Article 2: Triple test, adrift
Why in news: A nine-judge Supreme Court Bench on August 20 examined the Triple Test defining “industry” under labour law and its relevance after the Industrial Relations Code, 2020.
Key Details
- Triple Test: The Bangalore Water Supply judgment defined an industry through systematic activity, employer-employee cooperation, and production/distribution of goods or services.
- Broad definition: Profit motive was irrelevant, while only specified sovereign functions were excluded from the definition of industry.
- Nine-judge ruling: The Court retained the Triple Test for disputes under the repealed Industrial Disputes Act, but held that the 1978 judgment should not be the interpretive anchor for the IRC.
- Industrial Relations Code: Section 2(p) of the IRC retains much of the essence of the Triple Test, making its exclusion as an interpretive framework contentious.
- Worker–employer balance: The broader definition provides worker protections but also imposes regulated retrenchment and closure procedures and restrictions on strikes, supporting industrial peace.
Background of the Triple Test
- On August 20, a nine-judge Bench of the Supreme Court examined the correctness of the Bangalore Water Supply and Sewerage Board (BWSSB) v. A. Rajappa (1978) ruling.
- Justice V.R. Krishna Iyer had established the “Triple Test” for determining what constitutes an industry under Section 2(j) of the Industrial Disputes Act, 1947.
- The test requires a systematic activity as one of the essential conditions.
- It also requires employer–employee cooperation in the activity.
- The activity must involve production or distribution of goods or services to satisfy human wants, excluding purely religious or spiritual activities.
Scope of the Triple Test
- The profit motive was considered irrelevant in determining whether an activity constitutes an industry.
- The focus was on the nature of the activity, rather than its ownership or profit orientation.
- Only specified sovereign functions were kept outside the scope of “industry”.
- A five-judge Bench in State of U.P. v. Jai Bir Singh (2005) subsequently raised doubts about this interpretation.
- The issue was therefore referred to a nine-judge Constitution Bench for reconsideration.
Supreme Court’s Current Position
- The nine-judge Bench left the Triple Test intact for disputes governed by the earlier Industrial Disputes Act.
- The Industrial Disputes Act was repealed when the Industrial Relations Code, 2020 (IRC) came into force on November 21, 2025.
- However, the majority held that the BWSSB judgment should not serve as the “sheet anchor” for interpreting Section 2(p) of the IRC.
- Justice B.V. Nagarathna dissented from this approach.
- Her view was that the reference itself was unnecessary because the Triple Test required no interference, a position shared by three other judges.
Importance for Workers
- The article argues that an expansive definition of “industry” has become more important after the economic reforms and privatisation that began in 1991.
- A larger share of workers has moved from relatively secure public-sector employment to the private sector.
- The Triple Test provides a broader framework for bringing activities within the scope of labour protections.
- Its continued relevance could therefore provide an important legal safeguard for workers.
- The argument is that changing employment patterns strengthen the case for preserving an expansive understanding of industry.
Implications of the Industrial Relations Code
- Section 2(p) of the IRC substantially retains the essence of the Triple Test.
- The Triple Test was not only a pro-worker mechanism; it also imposed restrictions on employers.
- These included regulated procedures for retrenchment and closure, while workers faced restrictions on striking at will.
- The broader objective was therefore to promote industrial peace, rather than merely worker welfare.
- The key concern is that courts and tribunals should not treat the change in statute as a change in legislative intent, particularly since the essence of the Triple Test has been carried into the IRC.
Conclusion
The Triple Test remains significant because it links the definition of industry with both worker protection and industrial discipline. Although the Supreme Court has limited its role as an interpretive anchor under the Industrial Relations Code, its underlying principles remain relevant. Courts and tribunals must ensure that statutory change does not unnecessarily result in a change of legislative intent, preserving balanced industrial relations.