Triple test, adrift: On the ruling on definition of ‘industry’

On August 20, a nine-judge Bench of the Supreme Court of India delivered a judgment on the correctness of the ruling in Bangalore Water Supply and Sewerage Board vs A. Rajappa (BWSSB) (1978). In that judgment, Justice V.R. Krishna Iyer had laid down what was called the “Triple Test” on what counts as an “industry” under Section 2(j) of the Industrial Disputes (ID) Act, 1947 (ID Act). Three conditions were to be met for an industry — a systematic activity, employer-employee cooperation, and production/distribution of goods and services to satisfy human wants other than those that are purely religious or spiritual. Profit motive was irrelevant; what mattered in this determination was the nature of the activity, and only “sovereign functions” stood outside it. A five-judge Bench in State of U.P. vs Jai Bir Singh (2005) raised a doubt about this definition and a seven-judge Bench sent it to the current nine-judge Bench. This Bench, led by Chief Justice of India Surya Kant, left the Triple Test standing for all pending disputes under the older ID Act, which was repealed on November 21, 2025 when the Industrial Relations Code, 2020 (IRC) came into force. However, a majority of the nine-judge Bench also ruled that BWSSB will not be a “sheet anchor” for interpreting Section 2(p) of the IRC. That is a mistake. In her dissenting opinion, Justice B.V. Nagarathna held that the reference itself was unnecessary and that the Triple Test requires no interference — a view shared by three other judges. Her reasoning is compelling. Since 1978, and particularly after the liberalisation and privatisation reforms of 1991, a far higher number of workers have moved to the private sector, out of the security of public employment. An expansive definition of industry, as entailed in the Triple Test, is therefore even more necessary now as a bulwark for the worker.

Yet, Section 2(p) of the IRC does not move away from Justice Krishna Iyer’s Triple Test formula in BWSSB and reproduces much of its essence. It is therefore difficult to understand why BWSSB has to be set aside when Section 2(p) itself comes up for interpretation. The Triple Test was also not merely a pro-labour device. An expansive definition of industry brought with it not just the ID Act’s protections but also its restrictions — for instance, a regulated route to retrenchment and closure for the employer, and a bar on workers striking at will. In essence, the Triple Test allowed for industrial peace rather than worker welfare alone. Severing that principle from the IRC, as the majority has done, cuts away the interpretive framework that allowed such disputes to be resolved. With the essence of the Triple Test carried into Section 2(p), it is now incumbent upon courts and tribunals to ensure that a change of statute is not read as a change of intent even if the majority judgment has removed the anchor to do so.