Severing a Working Precedent for the Sake of a Clean Slate

The Test the Court Didn't Need to Abandon

Nine judges of the Supreme Court just decided that a legal test which has defined "industry" for nearly fifty years should no longer bind interpretation of the very provision that largely reproduces it. That is the angle worth sitting with: the majority didn't reject the Triple Test's substance - it rejected its authority, while keeping almost everything the test actually said.

What Actually Changed and What Didn't Justice V.R. Krishna Iyer's 1978 Triple

Test said an "industry" exists wherever there is systematic activity, employer-employee cooperation and production or distribution of goods and services to satisfy human wants - profit motive irrelevant, only genuinely sovereign functions excluded.

This swept hospitals, educational institutions and charities into labour law's protective net. The new Industrial Relations Code's Section 2(p), by the editorial's own reading of the text, "does not move away from Justice Krishna Iyer's Triple Test formula... and reproduces much of its essence." So what did the majority actually change?

Not the substance of the definition - the authority of the precedent that explains it. Courts and tribunals applying Section 2(p) going forward are free to read it without treating BWSSB as binding, even where the words on the page say nearly the same thing BWSSB already interpreted.

Why That Distinction Matters More Than It Sounds This is not

academic. A test's substance tells a judge what facts to look for. A test's binding authority tells every lower court and tribunal that the same facts must be decided the same way, keeps outcomes predictable and stops each new bench from re-litigating what "systematic activity" or "production of goods and services" means from scratch.

Severing the authority while keeping the substance produces exactly the instability the editorial identifies: courts must now infer that the old meaning should still apply, without the interpretive anchor that used to make that inference automatic rather than case-by-case.

The Argument the Dissent Made That Deserves More Weight Justice

Nagarathna's dissent - joined by three colleagues - argued the reference was unnecessary in the first place, precisely because nothing about the post-1991 economy makes an expansive worker-protective definition of "industry" less necessary.

If anything, the shift of workers from secure public employment into an expanding, less-regulated private sector since liberalisation makes a broad definition of what counts as an industry more essential as a bulwark, not less.

Four votes against five is not a landslide majority - it is a genuinely contested question decided by the thinnest of margins and institutional commentary treating a 5-4 split as settled doctrine understates how live this disagreement actually is.

What This Means Going Forward

For now, courts and tribunals interpreting Section 2(p) must do the work precedent used to do automatically: read "much of its essence" carried over from BWSSB without being told they have to. That is a real cost imposed for the sake of legislative tidiness - freeing the IRC to be read on its own text - when the text itself didn't actually need freeing from an interpretation it substantially agrees with.