Supreme Court Refines Bangalore Water Supply’s Triple Test, Rules “Shall Remain Undisturbed” for Pending Disputes
A nine-judge bench, by majority, has refined but not overturned the triple test in Bangalore Water Supply for what counts as an ‘industry’ under the Industrial Disputes Act, 1947.
Published on: 20 August 2026, 08:33 am
TODAY THE NINE-JUDGE BENCH, while deciding the reference concerning the interpretation of industry, under Section 2(j) of the Industrial Disputes Act, 1947, by 5:4 majority recognised that while the essential framework of the triple test laid down in Bangalore Water Supply and Sewerage Board v. R. Rajappa (1978) stood the test of time, certain aspects of the triple test and the accompanying guidelines were capable of further refinement.
However, Chief Justice of India (‘CJI’) Surya Kant, while pronouncing the judgment, clarified that the ruling would operate prospectively and would not affect pending disputes or proceedings.
“Judgments, settlements and determinations that are no longer subject to challenge shall remain undisturbed, notwithstanding the reformulation of the test set out in this judgment,” he said. It was further clarified that ruling shall not be treated as a source or aid for interpreting the Industrial Relations Code, 2020, if such a question arises in the future.
The dissenting opinions on merits were delivered by Justices B.V. Nagarathna, Dipankar Datta, Ujjal Bhuyan and Joymalya Bagchi, who held that the law laid down in Bangalore Water Supply remains correct and does not warrant reconsideration or reformulation. On the question of maintainability, Justices B.V. Nagarathna and Ujjal Bhuyan along with Justice Dipankar Datta were of the opinion that the reference was not maintainable. However, six judges including CJI ruled otherwise.
Background
In 1978, a seven-judge Bench established the landmark “Triple Test” in Bangalore Water Supply by which any systematic activity organised through employer-employee cooperation for the production or distribution of goods or services qualifies as an industry. It rendered the profit motive entirely irrelevant. The interpretation swept hospitals, educational institutions, and government departments under the jurisdiction of labour laws, leaving a narrow exception for sovereign functions.
Over subsequent decades, this broad interpretation led to highly inconsistent and conflicting rulings among smaller Benches of the Supreme Court. Recognising these difficulties, a five-judge bench in State of Uttar Pradesh v. Jai Bir Singh (2005) referred the correctness of Bangalore Water Supply to a larger bench, noting the lack of unanimity in the judgment and its problematic consequences for public welfare institutions and state functions. In 2017, a seven-judge bench further referred the matter to a nine-judge Constitution Bench for authoritative reconsideration.
The current bench formulated four broad questions:
Whether the triple test laid down in Bangalore Water Supply is the correct law.
Whether the Industrial Disputes (Amendment) Act, 1982 and the Industrial Relations Code, 2020 have any legal impact upon the definition of ‘industry’ as contained in the principal Act of 1947.
Whether the social welfare activities and schemes of government departments or instrumentalities can be construed to be industrial activities for the purposes of Section 2(j) of the 1947 Act.
What are the sovereign functions of the State that fall outside the purview of Section 2(j)
On March 19 2026, after hearing arguments for three days, the nine-judge bench comprising of CJI Surya Kant and Justices BV Nagarathna, PS Narasimha, Dipankar Datta, Ujjal Bhuyan, Satish Chandra Sharma, Joymalya Bagchi, Alok Aradhe and Vipul M Pancholi had reserved its judgment.
The ruling
The majority firstly, held that the reference to the nine-Judge Bench was validly made and maintainable which allowed the Court to examine whether the interpretation of industry in Bangalore Water Supply required reconsideration.
Secondly, law in Bangalore Water Supply was not completely rejected, however, certain elements of its triple test required refinement, so the majority reformulated the test. This reformulation, the Court clarified, would apply prospectively and pending cases under the 1947 Act continue to be decided under the original Bangalore Water Supply triple test.