry". "Therefore, we propose to reformulate the triple test," they said in the ruling.

However, they left the interpretation of "industry" under the Industrial Relations Code, 2020 to be determined independently under the new law.

The judgment had not been uploaded to the court website at the time of writing this report.

The majority verdict said the reformulated test will operate prospectively. Cases pending before courts, tribunals, labour authorities or other fora under the 1947 Act may be adjudicated in accordance with the earlier definition, the CJI said, pronouncing the judgment on behalf of himself and other justices, along with a substantially concurring decision by Justice PS Narasimha.

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Supreme CourtTriple TestIndustrial Disputes ActIndustry DefinitionIndustrial Relations Code 2020CJI Surya KantNew DelhiLabour AuthoritiesLegal ReformJudicial Ruling

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