Bangalore Water Supply and Sewerage Board v. A. Rajappa
Supreme Court of India · 21 February 1978 · 7 judges · 1978 AIR 548; 1978 SCR (3) 207; 1978 SCC (2) 213
A seven-Judge Bench gave 'industry' in Section 2(j) of the Industrial Disputes Act a wide meaning under the triple test, overruled Safdarjung and other restrictive decisions, and dismissed the Bangalore Water Supply and Sewerage Board's appeal.
Facts
The meaning of 'industry' under Section 2(j) of the Industrial Disputes Act, 1947 had produced conflicting decisions, including the six-Judge ruling in Safdarjung Hospital. A smaller Bench, unable to find any consistent thread in the case law, referred the question to a larger Bench. A batch of appeals and a special leave petition concerning various employers, led by an appeal of the Bangalore Water Supply and Sewerage Board from a Karnataka High Court judgment, was heard by seven Judges. The Court decided the general question, disposed of the Board's appeal, and sent the other matters to a smaller Bench for decision on the merits.
Questions before the Court
- What is the true scope of 'industry' as defined in Section 2(j) of the Industrial Disputes Act, 1947?
- Are professions, clubs, educational and research institutions, charitable undertakings and welfare activities of government outside the definition?
- Were Safdarjung Hospital and other decisions restricting the definition correctly decided?
What the Court held
- 'Industry' has a wide import. Prima facie there is an industry where there is (i) systematic activity, (ii) organised by co-operation between employer and employee, (iii) for the production or distribution of goods and services calculated to satisfy human wants and wishes, not spiritual or religious.
- Absence of profit motive is irrelevant, whatever the sector. The decisive test is functional: the nature of the activity, with emphasis on the employer-employee relations. Philanthropy does not take a trade or business out of the definition.
- Professions, clubs, educational institutions, co-operatives, research institutes and charitable projects meeting the triple test are industries. Among them, only small ventures run without real employees, and free eleemosynary missions run without paid employment, are exempt.
- Under the dominant nature test, an integrated undertaking is an industry as a whole. Only sovereign functions, strictly understood, are exempt, not welfare or economic activities of government; severable industrial units in sovereign departments are covered; and legislation may exclude categories.
- Safdarjung, the Solicitors' case, Gymkhana, Delhi University, Dhanrajgirji Hospital and other rulings contrary to these principles were overruled, and Hospital Mazdoor Sabha was restored. The Board's appeal was dismissed with costs.
Why it matters
The judgment states the triple test and the dominant nature test for 'industry' under Section 2(j), holds profit motive irrelevant, confines the exemption for government to sovereign functions strictly understood, and overrules a line of restrictive decisions. Several Judges, including the dissenting Judges, called on Parliament to legislate on the definition.
In the Court's words
Copied from the official judgment; each passage links to its page.
“(b) Absence of profit motive or gainful objective is irrelevant, be the venture in the public, joint private or other sector. (c) The true focus is functional and the decisive test is the nature of the activity with special emphasis on the employer-employee relations. (d) If the Organisation is a trade or business, it does not cease to, be one because of philanthropy animating the undertaking.”
“We over-rule Safdarjung, Solicitors' case, Gymkhana, Delhi University, Dhanrajgirji Hospital and other rulings whose ratio runs counter to the principles enunciated above, and Hospital Mazdoor Sabha is hereby rehabilitated.”
“When undertaken by a private individual they are industries. Therefore, when undertaken by the State, they are industries. The nature of the activity is the determining factor and that does not change according to who undertakes it.”
“We are inclined to think that the definition is limited to those activities systematically or habitually undertaken on commercial lines by private entrepreneurs with the cooperation of employees for the production or distribution of goods, or for the rendering of material services to the community at large or a part of such community.”
Provisions interpreted
- Section 2(j), Industrial Disputes Act, 1947 (definition of 'industry')
Case and bench
- Parties
- Bangalore Water-Supply & Sewerage Board etc. v. R. Rajappa
- Case
- Civil Appeals Nos. 753-754 of 1975, with connected civil appeals and Special Leave Petition (Civil) No. 3359 of 1977
- Decided
- 21 February 1978
- Bench
- Beg, M. Hameedullah (CJ), Chandrachud, Y.V., Bhagwati, P.N., Krishnaiyer, V.R., Singh, Jaswant, Tulzapurkar, V.D., Desai, D.A.
- Opinions
- All seven Judges agreed that the Board's appeal be dismissed. Krishna Iyer, J. wrote the leading judgment laying down the tests, on behalf of himself and three other Judges (as Chandrachud, CJ records); Beg, CJ endorsed his opinion and conclusions in a separate judgment; Chandrachud, J. (giving reasons later as CJ) concurred separately; Jaswant Singh, J., for himself and Tulzapurkar, J., disagreed on the scope of 'industry'.
Questions on this case
2 questions in live Law Maker papers mention this case. A few from free papers:
Question 1 · Legal Current Affairs: August 2026
On 20 August 2026 a nine-Judge Bench of the Supreme Court delivered judgment in State of Uttar Pradesh v. Jai Bir Singh, revisiting the 'Triple Test' laid down in Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978). Under the Industrial Disputes Act, 1947 (since replaced by the Industrial Relations Code, 2020), the provision examined was:
- A. Section 2(j), which defines 'industry'
- B. Section 2(oo), which defines 'retrenchment'
- C. Section 2(s), which defines 'workman'
- D. Section 2(k), which defines 'industrial dispute'
Show the answer
A. Section 2(j), which defines 'industry'
The reference concerned the interpretive scope of 'industry' in Section 2(j) of the Industrial Disputes Act, 1947 and the Triple Test of Bangalore Water Supply (1978). The nine Judges delivered several separate opinions (2026 INSC 897). The Industrial Disputes Act has been replaced by the Industrial Relations Code, 2020.