In Bangalore Water Supply and Sewerage Board vs A. Rajappa (1978), a seven-judge Bench of the Supreme Court laid down the "Triple Test" for determining whether an activity is an "industry" under Section 2(j) of the Industrial Disputes Act, 1947, extending the Act's protections widely across government, statutory and charitable bodies.

Background / Facts

The case arose from years of conflicting Supreme Court rulings on whether hospitals, universities, clubs and government departments qualified as an "industry" under the Act. The entity whose status the Court had to settle was the Bangalore Water Supply and Sewerage Board, a statutory body providing water supply and sewerage services.

Question of Law

Whether a statutory body performing water supply and sewerage functions, and by extension any government, charitable or professional body carrying on organised activity, falls within the definition of "industry" under Section 2(j) of the Industrial Disputes Act, 1947.

Verdict / Key Observations

  • The Triple Test: Justice Krishna Iyer's majority opinion held that an activity is an "industry" if it involves systematic activity, cooperation between employer and employees, and the production or distribution of goods or services meant to satisfy human wants and wishes.
  • Profit motive irrelevant: A charitable or public body can qualify as an industry if it meets the Triple Test, whether or not it seeks profit.
  • Government or statutory status not a shield: An entity's character as a government department or statutory body does not by itself exclude it from the Act.
  • A narrow sovereign-function exemption: Only functions involving the state's inalienable, sovereign authority, not welfare or commercial activities carried on by the state, fall outside the Act.
  • The predominant-nature test: Where an entity performs mixed functions, its predominant character decides whether it is an industry.
  • Severability: An industrial department within an otherwise sovereign or non-industrial body can independently qualify as an industry.

Significance

  • Broadened protection: Extended labour law protection to a wide range of public-sector and statutory bodies, including hospitals, universities and utilities, that earlier rulings had excluded inconsistently.
  • No shield through statutory form: Established that the state cannot keep an activity outside industrial dispute-resolution machinery merely by carrying it out through a government or statutory body.
  • Nearly five decades as the reference point: Remained the governing test for "industry" litigation, and was itself referred for reconsideration in State of U.P. vs Jai Bir Singh (2005) 5 SCC 1 and later before a nine-judge Bench, whose 2026 ruling left BWSSB's framework intact for pending cases while declining to make it binding on how "industry" is read under Section 2(p) of the Industrial Relations Code, 2020, which replaced the Industrial Disputes Act, 1947, with effect from November 21, 2025.