Bangalore Water Supply Triple Test

The triple test is the judicial method used to determine whether an activity is an industry under Section 2(j) of the Industrial Disputes Act, 1947. It was formulated by the Supreme Court in Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978) and gives the statutory term a broad, activity-based meaning.

The three requirements

An activity is an industry when the following three requirements coexist:

• There must be a systematic activity, rather than an isolated or casual undertaking.
• The activity must be organised through cooperation between employer and employees; the employment relationship is a substantial element.
• It must involve the production or distribution of goods or services calculated to satisfy human wants or wishes.

How the test is applied

The inquiry is functional: the decisive consideration is the nature of the activity, not the formal character of the organisation conducting it.

• The absence of a profit motive or investment of capital does not prevent an activity from being an industry.
• An undertaking does not cease to be an industry merely because it is charitable, philanthropic or operated by a public authority, if the three requirements are satisfied.
• Strictly understood sovereign functions of the state fall outside the concept, while welfare or economic activities are not excluded merely because the government performs them.

Composite organisations

For an organisation carrying on several activities, the Court prescribed the dominant nature test. Its predominant activity and the integrated character of its departments determine whether the undertaking is an industry, although genuinely severable units may be considered separately.