The constitution of a seven-judge bench of the Supreme Court to examine whether the decision of Bangalore Water Supply and Sewerage Board (BWSSB) v A.S. Rajapppa[1] requires a reference to a larger bench[2] has reopened the vexed question of defining ‘industry’ in industrial and labour law. The formation of a larger bench is a much-belated response to the request of a 5-judge bench of the Court in State of Uttar Pradesh v Jaibir Singh[3] for a larger bench for reconsideration of the BWSSB verdict. The majority judgment in the BWSSB case, authored by Justice Krishna Iyer, had famously laid down the ‘Triple Test’ wherein any systematic activity, organised by cooperation between employer and employee for the production and/or distribution of goods and services would be considered an industry under Section 2(j) of Industrial Disputes Act, 1947 (IDA). The only exception the Court had recognised pertained to sovereign functions. Even though this judgment held sway as the ruling authority for almost three decades, in an astonishing decision in 2005, the Jaibir Singh bench held that the opinion of Justice Krishna Iyer could not be treated as an authoritative precedent and asked for a reference to a larger bench.

After more than a decade, the seven-judge bench has finally been constituted and the Bench, after concluding the hearing last week, has reserved its decision.[4] News-reports on the hearing indicate that the Bench appears to be favourably disposed towards referring the matter to a nine-judge bench. As we await its decision, I revisit the critique of BWSSB put forth by the 5 judge-bench and examine the arguments of the petitioners before the seven-judge bench in the Jaibir Singh case. In this series of two posts, I present the following arguments: 1) that Jaibir Singh’s assertion that the Triple Test did not have the support of the majority of judges of the BWSSB Bench was based on an erroneous reading of the separate opinions in that case, 2) that the reliance placed by the petitioners before the seven-judge bench on the analogy with Supreme Court’s recall of the NEET Order to plead that BWSSB decision is not a judgment in eye of law ignores the difference between the two cases, 3) that abandoning the Triple Test for a  more restrictive interpretation of industry, without enacting parallel employee-protection legislation would be regressive and 4) that while Triple Test provides an accessible and coherent framework for defining industry, certain aspects of the BWSSB verdict do require further clarification. In this process, I submit that a reference should be made to a nine-judge bench. However, the larger bench should refrain from discarding the Triple Test but should instead clarify some of those questions left unanswered by the BWSSB case.

Prior to the BWSSB decision, different benches of the Supreme Court had grappled with the wide amplitude of the terms listed in section 2 (j), leading to, what Justice Krishna Iyer described as, a “zigzag course of landmark cases.”[5] In laying down the Triple Test in BWSSB, Justice Iyer adopted a functional approach and carved out a coherent and yet simple framework for the definition of industry that could be applied across different activities. It also very demonstrably advanced the statutory intent of extending legal protection to a wider constituency of workers.

Yet, the judgment had come under attack from several quarters even before the Jaibir Singh case. In fact, the Parliament amended section 2 (j) in 1982 and took certain activities out of the purview of the word ‘industry’.[6] While the amended definition still awaits notification, a 2 judge-bench decision in Coir Board, Ernakulam v Indira Devi P.S.[7] launched another salvo by calling for reconsideration of the BWSSB decision by a larger bench. Justice Sujata Manohar observed that the expansive definition of the industry might have done more damage than good.[8]

But the decision of Jaibir Singh was a frontal assault on the BWSSB judgment. As mentioned earlier, the case suggested that the BWSSB majority opinion did not even constitute an authoritative precedent. This claim was based on the following propositions: a) that judges delivered different opinions at different points of time without perusing the opinion of other judges on the bench and Beg C.J. who wrote a separate opinion delivered in haste, only concurred with the conclusion that the BWSSB is an industry and not with other assertions in the majority opinion and b) that all the opinions had called for legislative intervention, while suggesting that their opinions were meant to provide a workable solution till the legislature stepped in.[9]

It is my submission that this argument of the Jaibir Singh bench is profoundly misplaced and ignores the commonality between the majority opinion of Justice Krishna Iyer and the separate but concurring opinions of Chief Justice Beg and Justice Chandrachud. The common ground between these opinions was not merely restricted to the final holding that the Bangalore Water Supply and Sewerage Board is an industry but also to the Triple Test. This can be inferred from the following observation by Justice Beg in Paragraph 165 of the judgment: “…I am in agreement with the conclusions of my learned brother Krishna Iyer and I also endorse his reasoning almost wholly.” This makes it abundantly clear that he agreed with the core rationale of the majority opinion too. The only major point of departure between the two opinions, as is evidenced by Paragraph 163, pertained to the nomenclature and scope of the sovereign function exception. Justice Beg observed “I do not feel happy about the use of the term ‘sovereign’ here. I think that the term ‘sovereign’ should be reserved, technically and more correctly, for the sphere of ultimate decisions.” However, Justice Beg did not express any disagreement on the substance or the rationale of the Triple Test. Justice Chandrachud’s separate opinion too sounded a discordant note on the appropriateness of the sovereign function exception. He reasoned that such an exception could not be squared with the functional approach to defining industry that the Triple Test espoused.[10] However as with CJ Beg, Justice Chandrachud also did not express any difference with the Triple Test. Therefore, it is submitted that the Triple Test – the core tenet of the majority opinion of the BWSBB decision – indeed had the support of the five out of the seven judges in the Bench. The common ground between the three opinions on the Triple Test did therefore constitute a binding ratio. It was consequently incorrect to infer that there was no authoritative precedent merely based on the few differences between the three opinions.

Similarly, the claim that all the opinions desired legislative intervention to clarify the legal position on definition of industry and that the Triple Test was devised as a stopgap standard is a non-sequitur. The judges might have indeed sought statutory amendments, but until such amendments are brought into force, the ratio of the case would be a binding precedent. That the plurality of opinions saw their decision as a temporary measure aimed at holding the field till Parliament’s involvement does not detract from the operation of the rule of stare decisis and the ratio decidendi upon which the decision is based, shall remain law under Article 141 of the Constitution.

One of the main arguments, reportedly forwarded by the petitioners before the seven-judge bench centres around the claim that the judges on the majority in the BWSSB and Justice Beg did not have the opportunity to peruse the dissenting opinion. Consequently, the case was analogous to the recall of order on NEET exam in a review petition in Medical Council of India v Christian Medical College,[11] Vellore because “there was no discussion among the members of the Bench before pronouncement of the judgment.” Based on this comparison, it has been argued that the BWSSB decision does not form a judgment in the eyes of the law because of the circumstances of the case. However, this analogy is thoroughly misplaced and disregards the differences between the two cases. The operative part of the decision in the Medical Council of India case also referred to the neglect of binding precedents by the majority decision in the NEET judgment. Therefore, the lack of discussion between the judges of the Bench did not form the sole reason for the recall. Ignorance of past precedents also contributed to the recall. In contrast, there has not been any question whatsoever of BWSSB overlooking binding precedents. Therefore, the reasons for the Medical Council of India order do not apply to the BWSSB at all and the attempt to draw an equivalence between the two cases is fallacious at best.(You can read Part-II here)