Triple test, adrift: On the ruling on definition of ‘industry’
A nine-judge Supreme Court of India bench recently reviewed the 'Triple Test' definition of an 'industry' under the Industrial Disputes Act. While the court maintained the test for pending disputes, it ruled that the definition would not serve as a primary guide for the newer Industrial Relations Code.
Why it matters
This ruling impacts labor rights and the legal classification of employment sectors, potentially affecting worker protections in the transition between old and new labor laws.
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.
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